Bill Stover (left), director of supply chain operations; Gregg Sayers, director ofsupply chain transportation; and Rick Schart, vice president of supply chain, Stein Mart.Cy Cyr/Getty Imageswhat’s now a cohesive supply chain teamfocused on providing support to theirmerchant, store, and vendor partners—and, of course, keep costs in line.So, what are the total cost savings? Tryabout $20 million annually; and that’songoing, year after year, says Schart.Defining the changeHistorically, Stein Mart was shippingfreight directly from its vendors to its260 stores via small parcel carriers.Even though the parcel carriers weredoing a commendable job of deliveringthe merchandise in a timely manner,this process had its drawbacks.Compliance with packaging and floorreadyguidelines was difficult to monitorand measure, freight visibility was limited,and store delivery appointment times werenot consistent and often occurred whilestores were open for business.“From a cost standpoint it was expensive,”says Sayers, who adds that thesecosts were not limited to moving the cartonsfrom vendor to store. “There wereexpenses at the stores to get the merchandiseready to sell; and there werealso problems with managing the receiptof our product and our ability to reconcileanything that was not in compliance.”In 2008, at the low point of the GreatRecession, many U.S. businesses werehurting. Stein Mart made a consciousdecision to review all expenses andmake the organization work more efficiently.Part of that decision was to takean overall look at its supply chain andto ultimately move to a more sophisticated,cost-effective model.“Based on the business review thatoccurred in 2008, and with full supportof the organization, we began to transitionour supply chain,” says Schart. “Iarrived in November 2008, and Bill andGregg were my first hires. We were confidentwe could pull it off, but we wereconcerned how fast we could pull it off.”According to Schart, it came down tothree keys: getting the right people onboard to develop and manage this newstrategy; finding the right carrier and 3PLpartners; and partnering with the rest ofthe Stein Mart organization, especiallyIT, to align and support the new concept.The groundwork for launching thenew supply chain took about six months.It involved educating vendors on newprocesses and expectations, workingwith finance to develop systems to capturecosts, launching technology (includingEDI for billing), as well as hiring anew set of 3PLs and TL and LTL carriers.“Those six months were grueling,but worth it,” says Sayers. “We all agedin dog years in those six months.”<strong>October</strong> <strong>2011</strong> | WWW.LOGISTICSMGMT.COM <strong>Logistics</strong> <strong>Management</strong> 25
NASSTRAC Shipper of the YearPutting it to workIn May 2009, Stein Mart launched itsnew supply chain network. The fourwallnetwork is comprised of consolidationcenters (CCs) and stores distributioncenters (SDCs). The inboundtransportation network is comprised ofTL, LTL, and intermodal carriers. Theoutbound transportation network iscomprised of dedicated fleets and pooldistribution companies.Almost immediately upon launch ofStein Mart’s new supply chain, thingschanged. Through its vendor supportprogram, the company began partneringwith its vendors, educating and communicatingnew expectations and guidelines.These included pre-ticketing andpre-hanging requirements to ensure themerchandise was “floor ready.”The team also included several newEDI transactions, which replaced a lesssophisticated method of billing. Goodsare all identified through the use ofindustry standard bar coded shippinglabels. “We did very little EDI beforethis started,” says Stover. “We had to layall of that groundwork.”The result of this partnership wasthat stores were able to receive theproduct by scanning the carton, asopposed to having to open and tallyeach unit within the carton. This significantlyreduced the time a cartonspent in the back room of the store andensured merchandise could be on theselling floor immediately after receipt.“Our vendors deserve a tremendousamount of credit for their efforts toadjust their processes to support ournew supply chain,” says Schart.Stein Mart’s distribution centers tookover the role of inspection and valueadded services such as ticketing and validationof carton contents. This ensuredthat when cartons arrived at the stores,the merchandise inside was exactlywhat the stores had been allocated bythe merchants. A new delivery networkintroduced day/time definite deliveriesso the stores could plan on—withina half-hour—the expected delivery oftheir merchandise, making labor schedulingmuch more efficient.Stein Mart’s shipping performanceon both inbound and outbound was alsodramatically improved. Through its vendorprogram, the supply chain team cansee whether a vendor isshipping early, on time,or late so appropriatecommunication andsteps can take placewith both the vendorsand the merchants.The inbound transportationnetwork istracked at the purchaseorder level, enablingthe supply chain to communicate thearrival of trailers into the store distributioncenters, allowing for better laborplanning within these operations aswell.From a delivery standpoint, Sayerssays that the on-time percentage runsover 95 percent—measured down tothe hour. “The small package guys simplydon’t measure it that closely. Theymeasure on-time in terms of days, wenow measure in terms of hours,” saysSayers, adding that the team needed toget much more surgical in its commitmentto the stores.“We needed to develop a deliverymethod to ensure that stores can accuratelyplan the number of associatesthat they’re going to need to receivethe product,” says Sayers. “Our goalis to have all our merchandise on thefloor before the store opens; so, whena customer walks into our store, thecustomer sees a fresh assortment ofmerchandise ready. That’s anotherbenefit.”Stein Mart’s three consolidation centersand three store distribution centersare operating by 3PLs. In addition, SteinMart operates its own building near itsJacksonville, Fla., headquarters to storeoffseason buys and to provide pick packand warehousing services. “One thingthat we’re most proud of is that once wewent live with our network in May of2009, we went from zero to running 90miles per hour overnight,” says Stover.Reaping rewardsThere are not many retailers in Americaable to boast of a supply chain initiativethat contributed $20 million directly tothe bottom line. According to Schart,these savings came from reduced transportationexpense; lower store operatingcosts from better labor planning andreduced floor-ready processing; new visibilityto purchase orderdelivery status; andimproved communicationand cooperationwith vendors.“The small parcelcarriers are great serviceproviders, so gettingour packagesto stores was not theissue,” says Schart. “Butby setting up our new network and establishingnew vendor expectations, we wereable to improve the quality of the deliveryexperience that now results in the merchandisebeing received, unpacked, andon the store’s selling floor before the storeopens. That’s a huge benefit.”Because Stein Mart utilizes a smallcore carrier base, it’s able to keep thosecarriers busy consistently throughoutthe year—resulting in favorable rates.It initiates regular conference callswith its carrier base to keep them upto speed on recent trends in the flowof freight, the upcoming seasons, orchanges in processes that will affect thecarriers, the stores, or the network.“We want to be a good steward for ourmerchant partners,” says Schart. “At theend of the day, our buying and allocationteams drive product into our stores. Beingsupply chain experts, we use our skills tocorrect issues and set higher expectationsfor every shipment to ensure timely, floorreadydelivery. If the right merchandisegets to the right store at the right time,that’s a win for everybody.”Despite winning Shipper of the Year,Stein Mart is certainly not resting on itslaurels—true to its corporate culture.“We’re always analyzing what we can dobetter, faster, and more efficiently andlooking for additional process improvementopportunities,” says Stover.Sayers adds that much of the creditgoes to Stein Mart’s organization foragreeing to this revolutionary logisticsoperations change. “This was a majorchange,” he says. “The support wereceived from the top down across ourentire organization was phenomenal.It could have gone a number of differentways, but because of that support itwent exactly how it was planned.” MJohn D. Schulz is a Contributing Editorto <strong>Logistics</strong> <strong>Management</strong>26 <strong>Logistics</strong> <strong>Management</strong> WWW.LOGISTICSMGMT.COM | <strong>October</strong> <strong>2011</strong>
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