Ozburn-Hessey Logistics Expands from Regional Warehouser to National 3PL

Memphis, Tennessee USA

February 3, 2004

By

Evan Armstrong

Key Personnel:

Shawn Barnett – Vice President, Business Development

Randall Coleman – Regional Vice President

Bob Spieth – CIO

Dan Ivens – Director of Transportation Systems Integration

With roots going back to 1951in southeastern warehousing, Ozburn-Hessey Logistics (OHL) is a recognized name in the 3PL industry. Through strategic mergers and acquisitions, OHL has built a national presence and expanded its service offering. OHL now has $227 Million in revenue and 61 warehouses totaling approximately 14 million square feet. By recently deploying G-Log’s transportation management system (TMS) “GC3” and integrating it with their warehouse management system (WMS), OHL has put a top-notch technology backbone in place for continued growth.

In a recent trip to Memphis, TN, we had the opportunity to visit three distinct distribution facilities. Each facility is ISO 9001:2000 certified and its individual operations are described below.

Our first visit was to a dedicated warehousing operation for Remington Arms. OHL leveraged the resources of its sister companies ProVenture Commercial Real Estate and Material Handling Resources, to build, configure, and equip the 300,000 square foot facility for Remington. The 3 ½ year old warehouse has strong security systems, is food-grade, has 32 foot high ceilings, and contains four-high wide-aisle racking in most storage areas.

Looking down the back side of the Remington Arms warehouse

The warehouse has separate caged-off areas for hazardous materials and high-value items. OHL uses Remington’s DMS WMS and maintains staff of 41 warehouse associates, six managers, and four customer service personnel to run the operation.

The OHL Memphis operation has made it possible for Remington to consolidate its distribution operations for four business units into one facility. This has lead to inventory reductions, increased order accuracy, and reduced transportation costs. OHL is responsible for maintaining approximately 9,000 stock keeping units (SKU’s). Products in inventory include firearms, ammo, fish line, clothing, accessories, and promotion items.

Repacking firearms into five-packs for retail distribution

OHL performs all picking and putaway with radio frequency devices (RF). This includes tracking firearms at the serial number level. OHL also offers lot control on most items.

Orders are received by OHL every morning for picking. Once picked, items are staged and audited against WMS order information using RF. After auditing they are shipped. ABC inventory slotting is utilized to maintain items with higher order volumes closer to shipping. Picking includes full pallet, case, and less than case quantities. OHL is also performing barcoding, special labeling, kitting, and packaging value-added services. These include building gun cleaning kits and five-gun packs of the same item from mixed pallets of firearms. The majority of products are being shipped to sporting goods and major department stores.

The second operation we visited was a multi-client warehouse where OHL is performing distribution for Phillips Medical Equipment and Medegen Medical.

Phillip's small parts are housed on shelves

Integrated pick, pack, and ship stations

In a separate secure 35,000 square foot partition of the warehouse, the Phillips operation is managed by 18 full-time personnel with normal operating hours from 6 A.M. to 11 P.M. 7,000 SKU’s are maintained in inventory. The majority of the activity involves the picking, packing, and distribution of approximately 350 daily orders for repair/spare parts for Phillip’s cardiac equipment division. Average orders contain 1 ½ SKU’s and the majority are sent small package.

OHL uses Phillip’s SAP-WMS in a paperless, all RF environment. OHL maintains lot control on all items and performs serial number capture on many of the items. OHL manages the products’ shelf life and expiration dates.

In addition to outbound distribution activities, OHL performs quality assurance inspections of inbound items to insure that the product received matches the purchase order. In some instances OHL repacks bulk items in usable quantities prior to putaway.

Medegen Medical has been an OHL account since June of 2002 and deals in primarily high-volume, low-value medical products. OHL maintains 11,000 SKU’s for Medegen Medical in 220,000 square feet of the warehouse and provides 70 warehouse personnel working in two shifts to distribute product worldwide.

Approximately 250 master orders per day are received via EDI and filled using OHL’s “Synapse” WMS. Synapse also provides Medegen Medical with access to view inventory and orders via the web.

As in the other OHL operations, all work flow is directed by the WMS and assigned to workers via RF. Approximately 70% of the picking is pallet pick and 30% is case pick. On average, orders are shipped within 48 1/2 hours from receipt. The total inventory is turned approximately once every three months. In addition to the outbound distribution, OHL receives inbound product from approximately 12 vendors and two manufacturing facilities. Inbound product is checked against electronic advance ship notices (ASN’s) before putaway.

The final 433,000 square foot facility we toured is utilized in handling e-commerce fulfillment for a major computer manufacturer and a large retailer, and distribution for two satellite television equipment providers. Each customer’s operation in the facility is supported by OHL’s Synapse WMS.

The first satellite TV operation occupies 170,000 square feet of the warehouse. Approximately 25,000 units are picked per day to fulfill approximately 5,000 orders. Serial numbers are captured for each item and most deliveries are made using multi-stop truckloads.

In approximately 30,000 square feet of the warehouse, OHL is performing kitting and pick and pack services for Rainbow DBS “VOOM” satellite HDTV systems. Each order requires 11 pieces to be picked and assembled into a kit.  Once kitted the items are packed out and shipped.

For the major retailer’s e-commerce fulfillment operation OHL maintains 4,600 SKU’s in 30,000 square feet of the warehouse. On average 500 orders are filled per day using an automated pick and pack line. OHL is also performing returns processing and liquidation services.

In a separate secured 100,000 square foot end of the warehouse, OHL runs an e-commerce fulfillment operation for a large computer manufacturer. Approximately 4-5,000 orders are filled each day. Items include desktop and notebook computers, printers, hardware, software, parts, and accessories. The fastest moving items are stored next to a main pick line.

Computer e-Fulfillment operations

Slower moving items are maintained in four-high racks and smaller high-value items are kept in a segregated into a 5,000 square foot caged off area. All items are picked, packed, and shipped via FedEx. Orders can be shipped up until 10 P.M. for next day delivery.

Beyond the operations, we were also given insights into OHL’s information technology strategy by CIO Bob Spieth and Dan Ivens – Director of Transportation Systems Implementation. OHL maintains an I.T. staff of 30 with most personnel performing network support and deployment functions.

In October of 2002 OHL acquired ODC--a logistics company with significant transportation management operations. In January 2003, OHL began looking for a solid TMS that would support its growth. After an extensive review of multiple systems, G-Log was selected. In August of 2003, OHL went live with G-Log in Atlanta. OHL has rebranded G-Log as “Transynd” for its customers. They currently have deployed Transynd for seven customers and anticipate having all transportation management customers on Transynd by July of 2004. OHL uses Sterling middleware to integrate Transynd with its WMS.

For WMS OHL has developed its two main systems: Synapse and WIS:DOM. Synapse is the latest system and WIS:DOM is being phased out. Synapse handles multi-client picking, task assignment, multiple picking methods, product substitution, and has multiple exception notifications for stock-outs, etc. The current version is written in Delphi with an Oracle database running on an HP 9000 server; however, a web-native .net version of the WMS is being developed for release in the first quarter of 2005. OHL’s goal is to provide customers with a solid integrated G-Log/Synapse systems solution to optimize their operations. Though solid operations and information technology OHL will continue to grow and increase its national presence. It is foreseeable that OHL could double in size over the next five years. OHL’s biggest challenge will be in changing its current brand as a regional warehouser and repositioning itself as the national player it has become.

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