Alogistics overhaul, by the numbers

Last April, about a week after former Sears executive Steve Poplawski was hired as True Value’s senior vp logistics and supply chain management, he received a phone call from a disgruntled co-op member.

“He said, ‘I have to tell you about this one distribution center. I’ve never liked my shipments, and I’ve been with the co-op 25 years,’” Poplawski said. “‘I know you’re never going to be able to fix it, so I don’t know why I’m bothering to tell you.’”

But Poplawski and his associates—far from ignoring this comment—took it to heart, along with similar feedback they received during a series of focus groups with True Value members over the summer. The purpose of these meetings was to discuss ways to improve service on True Value’s 250,000-plus deliveries each year, with the end goal of a damage-free and accurate load each time. What Poplawski’ s team came up with was a new quality shipping program that was piloted through True Value’s Woodland Hills, Calif., distribution center in the fourth quarter of 2007 and has been fully operational through all 13 DCs since the beginning of January.

According to Poplawski, the summer meetings offered a few surprises. It wasn’t so much that a large percentage of members put down “fill rates” as their number one concern when it comes to shipments, but the fact that the term “fill rates” en compasses so many different issues for different people.

For some it’s about items that are damaged or dirty, for others whether the label is in the correct place. Many also believe the term means whether the merchandise is fit to be put out for customers when it comes off the truck.

“It’s not like Sears, where there’s a truck going to each store. We probably have any where from four to 10 stores going on a truck, and they can be as varied as a big store receiving patio furniture and grills to a smaller store receiving a pitchfork or 12-foot length of pipe,” Poplawski said. “Making sure those items are absolutely perfect, that they’re in sellable condition and that we’d be proud to present them to the member’s customers was what we wanted to put together.”

The logistics team decided to take the challenge to the Woodland Hills facility, which in 2007 had the highest quality ratio (99.88 percent) in True Value’s network of distribution centers. Poplawski asked operations manager Tom Statham and his staff to come up with a plan to improve shipment quality. Within a few weeks, they came back with what amounted to a list of their own best practices that could be rolled out to the rest of the system. (See sidebar.)

“We try to maximize cube like everybody else, so in some cases we’re stacking up our palettes pretty high,” Poplawski said. “So they actually created a label that said, ‘Cut here, cut down two feet, unload, cut down two feet, unload.’ It sounds like a simple thing—a no brainer—but believe it or not, there were people who were getting potentially injured, so it was a necessary safety thing.”

Statham’s team also got some ideas from Richard Bilodeau, warehouse superintendent at the Manchester, N. H., DC who had previously written a loading manual with regulations like: palettes should not be stacked over five high; glass items should be moved to the side of the trailer; fragile items should be top-loaded and secured; the trailer should be swept out after being emptied.

In addition, the Woodland Hills team decided it was important to create ownership for the loader, who is the “last set of eye s” on every delivery. He must make sure the labels are in the right place, that the boxes aren’t going to be crushed and that the items will arrive in sellable condition. Every palette has a two-by-four-inch label with the loader’s name and photo on it. (The driver’s name and picture is affixed to each palette as well.) Those loaders and drivers with the best ratings on 10 or more loads per month win a certificate and $25 gift card.

“I think that denoting ownership is a little bigger than we even thought it would be, because it’s working so well,” said John Camacho, the Woodland Hills warehouse superintendent.

The last piece in the program involves member feed back. Once the load is delivered, the store is asked to provide a “member snapshot,” rating the experience on a scale of 1 to 5 (1 being poor, 5 exceptional) and providing comments on what was right or wrong with the delivery and what could be improved.

“It allows us to go back to that person or team and say, ‘We see a pattern here,’” Poplawski said. “We weren’t doing everything perfectly before, and we’re still not doing everything perfectly, but I would say the overwhelming response has been positive.”

“It’s about recognizing good work and rewarding it,” Statham added. “And we can take that in formation from the snapshots and use it to continually improve service. We want to get over that 99.9 percent hump, and I think this will take us there.”

Still, the true test will come with the spring season—otherwise known as the “peak period” for home improvement retailers. Not only is it the busiest time of year for the majority of stores, but the product mix of fertilizer, soil, stick tools, pool chemicals and other delicate items presents its share of logistical problems.

To step up the quality control aspect even more, Poplawski’s team will be initiating what he calls a “follow-on” to the program, where part of the shipping team will be sent out to stores blindly each month to receive the load. “We’re going to scan every item in, so if we have a bad PC number, we’ll catch it at the back dock instead of the cash register,” he said. “If we have something within one of our totes that opens and sprays across other items, we’ll be able to understand what we have to do differently from a picking standpoint.

“We do believe that having a blind random inspection—even though it’s a small sample—will help the members with the quality of their load, the accuracy of the load, all of the labeling of the load. And we’ll discover more about how we can do those things better.”

Poplawski says he knows the co-op has a long way to go in achieving its goal of near-perfect deliveries, but he’s already seeing the forest beyond the trees. About three weeks after the program was kicked off across the country in January, that same member who had earlier complained about deliveries called back. Poplawski related part of the conversation: “Well, I might have been wrong,” the caller said.