The following case study is taken from The Supply Chain Digest Letter on WMS, our hardcopy newsletter that recently focused on Warehouse Management Systems. A pdf of version of that issue, along with a variety of other information and resources, can be found at our WMS Resource page.

Landsman Says:

We’ve been able to meet a real challenge, which is to optimize “each picking,” case picking, cross docking and returns processing in a single facility using one WMS,” said Landsman. What do you say? Send us your comments here

Cabela’s, headquartered in Sidney, NE, is a fast growing retailer of outdoor and sporting goods. Its massive stores can carry as many as 150,000 different SKUs, and have helped drive annual sales above $2 billion. The retailer is successfully managing strong growth in both its original consumer direct business and its rapidly growing brick and mortar retail store channel, now numbering more than 20 “destination” retail locations.

Like many fast growth companies, Cabela’s found its existing processes and technologies weren’t scaling to meet its needs, resulting in too much inventory overall, inventory shortages versus demand in other cases, and rising distribution and logistics costs.

Supporting Multiple Processes and Product Flows

Perhaps not surprisingly, Cabela’s turned to an advanced WMS to help it better manage distribution operations. The WMS it deployed came from Manhattan Associates as part of Cabela’s implementation of a broad suite of supply chain software, including not only WMS but also merchandise/assortment planning and replenishment solutions from Manhattan.

Like an increasing number of retailers, Cabela’s manages both store replenishments and consumer direct shipments (catalog and web orders) in the same distribution centers. The new WMS has been deployed at three Cabela’s DCs plus another two returns processing facilities. The three regular DCs are huge, with each facility operating almost 1 million square feet. On really busy days, each facility can process more than 100,000 store and consumer direct orders and in excess of 800,000 individual order lines.

(Distribution and Materials Handling Article - Continued Below)

Even with that huge processing power, only the top 30% of Cabela’s SKUs are stored in the DC. The remaining 70% are stocked at the store level only, often using vendor direct shipments. The distribution network also includes some specialization, with one of the three DCs handling all the hazardous materials, and another all the really large or hard-to-handle SKUs.

The WMS obviously needed to be able to scale to meet those levels of processing requirements. But it also had to support multiple processing types and physical product flows:

• Vendor-to-DC-to store

• Cross Dock

• Traditional wave processing for store replenishment orders

• Small order picking/waves for consumer direct shipping

• Multiple material handling systems

• Reverse logistics processes at the returns centers and the DCs

According to James Landsman, project manager for Cabela’s multi-channel transformation, a number of advanced WMS features are key to Cabela’s distribution success. Those capabilities include:

• High volume cross dock processing

• The ability to create and manage multiple pick wave types

• Advanced pick face replenishment logic

• Cartonization optimization to minimize shipping cube and transportation costs

• Rate shopping for parcel carriers, using Manhattan’s integrated parcel system

• Processing store orders for value-added services like apparel hanging and packaging by department, so received goods at retail can often go straight to the floor

“We’ve been able to meet a real challenge, which is to optimize “each picking,” case picking, cross docking and returns processing in a single facility using one WMS,” said Landsman.

Taking the WMS In-Store

Cabela’s retail stores are massive, with the stock room alone often sized at 30,000 square feet; the stores carry as many as 150,000 SKUs.

To deal with these inventory challenges, Cabela’s also implemented a “light” version of the WMS from Manhattan in its retail stores. Incoming inventory is scanned into general location areas in the stock room, providing a very accurate picture about were backroom inventory has been located.

It’s interesting that part of the business case for RFID in-store is that retail associates can’t find product needed for shelf replenishment in chaotic back office stock rooms. Cabela’s example shows the “light WMS” approach, using traditional technologies such as bar codes and RF scanning, can provide the location accuracy needed right now as RFID technology continues to mature in cost and performance.

When inventory is required on Cabela’s store floor, a “pick list” is automatically generated by the WMS using the same type of replenishment logic found in a DC – except in many cases the replenishment quantity for large items might be only one. Replenishers use Radio Frequency terminals to scan the inventory out of the stock room and confirm its placement in the new location on the floor or shelf. The WMS also provides the store’s perpetual inventory system, which is integrated with merchandise, replenishment and POS systems.

“Before we used Warehouse Management to manage store inventory, we had difficulty keeping the floor stocked. Our previous system didn’t distinguish between inventory on the floor and inventory in the back room,” said Landsman. “Floor restock was dependent on employees walking the floor and then finding the inventory in the back room. Today, we run lean-time replenishment several times a day to restock the floor. The systems integrated to provide near real-time inventory updates. Store associates have access to Warehouse Management so they can locate inventory easily and better serve our customers.”

Cabela’s also uses Warehouse Management to manage receiving, returns and return-to-vendor (RTV) processes at the stores. These retail restock capabilities minimize in-store handling by allowing in-store personnel to preprocess inventory, optimizing in-store put-away by sorting picks by department, and optimizing picking efficiency by combining store orders.

The Results

Cabela’s has seen substantial improvement in a number of metrics through implementation of the Manhattan Associates supply chain solutions, such as reduced inventory levels while achieving better in-stock positions. It is also operating on “one version of the truth,” having single plans for inventory, sales and financial performance, versus multiple plans across the company before the new systems.

Inventory accuracy and productivity at the DCs have also improved substantially, while relative transportation costs have dropped. The WMS has enabled Cabela’s to support common processes while embracing channel uniqueness. Just as importantly, the WMS and other new systems have positioned Cabela’s to be able to profitably manage continued strong growth, with expectations for 50-100% volume growth over the next five years.

“We have our value statement right,” said Landsman. “The customer is always number 1.”

A BusinessWeek special report recently ranked the company 15th among the top 25 “Customer Service Champs” in the U.S.