Toy Group Australia (TGA) is one of Australia’s large toy wholesalers, supplying toys and premium nursery products to both independent stores and the major retailers like Target, K Mart and Big W.
When first meeting with Cross Docks Australia , TGA’s logistics and distribution operations were outsourced. After a period of rapid growth TGA identified that its continued success depended on outsourcing its logistics and distributions functions (including kitting and assembly work). However, TGA soon found that it was growing at such a pace that its chosen 3PL could not keep pace.
All communication between TGA and its chosen service provider relied on manual and outdated methods that were both inefficient and costly. Pick slips, invoices and despatch labels were printed out on a daily basis at TGA and couriered to the 3PL, who then packed them with the product.
This one-way system was inefficient and allowed absolutely no dialogue between any of the three parties involved. In fact the only way that TGA knew that the orders had been despatched was when clients did not call to complain. The system relied on negative feedback before anything happened.
Cross Docks Australia was charged with the task of reducing the costs associated with couriers and double handling of warehouse documents, and improving customer service by offering a transparent system that gave TGA access to order delivery and dispatch information.
To do this Cross Docks Australia and TGA’s IT service provider jointly designed and built a dashboard that linked directly into TGA’s ERP system. Cross Docks Australia then linked into the dashboard via a Virtual Private Network (VPN) from its warehouse facility in Preston.
The dashboard provided TGA the following key functionalities:
- Orders downloaded daily: TGA simply downloaded all orders electronically onto the dashboard. Once the orders were on the dashboard it then became Cross Docks Australia’s responsibility to print off all the picking slips and all the invoices.
- Real-time visibility: The dashboard gave TGA real-time access to information as to when the orders were printed, picked, despatched and more importantly, what the transport consignment note/tracking number was for ease of follow up.
- Reduced costs: The dashboard completely eliminated the need for costly daily couriers between TGA and Cross Docks Australia as well as eliminated the potential for documents to be lost.
- Improved staff utilisation: TGA’s accounts administrative staff were freed from performing laborious, time consuming tasks like printing warehouse documents, could instead focus on its core responsibilities like taking customer orders and providing pro active feedback to customers.
Improved customer service: Improved visibility led to superior customer service for TGA’s customers. The dashboard allowed the TGA customer service team direct access to order status, thus improving dialogue and providing its clients with real time order progress reports.
End result: Save time, drive sales, reduce inefficiency, and reduce costs.
Overall the positive feedback loop created by the dashboard gave TGA the assurance that orders were being processed in a timely fashion and confidence that its customer’s would receive the orders when they said that they would be delivered.
In addition to a tailored IT solution Cross Docks Australia implemented a number of key operational processes that benefited both TGA and its customers. At the beginning of the relationship TGA had expressed another key concern; order turn around time. Previously TGA orders were being processed within a window of 3 - 5 working days. Cross Docks Australia believed that this time lag could be dramatically reduced, by implementing some simple but critical processes. Working closely with TGA the turn around time was reduced to just 24 hours. The following strategies were employed to achieve this:
- Regular Status Updates: Cross Docks Australia arranged monthly meetings with TGA staff to gain a good understanding of inbound stock delivery schedules. Cross Docks Australia cross-referenced this data with the stock that was on back order and used this information to expedite back orders during the unloading process. Back orders could then be given priority and be dispatched, as soon as the stock was reconciled.
- Implementation of timeline’s and KPI’s: Cross Docks Australia and TGA worked together to implement time lines for receiving and dispatching orders. Key Performance Indicators (KPI’s) were introduced to ensure both parties adhered to the time lines set. Performance was measured and discussed on a monthly basis. This kept both parties accountable and allowed for clear communication if hurdles came up. Importantly this focus on timely order delivery was a huge benefit to TGA’s customers who now received prompt delivery of orders.
- Efficient staff deployment: Cross Docks Australia was aware that adequate staffing levels were required to facilitate rapid order turn around times. Once the time lines were set in place, Cross Docks Australia monitored the daily volumes and ensured that it had enough staff to accommodate the average daily orders. However to cope with order volume fluctuations, Cross Docks Australia employed staff members from operations to fill the void, or deployed them to other operations if the volume fell below the daily average.
A win for all three parties: was received.
The ultimate beneficiaries of reduced order turn around times were TGA’s customers, who received their orders in a timely fashion. The additional time on the shelves increased sales for retailers but also produced a flow on effect that resulted in additional and incremental sales for TGA.
Moreover, due to the transactional nature of the relationship between TGA and Cross Docks Australia, Cross Docks Australia also benefited from the incremental sales. With some careful planning and collaboration between TGA and Cross Docks Australia a tremendous improvement was achieved for all parties in the supply chain.
Accurate inventory management: precise picking and staff accountability:
Another benefit that Cross Docks Australia brought to the TGA relationship was a strong focus on inventory management. Cross Docks Australia introduced an efficient location system to manage the inventory with precision and accuracy. In addition to quarterly stock takes, regular cycle counting was done on the fast moving lines to ensure that inventory accuracy was maintained
Cross Docks Australia also implemented a rigorous picking and checking regime. Every order was double checked by another employee. Picking accuracy results were then measured and posted on the staff notice boards to ensure that staff remained accountable at all times.
Key products and customers were flagged as white glove and all of these products/orders were checked by a supervisor. All white glove orders were fast tracked through the system which ensured that they received preferential treatment at all times.
The final benefit that Cross Docks Australia bought to the TGA relationship was its simplified pricing solution. The simplified pricing solution allowed Cross Docks Australia to charge TGA one bundled charge for every toy unit despatched and one bundled charge for every nursery unit despatched.
This dramatically simplified the invoice vetting process for TGA eliminating the numerous separate costs traditionally associated with 3PL charges such as container unloading, pallet pick/despatch, administration rates, storage etc. This bundle charge system reduced the time consuming process of invoice reconciliation.
By working closely with TGA, Cross Docks Australia was able to ascertain TGA’s logistics needs and implement a tailored solution for the business. Rather then a one-size fits all; TGA attained a solution that ticked all the boxes; order status visibility, inventory accuracy and integrity as well as a simplified contractual arrangement.
With its logistics needs all stitched up, TGA could focus on what it does well, that is providing customers with a superior product and exceptional customer service. The flow on effect was to drive incremental sales and improve order turnaround time. The move to Cross Docks Australia confirmed to TGA that outsourcing these services to professional and competent service providers would allow it to focus on growing its business, whilst still having an eye on what is going on behind the scenes.