Sep 14, 2015 in Case Study

The Challenge

A thriving specialty outdoor fitness company was contemplating outsourcing its warehousing and fulfillment operations. The owner wanted to spend more of his and his senior management’s time and energy on developing new and innovative products to help grow market share. He found that operating a warehouse was outside his company’s core competency; he couldn’t afford to hire experienced warehouse management and personnel and therefore his on-time fulfillment and order accuracy suffered. The company had the additional challenge of operating a seasonal business that required more warehouse space than they leased during the busy seasons and left them with expensive excess space during slower seasons.

Challenge Becomes Opportunity

After allowing XB Fulfillment to prepare a free, detailed cost analysis, the owner was surprised to learn that the fully-loaded cost of running his warehouse—after taking into account salaries and wages, workers compensation, rent, insurance, material handling equipment, and general warehouse costs—were far greater than he realized. He also recognized that those costs were about to go even higher when factoring into account recently passed minimum wage legislation and the increasing health insurance costs.

With this data in hand, the owner was ecstatic to learn that by outsourcing his fulfillment operations to the professionals at XB Fulfillment, he would:

  • Significantly improve customer service metrics
  • Reduce warehousing and fulfillment costs by 43%
  • Avoid all future minimum wage and health care cost increases

Transition to Go Live

Once the decision was made to transition the operations, an XB Fulfillment Implementation Coordinator prepared a detailed and comprehensive transition plan in coordination with the cycling company operations team. Weekly meetings were held and a target cut over date established.

The detailed transition plan included obtaining the client’s SOPs, routing guides, item master uploads, electronic data interchange requirements, packaging and labeling requirements, and a myriad other details. After integrating with the client’s shopping cart platform, the next order of business was implementing a more efficient slotting strategy in the warehouse. Using data obtained and analyzed during the transition planning process, the XB Fulfillment team assigned specific skus to the most appropriate storage medium by product family. Next, products were assigned to pick locations based on their velocity to maximize labor efficiently and implemented a “Golden Zone” for high velocity movers to ensure the most efficient pick locations. After a 60-day planning and implementation cycle, the warehouse transition was complete and the warehouse was up and running; ensuring a smooth transition and minimal downtime in fulfilling new orders from customers. As always, the XB team began reporting on a series of metrics: inventory accuracy, order cycle times, on-time delivery and other key performance indicators as determined in conjunction with the customer. The customer had 24×7 visibility of their inventory, receipts, shipments and tracking information through the XB Fulfillment real-time web portal.

Results Delivered

Ultimately, the customer experienced in excess of 40% cost savings over running their own warehouse, received up-to-date metrics to better understand key customer satisfaction indicators and their team was able to focus on developing new and innovative products.

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