In Search of Key Lime Pie

Aug 01, 2001 9:30 PM  By

We need more operations people to share their successes

Last May, I attended the National Conference on Operations and Fulfillment (NCOF) in Dallas. This conference is a premier forum for the operations manager who strives to improve productivity, customer satisfaction, and the bottom line.

At the outset, I set four personal conference objectives: (1) network with other professionals, (2) learn from the sessions, (3) walk the exhibit hall to gain new ideas to improve operations, and (4) find the best key lime pie in Dallas.

You’re not alone

To the experienced operations manager, the greatest benefit of attending NCOF is the opportunity to network. We all face the same challenges employee turnover, low productivity, high freight costs, poor inventory accuracy, and a lack of warehouse space, to name a few. Bring your operational problems with you to the conference. You’re not alone; ask others how they tackled obstacles. If your challenge is high outbound freight costs, you might start by asking, “What is your company doing to control freight costs? Have you tried a Parcel Select consolidator or Airborne@home? Are you satisfied with your carriers’ service?”

Fulfillment 101

To the new operations manager, the educational sessions provide a wealth of knowledge. Sunday’s pre-conference workshops start with the basics. With over regular 100 sessions, it’s almost overwhelming to pick the right ones for you. Do your homework before the conference and allocate your time wisely.

Overall session content this year was good. For me, the company case studies were the best. One outstanding session was led by Bill Monk, logistics manager for Nordstrom.com. Bill presented a case study titled “How Nordstrom Manages the Returns Process for Catalog, E-Tail, and Retail.” Nordstrom offers multichannel returns buy from the retail store, catalog, or Internet, and return it anywhere. For fashion companies like Nordstrom, processing returns efficiently can make a big difference in customer service and profitability. Nordstrom provides customers with pre-printed return labels to simplify the process and charges a nominal flat rate for returns. Exchanges are free. Every return label is bar coded to streamline processing. Once packages are received, the system is updated and processing is usually completed within 48 hours. Expert repackers help restock over 85% of customer returns. Backorders are processed directly from returns to improve customer service and reduce fulfillment costs. Nordstrom’s legendary customer service is alive and well at Nordstrom.com.

Some of the other companies participating in the educational sessions at NCOF were Victoria’s Secret, Spiegel, The Discovery Channel, J. Jill, Sturbridge Yankee Workshop, PHE, Inc., and the Museum of Modern Art. In my opinion, we need more operations people to take time to share their successes with their peers. Sorry, fellow consultants if I have one complaint it is that consultants or vendors conducted the vast majority of sessions. Next year, the show in Nashville could benefit from more case studies like the one given by Nordstrom’s Bill Monk.

Ship and pack

My first stop in the exhibit hall was DM Transportation Management Services (www.dmtrans.com.) They offer a vendor inbound cost and control program tailored to the direct marketing industry. Discounted LTL, air, and international rates help DM Transportation save its clients an average of 24%. According to president Bill Wilson, the company has successfully reduced inbound freight costs for over 100 direct marketing companies over the past five years.

Next, I visited FedEx Home Delivery (www.FedEx.com); they offer a competitive alternative to UPS for residential delivery. FedEx has matched UPS residential rates but offers some new home delivery services. Delivery hours are extended until 8 p.m. Tuesday Saturday. Unlike UPS, residential ground packages are covered by a money-back guarantee. FedEx also offers premium upgrades allowing for appointments, signatures, and special evening deliveries. Volume discounts on home delivery are negotiable. Currently, FedEx Home Delivery serves 70% of the U.S. population, and is planning full coverage by September 2002.

Next, Tru-Tech Packaging (www.tru-tech.com) and System Packaging jointly demonstrated their automated cold-seal packaging machine with tear-resistant coated paper bags. Both Nordstrom and J. Crew have implemented this system in collaboration with the U.S. Postal Service. The USPS provides pre-printed and branded Priority Mail packaging. This was a real showstopper a big hit with high-volume single shippers of apparel, books, CDs, videos, and other unbreakable items. It works like this: System Packaging provides the equipment to package and seal flat items. This equipment is integrated with the fulfillment company’s automated pack line. Package inserts, pack slips, and products are placed in trays and are sealed at rates up to 40 packages per minute, using lightweight, durable, and secure Tru-Tech paper. Shipping labels are applied and the package is ready to ship.

Tru-Tech’s Tom Santelli said that both J. Crew and Nordstrom reduced costs by lowering packaging weight. In many cases, parcels were shipped a pound lighter, saving about $1 per shipment. Labor savings were also achieved through automation.

My last stop included several guys wearing crazy paper hats working for Geämi, a (www.geami.com) provider of protective packaging. Geämi offers a good alternative to foam peanuts, air bags, or bubble wrap. Geämi packaging is made from Kraft paper easily recyclable and friendlier to the environment. The system consists of pre-cut paper expanded by a machine to create thousands of little hexagonal cells to protect fragile items. Geämi claims to protect your products, your profits, and your planet. The company offers a free cost evaluation of your existing protective packaging as compared to Geämi’s system. See Geämi’s Web site for details.

Pie, please

My final objective was to find out who has the best key lime pie in Dallas. After days of extensive research, the results are in Bob’s Steak House. They have great steak and excellent key lime pie. I hope to see you next year in Nashville.

Jeff Kline, founder and president of Kline Management Consulting (www.jklineco.com), has over 20 years of experience with companies such as Nordstrom and toysrus.com. He provides operations assistance for catalog and e-commerce companies. Kline can be reached by phone at (901) 850-0645 and by e-mail at jeff@jklineco.com.