When David and Christine Persson, owners of The School Box, decided to expand their business in the midst of the current recession, they were well aware of the risks. The expense and potential disruptions associated with adopting a new technology system can be a source of concern at any time for small and mid-size businesses. Those concerns were particularly acute in December 2008, when no one knew how bad things would be in 2009 or when the economy would recover. But The School Box made a bold decision to implement a new warehouse management system (WMS).
The School Box is a Kennesaw, Ga.-based school supply company that serves teachers and parents. The company maintains approximately 15,000 active and 22,000 total SKUs, with about 60% of its business coming from retail stores. The remaining 40% is derived from its fast-growing catalog and Internet sales. Between the 15-and-a-half stores — the half being a mobile store that tours rural neighborhoods — and the catalog and Internet business, The School Box was bursting the seams of its distribution capacity. The company was sharing the same inventory with a retail store — picking product alongside customers for other stores and the catalog business.
These distribution challenges also strained the limits of The School Box's inventory management system, which was a module of an 18-year-old point-of-sale (POS) system that was never intended to run a warehouse. The company relied on paper printouts and manual processes, including a “double check” at packing to correct picking mistakes. Special orders took weeks to process. During back-to-school season, CEO David Persson was forced to rent extra warehouse space and tend to orders himself. It was clear that The School Box needed to become more efficient.
With a limited distribution center and an out-of-date system costing the company in excess inventory, order accuracy and productivity, The School Box set the wheels in motion to move to a new 40,000-square foot warehouse. A WMS and mobile computers were key components of the expansion.
The School Box executed the switch to its new WMS in a very short time — just over three months. The team completed a business requirements study and outfitted the warehouse with racking. They installed and configured the RF backbone as well as a new computer and handheld computing devices. They also loaded the WMS with data and configured it for The School Box's needs, interfaced the WMS to the existing order management system and trained employees.
The School Box currently uses 16 mobile computers for inventory receiving, putaway, picking, cycle counts and stock replenishment. The company plans to expand to 20 units for packing and other uses.
The School Box chain went live just after its back-to-school period, and six months later, the benefits were already greater than the sum of its parts. The fill rate for special orders dropped from two weeks to two days. And with order fulfillment being done by a scanner, employees are now able to catch mistakes before they go out the door. A more accurate fill rate allows The School Box to promote shipping promises to customers. Additionally, the visibility and management capabilities provided by the WMS system have enabled the company to eliminate excess store inventory.
As a result of these improvements, The School Box has enjoyed a net increase in profitability. And the company expects the total warehouse project to have an ROI of 12 to 15 months.
In the middle of a recession, most mid-sized businesses trim their sails. Few invest in new technology. For The School Box, the decision to expand to a new WMS helped push the company to the next level in inventory management, productivity and accuracy.
Rick Register is president and chief operating officer of Cambar Solutions, a vendor of warehouse management systems in North Charleston, S.C.
