an item.

“The system applies a level of discipline that’s critical to see the kind of success The Reynolds Company has seen,” he says.

Challenges
The system requires a meticulous implementation. For example, at The Reynolds Company, employees had to label 30,000 bin locations by hand. Also, before the system could even be implemented, the company had to switch from its legacy customized software to a new, standardized business platform.

The new warehouse management system was a challenge with some of the workers, as well. “It’s a significant culture change,” says Reynolds. Some long-time employees didn’t like the transition at first, he says, but they have caught on. Now any worker regardless of tenure can find an inventory item while before it could take the better part of a year for a worker to learn where items were placed in the warehouse.

Reynolds stressed that one of the biggest returns for the company has been the ability to grow the number of its branches and level of inventory without sacrificing service.

“It’s absolutely critical to invest in the management of your inventory assets so you are not throwing money down the drain,” Reynolds says. “It’s a significant part of your cash flow. Managing your assets will help you grow.”

More From This MDM Series:
Technology Case Study: Automating Processes

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This electrical distributor implemented a wireless warehouse management system, which all but rid the company of inventory write-offs and dramatically decreased shipping discrepancies. The system has helped the company grow without sacrificing service levels.

The Company
The Reynolds Company is an independent family-run electrical distributor based in Dallas, TX. The distributor started as Cummins Supply in the 1940s. Recently, The Reynolds Company expanded its market beyond Dallas and Fort Worth to Austin (1998) and Houston (2000).

COO Don Reynolds and company President and brother Walter Reynolds took over in 1997. They quickly realized that to continue growing, the company would need to implement a logistics system that would dramatically improve productivity in the warehouse.

The Reynolds took a closer look at how the company was managing its inventory. Don Reynolds says the company had about $4 million in inventory, and was writing off close to $300,000-$400,000 each year. Shipping/receiving discrepancies were high it was normal to have 50-60 discrepancies in a day. What’s more, when sales volume increased, errors went up.

The distributor also had been conducting an annual inventory count, which cost it a day of revenue and negatively affected employee morale.

The Solution
In November 2000, The Reynolds Company decided to abandon its paper-based inventory management system and install a wireless warehouse management solution from Infor.

The system is designed to address warehouse workflow including receiving, product movement, shipping, picking and counting. The Reynolds company currently has about 2,200 picks a day at 16 branches and receives 1,400 lines in warehouse transfers and purchase orders. Some features of Reynolds’ system are:

• Material is scanned at the receiving dock employees who receive product are able to barcode any unlabeled product, correct mismarked material and make purchase order corrections.
  
• The company’s Inventory Control division no longer spends time searching for missing product, but instead researches why product is missing as well as performs its new cycle-count program, which is a way of verifying inventory levels every day. (A items four times a year, B items three times a year, C items two times a year, and D items one time a year.) The process rids the company of the need for an annual inventory count.
  
• Every piece has a location with the wireless warehouse management system. When Receiving gets the product, it inputs the item to the system. The system tells the stocker where to put it in the warehouse. The WMS effectively tracks the material from the dock door to shipping and back out to the customers.
  
• When a customer makes an order, the employee who receives the call inputs the order to the system. The order is sent to the barcode gun (equipped with Radio Frequency software) of another employee who then retrieves it from the correct bin. The employee must scan every piece pulled as well as the bin itself. This keeps inventory levels up-to-date in real time.

The Results
Inventory write-offs have gone down from a high of $400,000 to years when the company has not written off anything. The Reynolds Company has been able to increase its inventory from $4 million about five years ago to $22 million today to support its market expansion. This has been done without sacrificing service levels, Reynolds says.

The company now sees, at most, 10-15 shipping and receiving discrepancies a day. When we have a shipping discrepancy now, it’s a big deal,” Reynolds says.

Infor’s Director of Industry Marketing Scott Ellenson says in order to see such results companies must use the system religiously. Every item must be scanned. A salesperson can no longer just go back to the warehouse and grab