Boston Inc., Plans For Warehouse Growth
Case study of a family owned chain of four stores that built a centralized warehouse with expansion capabilities to support a high level of customer service during times of rapid sales growth.
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Centralized warehouse with expansion capabilities supports high sales growth rate and improves customer service satisfaction.
In recent years the furniture retailing news has frequently been about companies that go out of business rather than the ones that survive and grow profitably. A key attribute of those that succeed is the ability of management to recognize and implement change. This article reports on a company that has positioned itself for continued viability. Some of the things they have done surely can help your business.
The name Boston Inc. wasn’t mentioned in the August/September 1999 FURNITURE WORLD Magazine article about Furniture & ApplianceMart Superstore, but much has changed in six years, as sales volume tripled.
Furniture & ApplianceMart Superstores, a Furniture ApplianceMart Outlet and two Ashley HomeStores now operate under the Boston Inc., corporate umbrella. A third Ashley HomeStore will open in early 2006. Each retailing location is approximately 50,000 square feet, is served by a central distribution and administrative center in Stevens Point Wisconsin and shares a common media market.
One measurement of their success can be gleaned from responses that document customer service performance from the time of sale through any necessary repairs. For the first quarter of 2005, the organization received a 3.62 rating on a scale of 4.0, an increase from an impressive 2004. These efforts help to build the type of loyal customer relationships that are necessary for any independent retailer to survive.
Boston Incorporated’s customer surveys have been a major source of data for their continuous improvement programs. The free form section of the response card has yielded insightful comments that cannot be obtained by using closed probes. While the mailed in card has been very helpful, management recently decided to discontinue the written format in favor of a telephone survey program. The new format will provide real-time feedback through a software interface, to sales staff, office personnel, and delivery crews. Exceptional service as well as problem situations will be more easily recognized in a timely manner. Telephone interviews will also provide another personal interface with customers that will demonstrate the store’s customer-care philosophy.
Boston Inc. is a family owned business that was founded in 1970 with Vince Fonti Sr.’s $5,000 investment. The store’s growth was driven by a philosophy to build the company one customer at a time by providing the finest total shopping experience. Since his retirement in 2000, Vince’s three sons continue to live that philosophy with commitment to integrity, service, quality, providing consumer value and maintaining strong ties to the communities they serve. Vince Sr., wasn’t exaggerating when he said, “No question, my sons’ relationship with each other is one of the company’s greatest strengths. They share a harmony and the ability to communicate, openly and honestly, to reach a common goal.”
Bill is President and Joe is Executive Vice President of Operations. Vince Jr. is Vice President of Merchandising and Purchasing. Senior management provides an example of teamwork that inspires others within the company. Daughter Laurie assists in Human Resources and third generation family members are becoming involved.
To support the business’ growth there have been major infrastructure changes to gain operational efficiencies. The 2001 construction of a 70,000 square foot central distribution center replaced five separate warehouses. Benefits gained from consolidation include increased inventory turns, reduced labor costs, reductions in product damage and achievement of 99% inventory accuracy.
Another major benefit is that a centralized prep area now assures uniform high standards for each piece before it leaves the distribution center.
Comprehensive computerization of business documents and radio frequency bar coding has also yielded an excellent return on the investment.
Business growth required more space for inventory and docks but equally important was the consideration of assembly operations in the overall plan. The application of engineering principles to the assembly and prep areas has yielded excellent results. Workers now assemble at work stations with appropriate tools. Photo “D” on the previous page shows a flex drive being used to install table leg bolts. Tables can be assembled in half the time relative to using hand tools on the floor. Corrugated carts have been added to increase efficiency. After stripping packaging materials from product, the corrugated is flattened and placed in a wooden cart. One trip to the recycling area hauls approximately 8 times as much material as with the previous method. It also improves housekeeping and contributes to safety in the work area. Another factor that has boosted delivered product quality is the quality of lighting on the dock that has made it possible to catch more manufacturers’ defects and minimize service calls.
Fortunately, expansion was considered in the original site acquisition and building design so that 50,000 square feet could be economically added without compromising warehouse efficiency. This expansion was completed early in 2005 and included provisions to support periodic warehouse dock sales. People were standing in line before the doors opened and a steady stream of customers kept cash registers ringing and crews busy loading vans and trucks throughout the weekend.
Continuous improvement changes will be ongoing throughout every company function. Management has identified projects and goals to enhance training, reduce non-saleable inventory, implement more effective cross docking, improve delivery, and customer care. In today’s competitive retail environment, continuous improvement policies aren’t optional for independent retailers. The strategies being employed at Boston Inc., will provide Vince’s grandchildren an opportunity to be a part of this success story when they complete their education.
Dan Bolger helps furniture companies achieve improved transportation, warehousing and logistics. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan at firstname.lastname@example.org. See many of Dan Bolger’s articles posted to the article index archives on the furninfo.com website.
Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at email@example.com or call him direct at 740-503-8875.
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