SAP Retail Forum: Harry & David receives warehouse management gift

Having two of something is not always better than one, especially when it comes to warehouse management systems.



“We wanted to provide the quickest means to manufacture and fulfill orders in the most cost-effective manner,” said Heather Bothern, manager of SAP applications for Harry & David, during a session at the recent SAP Retail Forum in Miami. “We needed full visibility of all materials in all locations.”



As a vertically integrated retailer, Harry & David manages every step of its supply chain from source to shelf (or customer order). This includes growing its own fruit and running its own bakery. The specialty gift retailer, which was purchased by 1-800-Flowers.com in 2014, also operates across numerous channels, including catalog, mail order, call center, store and e-commerce.



To handle this complex supply chain, Harry & David had previously operated two separate warehouse management solutions, one for West Coast operations and one for East Coast operations. As an established user of an SAP enterprise platform, the retailer decided to try to simplify warehouse management by interfacing both systems to its SAP ERP solution.



“We built 40 to 50 interfaces between the warehouse management systems and the ERP system,” explained Bothern.



Harry & David found this patchwork system did not provide sought-after benefits in areas such as inventory transfers and batch controls. Further complicating matters was the extremely seasonal nature of the retailer’s business.



“Seventy percent of our revenue comes during three weeks in the holiday season,” said Bothern. “We send 400,000-plus Federal Express packages a day for those three weeks. We add four to five extra distribution centers to our two main distribution centers and add about 10,000 seasonal workers to our 1,100 full-time distribution employees.”



Harry & David decided to implement an SAP enterprise warehouse management solution. Initially, the retailer intended to go live in July 2012, but determined the business users didn’t yet fully understand the new system. Live implementation was delayed to October 2012, and then to February 2013 to avoid interference with the all-important 2012 holiday season.



“It was a smooth implementation,” said Bothern. “We shut down on Thursday night and were up and running by Sunday. We didn’t miss a customer cut-off and there were no lost shipments.”



However, it took a longer-than-expected three months to stabilize operations on the new warehouse management system, and during the 2013 holiday season inventory accuracy decreased from its normal 99%-plus mark to 88%.



Harry & David analyzed the situation in 2014 to ensure inventory accuracy would return to normal in time for the 2014 holiday season. Bothern said the retailer made some key discoveries.



“Best practices do not always work in a real-world warehouse situation,” she said. “Look at what your workforce is capable of. We needed systems that were quick and easy to use.”



By eliminating arbitrary best practices that did not fit its specific business needs and generally simplifying and streamlining warehouse management technology and processes, Harry & David was able to return to 99% or higher inventory accuracy for the 2014 holiday season.



“I didn’t have to sleep at the office,” she said. “I consider that a success.”