A project for a Maui Jim Sunglasses

The company and the warehouse

Maui Jim Sunglasses is a privately held, worldwide distributor of premium sunglasses based in Peoria IL. The Peoria DC is responsible for all domestic distribution (except Hawaii), handling 65-70 percent of the total sales volume. The Peoria DC also replenishes 11 international DCs (Australia, Canada, Dubai, France, Germany, India, Italy, Mexico, Spain, Sweden, and UK) and 1 DC in Maui, HI. All Sunglasses are contract manufactured in Japan and Italy by 2 manufacturers (Nakanishi and Barbarini). Marketing materials (called “POP”, for “Point of Purchase”) are also purchased by various suppliers throughout the world with a large fraction produced in Asia. All product is shipped to Peoria with a small fraction shipped to a DC in Mexico and to a 3PL in Hamburg (Germany) that services six DCs in the EU. The Peoria DC is multifunctional in that it ships internal orders to the DCs, internal customers as well as resellers and consumers.

The Peoria HQ is also responsible for all domestic repairs while manufacturing all Rx product for all worldwide locations through the Rx lab.

Maui Jim has been experiencing 20-30 percent growth over the last several years (pre-August 2008) and has plans to expand into additional countries in the future.

Operational Overview

The Peoria DC is comprised of several different functional areas. Physically the DC is referred to as “Whse 1” and “Whse 2” with varying functions taking place in each part. Below is a brief description of each warehouse with their accompanying functional areas.

Whse 1 (approximately 21,000 sq ft, 40 employees

Quality Control

All sunglass shipments are quality-checked upon arrival from the manufacturer. Established skus are subject to a 10 percent check and new skus are 100 percent checked for appearance, form and function. Shipments arrive weekly.

Large Order Prep (LOP)

• External Customers: All large reseller (i.e. Sun Glass Hut, Solstice) orders are processed in a light kitting process where the glasses are placed in a case with customer specific labeling and packaging such as placing inside retail box.
• Internal Replenishment: The pick/pack (P/P) aisle is replenished through LOP where a light kitting process is performed. This process is similar to the external customer process in that all glasses for the P/P aisle are placed in a case and then inside a retail box with standard labeling.
• DC Order Processing: Due to importing rules some countries require that the glasses be cased and placed in a retail box before entering the country. LOP performs this kitting for shipments to those countries (India, Dubai). Orders are shipped utilizing various modes such as small parcel, LTL/TL, air and ocean, depending on customer location and size of order.

Pick/Pack Aisle

• External Customers: All small reseller orders and consumer web orders are fulfilled through the P/P aisle. Both glasses and POP are picked in this aisle. All orders are picked from flow racking to gravity conveyor from paper orders. All glasses are cased, labeled and packaged in a standard format. There is some special marking/labeling on the shipping cartons for customers but, by in large, the process is the same for all orders. All consumer web orders are fulfilled through the P/P aisle as well but this is a very small minority of the orders. On a daily basis this probably amounts to about 100 orders/day. All orders are shipped through shipping stations utilizing the Manhattan Associates LogPro software.
• Internal Customers: Less than case quantities of POP is picked from the P/P aisle for the DC orders.

Parts Fulfillment

Internal Customers: All parts replenishment orders for Peoria repairs, Rx lab and international DCs are processed through the Parts area. The majority of the parts are fulfilled from parts inventory; however when parts inventory is insufficient, whole skus must be broken down or cannibalized for their parts. These parts are stored in static shelving in a separate area in Whse 1. This process is completely separate from any other functions within Whse 1.

Whse 2 (approximately 33,000 sq ft, 6 employees)

Bulk storage

Handles all receipt and storage of bulk inventories of glasses, cases, POP, raw Rx lenses and store displays. All glasses in Whse 2 are uncased and in original manufacturer's packaging. All glasses are packaged 10 units per inner pack and 100 units per master carton. Cartons vary somewhat in size as do the inner packs but the standard quantities apply regardless. POP comes in various packaging quantities. All product is stored in pallet rack with a small pick aisle, with case flow rack, where less-than-case quantities are picked into “pastry carts”. Glass orders are processed using RF while most POP is picked with paper pick lists due to bar code limitations.

Internal Replenishment

Internal Orders: Fulfills all internal replenishment orders for LOP, P/P aisle, Parts and Rx lab. Includes all glasses, POP and raw lens material for Rx lab.

DC Replenishment

Fulfills and ships replenishment orders for all worldwide DCs . Includes all glasses, POP and store displays. All orders for sunglasses are filled with using a MOQ of 10 (standard inner pack). DC orders are filled with uncased glasses (except for destinations India and Dubai).

Corporate Event Processing

Corporate events are when Maui Jim sells glasses to an organization/company at a discounted rate for distribution at one of their events, such as golf tournaments, sales conferences, etc. Sunglasses are shipped, on consignment, to location, usually a resort or conference center, for fitting/distribution by on site representatives of Maui Jim. Sunglasses that are not given away at the event are shipped back to Maui Jim with the outstanding amount being billed to the customer. These orders are processed by a small group of dedicated people within Whse 2. This is a separate process from other Whse 2 functions.

Client Challenges/Objectives/Questions

Some of these are specific and others tend to the rhetorical. Part of this project will be to identify pieces that can be usefully addressed within the time available.

Warehouse questions

Suggestion: Identify core questions here and focus on those.

1. What are the possibilities for process improvement on a no-cost, low-cost, and high-cost basis?
2. How can the flow of information be improved?
3. What is optimum layout/process for DC, specifically LOP and P/P aisle that will enable future growth?
4. Are there any roles for new warehouse technologies?

Supply chain

These are out-of-scope for this class but by all means, contribute any useful insights or interesting ideas here.

1. How can the inventory management processes be improved?
2. What are best practices for businesses of similar size, structure and product?
3. How can the supply chain be improved?
4. What should the structure be in the future? Should the Central EU DC handle more business? Should the use of 3PL be expanded?
5. Should the DCs be aligned with the manufacturers? How can the QC process be improved either internally or working with manufacturers?

Data

16 November 2009: All data has been removed from web access at the request of the sponsor. Students: Write to me if you need copies of anything.

First steps

• Try to get a feel for the timing of events and the flows of information and material.
• Decide which warehouse or process, etc. offers the most opportunity for improvement.
• Decide what additional data you need.