Georgia Tech February 4, 2003

Transcription

1 Georgia Tech February 4, 2003

2 Go Dawgs!!!

3 Our Mission is to be the Reseller s Preferred Source of Business Products and Services through Leadership in Operational Excellence, Customer Support, and Integrity

4 S.P.Richards Sales Results 2001 $1,379,859, % 2000 $1,336,500, % 1999 $1,218,367, % 1998 $1,122,000, % 1997 $1,081,000, % 1996 $1,035,000, % 1995 $ 948,000, %

5 Established in 1848 S.P.Richards History Over 150 years of experience in the Office Products Industry Oldest continuously operating business in Atlanta, Georgia Purchased by Genuine Parts Company in 1975

6 GPC Overview Billions $10 $8 $6 $4 $2 5,261,904,000 Sales Results ,720,474,000 6,005,245,000 6,614,032,000 7,981,687,000 8,369,857,000 8,220,668,000 $

7 GPC Overview Automotive Parts Group ( NAPA ) Industrial Parts Group ( Motion Industries ) Office Products Group ( S.P.Richards Co. ) Electrical/Electronic Materials Group ( EIS ) Common to all divisions is expertise in warehousing and distribution 27% 17% 5% 2001 Sales 51% Automotive Industrial Office Products Electrical

8 GPC Overview NAPA - Automotive Parts Group Motion Industries - Industrial Parts Group S.P.Richards - Office Products Group EIS - Electrical/Electronic Materials Group 25% 20% 1% 54% Automotive Industrial Office Products Electrical 2001 Operating Profit

9 S. P. Richards Competitive Overview National wholesaler - United Stationers Regional wholesalers Computer supplies wholesalers Furniture wholesalers

10 How Our Customers Compete Mega Dealers ( Office Depot, Corporate Express ) National scope ( National contracts ) Next day delivery Purchasing control Low price Independent Reseller High service Next day ( or same day ) delivery Internet Reseller Ease of ordering Quick delivery

11 How Our Customers Use Us Items resellers don t stock The smaller the reseller, the fewer items they stock Economic decision Expand selection Their catalog Our catalog Backup during transitions ( new catalogs ) Backup for temporary out-of of-stocks Can be huge volume Impossible to forecast

12 How Our Customers Use Us Business relationship with S. P. Richards and United No such thing as a backorder Missed order is lost business Most orders are for pre-sold merchandise End user order to our customer Item they don t have Wrap & Label Consumer packaging To: End User From: Office Depot Approximately 77% of our orders

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14 - Atlanta - Charlotte

15 Trends Favoring Wholesale Distribution Inventory reduction Traditional resellers Stockless resellers Total Fulfillment E-commerce Pure Play Internet resellers ( No Bricks or Mortar ) Resellers expanding beyond their geographic reach Nationwide drop shipping Niche specialists seeking to provide a complete business product offering

16 S.P.Richards Strengths 36 full stocking Distribution Centers 2 Furniture DC s 3 Horizon USA ( Data Supplies ) DC s Broad inventory offering 22,336 catalogued items featured at every DC. Over 30,000 total items in inventory 1% - 2% list price advantage over our major competitor Best service Fastest delivery Highest service levels Fewest errors Lowest cost structure

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18 S.P.Richards Competitive Advantage Intense focus on our customers Highly personalized service Flexible - Do anything they need us to do to further their business Physical delivery Information Systems Best customer relationships in the industry Every customer is our only customer

19 S.P.Richards Competitive Advantage At S. P. Richards, We make money the old fashioned way Manually

20 Disclaimers The information presented here represent the views of the presenter, not necessarily that of S. P. Richards Company You can t improve without looking at your weaknesses it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time. - Winston Churchill S. P. Richards might look like a poor distributor, except in comparison to all the others.

21 S. P. Richards Company vs. United Stationers 2001 Fiscal Year $4,500 $3,926 Millions $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,380 $1,000 $500 $0 $142 S. P. Richards United Stationers Sales Operating Profit $170 * * Excludes restructuring charge

22 2001 Operating Profits as a Percent to Sales 12.0% 10.3% 10.0% 8.0% 6.0% 4.3% * 4.0% 2.0% 0.0% S. P. Richards United Stationers * Excludes restructuring charge

23 Virtual Tour - Atlanta

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31 S.P. Richards Logistics Challenges Rapid Delivery Business began as same day order picking, next day delivery S. P. Richards moved the industry to same night deliveries 20 years ago Everyone wanted the first AM delivery Allowed resellers to deliver earlier to their customers Deliver more rapidly than the competition Unattended; key access All customers have merchandise at the start of the next business day Required reduced cycle times for S. P. Richards

32 S.P. Richards Logistics Challenges Rapid Delivery No pre-planning planning of orders Real-time Constantly adjusting Difficult to plan quantity and timing of labor Statistically based Tuesday, Wednesday, Thursday are heaviest shipping days Housekeeping Monday and Friday Managing overtime a challenge Adjust and stagger starting times as appropriate Part time labor a huge plus where available Continuous manual expediting More flexible than systems driven prioritization

33 3,500 3,000 2,500 2,000 1,500 1, S. P. Richards Company Order Lines by Hour 2:00 AM 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM Noon 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM 9:00 PM 10:00 PM 11:00 PM Philadelphia 1/3/01 Philadelphia 1/10/01 Atlanta 1/10/01 1:00 AM Midnight

34 9:00 PM 10:00 PM 11:00 PM 14, % 13,390 90% 11,902 80% 10,415 70% 60% 8,927 50% 7,439 40% 5,951 30% 4,463 20% 2,976 10% 1,488 0 S. P. Richards Company Order Lines by Hour 3:00 AM 4:00 AM 5:00 AM 6:00 AM 7:00 AM 8:00 AM 9:00 AM 10:00 AM 11:00 AM Noon 1:00 PM 2:00 PM 3:00 PM 4:00 PM 5:00 PM 6:00 PM 7:00 PM 8:00 PM Philadelphia 1/10/01 2:00 AM 1:00 AM Midnight 0%

35 S.P. Richards Logistics Challenges Rapid Delivery - Examples: Corporate Express - Whippany, NJ Shipped from: Order cutoff: Truck departs: Delivery: Staples - Ontario, CA Shipped from: Order cutoff: Truck departs: Delivery: Moorestown, NJ 6:30 PM 7:00 PM 8:00 PM Mira Loma,CA 5:00 PM 5:45 PM 6:00 PM

36 S.P. Richards Logistics Challenges Rapid Delivery - Examples: Lindy Office Products - Los Angeles, CA Shipped from: Order cutoff: Truck departs: Delivery: Mira Loma,CA 6:00 PM 8:00 PM 9:00 PM Independence - Cleveland, OH Shipped from: Order cutoff: Truck departs: Delivery: Pittsburgh, PA 6:00 PM 7:00 PM 11:30 PM

37 S.P. Richards Logistics Challenges Rapid Delivery WMS Implications Order prioritization is paramount Multiple picking zones Different travel times through system Order completion needs to be prioritized, not order initiation How do you maintain the same degree of responsiveness with an automated system that you had with a manual one? Accuracy vs. Cycle time

38 S.P. Richards Logistics Challenges Stockless Fulfillment USA Express EDI transmissions 70% of orders Another 15% remotely entered by our customers Real-time acknowledgement Auto-routing by zip code Out-of of-stocks routed to alternate facilities Wrap and Label Order up until 3:00 PM, UPS shipment same day Order tracking

39 S.P. Richards Logistics Challenges Stockless Fulfillment USA Express Can ship to 96% of the US population next-day UPS ground Still a small percentage of the overall business All 36 Distribution Centers must be small package experts Enforcing consistency a challenge Premium on high order fill rate from one DC Minimizes number of boxes Consistent delivery times Developed a system that allows customer to prioritize: Quickest shipping Fewest packages Automated with the EDI transmission

40 S.P. Richards Logistics Challenges Service Levels Don t get a second chance - order lost if out of stock Demand often not statistical Random hits Different DC s Different items Different times Communications important Learn more about customer s business Collaborative inventory management?

41 S.P. Richards Logistics Challenges Forecasts are always wrong, and planners are always surprised - George Plossl

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47 S.P. Richards Logistics Challenges FIFO LIFO FISH

48 S.P. Richards Logistics Challenges Service Levels Developed SPRinter network Same night service from other DC s Raises fill rates 1% to 2% to customers Wrap and Label Efficient merging for resellers Creates extra box(es es) ) for consumers

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50 S.P. Richards Logistics Challenges What I didn t mention Transportation Most deliveries on our private fleet Every stop every night

51 S.P. Richards Logistics Challenges Learnings World class is doing more than what your customer needs with excellence It s about process design and organization Must eliminate work Lower costs Reduced cycle times Automation where it helps meet ( or anticipate ) customer requirements

52 SPR Philadelphia Your mission, should you choose to accept it Increase order picking efficiency in C and D zones Reduce labor costs Equal or better quality Decrease number of multi-zone orders Increased customer satisfaction Reduce packaging costs Reduce empty space (air) in the shelves Increase efficiency of UPS orders Improve full case/broken case picking (paper) Capital investment that fits the business

53 SPR Philadelphia Currently picking with carts Every picker travels the whole zone each picking tour Average tour consists of 50 order lines Pick directly into final packaging Except for customers who demand it, pack separate boxes in each zone Multi-zone orders have to be sent downstairs on a conveyor and completed Drastically increases order cycle time

54 SPR Philadelphia Start / Finish * Conveyor From Upstairs (Unfinished) Conveyor From Upstairs (Finished) Checking/Packing Finished UPS From Upstairs C Zone - Floor Level - Mostly 18 Shelving

55 SPR Philadelphia D Zone - Mezzanine - Mostly 30 Shelving

56 SPR Philadelphia - Data D Zone ( Small goods - Mostly 18 Shelving ) Picking aisles numbered as labeled Bins A, C, E, Etc. to the left Bins B, D, F, Etc. to the right All bins 42 wide Pallet positions in center open area and along right wall Location ending with B denotes an item with reserve stock somewhere else Bin location only denotes shelf, not position

57 SPR Philadelphia * Start / Finish C Zone - Mezzanine - Mostly 30 Shelving

58 SPR Philadelphia C Zone - Mezzanine - Mostly 30 Shelving

59 SPR Philadelphia C Zone ( Light Bulk - 30 Shelving ) Picking aisles numbered as labeled Bins 1, 3, 5, Etc. to the left Bins 2, 4, 6 Etc. to the right All bins 42 wide Pallet positions in center open area, along with checking and packing Location ending with B denotes an item with reserve stock somewhere else Bin location only denotes the bin, not the shelf

60 SPR Philadelphia - Data

61 SPR Philadelphia - Data Sales Date, Item, Order #, Line #, UOM, Qty Ordered, Qty Shipped Item Item, Description, Status, Item Class, Vendor, Bin Location, Zone, Sales & Case UOM s,, Dimensions Locations Bin Location, Zone, Bin, Location Type, Reserve Location? Zone Descriptions Items Needing Dimension Information Lists Information on Atlanta stocking status

62 SPR Philadelphia Limitations Mezzanine supported by shelving uprights COMPUTER SYSTEM doesn t (today) support multiple locations for an item Philadelphia not yet on WMS (PkMS) Items stored by manufacturer Items assigned different size spaces based upon normal volume on hand

63 SPR Philadelphia General Data Limitations Selling UOM s quantity per case missing in many cases In many cases, case dimensions also missing Provided vendor in item file Provided S. P. Richards catalog Provided Atlanta stocking information Multiple SKU s assigned to one location Locations not to the item level

64 2001 Operating Profits as a Percent to Sales 10.3% 12.0% 10.0% 8.0% 4.3% * 6.0% 4.0% 2.0% 0.0% S. P. Richards United Stationers * Excludes restructuring charge

65 Questions?