Bars and stripes. Bar code technology can improve operations. So why aren't more companies using it?

While most of the large WDs (and the large retail chains) have deployed bar code scanners (usually in conjunction with a warehouse management system), many small and mid-size companies have not. The cost of the technology and the resources needed to implement it are the biggest barriers to adoption, but many companies do not have a clear enough understanding of the potential benefits, or of their own inventory shortcomings, to perform an accurate cost-benefit analysis.

"It's a great productivity tool for us," says Bill Schlatterer, COO at Parts Warehouse Inc., which has been using Activant's Paperless Warehouse system along with bar code scanners for several years. "It increases accuracy for product coming in and out of the warehouse, and has a host of associated benefits."

A code with benefits

The primary benefits of using a bar code system in conjunction with a warehouse management system (WMS) are improving efficiency, shipping and receiving accuracy and inventory management and visibility.

"When you change to this new technology, you also have to change your processes," says Mike Woodward, senior field implementation specialist, professional services, at Activant. "If that's done correctly, you will see gains in productivity and accuracy for your customers."

Pacific Supply, a California-based warehouse distributor, is using The Paperless Warehouse (TPW) for picking and shipping operations at its Buena Park warehouse. "We had a lot of picking mistakes that led to overages and shortages," says company President Brad Wayne. "We did a cost-benefit analysis of how much the system cost versus how much we thought we were losing from these mistakes. It was substantive enough that we estimated a one-year payback on TPW, and we hit that target."

Workers at the Buena Park location, which handles about 18,000 lines per day, use hand-held bar code scanners for picking and consolidation, and this has virtually eliminated mistakes. "Once we saw what the actual overages and shortages were, the system paid for itself very quickly," Wayne says. "Customer satisfaction is to the point now that most of our customers don't even check their orders in anymore. They're that accurate."

The system also has provided a more accurate view of picking operations and greatly improved the efficiency and accuracy of returns processing. (Pacific is not using the system for inbound receiving.)

Automotive Jobbers Supply in Spokane, Wash., developed its own bar coding system five years ago that is integrated with Activant's Ultimate system. According to vice president and CFO Paul Agather, the company immediately experienced time and labor savings at receiving, and improved shipping accuracy to its stores.

"We went from seven hours down to one hour for check-in time on the first lines we used it with," Agather says. Freight is put away more quickly, and the company has reduced overtime. Check-in is now a breeze, even for complicated lines, and Agather has since expanded the system to the company's branch stores.

Some challenges remain

Despite the benefits, there are a number of significant hurdles to deploying a bar code or WMS system, the biggest of which is the upfront cost. "It's a sizable investment for a company, and there are always internal competing initiatives," Woodward says. "Some companies also don't have the personnel to deploy the system. They might be too busy fighting fires or they're just strapped for time. That causes a lot of people to hesitate."

One issue that Agather had difficulty with early on was the quality of supplier bar codes. "They would change the bar code to a different product while the old product was still on the shelf, so there'd be an error," Agather says. "The same code would be used on multiple products, or the number on the label wouldn't match the number that came up when you scanned it."

A lot of these mistakes, Agather says, stemmed from the fact that vendors weren't using the technology internally, so they weren't checking on the quality of their codes. In some cases, the suppliers weren't entirely convinced that the bar codes benefited the distributors.

"We see less of those problems than we used to," Activant's Woodward says. "When their customers put pressure on them, they figure out pretty quickly what the consequences are."

"We're making such huge strides in terms of the benefits that we can accept some of these problems coming through," Agather states. "But the sales reps know coming in here that they will be confronted on these problems, and we won't let go of it until they fix it."

More WDs have been exposed to the benefits of bar coding as their larger counterparts have deployed the technology, but Agather thinks that many distributors still can't see the forest for the trees when it comes to warehouse automation.

"I don't think they necessarily see the benefit," Agather notes. "WDs are running around like chickens with their heads cut off, and not making time to sit down and study their business. How can you be better at your business without constantly being in fire-fighting mode? Once you get a handle on those basic operations, you can turn your attention to more strategic issues."

Leaders of the pack General Parts Inc. (GPI)

General Parts, the largest member of the CARQUEST network, has deployed a warehouse management system from HighJump Software (a subsidiary of 3M) along with bar code scanning technology in 21 distribution centers (DCs). GPI also assisted one of its CARQUEST partners with an implementation in another DC. The company plans to implement the system in an additional 10 GPI distribution centers this year.

Product is scanned from receipt through picking, packing and shipping of outbound orders to customers. The company has deployed between 40 to 100 scanners per facility, depending on the size of the DC, and the scanners are also used to track returned merchandise.

GPI has realized a reduction in shipment errors of 50%. "We have virtually eliminated invoicing errors, and realized significant labor savings in the distribution centers using the HighJump WMS," says Patrick

"We are able to view and report on much more timely and accurate data using our WMS than we were before," Shearon continues. "This has enabled us to be more proactive in our inventory and labor management efforts, targeting specific areas of opportunity instead of reacting to historical problems."

Pacific Supply

Pacific Supply, a $105 million distributor in California, has implemented Activant's The Paperless Warehouse at its 200,000-square-foot facility in Buena Park (which includes 160,000 square feet of floor space and 40,000 square feet of mezzanine storage).

In the past, Pacific Supply manually kept track of picking and shipping operations using pen and paper, which led to shipment errors and unhappy customers. The company now scans all outgoing shipments and all incoming customer returns, but currently is not using the system for incoming freight.

According to company president Brad Wayne, approximately 98% of all merchandise is bar coded by suppliers. Items without bar codes are labeled in-house.

The company has been able to virtually eliminate shipping errors, saving both time and money. Pacific Supply also has more visibility into its own picking operations.

"The system really gives us accurate information on picking performance," Wayne says. "It ties the exact number of hours with the number of lines picked."

While picking operations utilize wireless bar code scanners, the returns department uses tethered scanners. The Buena Park facility accepts returns for all 31 Pacific Supply locations, including company stores, so manually managing the high volume of returns was a labor-intensive task. "We've gained efficiency there, but the biggest benefit is the level of accuracy," Wayne says. "The system has improved our inventory integrity, and provided some cost benefits, as well."

Automotive Jobbers Supply

Spokane, Wash.-based Automotive Jobbers Supply developed its own bar coding system five years ago. According to Paul Agather, executive vice president and CFO at Automotive Jobbers Supply, the system (which is integrated with Activant's Ultimate platform) was originally tested on two product lines, which cut receiving from seven hours down to one hour.

Using bar code scanners (from Symbol Technologies) has saved time and labor in receiving, and improved shipping accuracy to the company's stores. Complicated lines that staff had previously not bothered to check in (because they were so time consuming) are now some of the easiest to receive. Employees that used to spend hours on the receiving process can spend more time taking care of exceptions.

The company has since expanded the system to its branch stores, where countermen can check in daily shipments in a fraction of the time it used to take. "I expected a lot of resistance from the stores, but they were all over this," Agather says. "They absolutely love it. We do three stock orders a day to the branch stores, and it's now very easy for them to check product in. Once they push a button, it's in their inventory."

Eventually, Agather plans to deploy wireless scanners to automate picking at the distribution center, and he wants to tie the system to electronic advance shipping notices (ASNs) once all of the company's suppliers can provide them