APL Logistics Works in Stride with Retailers
Lithia Springs, Georgia USA Site Visit
March 29, 2012
David Frentzel – Vice President, Global Contract Logistics
Rajiv Saxena – Vice President, Global Supply Chain Engineering
Bill Spiker – Vice President, Business Development, U.S. & Canada
Kyle Oslos – Director, Operations, U.S. & Canada
Dan Montgomery – Vice President, Account Management, Americas and LTAM Operations
APL Logistics Overview
APL Logistics is a top 50 global third-party logistics provider (3PL) and part of the $9.2 billion Singapore-headquartered NOL Group. In 2011, APL Logistics generated gross revenue of $1.3 billion and Core EBIT (earnings before interest and tax) of $69 million. It has a staff of 4,500 employees spread throughout 260 locations in 50 countries. APL Logistics derives significant revenues from five main customer industry groups: Automotive and Industrial Manufacturing, Apparel/Fashion, Retail, Food and Consumer Goods, and Electronics/Hi-Tech. Key customers include: ASICS, Avon, Colgate-Palmolive, Dow Corning, Electro-Motive Diesel, Emerson, Netgear and Stein Mart.
About 60% of APL Logistics’ revenues are from its warehousing, land transportation and automotive logistics services and the rest are primarily from its international logistics services which includes origin services, ocean consolidation, destination deconsolidation and transloading, and air and ocean freight forwarding operations. APL Logistics is expanding its land transportation services to an asset-based, domestic transportation management model with the addition of 1,000 new 53’ containers in 2011. This move to company-owned assets has resulted in 60% plus year-to-date growth for 2011 and has complemented the company’s contract and international logistics services. The Americas account more than 60% of APL Logistics’ revenues and represent 15.8M square feet of its total 24.7M square foot global contract logistics warehousing network.
Asia/Middle East and China are the next largest contract logistics geographies followed by Latin America and Europe. APL Logistics’ global warehousing network is detailed in the table below.
APL Logistics – Global Warehousing Footprint
APL Logistics provides customers with a mix of dedicated and multi-client value-added warehousing solutions. It has core capabilities in kitting, packaging, pick/pack order fulfillment, manufacturing support, vendor managed inventory (VMI), sequencing, light assembly, labeling and other value-added services. It couples these services with its international and domestic transportation management operations to provide customers with an integrated, end-to-end supply chain management solutions offering.
To support its contract logistics operations, APL Logistics utilizes a suite of warehouse management systems (WMS) including Manhattan Associates “WMi/PkMS,” Dematic/HK Systems “HKwm,” and its proprietary “WMSp.” Each WMS integrates with clients’ enterprise resource planning (ERP) systems as well as with the company’s suite of transportation management systems: “OTM” Oracle Transportation Manager, “TM400” and “LoadTech.” APL Logistics’ technology solutions include systems for labor management, yard management, shipment optimization, and supply chain visibility to facilitate full order-to-delivery supply chain optimization and tracking. Integration with clients’ SAP ERP systems is a core competency. Most of APL Logistics’ warehousing operations utilize radio frequency (RF) devices integrated with the warehouse management system(s) for paperless put away, picking and overall inventory management. RFID, voice data collection, integrated parcel manifesting and automated material handling solutions are also deployed when needed. In addition to APL Logistics’ suite of logistics management applications, it has also deployed an “Executive Dashboard” which provides its management team with a comprehensive view of business metrics including: financial, operational, safety, service, and other key metrics necessary to properly manage its operations.
APL Logistics invests significant resources in Lean Management and ongoing continuous improvement initiatives. It has a company-wide formal continuous improvement process which incorporates Lean and Six Sigma methodologies. Many of the efforts work towards reducing operational waste, streamlining operations, and standardizing its leading operational procedures and processes across its global network.
Just outside of Atlanta in Lithia Springs, Georgia, APL Logistics is running six value-added warehousing operations with a footprint of 1.7 million square feet and over 325 employees. In a recent visit, we had the opportunity to tour a high-volume automated retail consolidation and distribution operation which APL Logistics manages for large retailer Stein Mart. It is detailed below.
Stein Mart Retail Consolidation and Store Distribution Center Operations
APL Logistics has been working with Jacksonville, Florida-based retailer Stein Mart since 2009. Prior to its startup with APL Logistics, Stein Mart received small parcel shipments via UPS from over 1,000 U.S. vendors directly at its 264 stores. The stores received shipments without any advanced notification. Stores were also required to perform several functions to prepare the merchandise for selling.
Stein Mart designed a more efficient inbound supply chain management process utilizing 3PL providers, including APL Logistics. A 12 person startup and engineering team from APL Logistics assisted with facility design and implementation planning. Today, Stein Mart’s vendors ship inbound products to three regional origin consolidation centers, or directly to its three regional store distribution centers (SDCs) instead of via small parcel to its domestic network of 264 stores. Its consolidation centers are in Compton, CA; Secaucus, NJ and Atlanta, GA. At the consolidation centers, purchase order shipments of cartons from vendors are consolidated into truckloads destined to one of three Stein Mart regional SDCs based in Compton, CA; Dallas, TX and Atlanta, GA.
APL Logistics engineered, developed, and manages the Atlanta consolidation center and two of Stein Mart’s three regional SDCs located in Dallas, TX and Atlanta, GA. APL Logistics made a combined material handling and software investment of over $2.5 million for the three operations. The 40,000 square foot Dallas SDC supplies products to 64 stores in the Central U.S. The Atlanta SDC operation is the largest at 110,000 square feet and is responsible for supplying products to 167 of Stein Mart’s stores located in the Eastern U.S. Total annual outbound volumes from both operations are 6.1 million cartons and 66 million pieces.
Warehouse staffing in the Atlanta SDC varies significantly based upon changes in store product demand and ranges between 25 to 200 people. Store demand has a seasonal pattern with the highest demand volumes in March and from August through mid-October. The operation is high-volume and, on average, cartons received in the SDC are ready for shipping within 12 hours of receipt.
The first part of the process is for APL Logistics to scan barcodes on inbound cartons received from vendors at the consolidation center or SDCs. The information updates APL Logistics Manhattan PkMS warehouse management system which interfaces with Stein Mart’s order management system.
Carton label compliance is a major process efficiency driver and APL Logistics provides significant support to Stein Mart in identifying non-compliant vendors for continuous improvements.
Cartons received at the SDCs are individually scanned. A check is performed to ensure that an ASN (Advance Shipment Notice electronic data interface transaction) specifying the carton’s contents has been received from the vendor.
After the initial barcode scan, cartons move into the automated sortation system designed and implemented by APL Logistics for Stein Mart.
Cartons are scanned by an overhead scanner which captures the carton identification number and routes cartons to specific quality inspection stations or individual store staging areas.
Core to the operation are 23 quality assurance inspection stations and 10 flex stations which APL Logistics can deploy during peak demand volumes. At the inspection area, each item in the carton is individually scanned into Stein Mart’s inventory comparing the goods received to the information supplied on the ASN. Product quality and quantity conformance to purchase order information and other requirements such as point of sale price ticket labeling are verified.
As a value-added service, APL Logistics corrects price ticket discrepancies, inventory variances, and processes any damages as needed.
After inspection, items are repackaged and inducted back into the sort to be sorted to an individual store lane and staged with products destined to the same store.
Cartons destined to the same stores are either loaded loose into dedicated trailers for further consolidation at Stein Mart contracted pool points, or scanned to individual store pallets.
Once full pallets are built for a store, they are staged in lanes for outbound shipping. The majority are multi-stop truckloads to multiple stores.
At each store, each carton is scanned upon receipt and Stein Mart’s inventory is automatically updated. Individual stores receive regularly scheduled deliveries each week.
Five main accuracy key performance indicator (KPI) metrics are tracked for the Stein Mart SDCs: “Load,” “Carton,” “Unit,” “Ticketing” and “Compliance.” Load is an ongoing measurement of APL Logistics store order processing accuracy—the right product to the right store, damage free. For the 4th Quarter of 2011, APL Logistics surpassed the expected goal in Atlanta and Dallas. The other KPIs are based upon random APL Logistics process post audits which are in-turn verified by Stein Mart. For each of the other post audit metrics, APL Logistics is exceeding the accuracy KPIs for both the Atlanta and Dallas operations.
Since bringing the operation online, APL Logistics has worked with Stein Mart in making further continuous improvements. Process improvements have included cross-dock efficiency, non-conveyable product processing, carton handling reduction, high volume store processing prioritization, and labeling compliance projects.
APL Logistics Operations Summary
APL Logistics has a competitively differentiated service offering. It is leveraging its global contract logistics, U.S. domestic distribution and international transportation management capabilities in developing new 3PL business and has the key U.S., Latin America, and Asia operations needed to support intensifying global trade. Through its ongoing emphasis on engineering and continuous process improvement, it has developed advanced operations and solutions such as those for Stein Mart. We anticipate APL Logistics will continue to build upon its Retail business and leverage its skills in developing solutions for other vertical industry customers requiring significant value-added services.
Sources: A&A Primary Research, http://www.apllogistics.com/