ROI in 3 months!

Avocent  Corporation leverages Catalyst' s expertise in SAP WMS and process improvement and achieves ROI in 3 months.

Avocent Corporation is a leading global provider of IT infrastructure management solutions for enterprise data centers, small/medium businesses and branch offices. Its customers include Microsoft, Intel, HP, Dell, Time Warner, GE, Exxon Mobile, FedEx and Home Depot, among many others.

The Catalyst team worked closely with Avocent to understand its requirements and priorities. "Like most fast growing companies, our primary requirement was simple - just give us the flexibility to do it all," said Gothart. "Realistically, though, we were willing to settle on getting the objectives accomplished with the greatest benefit to the business. That's where Catalyst's SAP WM expertise really demonstrated its value."

The Catalyst team quickly realized the greatest opportunity for ROI was in Avocent's outbound process. As a result, Catalyst focused its optimization efforts on how SAPConsole combined with standard SAP functionality could help them execute orders more effectively. One of the goals was to ensure that the solution could adjust to the fluctuations of Avocent's demand levels to reduce or eliminate corresponding fluctuations in labour costs. Catalyst built an RF picking transaction to handle direct delivery picking, as well as work with the warehouse management groups in combination with two-step picking, so that the user's path drove levels of demand, not the limitations of the system.

A second opportunity for improvement was carrier integration in its shipping stations. Avocent works with multiple small parcel and LTL couriers, but did not have the ability to perform packing and shipping tasks in a timely manner, or within its SAP framework. The team opted to deploy the Catalyst XPS solution to address these issues.

Catalyst XPS, a cross-carrier packing and shipping system, is a comprehensive, powerful and easy to use solution that simplifies all aspects of packing and shipping by integrating seamlessly with SAP and leading third-party parcel carriers systems to deliver complete visibility and control over all aspects of order fulfilment - from the warehouse to the customer.

"Catalyst XPS allows our users to pack and ship in a streamlined fashion without ever leaving SAP," said Avocent Systems Analyst and Logistics Kim Jaynes. "Previously, the process moved faster than the system resulting in delays and the need for increasedlabor.  XPS has eliminated the delivery locking issues experienced in the past  and provides us with the traceability we didn't have with our old system."

In addition to the delivery locking issue, Avocent also needed to decrease the number of scans to track outbound serial numbers. "When volume is high, time works against us," said Jaynes.

XPS was able to address this need as well, using 2D barcodes to provide integrated serial number capture from individual unit boxes to multiples - or even up to the pallet level. Among the many advantages: captured serial numbers, as products, can be shipped out, while still allowing the information to be readily accessible in SAP and the customer's account for greater accuracy in later reporting, including return material authorization warranties. With XPS, Avocent can now improve the speed and delivery of service for product returns, repair or refunds. This ability, combined with a RF Handling Consolidation transaction, helped turn what was formerly a bottleneck in Avocent's distribution operations into a competitive advantage, particularly during periods of high volume.

RESULTS

"The ROI was gained in the first quarter. The impact was solid and noticed." --Robbie Gothart , Distribution Manager, Avocent

- Initial average daily throughput $5.5M
- Needed to accommodate fluctuating inventory levels and expedite service
- Implemented X PS and SAPConsole
- Solution implemented in the US and Ireland distribution centres.

KEY RESULTS

By leveraging Catalyst' s expertise in SAP WMS and process improvement, Avocent was able to:

- Almost double daily shipping throughput
- Cut cycle times by 50%
- Reduce its warehouse workforce 22%
- Receive products on-demand to provide products faster to their end customer
- Streamline the order fulfillment process
- Realize ROI within the first 3 months

Catalyst enabled Avocent to do everything - at least on their list of top priorities - and do it much more efficiently and cost effectively than expected. Once the solution was fully in place, Avocent was able to meet the challenge of growing and fluctuating demand head on - without building one additional square inch of physical space.
 
Avocent now has wireless, paperless processing in its distribution centres throughout the entire process - from order receipt to shipment. By utilizing Symbol wireless handheld devices to interact with Avocent's SAP ERP system, the company can more easily track and process all products in the distribution centre. The elimination of paper and the physical transfer of orders throughout the warehouse meant stronger internal controls and inventory management. The company also saves money by reducing paper and printing costs.

Distribution centre operations are also significantly streamlined. Order fulfilment is now a two-step picking process, in which an aggregated count can be generated to create the most efficient picking path for the warehouse operator. Receipts into the warehouse and transfer orders are now dispatched to wireless handheld devices for system-directed put away.

"Avocent's order processing capabilities have benefited greatly from this initiative," said Gothart. "Even large orders can enjoy same-day turnaround. This would have been more challenging under our earlier system."

Prior to the updated system, the throughput at Avocent's main North American distribution hub topped out at $5.5 million per day. The company's current maximum throughput is nearly double that. Avocent can now better serve its distributors because cycle times are cut in half. These companies can now receive orders on-demand, enabling them to provide products faster to their end customers.

Avocent was not only able to increase its throughput capacity and reduce its cycle time, but they achieved it with fewer workers in less time - the new system enabled Avocent to increase its performance while reducing its warehouse workforce by 22 percent. This contributed to both immediate and long-term return on investment (ROI) from the project.

"We believe we have achieved the biggest bang for the buck with this initiative," said Gothart. "ROI was achieved in the first quarter of implementation. The financial impact was solid and noticed."

Catalyst worked closely with Avocent every step of the way from design throughout its project implementation. "Though the project work was challenging and time consuming, the Catalyst group partnered with Avocent to work in a team fashion," said Gothart. "We believed this contributed to the development of a total solution that addressed our unique needs and enabled us to achieve successful results within our timeline and budget."

Following the successful implementation at its United States headquarters, Catalyst supported the rollout of SAPConsole and XPS at its EMEA Operations Center in Shannon, hand to assist in them in their efforts.