Author’s Note: The following case study was written in April 2019 by Tim Parry for Blue Horseshoe, which was founded in 2001 by a team poised to change the way companies leveraged technology to transform their businesses and disrupt their industries. With a focus on supply chain, Blue Horseshoe helps companies drive value through greater efficiencies and productivity.
While major national booksellers have shuttered retail outlets as they try to compete with Internet giants, Half Price Books has seen a remarkable 21st century growth spurt. With 130 stores in 17 states, Half Price Books is the largest family-owned chain of new and used bookstores in the United States.
Half Price Books also operates a wholesale subsidiary, Texas Bookman, chain-wise supply item fulfillment and saw future potential for internet sales, and it was clear that the company was going to have some growing pains in its central distribution center. Half Price Books simply could no longer run its warehouse manually, needed inventory visibility and needed to come into the digital age.
Half Price Books required a warehouse management solution that would help it manage its supply chain, inventory, labor, and more.
Growth Requires Innovation
In 2010, Half Price Books’ 127,000sq.ft. central distribution center in Dallas implemented its first warehouse management system (WMS), Manhattan SCALE. Before that, Half Price Books relied on a privately-developed distribution and inventory system to automate the application of allocation schemes and other distribution processes. The solution fell short of true inventory visibility for the chain and lacked the ability to support increased desires for more reporting capabilities.
The Manhattan SCALE implementation brought Half Price Books into the technology age. This warehouse management system served as the cornerstone to streamline supply chain operations. The company had inventory visibility that was needed to distribute books to its stores, as well wholesale trade customers its services through its Texas Bookman wholesale division and serve as the cornerstone for increased reporting capability throughout the chain.
In addition to growing its retail store footprint, Half Price Books also increased the number of SKUs, or stock keeping units, it carried and the breadth and depth of products it sold as the retail market evolved. Their expanded inventory grew to include impulse items like small electronics, coffee mugs, t-shirts puzzles, board games, and even pocket knives and mints.
By 2017, Half Price Books’ growth began pushing the boundaries of its central distribution center. Since the bookseller owned its facility, it preferred to stay put. Half Price Books made the decision to maximize its existing space to improve capacity. This meant re-tooling and scaling the building to support its expanding inventory and growing number of retail locations.
“Our current distribution center configuration was going to run out of capacity because our storage was maxed out,” says Eric James, Half Price Books’ vice president of supply chain and logistics. “The current capacity could support 137 stores, and we had just opened up store number 130.”
The bookseller needed a better way to store more product in its already-crowded central distribution center, as well as a more-efficient and ergonomically-correct way to distribute product to their stores. On the back end, Half Price books still wanted to use its existing WMS, even if the system needed customization to work with the more efficient processes and a reconfigured warehouse.
Designed for Efficiency
After a thorough RFP process, Half Price Books selected Blue Horseshoe to take on the supply chain enhancement project.
“There were a few differentiators that set Blue Horseshoe from the pack,” James says. “The first was Blue Horseshoe’s relationship and knowledge-base as a Manhattan SCALE partner. The second is that the Blue Horseshoe team had previous experience heading up similar projects with other book distributors.”
Blue Horseshoe created a feasibility study for Half Price Books to determine areas of improvement with a goal of improving the design and operations of their central distribution center.
The objectives of the project were for Blue Horseshoe to increase Half Price Books’ throughput in several ways. This included introducing select technologies and equipment, and creating improved capacity using various space-saving measures. Blue Horseshoe also developed an operating plan for the central distribution center that would provide a plan for Half Price Books to continue its growth while maintaining the current company culture.
Blue Horseshoe created a detailed facility design for the Half Price Books’ distribution center. The team created an inclusive budget for all equipment required to support the facility. This included a comprehensive financial analysis of improved process, equipment, and facility design supporting Half Price Books’ ROI criteria. Key to the project was engineering efficient, ergonomic, and economical processes and layouts.
Change for the better
Blue Horseshoe recommended a change in the way Half Price Books distributed merchandise to its stores and vendors. In the past, the bookseller’s inventory had been siloed into three buckets: one for its store business, one for its wholesale business, and one for intracompany supply item fulfillment. There were separate teams for each business.
Blue Horseshoe recommended Half Price Books to implement a pick-to-carton solution. This allowed the bookseller to ship daily instead of weekly.
The results? Reduced foot traffic in the central distribution center, and increased pick and storage density.
The biggest enhancement implemented by Blue Horseshoe was in the design of the forward pick area. Pack teams were putting product into individual cartons or 4X4X4 gaylords, depending on the destination. The warehouse now utilizes a more efficient carton flow rack and shelving, gravity and powered conveyer, and a pack and seal area.
“The new forward pick area is biggest evolutionary change in the building,” James said. “Most of the worktime was spent walking and consolidating into a much denser pick area meant we needed less labor in the pick process. We were able to reallocate workers into replenishment and receiving, which created a more flexible staff that was less dependent on the tribal knowledge of the processes particular to the different fulfillment functions.”
There was a second reason Blue Horseshoe suggested the pick-to-carton implementation as well. The Blue Horseshoe team went to a few Half Price Books locations and discovered some inefficiencies in the receiving process that may have been created by the shipping process.
Shifting to pick-to-carton did have its pros and cons. For example, it meant packing with void fill and dunnage that had never been done by Half Price Books before. But on the other hand, the pick-to-carton process created efficiencies in the central distribution center, and assumedly at the store locations, as receiving and stocking takes less time and allows employees more time on the salesfloor.
Timing is Everything
Project timing was also a challenge.
The project was a reconfiguration of an existing distribution center and Half Price Books’ operations team still needed to do business as usual while parts of the distribution center were closed off. While it meant working in tighter areas during the hot Texas summer months, James said the staff handled the short-term inconvenience swimmingly.
Holiday peak also posed challenges. The distribution center project began in late July, and the conversion was completed in late September. This left a tight window to train the Half Price Books staff on the new processes and make necessary revisions to the warehouse management software.
The warehouse employees were very eager to learn new processes and get to work, which made the training period transition a smooth one. Some of the supervisors were able to begin training others almost immediately, which allowed Blue Horseshoe’s team to focus on other parts of the optimization project.
James says that the interaction between Half Price Books and Blue Horseshoe was very good. The partnership also did not end when the implementation went live. Blue Horseshoe made follow-up visits after the go-live to troubleshoot work flows, ensure the configurations were working correctly, and more.
“They did a great job with the project management, whether it was keeping people on task, pointed in right direction, or redirected in collaborative matter,” James said. “Blue Horseshoe was very willing to jump in and help manage the training process for the staff by creating training documentation and anything else that needed to be brought to bear.”
Before the distribution center reconfiguration, James said it was challenging for Half Price Books to review key performance metrics that didn’t have to be taken with certain grains of salt. Since they’ve changed the pick process it’s taken the vagueness out of process and made evaluation more transparent. Before the reconfiguration, the KPIs on user performance were not very actionable or accurate.
“In the past month we have been able to get good data for user production and shift production and have been able to put finer point on those metrics,” James says. “Before we really did not have methodology to get there and relied on high degree of interpretation as to what were objective and fair performances.”
James also touted the great working relationship between Half Price Books and Blue Horseshoe throughout the entire process.
“Our interaction with the Blue Horseshoe team was very positive,” James says.