Supply Chain Overhaul With Warehouse/Transportation Management
$800 million publisher Houghton Mifflin was picking to order from packing slips… until the company found a WMS/TMS solution that saved 20% in labor and transportation.
Few students would root for the success of $800 million Houghton Mifflin. The Indianapolis-based publisher of college, high-school, and elementary educational materials employs more than 1,000 people nationwide to ensure that all kids, whether they're playing with crayons or learning to drink beer, get their textbooks. Despite the ill hopes of those students, Houghton Mifflin continues to tweak its business engines. Its latest overhaul: A warehouse management system (WMS) and transportation management system (TMS) implementation. The overhaul is designed to achieve higher productivity rates and save on transportation in the company's three main distribution centers.
Although Houghton Mifflin has warehouses nationwide, the company does the bulk of its distribution and warehousing from three main facilities. Two of these warehouses are located in Indianapolis (referred to as the east and west facilities), and take care of college and high school materials. The third facility is located in Geneva, IL and handles all elementary materials.
Overhauling Outdated Warehouse Processes
According to Marvin Logan, director of systems and engineering, many of Houghton Mifflin's old warehouse processes were "archaic." "We were picking to order from packing slips," he remembers. "Transportation was decided based upon transportation tables in the mainframe," he remembers. "We weren't even looking at order consolidation or opportunities for batch picking. There were very few conveyor systems — and a lot of walking around."
The catalyst for a new system began in 1996 when Houghton Mifflin acquired fellow publisher D.C. Heath. That acquisition brought with it the second Indianapolis warehouse. With three warehouses, Houghton Mifflin began to notice duplication of inventories in its facilities.
The company began planning a WMS/TMS installation in the third quarter of 1996. By January 1997, Houghton Mifflin had decided upon Mishawaka, IN-based Intrepa, a provider of supply chain management applications.
Houghton Mifflin was done with its first installation in June 1997, only six months after officially starting the project. Houghton Mifflin knew that the real payback for the system would be on labor associated with picking orders. In fact, 80% of the company's labor was devoted to the picking process. Logan described the installation as relatively uneventful, but did mention that it entailed a great deal of employee training. "We hired a full time and a part time person to do nothing but train new employees," says Logan. In fact, all employees who used the new system had to go through different levels of classroom training depending upon their positions.
New System Reduces Labor And Transportation Costs
The benchmark of the new system's success, however, is not the ease of the installation, but rather the improvements that the system has produced. Statistics compiled by Houghton Mifflin support that its implementation was a success. The company reports about a 20% improvement in direct labor and transportation savings. In one facility, the volume went up 50% despite no increases in labor.
The ultimate testament of the system's success, however, has been the new clients that Houghton Mifflin is attracting. Yes, that's right — clients. The new WMS/TMS has improved efficiency so dramatically that the company has actually begun to handle distribution needs for other publishers. Of course, Houghton Mifflin isn't helping competitors. The company is handling the needs of publishers who carry complementary products. Still, the scenario is unusual…and profitable. If Houghton Mifflin continues its successful warehousing and distribution, students everywhere promise to remain well-supplied — and thoroughly disgruntled.
Doug Campbell
Few students would root for the success of $800 million Houghton Mifflin. The Indianapolis-based publisher of college, high-school, and elementary educational materials employs more than 1,000 people nationwide to ensure that all kids, whether they're playing with crayons or learning to drink beer, get their textbooks. Despite the ill hopes of those students, Houghton Mifflin continues to tweak its business engines. Its latest overhaul: A warehouse management system (WMS) and transportation management system (TMS) implementation. The overhaul is designed to achieve higher productivity rates and save on transportation in the company's three main distribution centers.
Although Houghton Mifflin has warehouses nationwide, the company does the bulk of its distribution and warehousing from three main facilities. Two of these warehouses are located in Indianapolis (referred to as the east and west facilities), and take care of college and high school materials. The third facility is located in Geneva, IL and handles all elementary materials.
Overhauling Outdated Warehouse Processes
According to Marvin Logan, director of systems and engineering, many of Houghton Mifflin's old warehouse processes were "archaic." "We were picking to order from packing slips," he remembers. "Transportation was decided based upon transportation tables in the mainframe," he remembers. "We weren't even looking at order consolidation or opportunities for batch picking. There were very few conveyor systems — and a lot of walking around."
The catalyst for a new system began in 1996 when Houghton Mifflin acquired fellow publisher D.C. Heath. That acquisition brought with it the second Indianapolis warehouse. With three warehouses, Houghton Mifflin began to notice duplication of inventories in its facilities.
The company began planning a WMS/TMS installation in the third quarter of 1996. By January 1997, Houghton Mifflin had decided upon Mishawaka, IN-based Intrepa, a provider of supply chain management applications.
Houghton Mifflin was done with its first installation in June 1997, only six months after officially starting the project. Houghton Mifflin knew that the real payback for the system would be on labor associated with picking orders. In fact, 80% of the company's labor was devoted to the picking process. Logan described the installation as relatively uneventful, but did mention that it entailed a great deal of employee training. "We hired a full time and a part time person to do nothing but train new employees," says Logan. In fact, all employees who used the new system had to go through different levels of classroom training depending upon their positions.
New System Reduces Labor And Transportation Costs
The benchmark of the new system's success, however, is not the ease of the installation, but rather the improvements that the system has produced. Statistics compiled by Houghton Mifflin support that its implementation was a success. The company reports about a 20% improvement in direct labor and transportation savings. In one facility, the volume went up 50% despite no increases in labor.
The ultimate testament of the system's success, however, has been the new clients that Houghton Mifflin is attracting. Yes, that's right — clients. The new WMS/TMS has improved efficiency so dramatically that the company has actually begun to handle distribution needs for other publishers. Of course, Houghton Mifflin isn't helping competitors. The company is handling the needs of publishers who carry complementary products. Still, the scenario is unusual…and profitable. If Houghton Mifflin continues its successful warehousing and distribution, students everywhere promise to remain well-supplied — and thoroughly disgruntled.
Doug Campbell