Racks line the receiving area, and each of Deeley’s retailers is assigned a slot. When a load of seasonal merchandise enters the facility, operators unpack it and dispense the contents into the appropriate retailer’s slot.
Seasonal orders were the logical first choice for the company to cross-dock because of the strict deadlines they must meet. These items are released on set dates, and retailers don’t like to receive them even one day late.
Today, a seasonal item is in the DC for a very short period of time—often only a few days, and never more than two weeks. For the staff, the increased speed of such shipments carries ancillary benefits as well, Draves says. “Our performance is measured on fill rates and inventory turns, so we have a vested interest in the velocity at which product moves through the DC.”
Second gear
After it started cross-docking seasonal orders, Deeley started the second phase of its improvement plan: getting retailers to place orders in batches. “Originally, retailers put in orders every day, and we shipped them every day,” Arthur says. “Because of the way many operated, we’d end up with a huge peak on Mondays and Tuesdays, and then virtually nothing on Thursdays and Fridays. When you overlap that with the huge seasonal peaks we had from May to September, it could be a bit of a nightmare.”
Deeley started assigning retailers regular deadlines to place orders: weekly throughout most of the year, twice-weekly during the busy summer season. If the deadlines are met, the stores are guaranteed delivery by a set day. This change has removed much of the variability in the DC.
“We’ve balanced a lot of the volume so that it takes away a lot of the peaks and valleys,” says Arthur. “Retailers have started taking advantage of the stocking day, so our rush orders have cut in half.”
The enthusiasm among retailers toward the change has been strong. In fact, many have taken the opportunity to become more strategic in managing their stock, reports Draves. “There are a lot of retailers who will now take the time to build an order and do proper inventory management.”
A key driver of the successful transition to batch ordering was collaborative inventory management
(CIM) software. Deeley’s CIM program—which ties into its warehouse management system (WMS)—is not new, but it was an effective tool in helping the retailers adjust to the change.
Smarter use of CIM has also helped Deeley improve its sourcing. It started using the technology to collaborate much more actively with Harley-Davidson US. The manufacturer now gives Deeley more notice about product obsolescence and substitutions, which allows the distributor to make sure everything in stock will be sellable. “We’ve reduced our obsolete inventory by about a million dollars since we’ve started,” Draves says. “It’s of almost no consequence to us now.”
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