Papa John’s fresh take on WMS and voice technology
One of the country’s largest pizza makers turned to supply chain software and voice technology to streamline distribution processes and deliver fresh ingredients to its stores.
Supply chain software synchronizes DC and store replenishment processes. Meanwhile, inside the DC, order picking is directed by voice technology.
By Bob Trebilcock, Executive Editor
November 01, 2014
A pizza’s just a pizza, right? One pie is pretty much as good as the next…That kind of thinking does not exist at Papa John’s, the nation’s third-largest pizza chain according to the trade magazine Pizza Today. With nearly 4,500 locations around the world, including 3,200 stores in the United States, and $3 billion in annual sales, the Louisville, Ky.-based company is constantly thinking about the next system or process that can help customers get their pizza in a timely manner.
The company has experienced tremendous growth with locations in all 50 states and more than 36 countries. No matter how big the company gets, Papa John’s is committed to its humble beginnings of using quality ingredients and quality people to build a better pizza and deliver a better pizza experience.
To that end, in 2006 Papa John’s began to transform its network of 10 dough manufacturing and distribution centers (called Quality Control Centers) through the use of better technology. The focus of this technology is on managing inventory, especially perishable products, to deliver the freshest ingredients to its stores, twice a week.
The DCs are light on materials handling systems, which primarily consist of lift trucks and pallet racks. But the entire supply chain process, from inventory planning and procurement through the replenishment of stores, is enabled by supply chain management and execution software (Manhattan Associates, manh.com) and voice-directed picking processes (Honeywell—Vocollect Voice Solutions, vocollect.com). The combination delivers supply chain visibility.
“Ultimately we want visibility from our DCs and suppliers all the way to our restaurants,” says Shane Hutchins senior vice president, PJ Food Service at Papa John’s. “That led us to automate key systems, including the way we plan the replenishment of our stores, tender loads to our carriers, capture product and lot information, and pick and load orders for delivery to the stores. While we’ve got more work to do, we’re on the right track. Since implementing these systems, DC visibility has been key to our entire inventory management approach.”
Eight years later, Papa John’s continues to update the system, adding supply chain intelligence and alerting capabilities. More recently, the company began the roll out of appointment scheduling to its suite of transportation and warehousing software applications to replace a manual scheduling system.
The combination of software and voice recognition allows Papa John’s to manage distribution processes across its supply chain in several key ways:
• Pull don’t push: Inventory for the stores is pulled through the supply chain based on real demand at the stores, rather than pushed to the stores based on what might be needed. That keeps inventories lean and avoids building up stores of perishable products near their expiration dates.
• Keep it central: Planning and transportation software systems are the engine behind a centralized purchasing strategy that ensures inventory is ordered in just the right amounts to move quickly through each facility to the stores. At the company’s largest DC in Louisville, some inventory turns every day, explains Eric Hartman, senior director of logistics and support. The system also keeps close tabs on expiration dates, ensuring quality and freshness. An added bonus, Hartman adds, is that tighter control over inventory levels has “eliminated the need for outside storage, which has saved us several million dollars on a year-over-year basis.”
• Track it: The warehouse management system (WMS) and voice systems capture both product and lot information during transactions, giving Papa John’s visibility into the location of inventory in its DCs and stores at the SKU and lot level. That not only complies with food safety regulations, it also means the pizza chain can easily and quickly facilitate a recall if required.
• Make it efficient: Voice-directed picking replaced a manual picking process, improving the accuracy and efficiency of picking operations across the DCs. “We’re also more accurate because we’re using voice to validate each step in the picking process,” says Michelle Rowan, senior manager of business solutions. Rowan adds that voice is especially useful in the freezer, where writing information by hand was a challenge.
“We always want to be at the forefront of the industry—be it through our better ingredients or advanced technology,” says Hutchins. “Our founder, John Schnatter, had infused a culture of tinkering at Papa John’s, so we’re encouraged to always try new innovative things that further our mission to deliver the best quality in the best way possible.”
A foundation of freshness
Papa John’s was founded 30 years ago in 1984, when John Schnatter returned to his hometown of Jeffersonville, Indiana after graduating from college to work in the family tavern. According to the company history, to shore up the tavern’s finances, Schnatter sold his 1972 Camaro Z28 for $2,800. Schnatter bought $1,600 in used restaurant equipment and removed a broom closet in the rear of the building to create a space to sell pizzas. A year later, Schnatter moved into his own space. Papa John’s was on its way.
Papa John’s was founded 30 years ago in 1984, when John Schnatter returned to his hometown of Jeffersonville, Indiana after graduating from college to work in the family tavern. According to the company history, to shore up the tavern’s finances, Schnatter sold his 1972 Camaro Z28 for $2,800. Schnatter bought $1,600 in used restaurant equipment and removed a broom closet in the rear of the building to create a space to sell pizzas. A year later, Schnatter moved into his own space. Papa John’s was on its way.
From the start, the company says it was built on a foundation of freshness. Growth was brisk. The first franchise location opened in Fern Creek, Ky., in 1986. By 1991, there were 100 Papa John’s locations. No. 2,000 opened in 1999, the same year the company topped $1 billion in sales. There have been innovations along the way. In 2001, Papa John’s pioneered online ordering at all U.S. restaurants. By 2008, the company posted $1 billion in e-commerce sales and its first $1 million in mobile Web orders. Today, nearly 50% of the company’s sales are generated online. Promotions through partnerships, like the one it established with the NFL, are another significant driver of growth.
Promotions and rewards programs have resulted in a more volatile mix in orders, which has an impact on distribution to the stores. Every location is replenished twice a week: once at the beginning of the week following the weekend and then again at the end of the week to prepare for the upcoming weekend. “In the past, you might have seen a 5% to 8% shift in the volume of orders from one delivery to the next,” Hartman says. “Today, we can easily see a variability of 20% between the first order and the second order in the week.”
As if that was not challenge enough, Papa John’s was confronted with new federal food safety regulations that call for more transparency and tighter controls over the tracking of food so that companies can quickly initiate a recall if necessary. At the time, the company’s inventory systems were spreadsheet based and DCs placed their own replenishment orders with vendors. Smaller facilities sometimes ordered more than they needed to save on freight costs and ended up with too much inventory that might be approaching a sell by date. Larger facilities sometimes ordered too little to stay lean and ran short of ingredients. More importantly, tracking lot code shipments manually was prone to error.
“Brand protection was very important to us,” says Rowan. “As a responsible organization, we wanted to enhance the quality of our food product and be able to respond quickly in a recall.”
As a result, in 2006, Papa John’s began exploring new technologies for its rapidly growing chain. After visiting other facilities with similar requirements, the company decided to revamp its supply chain processes in several ways:
• It would centralize replenishment activities at the corporate level so the DCs could focus on filling orders and replenishing stores.
• It would automate processes to get better visibility into inventory down to the SKU and lot level and control inventory levels.
• It would standardize and automate warehouse processes to drive more efficiency.
• Finally, it would enable those changes with software and voice technology.
• It would centralize replenishment activities at the corporate level so the DCs could focus on filling orders and replenishing stores.
• It would automate processes to get better visibility into inventory down to the SKU and lot level and control inventory levels.
• It would standardize and automate warehouse processes to drive more efficiency.
• Finally, it would enable those changes with software and voice technology.
“Software applications, like the WMS, gave us the information we needed to comply with FDA regulations and enhanced speed around a recall,” says Rowan. “From an ROI perspective, voice delivered quantifiable efficiencies. That was critical.”
Crawl, walk, run
Implementing new software and voice across 10 distribution centers took a little more than three years. The process took that long in part so as not to conflict with other internal projects.
Implementing new software and voice across 10 distribution centers took a little more than three years. The process took that long in part so as not to conflict with other internal projects.
“If a facility was doing an operations project, we did not want to also put in a new system,” says Rowan. Additionally, there were breathing spaces during the holidays or other peak periods where demand on the DCs was heavy. But another reason is that Papa John’s employs a crawl, walk and run methodology, in which it goes live, tests and modifies a system in one facility before moving on to the next implementation.
In many respects, this was a supply chain project and not just a distribution project: Papa John’s began the initiative in 2007 by centralizing the purchasing department and rolling out inbound transportation management and demand planning. That would allow individual DCs to concentrate on order fulfillment, while inventory planners had a more global view of the inventory in the system and lead times from vendors.
Once centralized replenishment was in place, the company began implementing WMS, voice and outbound transportation management in the summer of 2008. A goal of completing that project in one year proved ambitious, and the last DC went live in 2010.
Transitioning from paper-based to technology-directed picking involved change management, according to Hartman and Rowan. On the one hand, they believed that the next generation of worker coming into distribution expects to work with technology. For that reason, the change made sense. At the same time, they wanted to keep their processes as standard, simple and as streamlined as possible to accommodate experienced workers as well as workers for whom English is a second language. “We wanted our associates to be able to capture the information we need for our processes and for FDA compliance, but to be as efficient as possible,” Rowan explains.
One approach involved working closely with its supply chain software and voice partners to standardize processes across facilities and to minimize changes to the basic WMS and voice software packages. “They were supply chain experts,” says Rowan. “Rather than duplicate our home-grown processes, we wanted to work with an out-of-the-box process as much as possible to make it simple for our team.”
The second part of the approach was to train someone on the system from each of the different functional areas in a DC, even if they wouldn’t directly work with the system, and not just the order pickers. “Ultimately, the system has an impact on everyone,” Rowan says. “We wanted everyone to understand what we were doing, how it would benefit them, the DC and the company.”
There was typically a brief learning curve in a facility, where KPIs such as cases per man/hour dipped for a few weeks until associates were comfortable with the system. “We were told to expect a decline in efficiency at first,” Rowan says. “What surprised us is how quickly we were back up to speed.”
Intelligent transformation
The transformation of Papa John’s supply chain is still an ongoing project. In 2012, the pizza maker implemented a supply chain intelligence application that is providing exception-based alerts and reports.
The transformation of Papa John’s supply chain is still an ongoing project. In 2012, the pizza maker implemented a supply chain intelligence application that is providing exception-based alerts and reports.
If a carrier misses a scheduled pickup, for instance, an alert is sent so that a transportation or inventory manager can proactively find out what’s happening. In the crawl, walk, run approach, supply chain intelligence represents a pretty brisk job. More recently, the company began implementing appointment scheduling to automate what is still a manual process.
The end result has been more effective replenishment with a significant reduction in off-site inventory, quicker turns, overall fresher ingredients, and more efficient distribution to help control food costs.
“We know every detail matters when it comes to delivering ‘Better Ingredients.’ It’s not just one aspect of the operation that ensures we can deliver on that expectation consistently, but a thousand small things added together. Inside our network, we have better technology and that leads to a better delivery experience for our restaurants and ultimately a better quality experience for our customers,” Hutchins says.
After all, a pizza isn’t just a pizza.
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