International Beauty Solutions* is a global distributor and retailer of professional beauty products for retail consumers and salon professionals with an annual revenue of nearly $4 billion. Through its Retail Beauty Solutions* and Salon Beauty Solutions* businesses, the company sells and distributes through more than 5,000 stores, including approximately 200 franchised units, throughout North America, South America and Europe.
Retail Beauty Solutions operates more than 3,500 stores that offer more than 10,000 products for hair, skin and nails through professional lines as well as an extensive selection of proprietary merchandise. Salon Beauty Solutions operates more than 1,000 stores, including nearly 200 franchised units, and is also one of the largest networks of professional distributor sales consultants in North America with approximately 1,000 consultants. The Salon Beauty Solutions stores, along with the company’s direct sales consultants, offer up to 10,000 professionally branded products that are sold exclusively to professional stylists and salons for use and resale to their customers.
Diffused network creates tangles in distribution operations
When International Beauty Solutions first approached Tompkins International, the company was operating a total of 16 distribution centers (DCs) across North America, with three serving Retail Beauty Solutions, 12 dedicated to Salon Beauty Solutions and one standalone facility for its salon equipment division. The SKU population was comprised of approximately 50,000 items that generated more than 100 million picking lines per year.
Continued growth through a series of acquisitions amplified the existing issues with the company’s disjointed operations. As International Beauty Solutions began preparing for its impending spin-off from its former parent company, it recognized the need to increase supply chain efficiency and reduce transportation and distribution costs. Understanding the gravity of its current distribution flaws, International Beauty Solutions enlisted the help of Tompkins International.
“The principles of transportation and distribution have been highly refined over the past 30 years,” said Jim Tompkins, CEO of Tompkins International. “Based on our decades of experience with a variety of retail and wholesale consumer products companies, we are able to provide International Beauty Solutions with insights on what works and what doesn’t, and the analytical skills needed to address the myriad of challenges that will emerge in the future.”
Styling a distribution network for long-term success
The Tompkins team conducted a thorough evaluation of International Beauty Solutions’ current distribution networks for Retail Beauty Solutions, Salon Beauty Solutions and the salon equipment division to determine the optimal design for each based on operating costs, transportation costs and service level. A number of alternatives were tested, including combining divisions, consolidating facilities and expediting shipments to meet desired service levels.
In addition to analyzing the distribution networks, Tompkins also evaluated International Beauty Solutions’ DC procedures and identified operational enhancements to improve picking and receiving processes. International Beauty Solutions: A Facelift for Aging Fulfillment
Tompkins compiled its recommendations and alternatives, along with a financial analysis of the associated costs and savings, into a comprehensive strategic master plan and implementation timeline to enable International Beauty Solutions to seamlessly transition from its existing network to the recommended network design.
Based on its findings, Tompkins determined that the best strategy was to retain the current distribution network for Retail Beauty Solutions and for the Salon Beauty Solutions to undergo a major network realignment. The Tompkins team recommended consolidating the 12 facilities and realigning their Western operations with a new automated warehouse in California. Impressed with the Tompkins team’s extensive knowledge in network design and thorough understanding of International Beauty Solutions’ unique business operations and needs, the company enlisted Tompkins to implement its strategic master plan.
In addition to the realignment and implementation of a new greenfield facility, Tompkins performed an extensive retrofit of the Midwest and Southeast facilities, including modifying and replacing old conveyor systems and installing new broken case packing lines and in-line quality assurance stations. At the Midwest DC, Tompkins also installed additional pallet racking, a second pick module and a new less-than-truckload (LTL) down line for expanded capacity. All three DCs were equipped with Tompkins’ warehouse execution system (WES) and a hybrid pick and pass operation incorporating pick to light, voice picking and RF picking to increase efficiency, accuracy and productivity.
The network redesign and material handling equipment (MHE) upgrades resulted in the following:
- Nearly 20 percent increase in throughput capacity while reducing operating expenses
- 8 percent annual operational savings from advanced picking technology
- 16 percent annual logistics savings
- Approximately 70,000 additional lines per day International Beauty Solutions: A Facelift for Aging Fulfillment
Over the years, Tompkins has worked alongside International Beauty Solutions to improve productivity, efficiency and accuracy at the Salon Beauty Solutions DCs. So, when the time came to reevaluate Retail Beauty Solutions’ fulfillment operations, International Beauty Solutions naturally turned to Tompkins.
Aging equipment causes wrinkles in fulfillment
Several years after realigning Salon Beauty Solutions’ distribution network, Retail Beauty Solutions found itself rapidly approaching capacity at its store replenishment DCs due to current store growth projections. Additionally, these facilities were comprised of ancient MHE that was running on outdated controls systems and required heavy, constant maintenance.
Tompkins performed a comprehensive network design of Retail Beauty Solutions’ three store replenishment DCs to determine the optimum long-term supply chain strategy to minimize overall logistics costs while maintaining expected service requirements. The first part of this two-phase effort included a macro-level facility capacity analysis, transportation modeling and inventory modeling, with the goal of determining the maximum store capacity of the Ohio DC and if a fourth DC was economically justified. The Tompkins team evaluated and identified potential capacity constraints, short-term improvement opportunities and other ways to improve capacity without expansion.
As a result of Phase 1, the Tompkins team conducted detailed MHE assessments of Retail Beauty Solutions’ two oldest facilities located in Florida and Ohio. Opened in 1992, most of the MHE at the Ohio facility was more than 20 years old, producing massive capacity constraints and inefficiencies. With the DC approaching full capacity and space and processing limitations impacting productivity, extensive overtime was being used to meet processing requirements. These outdated technologies were impacting the following procedures:
- Picking: The pick to light was malfunctioning and no longer supported and approximately 50 percent of the active pick faces only contained a 3-day supply, making replenishment labor intensive and challenging to keep up with picking.
- Conveying: The second conveyor line that was added to relieve pressure and provide additional accumulation required a manual trigger for use, which led to a decrease in productivity and increase in carton travel time. Carton rotation and gapping was also a manual process since alignment and gapping could not be guaranteed prior to the vision system, resulting in increased labor and inefficiencies.
- Sorting: The shipping sorter was running slowly and impacting productivity but increasing the speed of the sorter would also increase wear and tear, which would produce additional challenges for the already outdated system.
- eCommerce fulfillment: The DC processed some overflow eCommerce orders, but it was done outside of the existing system and was labor intensive. If eCommerce volume increased, this would become a significant challenge for the warehouse.
These procedures and MHE were further constraining the DC’s inventory, throughput and labor productivity. Additionally, the change from high-volume full case picking to primarily each store replenishment had resulted in a mismatch between picking location types. International Beauty Solutions: A Facelift for Aging Fulfillment
An MHE makeover for a brighter future
Aside from the various capacity constraints identified at the Ohio facility, one of the operation’s biggest flaws appeared in its conveyor systems. Approaching nearly a decade beyond its useful life, there was a substantial risk of a catastrophic failure that would disrupt Retail Beauty Solutions’ fulfillment operations for an extended period of time. For a distribution network of its size, this could result in significant lost sales, increased operating costs and unquantifiable customer dissatisfaction.
Understanding the consequences of excessive downtime for Retail Beauty Solutions, the Tompkins team devised a multi-phase implementation plan to retrofit and modernize the Ohio facility without having to shut down operations. The rebuilt warehouse featured the following MHE upgrades:
- Combination pick locations: This hybrid pick solution incorporated a mix of pallet flow rack, carton flow rack and shelving locations to reflect current business needs and improve productivity and replenishment.
- Storage optimization: To increase storage capacity, empty storage locations in the aerosol cage were utilized for full case pallet storage of non-aerosol merchandise, and an aisle in general storage—close to the each pick modules—was converted to half pallet locations for full case pallet storage.
- Conveyor system: To minimize the business risk associated with aging technology, the conveyor system was modernized by retrofitting the existing case pick module, rack and packing; adding shelving, dock doors and a new packing sorter; and upgrading all conveyor controls.
- WES: The existing unstable control system was replaced with Tompkins’ WES and integrated with all MHE to increase efficiency and minimize potential downtime.
After witnessing the massive improvements in productivity and efficiency in Ohio, Retail Beauty Solutions enlisted Tompkins to implement these upgrades at its Florida facility, enabling both DCs to achieve a nearly 20 percent increase in throughput.
“While the MHE upgrades provided quantifiable improvements across the board, eliminating the operational risk of failing equipment and indeterminate and excessive downtime is an incalculable benefit that we feel rewarded to be able to provide to Retail Beauty Solutions,” said Kelly Reed, Executive Vice President of Tompkins International.
Nourishing a long-lasting relationship
With the pair’s long history of success, International Beauty Solutions continues to turn to Tompkins International for ongoing support. When eCommerce growth unexpectedly struck, the Tompkins team worked with Salon Beauty Solutions and Retail Beauty Solutions to integrate eCommerce processing areas and put walls to optimize picking processes and increase order accuracy and throughput. The new eCommerce operations also enabled International Beauty Solutions to eliminate the use of a third-party logistics provider, resulting in increased profit margins and a fourfold growth in eCommerce order fulfillment.
“With the level of competition in today’s business world, it is increasingly challenging for companies to build and maintain long-term customer relationships,” said Reed. “Our ability to listen carefully to International Beauty Solutions’ needs, uniquely understand their business and work collaboratively to improve their bottom line enabled us to earn their trust and in turn cultivate a more than 12-yearlong relationship, which we look forward to sustaining for years to come.”
*Company names have been changed to protect client confidentiality.