Automating the pampered chef’s new distribution center: the kitchenware merchant managed to automate its facility with both new and refurbished systems, proving that improved didn’t have to be new

Automating the pampered chef’s new distribution center: the kitchenware merchant managed to automate its facility with both new and refurbished systems, proving that improved didn’t have to be new

Peter A. Buxbaum

When The Pampered Chef opened a new distribution center in October 2002, warehousing and logistics were just part of the story. The 780,000-square foot facility in suburban Chicago was also home to the company’s new corporate headquarters.

But if the company went whole hog on its headquarters, it took a much more sober approach when it came to the technology powering its distribution center, an operation that took up over three-quarters of the building’s floor space. The company considered and rejected the idea of investing in a new warehouse management system (WMS); instead, it opted to upgrade its existing software. It expanded its investment in radio-frequency hardware to match its growing operations but acquired refurbished equipment to minimize costs.

On the other hand, The Pampered Chef automated warehouse control, outbound shipping, and quality processes for the first time and switched its picking technology vendor. The result was a distribution center operating with greater efficiency than its predecessor but with a look and feel that minimized the need to retrain warehouse floor workers.

Existing Systems

The Pampered Chef is a direct seller of kitchen tools, utensils, and cookware that modeled its marketing after the Tupperware party. Last year, the company sold its selection of 225 products–which range from 75 cents citrus peelers to pricey stoneware–to 12 million customers at one million home-cooking demonstrations hosted by 70,000 independent kitchen consultants in North America, the United Kingdom, and Germany. The company hasn’t released financial information since it became a privately held subsidiary of Warren Buffet’s Berkshire Hathaway Inc. in the fall of 2002, but a company spokesperson allowed that “sales have been very consistent over the years.”

When The Pampered Chef consolidated two of its three distribution centers at the new, 600,000 square-foot DC in Addison, Ill., it had to consider what it would do with the warehousing and information systems it then used to manage 30,000 pallets of inventory and 14,000 daily orders. The company’s IT infrastructure is anchored in a legacy, homegrown enterprise resource planning (ERP) system that the company had been operating for years.

The Pampered Chef’s information systems manage the inbound and outbound sides of its distribution operations separately. Since 1997, the company had been running a warehouse management system from the JDA Software Group. That system controlled inbound movements. Data on incoming shipments was entered via handheld wireless computers and matched against purchase order data stored in the ERP system. The WMS directs warehouse workers where to rack the incoming merchandise.

The WMS also keeps track of inventory in the building and of movements of inventory between buildings. “Every pallet has a tag on it, and every location has a bar code associated with it, so we can track product anywhere,” says Josh Klinzing, an operations engineer at The Pampered Chef.

The ERP system also generates picking orders for outgoing shipments. In the past, coordination of outbound shipping functions–such as picking, packing, labeling, and quality control–was done manually. The Pampered Chef did use a pick-to-light technology for nine years; that system directs workers to pick locations by illuminating the proper shelf. But the other functions were not automated, nor was there an automated warehouse control superstructure to coordinate outbound activities.

Something Old, Something New

“We were moving into a brand-new building and upgrading our conveyor system, so the question became what to do with the WMS,” says Klinzing. “Would we find a different vendor and spend a million dollars or more with a Manhattan Associates or an i2 system, or would we stay with JDA?”

Several factors entered into the final decision to stick with JDA. “Our IS department had done a lot of programming with the system,” says Klinzing. “A new system would have meant new programming interfaces with ERP as well as additional training.” Klinzing estimates that the programming costs would have run between $60,000 and $70,000.

A new WMS would also have meant buying new radio frequency data input hardware. The Pampered Chef was running a 900 MHz system but would have had to upgrade to 2.4 GHz if the warehousing software were changed. A separate problem was that the 900 MHz Norand (now Intermec Technologies Corp.) data collection terminals the company used had been discontinued by the manufacturer. But the Pampered Chef was able to source refurbished 900 MHz handhelds and forklift-mounted units from Heartland Computers, an RF equipment specialist.

“If we had gone with brand new hardware in the building, the system would not have been compatible with the other building,” Klinzing notes. “If we had upgraded both buildings, we would have spent between $100,000 and $200,000 per building. We also would have had to provide four hours of training to 50 handheld users.”

Klinzing estimates that savings in hardware and training costs in the new DC totaled around $150,000. The Pampered Chef spent around $60,000 on the refurbished equipment from Heartland.

“The decision to go with refurbished equipment was secondary to the software provider decision,” explains Joe Madson, The Pampered Chef’s manager of operations planning. “We realized we could use our existing hardware with upgraded software.”

Upgrading the JDA software meant jumping from version 1.0 (Pampered Chef was one of JDA’s first customers) to 3.7, a move that provided the company with additional features. Primary among these were superior capabilities in locating racked pallets and in managing the tasks of the forklift operators. The costs for upgrading the JDA software were “minimal,” according to Klinzing.

An Integrated Approach

The Pampered Chef took a markedly different approach when it came to meeting its outbound needs. In this case, the company sought a solution that would automate picking, labeling, and quality functions and integrate those within a warehouse control system. Instead of taking bids from individual vendors, the company turned instead to systems integrators for proposals.

Madson identifies price, familiarity with company operations, and functionality as the three primary factors considered in choosing the systems integrator. Distribution Planning Inc. got the nod in part because it had worked closely with The Pampered Chef in the past. In addition, DPI offered a name-brand WCS, from SeayCo Integrators Inc., whereas its competitors proposed their own proprietary solutions.

“The biggest technology advantage to the WCS is that the conveyor system is now routing cartons automatically during the fulfillment process,” says Madson. “Before, we were manually passing cartons from one person to the next.”

DPI’s proposal included complete integration of the SeayCo system with a pick-to-light system, an automatic carton labeling system, and a system of weighing outgoing packages as part of a quality control process. Going with DPI meant switching pick-to-light vendors.

The difference in approach between warehouse management and warehouse control is explained by the previous experience the company had with each. “We were always able to maintain the WMS internally,” says Madson. “Our previous pick-to-light system was controlled by an outside vendor. Going to a new vendor was not much of a stretch because we could do so with minimal interruption to our operations.”

In a new, automated quality control process, The Pampered Chef now weighs outgoing packages to detect picking errors and other quality problems. Actual weight is compared with expected weight to verify that the order has been picked properly. In addition, data on each weight transaction is processed by WCS, and through the system’s reporting features, potential problems can be detected. For example, consistent off-target weights of shipments including a specific item of stoneware could indicate a quality problem with an entire lot of that product. This process has reduced picking errors by 10%, according to Madson.

Geared for Growth

To minimize problems associated with the upgraded warehouse management system, the company phased in its operations at the new distribution center. “We upgraded the warehouse management system in July 2002, before we opened the building,” says Klinzing. “We did the training during the summer months, when production is not high.”

The company began storing product in the new distribution center in September 2002 but did not start shipping from that location until April 2003. Between February and April 2003, the new warehouse conveyor systems were installed, and the SeayCo WCS was tested.

One of the advantages to maintaining the same WMS vendor has been to minimize the need for extensive retraining of employees. In fact, according to Madson, the greatest training challenges appeared at the supervisory level, where personnel had to be educated in the workload management features of the WMS.

“We included the supervisors up front in the learning process,” says Madson. “Workers on the warehouse floor required less training because we tried to make the new systems look the same as the old ones.”

As with any complex implementation, not everything at the Pampered Chef DC went smoothly. “It was a custom-built system,” Madson notes, referring to the WCS. “When we encountered problems, it was because the situation was new to us and to the vendor.” A minor problem was a scheduling overrun, a three-month delay in an 18 month implementation.

“We are now comfortable with the systems on both the inbound and the outbound side,” says Madson. “Our costs per order have decreased while labor productivity and quality have increased.”

Another virtue of the DC and its systems is their flexibility. “We are easily able to expand,” Madison says, “and this company is geared for growth.”

At A Glance

Company:

The Pampered Chef Chicago, Ill.

Application: Warehouse automation

Components:

* Warehouse management system

* Wireless communications

* Warehouse control system

Benefits:

* Handles inbound shipments

* Manages inventory tracking workflow

* Locates inventory on warehouse floor

* Inputs bar code data into warehouse management system wirelessly

* Integrates outbound shipping functions, such as picking, labeling, and quality control

Web Resources You can get more information on Berkshire Hathaway Inc. at www.berkshirehathaway.com

Web Resources

You can get more information on Berkshire Hathaway Inc. at www.berkshirehathaway.com

Extra! Extra!

For further reading on this and related topics, see these articles, available at www.frontlinetoday.com/062004links:

“Improving Warehouse Picking Operations” May 2004

“Sears Logistics Services To Enhance Productivity Management Visibility with Red Prairie Software and Services” March 31, 2004

“Georgia Pacific Standardizes on Red Prairie Solutions at Eight Distribution Centers” March 2003

Company Information

Distribution Planning Inc.

Grandville, Mich.

616-406-3544

www.dpisystems.com

Heartland Computers, Inc.

Wauconda, Ill.

888-708-7226

www.heartland-usa.com

Intermec Technologies Corp.

Everett, Wash.

425-348-2600

www.intermec.com

JDA Software Group, Inc.

Scottsdale, Ariz.

800-479-7382

www.jda.com

SeayCo Integrators Inc.

Conyers, Ga.

770-918-8686

www.seaycointegrators. com

Distribution Center Details

Capacity

* 30,000 pallets, racked six high

* 50 receiving doors

* 14,600 orders per day

* 30,650 cartons per day

* 766,000 pieces per day

* 15-18 truckloads per day

Technology

* WMS: JDA Software Group

* Refurbished RF Equipment: Heartland Computers

* WCS Integrator: Distribution Planning Inc.

* WCS Vendor: SeayCo Integrators Inc.

* Intermec Technologies Corp.

Peter A. Buxbaum is a freelance journalist based near Washington, D.C. He specializes in business and government technology and security.

COPYRIGHT 2004 Advanstar Communications, Inc.

COPYRIGHT 2004 Gale Group