Fuji Film Chooses UTi as Distribution Manager Location: Hanover Park, IL

May 3, 2006

By

Richard Armstrong

Fuji Film found a solution to its U.S. warehouse and distribution problems by outsourcing them to UTi Contract Logistics. UTi now operates two distribution centers in Edison, NJ and Hanover Park, IL.

The Edison operations are fully functional shipping more than 800 orders a day. A display building/kitting line has been added rounding out the offering.

The 220,000 square feet operation I visited in Hanover Park, IL opened five months ago and now ships twice the orders shipped before the change. About 70% of orders are LTL and 30% are package shipments. Fuji has kept the northern end of the building for its own administrative functions.

The primary products shipped from Hanover Park are color paper, film, cameras, chemicals and mini-lab film processing machines. There are about 5,000 SKUs and over 13,000 rack locations. The customers are major retailers like Wal-Mart, Eckerd, Ritz and Best Buy.

On time delivery of exact orders is critical to preserve shelf space at retail customer outlets. Three key performance indicators are used to control this requirement. Orders shipped on time including compliance with “must ship” orders, shipping accuracy as measured by cases delivered without exception, and orders shipped compared to orders scheduled. The targets for these KPIs are 99.6%, 99.9% and 100%. UTi is meeting these measures on a regular basis.

Other KPIs cover safety, housekeeping, cost, productivity, and inventory accuracy. UTi and Fuji measure productivity in cases shipped per variable labor hour. Inventory accuracy requires a very close match (99.9%) between inventory dollar value counted and booked. This variable is measured using daily cycle counts. Costs must meet monthly budgets.

Conformance to the KPI requirements is made by a staff of 40 warehousemen operating one staggered start 13 hour shift. This workforce functions as a team. All of the employees and managers interact on a friendly, first name basis. All watch the KPIs closely and measure their individual success.

For the most part, the employees were in place before UTi took over. Their pay rates stayed the same and satisfaction levels have increased. Operating improvements are due to UTi’s process improvement and employee management methods. I got the impression that the guys working in the warehouse enjoyed it. It’s an impression I don’t often get. Everyone is on a first name basis. Conversations are equal to equal and this work place has harmony.

UTi’s process control and improvements come as standard operating procedure. At most warehouses, customer service, human resources and financial controls are displayed as basic performance systems.

UTi PERFORMANCE SYSTEMS

Performance system conformance is measured regularly at all UTi Contract Logistics locations by operations audits. Audits are conducted for compliance with contract, scope, safety, security, personnel, customer service/quality, financial aspects and operations. Process Improvement Manager, John Barrett performs most audits. He is also building profiles for each location he audits. The profiles are being accumulated and matched for a centralized operations file at UTi Contract Logistics headquarters. Development of these files allows for better account management, reporting and systemization of quality operating results.

As UTi tightens its processes, it improves its service uniformity at a high quality. Also, the centralization allows for consistency of replication for new locations. As Bill Gates says, “The key to sustained growth is consistent execution on service requirements. Business is not a ‘catch and release’ program. It does us no good to be reeling them in one side of the boat and tossing them out the other side.”

UTi’s operation for Fuji at Hanover Park meets the test. Within a year, UTi will probably manage all Fuji North American supply chains from manufacturer to customer.

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