ATC Logistics & Electronics

Leverages Leading Edge Value-Added Services to Fuel Growth

Fort Worth and Carrollton, Texas USA
April 24-25, 2006

By

Evan Armstrong

Key Personnel:
William L. Conley, Jr. – President
Art Smuck – Vice President of Operations

Jim Crawford – Vice President of Finance
Marc Sherman – Vice President of Information Technology

Jim Dickson – Director of Operations, Reverse/Test & Repair

Joel Shaffer – Director of Operations, Electronics Repair

Mike Lowry – Director of Operations, Nokia

Mike Simpson – Director of Operations Services

Randy Engel – Director of Operations Forward

Founded in 1996, ATC Logistics & Electronics (ATCLE) has been rapidly building business by leveraging its leading-edge value-added warehousing capabilities to attract high-tech and telecommunications customers. ATCLE currently operates four ISO certified warehouses and has over 2,100 employees. In 2005, ATCLE yielded net revenues of $153 million (having grown 147% since 1998). ATCLE’s core strengths are in high volume order fulfillment and advanced reverse logistics.

Operations Review, South Distribution Center

ATCLE’s 224,000 square foot Fort Worth south distribution center (D.C.) employs approximately 650 associates, runs 24/7 and provides fulfillment services for Cingular and ACS (AT&T Consumer Services). Approximately 800 stock keeping units (SKU’s) are kept on hand including: cell phones, VOIP routers, components and accessories. An estimated 60,000 orders are filled per day from three main pick modules and bulk storage areas. The majority of orders are shipped directly to consumers. RedPrairie provides the warehouse management system (WMS) backbone and it’s LENS “dashboard” web interface is used to provide visibility. Radio frequency (RF) devices are used to capture item information and to direct all tasks.

New product and refurbished phones are received through RedPrairie until midnight and are checked in against purchase orders. Heavy use of inbound advance ship notices (ASNs) has greatly improved receiving efficiency. Approximately 50% of ASNs come in via electronic data interchange (EDI) and the rest are primarily received through email. ASNs provide information on inbound product at the serial number, case and pallet level. Quality control checks are performed on refurbished phones to ensure that they meet customers’ requirements. Any failures can be reworked or sent back to the respective OEM for credit. The WMS directs putaway and provides for task interleaving.

There are three main pick modules in the D.C. The Cingular direct fulfillment pick module is used to process wireless phone and accessory orders. Items are picked to carton and then move via an automated conveyer to a pack out line where dunnage is automatically placed in the carton and automatically taped. As a value-added service, ATCLE is “burning” (programming) SIMM (single in-line memory module) cards that are inserted into the Cingular phones.

The second major pick module we viewed is dedicated to fulfilling similar Cingular orders; however, ATCLE is not required to install SIMMs. This allows pickers to pick to carton without any intermediate steps and increases productivity.

The final major pick module is dedicated to fulfilling ACS orders.

In additional to the pick modules, the bulk storage area is used to pick large multiple line item orders destined for retail locations. Items are picked from racks and gravity racks and orders are manually packed out.

ATCLE has created a real time custom application at the interface level to provide for rate shopping between FedEx and UPS based on required service level. Because of ATCLE’s high shipping volumes, UPS and FedEx maintain onsite personnel for loading out shipping containers. ATCLE can ship up till 10 P.M. for next day delivery to most points in the U.S.

 

As a value-added service for its telecommunications customers’, ATCLE processes warranty exchanges for cellular phones. ATCLE ships replacement phones prior to receipt of the returned phone. Through its process reengineering efforts, the number of phones replaced under warranty and not returned to ATCLE has been reduced to 2%.

ATCLE maintains an onsite customer service call center operation to handle order entry, warranty exchanges, and returns authorization. The customer service center runs in two shifts with an approximate staff of 20 and is scaled as necessary.

Operations Review, North Distribution Center

The North Fort Worth D.C. has 375,000 square feet and houses the Cingular and Nokia return and refurbishment operations, T-Mobile direct fulfillment, and LG packaging operations.

Cingular Returns

Using smart labels customers mail returned phones to USPS mail centers. The parcels are picked up and consolidated into gaylord containers for truckload delivery into ATCLE’s North D.C.

Returns are processed via three lines. Returned items are received and the product serial number is scanned to cross-reference the return material authorization number (RMA). Next the product is checked for the type of return. Cell phones are “powered up” to check their status, and a disposition code is assigned in the WMS for the returned product and if applicable, credit is authorized for retailers.

To provide Cingular a greater return on investment, used product is reconditioned and sold as refurbished, or is liquidated if it cannot be refurbished. Failed phones are returned to OEMs for credit. Cell phone testing and reconditioning is handled by 12 lines of personnel on three shifts. Reconditioning can include reprogramming phones, replacing faceplates, and many other detailed enhancements to fully refurbish the phone. All refurbished phones are assigned a new customer specific serial number and reboxed for distribution.

Cingular Special Project

In a separate 75,000 square foot section of the D.C., ATCLE is performing data scrubbing on Cingular phones that are to be sold on the secondary market. This ensures that any personal data related to a prior phone’s owner is removed. Once the data is removed, the phones are reprogrammed (“re-flashed”) by ATCLE and distributed.

Nokia Returns

ATCLE provides returns handling services to Nokia covering North America. Cell phones are returned to the ATCLE North D.C. and checked in. Disposition codes are assigned and phones needing refurbishment are segmented by the refurbishment level. Level one refurbishment is performed in the North D.C. Level two and three refurbishment is performed in Mexico.

LG Packaging

As another value added service, ATCLE is performing packaging services for LG electronics. The packaging includes LG private label packaging and packing of LG products for sale by Verizon Wireless.

T-Mobile Direct Fulfillment

In a separate section of the North D.C., ATCLE is performing direct fulfillment of T-Mobile phones and accessories. This operation is very similar to the Cingular direct fulfillment operation. Approximately 5,000 orders are picked, packed, and shipped each day. To ensure customers are satisfied with their orders, ATCLE has implemented an intensive quality control program.

Thales Returns

ATCLE recently won a contract to handle all North American returns for Thales. Thales is best known as the maker of Magellan personal global positioning systems (GPS). In this reverse logistics operation, ATCLE is receiving returns, de-kitting them, and determining disposition. If any refurbishment or remanufacturing is needed to move units back into saleable inventory, ATCLE has the capabilities in-house to perform the repairs.

Electronics Operations, Carrollton, TX

ATCLE’s Electronics call center and remanufacturing operation in Carrollton, TX occupies 39,000 square feet and customers served include: GM (Delphi and OnStar), Ford (Visteon) and Thales. ATCLE’s Electronics operations had 209 employees in 2005.

Automotive electronics operations focus on warranty administration and the remanufacturing of car radios, CD-players, “OnStar” systems, and dashboard displays for car dealers.

Oracle’s ERP system is used as the operational backbone for automotive customers and RedPraire’s WMS is being used for the Thales remanufacturing operations.

ATCLE’s electronics remanufacturing operation performs diagnostic testing and intricate refurbishment services. Each customer has a separate remanufacturing area within the warehouse. Remanufacturing service stations provide tools for rebuilding and refurbishing the various electronics systems.

The process for GM and Ford products starts in ATCLE’s onsite call center. A request is received from a car dealer for a part. This triggers the warehouse staff to locate and pick the item. On-hand inventory is used to fulfill the order for next day delivery.

Once the replaced product is received from the dealer at ATCLE it is scanned and matched to the original RMA. It then goes into testing. Multiple diagnostics are performed using a myriad of specialized testing equipment. Based upon the test results the equipment can be refurbished, remanufactured, or salvaged. Remanufacturing can include replacing a whole cassette drive to soldering replacement resistors onto a circuit board.

Approximately 500 units are processed each day at the automotive operation and the Thales operation is remanufacturing approximately 90 units per month. To meet its customers’ next day delivery requirements the remanufacturing operation ships all products by 7 P.M. each night.

Thales Remanufacturing Station
With a focus on complicated reverse logistics services, process reengineering, and high volume distribution, ATCLE has been able to grow by servicing customers demanding “six-sigma” standards. The operational processes it has developed will be the cornerstone to its continued growth.

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