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SUPPLY CHAIN, WAREHOUSING & SCANNING 19


SHOP DIRECT STREAMLINES DISPATCH W


ith over 75% of the Shop Direct Group’s sales generated online


and via mobiles, supply chain system developments have been crucial to supporting customer choice, keeping its costs low and ensuring excellent customer service. Shop Direct worked with trade and logistics software provider Kewill to deliver more accurate reporting of ‘direct dispatch’ delivery lead times. Direct dispatch eliminates the need for multiple warehouses or for all products to be kept in stock, freeing up capital that would otherwise be invested in inventory. This also enables logistics costs to be kept to a minimum, with the majority of products transported direct from the supplier to customer.


A competitive direct dispatch project


saw the implementation of a new ‘stock status’ module, which is linked to default lead times from suppliers. It gives advance notice of supplier delays in order fulfilment or exceptions in future holiday periods, when the business is closed, which helps Shop Direct hit its delivery key performance indicator (KPI) targets. Pauline Lauder, planning and


operations director at Shop Direct Group, commented: “Kewill was tasked with the significant challenge of developing a solution that would cater for our complicated needs. It is an intricate functionality to manage when you consider the continual change to stock levels, including thousands of products, all of which need to be made visible across our many brands. On top of


this, the system has to be simple to use for our supply base, something that Kewill delivered.” The system has reduced the delivery time on direct dispatch products, as well as enabling a next-day delivery option for a small premium. Lauder added: “We now have


improved stock availability information flow from suppliers, enabling the flexibility to define cut-off times on direct dispatch – for both individual suppliers and products – providing the flexibility to support next-day deliveries. Quicker and more accurately dated deliveries have also had a positive impact on our returns and cancellation rates.” Shop Direct Group now plans to


develop further enhanced services, such as timed deliveries.


UNIVERSAL OVERCOMES DISTRIBUTION CHALLENGES


Universal Music Group (UMG) has outsourced the distribution of its own music CDs, DVDs and games on behalf of third-party publishers throughout the UK. In response to reduced volumes as a result of changes in UMG’s customer base, the music company opted to outsource its Milton Keynes distribution centre services to arvato. The business process outsourcer


(BPO) took over UMG’s Milton Keynes site, handling the distribution and warehousing of 18,000 stock-keeping units (SKUs). It transitioned 160 staff in three months and replaced the existing warehouse management system with its own. New pick-by-voice systems also increased the speed and accuracy


of order picking and despatch in the warehouse, replacing the existing manual paper-based system using radio frequency (RF) terminal technology and barcode scanning to increase quality control. And an online performance measurement tool gave UMG transparency and visibility over stock and order tracking. The BPO subsequently brought


two other music labels’ distribution volumes to Milton Keynes, increasing throughput by 80% and reducing unit distribution costs by 25%. A mezzanine floor was built to facilitate multi- level order processing, enhanced by an automatic prioritisation system for stock movements.This enabled arvato to process 10% more orders at peak volumes with no increase in


staffing levels.The bulk storage area and narrow-aisle truck fleet were also overhauled, resulting in 15% efficiency improvements in this area. The partnership has recently expanded to include direct to consumer e-commerce fulfilment and customer service. Clive Smith, Universal Music Group supply chain director, told Retail Technology: “Together with arvato, we’ve been able to harness the growth in e-commerce to get closer to our artists’ global fan bases. Our partnership has enabled us to manage existing stock and to incorporate direct fulfilment for our e-commerce sites to international customers – enabling us to capitalise on the new ways in which people want to engage with their favourite bands and artists.”


SEPTEMBER/OCTOBER 2012 RETAIL TECHNOLOGY


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