Houghton Mifflin has been a leading publisher of educational resources for over 150 years. Based in Boston, the company has a workforce of more than 2,800 employees, and reported net sales of $862 million in 1998. Houghton Mifflin publishes textbooks, instructional technology, assessments, and other educational materials for the elementary, secondary school, and college markets. The company also publishes an extensive line of reference works, fiction and non-fiction for adults and young readers, and educational software and video.
After a merger with publisher DC Heath in 1996, Houghton Mifflin almost doubled in size. Besides its current distribution facilities — one in Geneva, IL and one in West Indianapolis, IN — it now had a third facility of approximately 500,000 square feet, located in East Indianapolis. Both the Geneva and East Indianapolis locations distributed educational resources. The other facility handled the distribution needs of the company's trade division.
Houghton Mifflin realized it needed to realign the activities of the two locations handling educational resources in order to eliminate existing redundancies and increase efficiency. In addition, the company was in a steady growth period, and the East Indianapolis facility was at capacity. Between 1996 and 1997, the publisher separated its inventory, moving elementary educational products to the Geneva location and distributing high school and college material from the East Indianapolis warehouse.
Houghton Mifflin Focuses On Increasing Productivity
With the inventory realigned between the two facilities, the company then focused its attention to increasing productivity by revamping its warehousing methods. Up until then, the facilities operated in a manual environment, where workers hand-picked orders. With the increased volumes brought about by the merger, Houghton Mifflin knew the time had come to automate its warehousing system.
"Our processes were very antiquated for a modern-day book distributor," said Marvin Logan, Houghton Mifflin Director of Systems and Engineering. "So, we went in search of a warehousing management system that would help us meet our short-term and long-term goals."
Houghton Mifflin evaluated three warehouse management systems (WMS) to determine which would best meet its needs. A core group of six people from the distribution executive committee chose Intrepa and its product, Logistics PRO, an integrated warehousing and transportation management system.
"We liked the flexibility the software offered," Logan said. "And, we were looking for a package that had an integrated connection with a transportation system. Logistics PRO is strong in that area — that was attractive to us. The other companies involved did not have the expertise in transportation that Houghton Mifflin required."
Phased Implementation To Control Impact On Customers
Houghton Mifflin took a phased approach to implementing Logistics PRO to ensure that customers and the divisions it supported were not negatively impacted. The system was implemented in one facility at a time, rather than upgraded together.
"Our approach was very non-traditional. Most implementations begin with the back-end, focusing on receiving and returns, then order processing. We did the exact opposite. We started with order processing, including shipping and transportation, then moved to returns, receiving, and other inventory functions. We wanted to use our warehouse and conveyor system as quickly as possible."
Houghton Mifflin Realizes Increased Volume And Inventory Accuracy
In just six months, the system has already paid dividends for Houghton Mifflin. After the implementation, the publisher shipped 80% more volume with the same number of people at the facilities. Inventory accuracy rose to 99.99%, eliminating the need for physical inventory counts. Now, the company relies on cycle counting, which has been approved by its auditors.
In addition, the new system has made life easier for customer service representatives, who handle much fewer questions regarding the status or inaccuracy of an order.
"We've taken the information and processes within Logistics PRO beyond where we thought they could go. We have added a lot of value to the whole process. Our initial project proposal was for a two-year payback, but I think we have far surpassed that. There is no way to say for sure because we've gotten much more benefit from the system in various areas we never considered."
Logan cited an instance where customer service wanted to determine what air freight shipments were being sent out for samples. "We were able to fulfill the request in one day. Before, it would have taken us a month to compile that information," Logan said. "Then, we took the information one step further and used it to determine how we could reduce our air freight shipments." With the improved access to information, Houghton Mifflin has also been able to negotiate better traffic rates with carriers, since the company now knows its exact volumes and schedules, and can plan ahead.
New Capabilities Expected In The Future
Since the implementation of Logistics PRO at the two facilities, Houghton Mifflin has also upgraded the third warehouse that supports trade distribution to book retailers. With the new system in place, the facility has been expanded to include client distribution for smaller publishers. In the near future, Houghton Mifflin plans to include an RF directive and paperless picking. In addition, the company is working with Intrepa to add voice-activated picking functionality.