Ship-Shape

Dec 01, 2007 10:30 PM  By

Touch of Class didn’t have the worst return rate, but 11% was bad enough. So the home decor cataloger started a quality assurance program. And it has paid off: In 10 years, returns have fallen to 7%, resulting in savings and a more loyal customer base.

What’s a quality assurance program? It’s a set of processes designed to prevent shipping errors. Mistakes are bound to happen at firms that send thousands of orders a week, many containing items with different shapes and sizes. But they can be headed off with a modest investment in training and technology.

Take computers cataloger CDW. It had sales of $6.8 billion last year, and it knew well that a lot of revenue can lead to a lot of blunders.

“You’re always going to have issues or mistakes when you’re working with people and multiple SKUs,” says Lisa Tegtmeyer, CDW’s senior director of operations. The trick is to “find ways to capture those mistakes and correct them before passing them onto customers,” she notes.

CDW does that by doing a weight variance quality check on orders before they leave the warehouse.

“It’s an additional quality check,” Tegtmeyer explains. “We have a very fast-paced operation, and with the weight variance check, we know that when we release an order, based on the dimensions of the box and all of the items that should be in there [if there is a problem or not].”

How does it work?

Say an order is supposed to weigh 10 lbs. If it ends up weighing 1 lb. over or under that, it will get diverted to the weight variance check area, where the barcoded shipping label will be scanned with an RF (radio frequency) gun and a worker will go through every item in the box. If something was mispicked, overpicked, or not picked, the worker will fix the problem and alert the picker who made the error.

In addition, CDW assigns a mentor to all new warehouse employees — someone who has been doing that job. And every picker is given an RF scanner.

CDW also has an incentive program for workers to suggest improvements.

“If we end up implementing the idea, we give them a cash bonus,” Tegtmeyer says.

Has it worked? CDW’s initiatives have helped reduce warehouse-related issues by more than 50% while improving the company’s bottom line.

Then there’s Carson Wrapped Hershey’s Chocolate, a firm that creates customized wrappers for Hershey’s chocolates. There, too, the emphasis is on personnel.

“A quality program is only as good as the people you have involved,” says Scott J. Frederick, president of business operations for Carson. “Before you make an investment in equipment, you must have the right [people and give them the right] type of training.”

The company is relatively small — just 15 employees are involved in daily order production, and four or five work on packing and shipping. But every one has the power to pull an item and question its quality.

“Orders are scanned as they go through departments in the building, and everyone in each department has to review the order paperwork and sign off on it, telling us if it is correct at each stage and has been proofed for quantity, personalization, correct item and size, etc.,” explains Frederick.

These efforts have paid off. Carson Wrapped Hershey’s Chocolate today has a loyal customer base, with 40% repeat/referral business.

SHAPING UP

Convinced that you need a QA program? Take some advice from Darlene Wible, the quality control manager at Touch of Class, and her assistant Donna Oldham. They keep things in line by:

  • Checking all boxes and packaging of items that will be reshipped to customers.
  • Writing boxing notes and entering them in the system so they can be used for all subsequent orders until said packing or box size changes (and then writing new boxing notes).
  • Contacting vendors whose packing has not been approved and asking them for improvements before the next shipment.
  • Deciding what improvements need to be made if the packing or box does not get approved as a reshipper.
  • Ordering special boxes when it is necessary to overpack something and maintaining this special box inventory.
  • Entering and maintaining the chargeback file, which calculates time and material needed to improve a product or its packing.
  • Monitoring and entering information for all initial items received from domestic vendors, checking them for correctness and writing boxing notes, and doing the same (or similar) for items received from foreign suppliers.
  • Sending items through the refurbishing department if improvements have to be made before stocking an item.
  • Checking new catalog layouts to make sure problems with products have been resolved or can be resolved.
  • Entering notes on new Pos for improvements that need to be made or parts that need to be ordered.

Touch of Class also has a planned return rate database. If an item surpasses the planned rate by a certain margin, the firm knows there is a problem and can start fixing it. The planned rate is based on an item’s past performance.

Of course, nothing is more important than good communication.

“Our returns, receiving, stocking, and pick/pack departments are very helpful in notifying quality control of problems,” says Wible.

So is the firm’s customer service unit. When a customer calls about a merchandise issue, the service people enter it into the “Questions to the Buyer” system, which alerts rebuyers and the quality control team.

These measures have allowed Touch of Class to catch problems even before items are stocked.

FROM THE TOP DOWN


One thing’s for sure: “To have a successful quality assurance program, the organization must be committed to it long term, be willing to react and make changes, and communicate the value, purpose and metrics of the program to its employees and/or affected parties,” says Randall Brough, supply chain manager at LifeWay, a marketer of Christian products and services.

Wayne Teres, president of Teres Consulting, which specializes in distribution and fulfillment, agrees.

“Quality has to come from the top, and everybody has to buy into it,” he says. Teres feels that accountability and communication go together.

“If somebody is making errors, you want to know who that somebody is, so you can counsel that worker and [get him or her] to improve,” he says.

Teres also believes in charts that show how people are doing. “If you’re looking at picking errors or packing errors or inventory accuracy, charts are very meaningful, because whatever gets measured gets managed,” he says.

Finally, Teres also stresses that quality control should start right at the receiving dock, because that’s where merchandise first touches your business. “You want to stop issues before they get into the building or past the dock,” he says.

For Tegtmeyer, a successful quality assurance program consists of four basic things: “The first is you have to have a goal. Number two is to have some type of incentive program. The third is automation.” And the fourth, she says, is to always look for “new ways to do things better and faster.”


Jennifer Lonoff Schiff is a freelance business writer based in Wilton, CT.

TIPS FOR SHIPPERS


Want to create a successful quality assurance program? Follow these suggestions:

  • Create vendor guidelines. These should include things like product specifications and how items are going to be packaged and shipped. The guidelines should also clearly list what is acceptable and what is not, and what the corrective action procedure is, so if there are problems, you know who will handle or pay for correcting them.

  • Hire the right people.

  • Set worker expectations upfront by telling new hires how many errors are acceptable — is it one in 100, two in 100, three in 100?

  • Give employees the tools they need to do a good job, even if it’s just a calculator.

  • Train all new employees, assigning them a mentor, if possible — and start them off picking or packing the easiest or simplest products and orders first.

  • Have more experienced workers pick and pack multiline and more difficult orders.

  • Regularly review employees’ work — and check all new hires’ work on the first day, to catch any problems right away.

  • Use clearly labeled, readable signage in all of the facility’s picking and packing locations.

  • Identify items that are hard to pick, such as items that make up a kit, and provide check lists or some kind of system to alert and help pickers pick these items.

  • Use warehouse technology, such as barcoding and RF scanners, particularly in the pick and pack areas, to help minimize errors.

  • Do cycle counting, in which you go (or cycle around) to different locations in the warehouse a couple times a year and count which and how many items are there.

  • Create an audit process, in which individuals are held accountable — and regularly post charts showing how many errors were made and by whom (or which area).

  • Appoint one or two employees to be in charge of your quality assurance program. It’s important to make sure these people are actively communicating with all areas of the company and that each department buys into the program.
    JLS