News
"Shaping up shipping: Firms keep costs from heading out the door" By Michael Maurer
Crain's Detroit Business
If you haven't been down to your company's shipping room in the past couple of years, you may be surprised to find money flying out the door.
Three local businesses, meanwhile, are using computer technology to bar the door and, in some cases, funnel those dollars back into the company.
- H.O. Trerice Co. in Oak Park manufactures industrial thermometers and pressure-control instruments for the commercial heating and cooling industry. It ships an average of 300 packages a day. Janet Genty is manager of the company's management-information system.
- J.H. Bennett Co. in Novi, is a distributor of hydraulic and pneumatic components for automotive and other suppliers. The bulk of its 70 - 100 shipments each day can reach up to 70 pounds. Michael O'Brien is inventory-control manager for the company.
- Merle Distributing, in Redford Township distributes trade books to bookstores, schools and libraries. It can ship 100 - 600 packages each day. John Buell is the company's president.
As the companies grew over the past 10 years, the use of technology in customer service, accounting and other areas increased. But most of the shipping functions were still handled by hand, including weighing, calculating shipping costs, labeling and creating manifests.
Because shipping and handling costs were usually just added on to the customer's invoice, shipping departments often escaped the eye of company cost-cutters, said Mark Taylor, president and CEO of TAYLOR Systems Engineering. His Plymouth-based company, formed by him and his wife, designs, constructs and integrates computerized shipping and receiving systems with general business and accounting systems.
"The basic computerized shipping system consists of a computer interfaced to an electronic scale, a label printer and a report printer," Taylor said. "Sometimes additional printers are used to print bills of lading or other documents. A modem is for transmitting and receiving data from the carrier, and a bar-code scanner can be used to input work-order numbers."
H.O. Trerice's Gentry said her company had TAYLOR Systems Engineering Corp. connect the shipping departments of its two facilities to the company's IBM AS-400 minicomputer and added a credit-checking function. "In the first hour the system was up, it stopped one credit-hold order from going out the door as well as a duplicate shipment," Gentry said. "There were too many hands in the pie Ñ pickers, packers and shippers. This saved us an immense amount of money."
J.H. Bennett carries more then $2 million in inventory, O'Brien said. As late as 1993, his shipping area would weigh a box by hand, figure how it would be shipped, and create the labels and manifests while accounting would bill the order.
"Now, customer service takes the order and puts it in the system," he said. "Shipping gets the order electronically, boxes it and puts it on the scale. The TAYLOR system shops (for) the best carrier rate, invoices it while it sits on the scale and sets up the billing for accounting.
"We're closer to real time than we've ever been and save the accounting department two to three man-hours a day." O'Brien said the company had a 10 percent error rate three years ago but has had only two or three calls related to shipping and freight costs since the system was implemented.
Merle Distributing was getting only 60 percent to 70 percent accuracy under a similar shipping system, said Buell, who bought the company in 1990. Now, with a shipping system integrated into the company's computer, the accuracy rate is more than 95 percent, he said. Buell also notes its effect on providing better receiving information to the customer.
"A customer may know a certain amount of material is coming but not know how many boxes to expect, he said. "If there are six and four arrive, the labels will tell the customer that two more are coming. The system paid for itself in less than six months."