Sales volumes at McNairn Packaging are growing 10% to 15% a year. That clip would be welcomed at most companies — and it is at McNairn. But McNairn has some special challenges.
The Whitby, Ont.-based manufacturer of submarine, hamburger and French fry wrappers owns two 100,000-square-foot production and warehouse facilities in which you’ll find, on any given day, about 600 types of finished product and up to 2,000 rolls of raw material. We’re not talking little rolls of toilet paper or decorative ribbon, but four million to six million pounds of foil and paper in an array of colors and weights. Despite those numbers, McNairn’s inventory accuracy is 98%, and it hasn’t added warehouse staff in more than two years — thanks to wireless technology.
Has the first wireless wave washed over your company yet? If it has, then your employees are probably using BlackBerrys to communicate with colleagues and might even have Wi-Fi built into their laptops, allowing them to surf the Web or check e-mail near wireless “hotspots.” Sounds advanced, but your competitors might already be riding the second wave, tapping wireless for more strategic applications that are helping them trim expenses, improve service and generate sales opportunities. And they’re doing it at surprisingly low costs.
McNairn’s system, which comprises six wireless bar-code scanners and six ceiling-mounted receivers at each location, cost just $35,000 per facility. Employees label rolls of material as soon as they arrive at the plant, then record the location of each roll by scanning the bar codes of the item, plus the bins in which they are stored. The information is instantly picked up by the receivers and routed into the firm’s enterprise resource planning system. Every time a roll is moved from one place to another — say, from storage to the plant and back again — another scan is completed. “Nothing moves unless it goes through the gun,” says Larry Coe, McNairn’s manager of information systems. Should anyone want to know the location of a roll, they can easily look it up.
It doesn’t sound like a huge innovation until you understand how inventory was tracked in the past. The movement of hundreds of items, which are stored in more than a thousand bins, was recorded by hand. Knowing that the system was slow and prone to human error, employees didn’t give it their full attention, causing more inaccuracies and delays. “The discipline to record things has gone way up,” says Coe. “They figure, ‘We’ve got tools that will work. Let’s do what we’re supposed to be doing’.” And when an item couldn’t be found, an employee would have to jump into a safety cage on the front of a forklift, and be lifted up and down racks of storage bins. “Walk out there any time and somebody was out there in a cage looking for something,” says Coe. “They don’t do that anymore.”
The results: despite a 25% to 30% surge in production volume in the past two years, McNairn has been able to hold its warehouse staff steady at six, inventory accuracy has climbed to 98% from 88%, and customers are receiving orders faster.
Haulage is one of the last industries where you’d expect to encounter a technological revolution, but wireless is transforming the business of 1-800-GOT-JUNK? The Vancouver-based junk removal service is delivering speedier, friendlier service with the help of the lowly cellphone.
Every day, GOT-JUNK takes about 600 orders over the phone or Web, which must be relayed to the firm’s 118 franchisees across North America. Before wireless, every morning at 7:30 most drivers would pick up their itineraries from their local franchise office, or retrieve them online by tapping into GOT-JUNK’s electronic booking system, JunkNet. Some computerless drivers would go to the local Kinko’s or Internet cafÃ© to pull their schedules, while others would wait for faxes to arrive on machines paid for by the franchisees.
Worse, additions and changes to the itineraries, which number about 400 a day system-wide, had to be communicated by calling the drivers directly. “More often than not, we wouldn’t be able to get hold of the truck, because the guys would be hauling a fridge out of a basement or their phone would be sitting in the truck,” says Cameron Herold, GOT-JUNK’s VP of operations. “So call-centre staff would wait a half-hour and call them back again [and verbally confirm the new booking.]”
Not anymore. GOT-JUNK’s drivers still carry cellphones, but today the company’s eDispatch system delivers all information — from schedule changes to how a customer would like to pay — as text messages to the drivers’ mobiles. When a new order comes through, a driver simply presses a button on the phone to accept or refuse the job. Drivers have 30 minutes to respond, after which they receive a voice call.
In all, says Herold, eDispatch has improved responsiveness to orders, saved drivers those early-morning trips to the office and reduced the number of call-centre hires required to accommodate GOT-JUNK’s amazing growth of 100% per year for the past five years. Factoring in the time required to make outgoing calls and long-distance charges — but excluding the 300,000-plus sheets of paper on which a year’s worth of schedules were printed — Cameron calculates that eDispatch saves GOT-JUNK about $200,000 a year. And it cost just $9,000 to develop, $5,000 to replace incompatible cellphones and $2,400 annually to maintain. JunkNet, the system to which eDispatch is tied, cost no more than $750,000 to build and expand over a few years.
That doesn’t mean you should just run out, buy the first wireless gadgets you see and jam them into your organization. Do that, and chances are you’ll end up with headaches and a lot of worthless technology. Coe advises looking for a system with good technical support that doesn’t need constant rebooting and updating. “We’re manufacturers and distributors,” he says. “We’re not computer people, so we got something that is designed to work.”
You will also benefit from having a sympathetic supplier, someone who understands which wireless devices will seamlessly integrate with your current computing system. Coe points out wireless equipment is available from all kinds of vendors at similar prices, so it’s up to you to find the one that will work best with you and is in the business for the long haul. “Are they going to be around for awhile?” he asks. “You’d hate to buy something and then a few years later the supplier is no longer around.”
Don’t discount the value of training, either. Herold says GOT-JUNK took for granted that its employees would know how to use their cellphones with eDispatch. Wrong.
He adds that GOT-JUNK managers try to envision a technology project with the clarity of a movie before building anything. Next, they map out the project and then create functional specifications that will make it work. As for determining your starting point, Herold believes it’s okay to dream. “There’s all kinds of things wireless can be used for,” he says. “I think people just need to sit down, blue sky and really think about it for awhile, and then bring it backwards and make it happen.
© 2004 Charles Mandel