DC Velocity - January 2013

stores nationwide—a significant increase in the number of outlets served. “We doubled the number of touch points with customers,” says Keith Nash, Lennox’s vice president of supply chain logistics.

But serving all of those stores from
the existing DC would have been far
too expensive. “We needed econom-
ical distribution to the store loca-
tions,” Nash says. “We needed [to
move to] the hub-and-spoke model
to adequately serve those stores.”
In addition, the company was
looking to reduce order cycle times
and the amount of inventory in
transit—goals that a shift to a regional
DC network would help it achieve.
Today, 95 percent of customers are with-
in reach of overnight shipments, either
from the storefronts or directly from the
regional DCs.

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A LONG JOURNEY

The shift to the regional model won’t be completed until the first quarter of 2013, but the process began more than three years ago, starting at the finished-goods DC in Marshalltown.

One of the topics Lennox had to address early on was technology. From the start, it was apparent that the technology that worked for the small warehouses wouldn’t be sufficient for new DCs ranging from 350,000 to 400,000 square feet in size and an order volume that reaches 2. 2 million lines a year. The company decided it would have to invest in new technology, specifically a warehouse management system (WMS) and a transportation management system (TMS).

“If we were going to do distribution
effectively, we had to up our game,” Nash
says. “We had a lot to gain in cost per trans-
action, cost per carton, and accuracy.”
Since Lennox was already using SAP’s
enterprise resource planning (ERP) sys-
tem, the company first considered
installing that vendor’s WMS. In the end,
however, it chose Manhattan Associates’
warehouse and transportation manage-
ment suite with Manhattan’s Supply
Chain Process Platform as the architec-
ture. Lennox chose the Manhattan solu-
tions in large part because the two sys-
tems were designed to work together. “We
thought that would be one less set of inte-
grations that would have to be managed,”
Nash explains.

The new technology offers a number of operational advantages. For instance, the integrated system produces a shipping label at the same time it sends an order through the WMS. “We can touch it once and put it down,” says Nash. “You have to have integrated warehousing and transportation systems to do that.”