Case studies
Model engines revs up with EAN•UCC (October 2004)
Model Engines, a family business that has grown into a multimillion-dollar success story was bursting at the seams when it called GS1 Australia for a fresh look at its operations.
Planes, boats, automobiles and even helicopters, together with their radio controls and thousands of spare parts, crowd Model Engines' warehouse.The product range includes more than 9000 items, mainly sourced from Asia, Europe and America, with some specialist parts made locally.
Wholesaling to a network of about 600 retail hobby and toyshops across Australia and New Zealand, Model Engines has grown at the rate of around 15% per annum to become a market leader.
Knowledgeable staff members are invaluable to the business, according to Managing Director, Mike Farnan. Mike employs enthusiastic hobbyists as salespeople because only an 'insider' has the technical expertise demanded by the market. The same specialist knowledge is needed to pick orders, given Model Engines' confusing array of thousands of seemingly identical parts. The result: salespeople are working both the phones and the warehouse.
"Our salespeople are finding it hard to sell because they just don't have enough time," Mike said.
"They should be asking whether the customer needs some extra glue to go with their order, but instead, they're rushing around finding and dispatching parts."
The problem of stock identification is exacerbated by Model Engines' cramped conditions. Despite purchasing a neighbouring warehouse and renting more space offsite, space is at such a premium that the location of new stock is dictated by the availability of free racking.
"I knew the key to freeing up our salespeople was a more systematic approach that allows less experienced staff to find the right items in the right location," Mike said.
In response, Model Engines invited GS1 Australia to conduct a thorough supply chain review. After spending a few days on site gaining an appreciation of the business's operations, GS1 experts analysed and mapped Model Engines' current processes using the Supply Chain Operations Reference Model as a template.The team then overlaid the EAN•UCC standards for the correct application of standard item numbering and barcode labelling of products. GS1's extensive report included 28 recommendations for quick wins, process improvements and strategic initiatives. Apart from the benefit of GS1 Australia's technical expertise, Mike said the reviewreport proved a valuable communication tool.
"The review dispelled any illusions our management team might have had about barcodes," he said.
"Just sticking a barcode on a box is not enough - we must have the systems right first to get results."
As Mike anticipated, the review recommended the allocation of stock locations so that salespeople could be freed from picking duties but also uncovered a need for better checking of stock during receipt. Phase two of the review will see the recommendations prioritised for implementation and Mike believes the timing is perfect.
"Before we go ahead and put the bulk of GS1's recommendations in place, we are going to move to a much larger location," he said.
"The report will help us to plan the new facility properly so we can start 2005 fresh with effective processes."
