Distribution Technologies for the Beauty Supply Industry
As a growing beauty supply distributor, at what point do you begin investing in distribution technologies? How much do you invest? How do you validate the appropriate solutions against your return-on-investment (ROI)? Is RFID on your horizon as your customers become more sophisticated? These are a few of the questions that plague many business owners and corporate executives trying to get a handle on distribution costs.
From our experience, a beauty supply distributor with annual revenues of $15M - $20M with a growth rate of over 5% per year should automate its distribution. It is also normal to make a one-time investment of 2 - 3% of one year of annual revenues to accomplish this objective.
In the vast majority of cases, the first step should be to invest in a Warehouse Management System (WMS). Regardless of the storage medium used in your warehouse, control is the critical element. As your distribution execution changes over time and you add or change storage equipment in your distribution center, the WMS should be flexible in design and must adjust to your new layout with relative ease.
What are the benefits of a WMS?
On-time order fulfillment and product delivery to the customer
Labor reductions through productivity improvements and increased accountability of employee time
Space savings through reduced inventory levels and maximization of storage locations
Real-time inventory accuracy and visibility throughout your supply chain
Improved shipping accuracy and dramatic reductions in returns
On-demand utilization of bar code and RFID technologies
An integrated multi-carrier shipping system to reduce shipping costs with audit capability
Modular design allowing the warehouse operations to be dynamic over time
These are all quantifiable benefits that provide you with significant "hard" cost savings. There are a significant number of intangible benefits as well.
The WMS you choose should be modular in design. Even though the basic processes remain the same, the needs of a $100M beauty supply company are obviously more extensive than that of a $20M company. The WMS must be flexible enough to grow with you and expand/contract as your business demands fluctuate.
Also, the WMS should be able to drive all types of warehouse equipment. For example, Marshall Salon Services (Dixon, IL) uses such a combination to fulfill their distribution needs. They use carton flow rack (with pick-to-light) for their high velocity items, horizontal carousels for their medium movers, and pallet racking with Radio Frequency (RF) technology for their larger shipments and slow movers. Their WMS is the intellectual brawn of the warehouse and provides them with the inventory visibility necessary to make real-time decisions on behalf of their customers.
With respect to the ROI, a reputable WMS supplier will provide you with meaningful statistics. At the most, 18 months should be your goal for payback. If you ask Jim Marshall of Marshall Salon Services, he will tell you that he dramatically exceeded his expectations, and the payback period was considerably shorter than he imagined.
There is an old axiom in business: "my warehouse is a cost center." But isn't it also true that you don't collect a dime if you don't ship? Making your distribution cycle efficient will actually enhance your customer retention and help secure new customers as you out perform your competition. Your distribution capability is actually getting you more business--doesn't that make it a profit center?
A properly designed and implemented distribution solution will save you labor, provide you with a space windfall and ultimately increase your customer base as you out-perform your competition. Order fulfillment, shipping accuracy and delivery schedules are the key factors to successful distribution and to keeping your customers coming back to you. Getting the right product to the right customers - on time - is the key. WMS is your first and best "bang for the buck."
Steve Hunyar is the EVP of E.D.G. Enterprises. He has over 20 years of experience in the warehousing and distribution industries. He can be reached at shunyar@edgent.com.
