Big results from small packages

OshKosh B'Gosh's sophisticated warehouse management program and innovative alliance with a small-package carrier have brought the company recognition as Shipper of the Year.

By Staff -- Logistics Management, 11/1/1999

OSHKOSH B'GOSH ENTERED THE GARMENT business in 1895 as a manufacturer of rugged clothing for farmers and railroad workers. Times have changed, and the company has kept pace. Best known today for its trademark children's overalls, the Wisconsin-based manufacturer and marketer of children's wear offers a diverse array of products that only begins with denim. Over the last 15 years, it has extended its brand to toys, shoes, car seats, and many other products, which it sells around the world. OshKosh B'Gosh even operates its own chain of more than 120 retail stores.

That expansion in products and markets has brought with it major logistics and distribution challenges, challenges the company has met with enormous success to date. In concert with its carriers, it has developed a transportation system that at once provides highly reliable service and minimizes costs. The company has transformed its major distribution center in White House, Tenn., into a world-class automated operation. In meeting the emerging demands of wholesale customers to move toward electronic commerce, the company's logistics and distribution managers have helped boost OshKosh's own profitability.

Those successes have earned OshKosh B'Gosh honors as this year's NASSTRAC Shipper of the Year. The award, which is sponsored by Logistics Management & Distribution Report, was presented to the company during the trade group's fall meeting in Washington, D.C.

Carrier Partnerships

OshKosh B'Gosh has taken a number of steps to ensure that it offers both its retailers and its wholesale customers service that matches 21st century expectations for reliability, information, and speed. Some of the impetus for updating its system has come from major retailers that are demanding that all of their suppliers develop information-technology capabilities. But OshKosh B'Gosh has gone beyond those demands to develop a system that has markedly reduced its costs, improved reliability, and helped accelerate cash flow. In other words, distribution and transportation managers have contributed to both top- and bottom-line improvements for the company.

Like many other companies, OshKosh B'Gosh has transformed its relationship with carriers over the last 12 years or so, consolidating its carrier base and building closer relationships with its core carriers. Today, 95 percent of its shipments to retail stores move via a single carrier. What's unusual is that the carrier is small-package specialist RPS, not a less-than-truckload carrier, as is more common in retail distribution.

Dennis Defnet, corporate transportation manager for OshKosh B'Gosh, says that he began working with RPS about 12 years ago, when RPS was still a new but growing competitor of United Parcel Service. He credits RPS, now a subsidiary of FDX Corp., with providing services that have contributed to efficiency in both loading and delivery as well as information management that have greatly benefited OshKosh B'Gosh.

"We've virtually eliminated LTL," he says. "We not only save a lot of money but a lot of time and effort at the distribution center. We don't have to stage freight or palletize it." Fluid loading--a practice in which cartons are loaded on the trailers directly after they've been packed and labeled--saves thousands of dollars a month by using trailers as an extension of the dock, he adds.

To transport the remaining 5 percent of OshKosh's shipments, the company has agreements with national LTL carrier ABF Freight System and regional specialist Averitt Express, which carries goods imported by air from Central America from the Miami gateway to the White House distribution center. In addition, the company makes use of a dedicated fleet provided by contract carrier First Fleet, based in Murfreesboro, Tenn., which provides both inbound and intra-company transportation for OshKosh.

Defnet is a strong proponent of building long-term relationships with providers, contending that frequent rebidding can hurt relations while wasting valuable administrative resources. Defnet, who sits on both RPS's and Averitt Express's customer advisory boards, sees his principal carriers as key partners in OshKosh B'Gosh's business success. RPS and others are called in whenever the company plans to introduce a new product or program.

In one current project, OshKosh and RPS have implemented a program that uses PDF 417 symbology, the two-dimensional bar codes developed by Symbol Technology. OshKosh encodes detailed information on consignees into the symbols, which are included in the labels attached to all packages. The intention is to provide more complete information on delivery to both OshKosh and its customers.

The PDF 417 technology enables OshKosh to embed very specific address data into the symbol. Almost immediately after a shipment is delivered, OshKosh receives a proof of delivery via the Internet. "We get the proof of delivery and immediately forward it [to accounts receivable]," Defnet says. "That's helped us reduce our daily sales outstanding. It's helped our cash flow and lessened the number of days receivables are outstanding."

At the same time, OshKosh continues to use 128 serial shipping container bar codes to trace its shipments through the RPS system. Labels produced through the company's warehouse management system include both types of bar codes for each carton.

Going Paperless

Operations at the distribution center in White House, Tenn., play a crucial role in OshKosh's logistics processes. OshKosh has installed an all-new warehouse management system (WMS) as well as a new materials-handling system in the distribution center. The $10 million project has rapidly produced benefits for the company that competitors may find hard to replicate.

OshKosh began looking for both engineering and software vendors to transform the warehouse in May 1996. "Heretofore, our practices were pretty much predicated on the manual movement of stock," recalls Joe Burgert, the company' s director of distribution.

Automating processes was essential both for internal reasons and to meet rapidly developing customer requirements, Burgert reports. "We have tremendous wholesale movement of goods to 10,000-plus customer locations with diverse requirements," he says, adding that customers were asking OshKosh to perform such tasks as pricing individual items or providing garments on hangers.

"Our first priority was to satisfy ourselves that we had an accurate inventory," Burgert continues. "Without that, no system is reliable. We had to design a system that was 99.99 percent accurate [with regard] to inventory." The warehouse management system, he says, had to track products beginning with dropping the order through picking, packing, palletizing, loading, routing, and shipping.

Another priority was to deliver product more quickly. The new system would have to improve productivity and at the same time help the company meet increasing customer demands. "We knew that value-added services would become overwhelming if we did not have product automatically directed," Burgert says.

Another very important priority was paper elimination. Says Burgert, "We knew that having all those pick lists in 400,000 square feet of warehouse space was a problem."

Eventually, OshKosh selected a warehouse management system developed by Kewill Logistics (formerly Exeter Software Ltd.). The system follows goods beginning with inbound receipt. Burgert says it assures that goods are put away correctly and pulled correctly and that the right product is shipped.

The system provides OshKosh managers with real-time information on inventory for as long as the goods are in the company's control. "We have total visibility of our inventory by multiple departments and outside accounts," Defnet says. "Under the old system, we tracked merchandise at receipt, reserved, and shipped status. The new system allows us to track it while it's in process."

The WMS system and materials-handling system OshKosh installed automate picking and direct product to carousels, where OshKosh associates pack them. "We can effectively pick a cross section of all SKU (stock-keeping unit) offerings in a tight and condensed area," Burgert reports. "That eliminates 90 percent of the non-value-added time we would spend moving up and down warehouse aisles picking orders."

The system also improves accuracy. "It's easy to pick product and pack product," he says. "Our associates have embraced it. The amount of time needed to train an associate has been cut by 75 percent."

Once picked and packed, packages headed for OshKosh B'Gosh retail stores receive labels generated by the system. The system also generates content tickets for each carton, which provides information to consignees.

The boxes are weighed and scanned and then move to dedicated lines for fluid loading on RPS trailers. Shipment data are transmitted to RPS through Distribution Solutions Inc.'s Clippership PC-based shipping system. Shipments headed for wholesale customers are staged according to individual customer requirements. Often, too, customers will specify the carrier and routing that OshKosh must use. Those requirements are loaded into the system.

Smaller, More Frequent Shipments

Like many other shippers, OshKosh has seen its shipment size drop and the volume of shipments climb in recent years as retailers change the way they manage their own inventories. The fluid loading into RPS trailers practiced by OshKosh is important in managing that efficiently. Fluid loading provides huge savings as a result of reduced handling, Defnet says. In addition, he has negotiated a rate with RPS for multi-carton shipments that he says actually reduces freight costs compared with LTL shipping.

"Because we have smaller, more frequent shipments, I want to save backroom costs," Defnet says. The system of fluid loading plus RPS's multi-carton shipping program have done not only that but also reduced overall freight costs and per-package costs. In addition, consolidated billing for shipments to all OshKosh-owned locations has helped reduce administrative costs.

One of the risks in that is keeping multiple cartons in a single shipment together. "There were and still are problems with shipment integrity," Defnet says. But he says that RPS has at times been able to keep 97 percent of multi-carton shipments together. He applauds the carrier's continuing attention to the issue. "I would never do this if I weren't comfortable with it," he says.

Using the Internet Saves Time and Money

From its base in White House, Tenn., OshKosh B'Gosh's logistics operation manages activities that extend to the nation's borders and beyond. To manage the inevitable paperwork that accompanies international shipping, logistics managers have implemented a number of steps to streamline operations. "We've taken all of our documents and made templates," says Dennis Defnet, OshKosh's corporate transportation manager. This allows the company to send import documentation to its customs brokers via the Internet, eliminating the use of faxes. Not only does that improve speed and reduce the amount of paper, it has been a hit with customs officials, who appreciate the clarity of the documents. "It's done tremendous things for accuracy, speed, and pre-clearing shipments," Defnet says. In addition, he reports, the cost per document using the Internet vs. EDI is significantly lower.

By linking its systems with suppliers' and carriers' systems, OshKosh also has the information it needs to manage inbound shipments. Gaining visibility of inbound shipments is crucial, explains Joe Burgert, the company's director of distribution. OshKosh has a large number of contractors shipping from Asia. The distribution center may receive 20 or more ocean containers a day. Knowing what product is in each container allows distribution center managers to locate seasonal product quickly and determine the best order for unloading shipments.

For those international shipments, OshKosh relies on shipment arrival information provided by its customs brokers, Emery Customs Brokers and V. Alexander & Co. "We have visibility as to the contractor, the seasonality, and the number of units and cartons," Burgert says. "We have all that information sent to the receiving department at White House." The data, provided electronically, are loaded into spreadsheet files, which OshKosh managers can use for planning.

Defnet adds that knowing the time of arrival allows the company to manage warehouse space and time for unloading air and ocean shipments. "We know exactly where our shipments are, when they clear customs, when the trucking company is notified, and so on," he says.

Shipments arriving in Miami are handled somewhat differently. Containers are stripped at the port and shipments are loaded on trucks provided by OshKosh's dedicated fleet provider, First Fleet. Containers are returned in 24 to 48 hours from when they are received, substantially reducing the company's container costs. Defnet says he expects to implement a similar program for shipments arriving on the West Coast.