es 96 million homes, and represents one of the top 10 sites
for e-commerce traffic.
Behind the smiles of the celebrities and the almost-famous hawking virtually anything imaginable beats the
heart of the HSN operation: a fulfillment network consisting of three distribution centers, located in Roanoke, Va.;
Piney Flats, Tenn.; and Fontana, Calif. The DCs, which
combined total more than 1 million square feet of space, are
overseen by the no-nonsense Monti.
Monti is only as demanding as the environment he works
in. HSN guarantees deliveries within 10 calendar days of a
customer’s order, but nearly 70 percent of its deliveries are
made within six calendar days. At the same time, HSN, like
its rivals, has been aggressively pushing such customer pro-
motions as free or reduced-cost shipping and handling
(S&H) to boost its value proposition. While this has pleased
HSN’s customers, it puts pressure on Monti and his staff to
continue to drive out costs while improving the operation’s
fulfillment and delivery standards.
A PUSH TO SLASH LABOR COSTS
With the pressure to contain costs mounting, in mid-2008,
Monti and his chief assistant, Caroline Dreyer, vice president of fulfillment operations, decided it was time to act.
They began exploring ways to improve efficiencies in HSN’s
three DCs to reduce operating costs and free up cash flow
so HSN could fund more delivery-related promotions.
They focused on a plan to improve DC worker productivity and slash what Monti calls “variable labor spend.” The
goal was an 18-percent improvement in productivity and a
10-percent reduction in operating expenses.
Given the fulfillment-heavy nature of HSN’s work, Monti
and Dreyer believed the company was further along than
most in understanding the nuances of DC work-force
issues. However, because they didn’t have automated productivity tools or sophisticated engineered labor standards
to measure workplace output, they were forced to measure
present and future results by past performance metrics.
While this yielded reasonably accurate data, Monti felt it
didn’t give HSN the maximum visibility needed to unearth
even greater efficiencies and cost-savings.
Monti proposed to engage TZA, a Long Grove, Ill.-based
consultancy specializing in the design and implementation
of labor management software and supporting it with a
deep knowledge of best practices and engineered standards.
But consummating the marriage wasn’t easy. HSN’s executive suite, in hunkered-down mode as the financial crisis
and recession took hold, twice rejected the proposal. On the
third try, in January 2009 with the downturn in full fury, it
was green-lighted.
A 20-PERCENT BOOST IN PRODUCTIVITY
The project took two years to complete and required a major
change in how the DCs and their workers functioned. But
when the dust settled, the results surprised even the hard-to-impress Monti. The operation met its savings goals, and
worker productivity rose by more than 20 percent, exceeding HSN’s original objectives. HSN recouped its entire
investment in less than 15 months, according to Monti.
Meanwhile, the savings enabled Monti’s unit to help HSN
