Many importers have explored the option of shipping product direct from factories in Asia to stores in the U.S. For Bakers Footwear Group, Inc., that idea was only the beginning of a multi-phase strategy to make its supply chain more efficient.
Headquartered in St. Louis, Mo., Bakers is a specialty retailer of fashion footwear for young women. Most of its stores are in malls. With sales of around $250m, it falls somewhere in the middle of the market in terms of price, says Charlie Kantz, vice president of logistics and warehousing.
In keeping with its emphasis on high fashion, Bakers doesn't stand still. Over the last two years, it has opened 52 new stores, and extensively remodeled 23 others. The very nature of the fashion industry demands constant innovation and quick reflexes, says Kantz.
That ability extends to the supply chain. So Bakers' first step was to enact a distribution-center bypass program. Nearly all of its product comes out of China. Under the old system, finished goods would pass through consolidation centers either in Shenzhen or Hong Kong, move by air or sea to the U.S. West Coast, then be checked into a Los Angeles warehouse run by Bakers' freight forwarder, Transmodal Associates.
All of those stops made for a supply chain that was lengthy and slow to respond to change. So Bakers shifted some key processes from the L.A. warehouse to the Shenzhen consolidation center. There, merchandise is counted, weighed and cubed for loading into containers, then shipped directly to stores. Accessing the document system of Bakers' software provider, IES Ltd., Transmodal creates receipts and prints out warehouse labels. The latter are applied to cartons and become Bakers' way of finding merchandise within the center.
Bakers receives warehouse receipts via the IES system, at which point the goods can be allocated against open orders. Transmodal then applies the labels and arranges for shipment to one of three gateways, Los Angeles, Chicago or New York. From there, packages are handed over to FedEx under a money-saving zone-skipping program.
The capture of carton weight and dimensions at the outset allows Bakers to provide FedEx with package-level details. As a result, FedEx doesn't have to run the packages through its Scan, Weigh and Key (SWAK) process, saving a couple of hours and ensuring that goods make tight loading windows.
For shipments moving by air, the new DC bypass program has been "a smashing success," Kantz says. Cycle times have gone from 14 to nine days, and freight charges have dropped 15 percent. Goods from Asia are in stores within four days of shipment from the source.
For oceangoing product, the report card was less impressive. Transit via that mode can take up to four weeks, including time in the Shenzhen consolidation center, on the water, at U.S. Customs and in the final stages of delivery. Meanwhile, allocations for each store might have changed, resulting in lost sales or costly transfers of merchandise between stores. "In the fashion world," says Kantz, "[28 days] is a lifetime."
Returning to the drawing board, Bakers, Transmodal and IES came up with a program that treats ocean containers as "floating warehouses." Store allocations can be postponed until the last possible moment, while goods are already in the Los Angeles DC. To make that possible, Transmodal generates warehouse labels overseas. The IES system issues the receipt, receives last-minute allocations from Bakers and prints out FedEx labels, which are applied to the cartons and entered into the FedEx system for store delivery.
Transmodal no longer has to print and sort peel-and-stick labels prior to a shipment's arrival in Los Angeles. Incoming containers need only be scanned, and their contents moved immediately into outbound trailers or the small-package delivery network. As a result, says Kantz, productivity at the Los Angeles DC has risen by 40 percent, to 100 cartons per man-hour. Container utilization has improved as well, because boxes can be fully loaded with merchandise from multiple or split purchase orders. Distribution costs by ocean have dropped 25 percent.
Still not satisfied, Bakers moved on to phase three of the program-what Kantz calls "wringing out the next dollar." It wanted to eliminate the need for Transmodal to print and apply labels for every carton. So it shifted the labeling process all the way back to the factory.
Next, Bakers wants to extend the program to domestic freight, with vendors pre-labeling merchandise before it reaches the Los Angeles DC. As with imported goods, the company will be able to allocate shipments while they are still in transit. Carton-specific information will be housed in one centralized system.
Bakers is eager to spread the word about its success. Says Kantz: "This distribution strategy can be implemented for any importer that wants to increase speed to market and reduce time wasted in a facility."
Thanks from Bakers
Business partners are a key determinant of success for any new supply chain strategy. First, from a systems standpoint, it is important to work with a provider that has unquestionable domain expertise and a successful track record in custom-developed solutions. Packaged software solutions don't always exist for leading-edge improvement opportunities, so working with a company like IES that has the right service orientation and application frameworks is critical.
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