Entertainment Wholesaler Super D Saves $1 Million in Annual Warehouse Costs

Posted May 13, 2010

Intermec 2425 RF ComputerFor media wholesaler Super D, the “unplugged” movement in the music industry has reaped million-dollar rewards. The company has a 45,000-square-foot warehouse full of music, sitting in bins and ready to move. Among rows of compact discs, cassette odd vinyl albums are the industry’s elite: compilations that have connected so powerfully with the public that they have sold a million units or more. Now the company is ready to reap yet another “unplugged” million-dollar reward – with a wireless mobile system from Intermec.

Three years ago, Super D Chairman and Chief Technology Officer David Hurwitz began casting about for a way to make his company stronger, more resilient. “We’ve lost a bunch of competitors in the last couple years,” he said, “primarily because with shrinking margins in a shrinking market, if you don’t have your systems in place to get every last nickel and dime you can, you’re dead. We’ve been investing in the technology side so much that it’s paid off.”

The new wireless system included handheld computers from Intermec Technologies Corp., integrated Great Plains software and Microsoft SQL servers.

That move transformed Super D’s warehouse operations, enhancing not only its speed and accuracy, but slashing overall warehouse costs, letting Super D keep more money from every sale. How much more? Three years ago Super D’s warehouse costs were running at 4 percent. Today that cost is down to 1.8 percent. Using current sales figures, warehouse cost savings for fiscal year 2003 total more than $1 million. “As sales continue to grow, that number’s just going to keep getting better,” Hurwitz said.

Twenty-five Intermec 2425® radio-frequency (RF) keypad handheld computers comprise the new system’s front end. They replaced the old method, which Hurwitz described as using “our hands and a clipboard” to pick from and stock the 150,000 bins at the Irvine, Calif., company.

“A smaller retailer has a tough time buying from every little place that has a few albums in its catalog. We’re like a consolidator. Our catalog is simply all of our vendors piled up. We do still print it. It’s like a phone book,” Hurwitz said. Within that catalog are some 400,000 items, each arriving preprinted with its own bar code.

It was the idea of that preprinted bar code that got Hurwitz thinking: Why waste the potential of something so useful? “We had to take advantage of those bar codes,” he said. “As the product moves through the operation, it needs to be tracked by bar codes, not by people looking at things and putting stickers on them.”

With the old method, pickers would fill orders singly. “If we had a hundred orders, somebody had to walk a hundred warehouse walks to pick it individually,” Hurwitz said. “You can imagine with 150,000 titles spread out – I’ve never measured how long one warehouse walk is, but it could be a quarter mile.”

Now each of 25 warehouse pickers carries an Intermec handheld computer. The computer’s software incorporates a map of the warehouse. It knows the location and contents of every bin. The warehouse manager creates a wave of batched orders and loads it onto the handheld computers.

When a picker arrives at the correct bin, he chooses a title and scans its bar code with the integrated scanner on the handheld computer. Scanned information travels to and from the SQL server in real time via a 2.4GHz, RF signal relayed through an Intermec 2100 ® universal access point.

The system verifies the item and tells the picker how many to load onto his cart. The picker must confirm the quantity before moving on to the next bin.

Super D uses the system for two other jobs: put away and cycle counting. Put away works much like picking in reverse. A pallet of incoming CDs is loaded into a large sorting machine, which scans each CD’s bar code and locates both its bin number and zone. CDs clatter out into one of the sorter’s 92 chutes, one chute for each zone in the warehouse.

“At the end of the day, we have 92 piles of CDs. The put-away guy goes over to the zone 57 pile and wheels it to that zone. Now he’s looking at a huge pile of product and a zone filled with about 1,500 shoebox-sized bins,” Hurwitz said.

“He takes the handheld computer, switches to put-away mode and scans the CD. The computer confirms the CD title and tells him that it goes into bin number 112,052. Once he gets there, he scans the bar-code label on the bin itself. Then he scans the CD again. The system confirms the match. It beeps if it’s wrong.”

Such compound verification takes virtually all of the human error out of the equation. Super D’s warehouse accuracy shot from 93 percent during the “hands and a clipboard” days to 99.7 percent with the RF system.

Daily cycle counting ensures the accuracy of Super D inventory. A designated team of two spends its entire shift scanning and counting the contents of bins in numbered order. Each scan sends inventory data through the Intermec handheld computer to the server.

At day’s end, software processes the count list and compares it with previous inventory records. Mismatches identify where inventory is off. Errors are caught and fixed within days, something that wasn’t possible with annual inventory counts.

The company’s ability to get real-time picking updates has changed the way Super D sales representatives work.

“Because we can now feed the picking updates into the database ‘live,’ sales reps can see when something gets put away, when something’s picked, when it’s put into the shipping box. We’ve tied this information into our Web site, so customers can see it as well,” Hurwitz said.

All of which has given sales representatives the time to concentrate on what they do best: selling. And Hurwitz said it gives them a confidence they didn’t have before.

The system’s visibility doesn’t just help the sales people. Super D management found that it affects warehouse worker productivity as well. Because users must log onto the handheld computers, the system tracks their progress. Super D developed a productivity module with Intermec to help make more effective management decisions.

“Being able to track the activity of everyone has allowed us to radically improve our productivity. We can measure it and look at where we need to focus our energies to improve it. As a result, our picking time has been cut in half.”

Pay raises, bonuses and promotions now are tied to documented productivity. No longer do warehouse workers accuse managers of playing favorites. Workers can check productivity numbers on a display each week to see how they compare with their peers. The right people get rewarded.

“It’s been great in reducing turnover, making everything fair,” Hurwitz said. “Your warehouse staff has probably the highest turnover rate in the company. If the warehouse guys feel like they’re being treated fairly, that’s a big deal for them.”

Million-dollar cost savings. Near-perfect accuracy. Sweeping inventory visibility. Workers motivated to peak productivity. Backed by Intermec, Super D is delivering platinum performance.

Filed under: Case Studies