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Case Study: Fingerhut Strengthens Their Supply Chain
With its distribution operations expanding and its reliance on manual
procedures, Fingerhut
Corporation, the primary subsidiary of Fingerhut Companies, Inc., now the third largest
mail order
catalog company in the United States, decided it was time to reengineer its traffic
operations. The
following areas were targeted for automation: routing of inbound orders, consolidation,
tracking
orders in route, tracking trailers for shipping, and freight accounting. After an
extensive evaluation,
Fingerhut selected the Logility Transportation Group to help with the automation effort.
Focus: Integrating Shipment Planning
The solution centered around an inbound Shipment Tracking System to integrate with
Logility
Transportation Group's Shipment, Freight Rating, and Audit & Payment software and
Fingerhut's
purchasing and financial systems. This integrated approach permits multi-departmental
access to
track and manage purchase orders from creation to receipt of goods. "Our integrated
approach to
inbound shipment management using LTG's application software has given us control and
operational
efficiencies needed to expand and grow," said Sal DiPietro, VP of System's
Development for
Fingerhut.
On the planning side, the system supports automated order consolidation,
carrier selection, and the
booking of loads. When shipments are received and validated against the purchase order,
the focus
of the solution changes from planning to controlling the audit and payment of freight
bills and the
allocation of freight costs for accounting and general ledger purposes.
Multi-Departmental Access Improves Communication
Five different Fingerhut departments use the Shipment Tracking System daily. Traffic uses
it in the
routing, scheduling and freight payment functions. Merchandising uses it to look up the
status of an
order and to manage back orders and new orders, while Corporate Inventory uses it for
forecasting
and printing labels before the goods are received. The Shipment Tracking System is used by
Receiving to schedule its labor force for upcoming days. Finally, the Traffic department
uses it to
construct backhauls by combining outbound planned shipments with inbound scheduled
shipments.
Cycle Time Reduced
Since Fingerhut opened its second Distribution Center in Tennessee, they have received
twice the
phone calls but have not increased their traffic staff. Now when asked to track a vendor
shipment, it
takes minutes instead of hours. The Inventory Department has seen a cycle time improvement
of
50% in the receiving and shipping process. This means that customers get their orders
faster. "We've
given ourselves a competitive edge by gaining control over the logistics process, while at
the same
time reducing our transportation cost," says Reuel Nygaard, Vice President of
Operations for
Fingerhut.
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