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Success through supply chain visibility:
Commodity Logistics employs winning technology for LeapFrog
Ken Mark
Becoming one of the top five suppliers to US retail giant Target Corp. wasn't child's play. But that's exactly what LeapFrog Enterprises Inc. managed to do, after deploying a new supply chain management system.
Based in Oakville, Ont., LeapFrog develops innovative, technology-based educational tools for children--from infants to grade schoolers. Its toys and learning products can be found at major retailers such as Wal-Mart, Toys-R-Us and Target.
But managing such a demanding supply chain had its share of challenges, particularly around visibility. That's why LeapFrog called in Commodity Logistics Inc., a full-service logistics company. After assessing the situation, Commodity Logistics implemented 3M HighJump's supply chain management software to provide visibility of inventory and shipments. Commodity Logistics has summarized its work with LeapFrog into a case study on the benefits of supply chain visibility.
The system employed for LeapFrog kicks in as soon as goods are loaded onto ships in Asia, en route to Commodity Logistic's dedicated 9,000 square-metre distribution centre (DC), north of Toronto.
All the relevant product data is loaded into an Oracle database, which then shows up on the HighJump system. The software issues a licence plate for each product. The data profile is rich in information, consisting of identifiers such as the size and weight, and item-specific data.
Once in the DC, the software captures all the transaction data. It knows who handled the product last, its current location, and its age based on time of receipt. That's crucial data, since inventory is shipped out based on FIFO (first in, first out) principles. In fact, the licence plate is a bar code, which identifies each product and then links into the relevant information stored on the corporate database.
Employees constantly key in the data and keep track of items with RF (radio frequency) guns or portable scanners. Easy access to location data enables DC staff to pick items more efficiently and consolidate customers orders quickly and accurately.
In addition, Advantage helps make their jobs easier. For example, it can conduct Pareto or ABC analysis to identify "hot" items. To prevent bottlenecks and traffic jams, Commodity scatters such A-list demand products in different picking zones throughout the DC, rather than in one central location. To further simplify picking, identical items are broken down into separate lost sizes-pallets, cases and single items--with separate SKU numbers to reduce employee confusion. They simply have to pick the proper SKU rather than do the math to meet the required order quantity.
Minimal training
The system is also easy to use. Employees simply follow the instructions on the screen of the RF reader. That's important because Commodity Logistics relies on part-time staff. Moreover, LeapFrog products are seasonal. Goods start arriving in July and August in time to stock stores for back-to-school sales and then keeps going for the Christmas rush.
At the same time, the system enables Commodity Logistics to match its daily staff needs with the day's work on the DC floor. So it can avoid overstaffing, or unnecessary overtime.
The technology eliminates mispicks, and overs/unders, thereby improving customer satisfaction, and it also tracks and manages the distribution of in-store product marketing display material. After receiving some training, Commodity Logistics staff can program the system to create customized reports, rather than having to call in outside consultants to do it for them.
"In fact, it only takes an IT person with a little SQL background to tweak the system," says Rob Giovannelli, operations manager for Commodity Logistics. As a result, business users can create system queries and reporting processes. The supply chain visibility system keeps track of product from the moment it's loaded onto ships in Asia. It reports data such as the number of times the product was handled, and its current location.
The system's cycle-counting accuracy eliminated a DC operator's worst headache--shutting down for the annual physical inventory count. As befitting its importance, the exercise required closing down the facility for an extended weekend while a small platoon of staff carried out the count. But now, DC staff file inventory data at the end of each day, consolidate the numbers at the end of each quarter and send them off to their auditors.
In turn, they conduct spot checks to ensure the inventory count's accuracy. In 2007, the figures were 100 per cent accurate, eliminating the need for an annual physical count.
Commodity Logistics uses transaction data related to DC activities to monitor employee performance, identify bottlenecks and spot problems. The data records how much time workers spend handling products and their success rate in terms of overs/unders.
By comparing such statistics across all workers and on different days, Commodity Logistics can spot outliers and other trends for further analysis. Later, it can address them either through better employee training or improving processes or pick locations. Another option is reassigning workers to other duties.
Commodity also uses HighJump Yard Advantage to manage outbound shipments. The system includes the location and status of all trailers in the yard. If a shipper has dropped off empty trailers, which Commodity Logistics can't load on time and for which it must pay demurrage charges, it can eliminate those costs by alerting the carrier of the changed conditions and request that they be brought back later. It also matches the trailer with the right shipping door.
The result of these efforts is multifaceted. Retailers have the most desired products in stock, and stakeholders in LeapFrog's supply chain have full visibility into the pipeline. For many organizations, this is the key to going from a marginal player--to a best-in-class example of technology at work.
Ken Mark is a Toronto-based freelance writer.
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