Hair care company ups supply chain efficiency
in North America has upgraded its supply chain in an effort to
improve efficiency. As a result supply chain specialist Bax Global
has helped the company shift from using distributors to a
The cosmetics company, which did not want to be named, had built up a supply network as a result of a number of acquisitions forged over the years. As a result it had forged its supply chain system through a distributor, due to its somewhat haphazard evolution.
Bax said that it was given a tight implementation time of just 50 days for the new system, a challenge that was compounded by high shipping volumes that included 800 stock-keeping units, making 21,000 to 28,000 picks per day. The products range in size from gallon jugs to small tubes of lipstick - items that were often part of the same order and require same-day shipping.
Adding to the challenge was a 99 per cent order pick accuracy, real-time inventory data and specific storage and handling requirements of hazardous packaging and materials and the scalability of the system to handle increased volumes due to company growth.
Californian-based Bax set about designing, implementing and operating the new distribution network to supplement the company's current distribution network, together with a returns handling operation.
The preliminary stages included a 'harmonization study' that concluded it could achieve targets in excess of those proposed by the cosmetics company. This meant that the company's desired 98 per cent on-time delivery levels, could be be upped to 99.8 per cent.
Elsewhere Bax suggested that the customer could leverage the new model to lower its delivery and distribution costs. This included a third party logistics shared facility at Bax's multi-purpose Toledo hub.
Bax also proposed to change weekly full-carton orders to same day order shipped by shipping orders directly to salon customers. Pre-glued die cut cartons were used to speed up assembly and induction, which in turn helped to increase distribution time by 10 per cent.
Facility start-up was introduced within 45 days, while the conveyor system installation took 60 day to implement. In total the project took five months to implement, from its inception.
According to Bax, the result has been an order accuracy of 99.8 per cent, inventory accuracy of 99.9 per cent and receiving-put-away of 99.5 per cent. Likewise the volume of activity increased by 15 per cent, leaving room for a 25 per cent expansion of business volume within the space of the next quarter.
The total capital investment for the project was just under $500,000, Bax said - an investment that is expected to have a payback of two and a half years at current business volumes.