Plugged In

by Array

When you’ve been in the electrical business as long as EB Horsman & Son, you come to appreciate the importance of technology.

Since 1900, the company has grown into the largest independent electrical supplies distributor in Western Canada. It runs 16 branches across British Columbia, serviced by a 20,000sqf distribution centre in Surrey.

The building is small but busy. The company ships product to every branch every day by truck, using a number of carriers (via ferry for its four branches on Vancouver Island). This translates to some $80 million worth of product—most of which is low-value items like bulbs, fixtures and switches—passing through the facility annually.

Such an operational model depends on quick and accurate replenishment. Recently, with business growing, the company had to decide how to maintain its own high shipping standards: either expand its physical footprint or make better use of the space at hand.

It chose to stay put and looked to new software to recharge the facility.

Charged for change

Sparking the change was outdated technology that was no longer flexible enough to handle evolving business needs.

Roy Bragg, Horsman’s vice-president of operations, joined the company in 1998, two years after the Surrey DC opened. At the time, there was some RF technology in place at the facility; workers were able to scan bins and had some directed picking. But the system had many flaws.

“We could only scan product ID on about 60 percent of the items because of manufacturer barcode non-compliance. If they were using European standards, there was an issue. There was no ability to create an internal barcode with that software,” he explains.

“It was fairly rigid. You were only allowed one barcode per item, and at the time we had products that could have had six different barcodes.”

This became less and less acceptable, and Bragg and his team set about creating a wish list. They soon realized they wanted much more than better barcode scans. They wanted a comprehensive system that could pull together all information, from sales reports to order-entry to shipping, in a simple interface. That meant finding ERP and WMS systems that could communicate seamlessly with one another.

The team started by choosing an ERP—the Prophet 21 (P21) system from Activant, which is meant for wholesale distributors. It so happened that Activant had a preferred WMS for the system—the Latitude suite from PathGuide.

Latitude is a modular WMS; it co-ordinates receiving, picking, packing and shipping, and a number of other modules can be added.

Bragg was intrigued, but unwilling to sign up without doing his homework. He ran some comparisons, visited a few sites where the WMS was live and consulted some industry colleagues. After detailed discussions with PathGuide reps, he became convinced that Latitude could be adapted to handle the company’s needs. Moreover, he suspected the system could manage options he was considering for the future, like automated storage technology. He signed a deal.

Switching on

Before implementing the new software, Horsman had some clean-up to do: For starters, stream-lining the disparate manufacturer’s barcodes into one format to avoid data corruption, a process PathGuide helped facilitate.

Horsman also secured the new data capture hardware three months ahead of go-live and started running the software in the background.

“That allowed us to capture the information on the Latitude system before switching off the old system,” Bragg says. “We used that hardware to capture the barcodes, the bin locations and to re-do and label any items that did not have manufacturer’s labels with an internal barcode.”

Each shift in the lead-up to the launch Bragg had a few staff members walk through the new processes. This totalled nearly two months of person-hours, but he claims it was worth it—the first full day of operation was glitch-free.

“We were able to ship and receive everything day one. Now, that first day was a 14-hour day, but it was a good implementation. We left nothing on the screen. Everything was done for the day.”

The power behind the picks

So how exactly does the new software work?

In a typical day, the building opens at 6:00am. A worker accesses the P21 system and pulls all the previous day’s sales from the branches. The system compares those numbers to each branch’s minimums and maximums and creates a suggested replenishment report.

“That report is reviewed for case lot size and those things,” Bragg explains. “Then it is posted, which creates a transfer in the system, which drops down into the WMS.”

Only after a second scan is completed at 10:00am do workers start the picking process.

“That allows us to capture more and more of the actual day’s sales and the previous evening’s sales as well, which leads to fewer stock-outs.”

The orders enter the WMS and are sorted automatically into different picking routes, which are structured according to pick efficiency, not end destination. Under the old system, staff had to conduct separate picks for each branch.

For small parts, the ability to pick in batches has proven especially useful. A single employee is now able to pick more than 40 percent of the total line count for smaller items—a 200 percent productivity improvement.

The WMS can manage items that Horsman has traditionally found difficult to keep track of in the DC: it gives lot numbers to wire cuts, for example, and assigns serial numbers to products with expiration issues (like electrical reels).

The system also allows staff to prioritize orders without disrupting the regular workflow. This occurs whenever a rush order comes through from a branch. Those orders are not sent into the batch scan queue—they are downloaded immediately into the WMS, which sends a message to the RF reader of the operator closest to the ordered product. The reader beeps and the operator is instructed to immediately pick the product. The item is picked, a carrier is called and the order is shipped as soon as possible.

“The software allows the operator to get out of the task they’re doing, do the pick, put it out for shipping and then get right back to the previous task,” Bragg explains.

Since Horsman receives 20 to 30 such orders each day, the ability to complete rush transactions quickly and without disruption is very valuable.

The numbers prove it

The new technology has allowed Horsman to make better use of its assets and staff. Since batch picks and cycle counts are co-ordinated automatically, workers are free to get a lot more done in a shift. The numbers prove it: before the new software was installed, the absolute maximum Horsman could ship out in a day—using nine people—was 800 lines. “And that took us about 16 hours to process,” Bragg admits.

Today, with a staff of 13, the DC can send out as many as 3,800 lines and accept as many as 500. On average, pick productivity is up 192 percent.

Moreover, accuracy is through the roof. Currently, the DC experiences less than one error in every 1,300 line items. And when an error does occur, the company is able to trace it back to the location and picker. This, Bragg says, is an excellent way to keep staff motivated to get it right.

“There’s a direct correlation between quality of work and pay,” he says. “Yes, people have ups and do
wns, but nobody is hired full time unless they’ve at least achieved that level [less than one error in 1,300] for a time in the probationary period. It’s our number one core competency.”

The technology is also helping the company improve the budding retail side of its business. Customers can now come to the DC, and, using the ERP/WMS combo, build an order in real-time.

“We can build an order on the fly with Latitude,” Bragg explains. “We host it up to P21 and basically go around the floor picking up the goods with the customer, scanning them and getting an ERP system order number. By the time we get back to the desk with the goods, we just punch up the order number and it’s all there.”

According to Eric Allais, CEO of PathGuide, this capability is a must for the growing number of wholesalers that also sell direct to customer.

“You have to be able to handle that situation like a retail transaction extremely quickly and track all the inventory at the same time,” he says.,

Charging forward

Bragg believes Horsman can still draw improvements from the WMS in areas like slotting and velocity. He’s still considering adding some automated equipment—perhaps carousels or pick-to-light hardware—but says the urgency of doing so has been greatly reduced.

“I think if we hadn’t have been able to do what we’ve done with the basic software, we would have gone that route. But we’ve been able to realize incredible efficiency gains, just through the batch-picking processes.

Those efficiencies have been a lifeline for the company.

“We can get the product to the branches before they open, so there’s no problem in getting good turns in inventory, both here at the DC and at the branch level. Obviously, that’s a very good thing,” he says.

Furthermore, the software overhaul has allowed Horsman to meet its targets—and those forecasted for the future—without having to move. Since constructing a bigger facility would cost an estimated $9 million, this, Bragg adds, is also a very good thing.

“If we didn’t have the current system, we would not be able to survive here.”