TrueCommerce VMI Helps Optimize Hub-and-Spoke Distribution for Next-Day Delivery

Headquartered in The Woodlands, Texas, Conn’s HomePlus is one of America’s leading furniture, mattress, electronics, and appliance store chains, with almost 150 retail locations across 15 southern and western states. With a mission to make it possible for everyone to purchase quality, long-lasting products for their homes, Conn’s is famous for their “buy it today, get it tomorrow” delivery promise. They also offer in-house retail installment financing programs.

According to Michael H. Luckett II, Executive Director of Logistics and IT Management, Conn’s started looking into Vendor Managed Inventory (VMI) solutions in 2019 as a way to “help our merchant teams get ahead of the buys.”

From “Min/Max” to Maximum Collaboration

Conn’s uses an efficient “hub-and-spoke” distribution model, with product replenishment moving from a distribution network involving two RDCs, 11 Hub-Spoke distribution centers (DCs) and on to 146 retail locations. For almost 40 years the team had managed store replenishment allocation on a “vintage” IBM AS/400 business system that was short on modern analytics capabilities.

Conn’s replenishment forecasting involved considerable manual effort, with help from spreadsheets and a traditional “min/max” replenishment method. Conn’s was already investing in an EDI solution from TrueCommerce. As that conversation evolved other TrueCommerce solutions came into the picture—especially potential synergies with VMI.

“We wanted somebody that was ready to grow with us and flexible enough to handle our unique model,” reflected Mr. Luckett. “Our next-day delivery promise required a partner that was able to look at some of the unique demands that puts on us.”
Conn’s had a strong business need to optimize both store replenishment and truck utilization, especially truck rounding at the warehouse. But they offered VMI providers a further challenge: what they wanted wasn’t “really” VMI.

“In our implementation the inventory is going out to our own facilities, not coming in from vendors,” Mr. Luckett clarified. “TrueCommerce is a partner that’s willing to flex to get to where we need them to be. We’d ask for something and their team would say, ‘Let us take that back and think about it,’ and the next thing you know they had something we could try.”

Implementing New Software and a New View of Replenishment

Implementing new software can require not just training but also a mindset shift. The first implementation step was a controlled rollout to Conn’s RDCs and 11 Hub-Spoke DCs, where the new, user-friendly solution was readily embraced by managers whose lives were now much easier. After a couple of months to shake out issues, Conn’s expanded the new replenishment solution to their retail stores.

“From the DC operational perspective, we automated a very manual process for how they were building trucks and releasing orders,” highlighted Patrick Wehby, Industrial Engineer with Conn’s. “Now the DCs don’t have to do all that guesswork and fumbling back and forth between a bunch of different transfer numbers, because everything is consolidated within TrueCommerce.”

The VMI solution automatically rounds out each truck so that the relationship between trucks and transfer numbers is straightforward, and all the items fit in the truck. This greatly reduces labor and management oversight requirements at the central warehouse and DCs, while also making both picking and truck utilization much more efficient.

Radically Improved Truck Utilization

Before implementing TrueCommerce VMI, Conn’s relied on a manual approach to truck building across its distribution network. This led to time lags and inefficient use of trucks.

Conn’s began seeing positive ROI from their TrueCommerce investment just weeks after they began using the solution in their DCs. Mr. Wehby estimated that about 75% to 80% of the benefit from TrueCommerce VMI for warehouse operations comes from truck building automation alone.

“The truck rounding feature immediately started impacting our truck counts,” echoed Mr. Luckett. “That’s hard, obvious dollars saved every day.”

Less Sent-Back Product, Fewer Change Requests, Major Time Savings

Another major advantage of TrueCommerce VMI is more automated and accurate replenishment, including the ability to adjust for seasonal peaks. Plus, the new system eliminates considerable manual effort and ad hoc data manipulation.

Increased replenishment accuracy compounds the solution’s tangible value in multiple ways, including:

• A significant decrease in product returns
• A reduction in transfer movement and product damage thanks to reduced returns
• Fewer out-of-stocks and lower not-in-stock numbers, helping to boost product availability and sales

Another win with the VMI system that Mr. Wehby’s team especially appreciates is a big decrease in questions and other demands on IT from retail stores around adjusting their min/max allocations.

“We have fewer communications from the stores, asking questions or asking for more or less product,” Mr. Wehby commented.

Support That’s a Strategic Advantage

Because of Conn’s custom implementation, TrueCommerce support goes “above and beyond” user onboarding and training, bug fixes and the like. It’s part of a collaborative effort to extend the TrueCommerce VMI solution in a new direction that is benefiting not only Conn’s but also other retailers and distributors with “hub and spoke” distribution models.

“From a strategic standpoint, it’s the engagement of the senior leaders and developers and designers that I really value,” emphasized Mr. Luckett. “I don’t think I’ve ever come out of a meeting with TrueCommerce where I didn’t feel like our asks were heard. That commitment by the senior leaders in the TrueCommerce organization to drive our business forward has made this a great relationship for us.”

Futures

Conn’s HomePlus and TrueCommerce both look forward to expanding the scope and value of their partnership.

“I’m super positive about the TrueCommerce relationship,” Mr. Luckett shared. “Their team has so many great ideas on tap for us. Not to mention, we still haven’t begun utilizing the solution to streamline how we order from vendors.”

If you would like to learn more about Conn’s HomePlus partnership with TrueCommerce and the benefits of a leading VMI solution, check out their complete success story.

About the Author: Scott Kleinert is a global sales executive with more than 25 years of experience in supply chain strategy development. He is currently responsible for TrueCommerce’s collaborative management service offering with specific expertise in the consumer goods and retail industries. Scott leads the team that initiates and develops the TrueCommerce vendor managed relationships as well as cementing the value associated with these collaborative initiatives. Scott lives in South Carolina, taking advantage of all that coastal living offers.