Oded Haner, CIO at Monster Cable Products Inc. in Brisbane, Calif., has spent the past year consolidating and automating the consumer electronics company's warehouses.
Using radio frequency identification tags and other technologies, the project has given Monster Cable a previously unthinkable view of inventory, shipping and orders. While also reducing the likelihood of error, Monster Cable has positioned itself with a wealth of new information that can be used to improve operations even further.
One CIO Decisions award judge wrote that Haner's own vision "expands past the doors of technology and into most aspects of the company." Haner, who began his IT career in Israel, has been CIO at Monster Cable for three years. He spoke about the project with SearchCIO-Midmarket.com.
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Read the full transcript from this podcast below:
CIO Oded Haner: A clear view for shipping and receiving
Zack Church: Hi, this is Zack Church, news writer for SearchCIO-MidMarket.com. On the phone today, we have Oded Haner, CIO at Monster Cable in California. Oded is one of this year's Midmarket IT leadership award winners. Oded, how are you today?
Oded Haner: Great, thank you.
Zack Church: Excellent, glad to hear it. Well, I'd like to have you tell us a little bit about the project that you've won the award for. I know it had to do with automating the shipping and receiving there at Monster Cable, but why don't you describe it in your words, please?
Oded Haner: Sure. The project was really part of a greater metamorphosis. Monster Cable is going, mainly due to the growth we've had in the last couple of years and the rapid change of the consumer electronics market, whereby we have decided to consolidate a few small disparate warehouses, each fairly small, into one significantly greater and more complex warehouse. And so there was a big logistics for engineering project, where the automation was part of, and actually contributed to, the overall success of the project.
Our task, or the task at hand, was to be able to fulfill all the orders, as well as all the shipments internationally to our international logistic centers from a single location. The challenge was to do it significantly more efficient than each smaller warehouse could do, and our economy's a scale that's helped us, obviously, to accomplish that, but the significant advantage came from overhauling all the processes and the basic methodology used for inventory handling, and adapt receiving and shipping in particular, and then support that, obviously with technology.
We did not use any currently already, normal technology like RF or RFID. We used bar codes or bar code scanning, but very little of it, and so the idea behind this project was to reach the efficiencies that at least the market demands from us, and then some, do it with a higher quality than we did to date, and then obviously being able to do that at the lower cost of making sure that the project is cost-effective within the short term, obviously due to the reason that the market is more competitive, and becoming even more competitive as we speak.
Zack Church: So you said you did not RFID here?
Oded Haner: In the past, we did not. Currently, we do.
Zack Church: Oh, okay. So you are using now?
Oded Haner: Yes.
Zack Church: So tell me a little bit about that as well as the other technologies and applications you used here.
Oded Haner: Sure. The need across the market is to be able to track the inventory much more...in a much more automated way than we did in the past. In the past, obviously, there were, you know, a lot of labeling, case labeling and pallet labeling, but it requires a manual, or person manually scanning one case after another, or, at best, a conveyer belt to offload a truck or load a truck, depending on whether it comes from a vendor or goes to a customer.
RFID obviously makes all of this very transparent, and as a pallet currently gets out of a truck that arrives from a supplier or from our manufacturing facilities around the world, all of the RFID tags will automatically be scanned. Obviously the pallet RFID will be scanned. By virtue of doing that, we have significantly more accurate snapshots of inventory at any given time in our warehouse within locations, too.
I think, more importantly, we enable our customers and specifically the bigger ones, like Best Buy, Circuit City, and Walmart that have RFID initiatives, to...we collaborate, or...to integrate almost directly into our system by virtue of sharing the RFID that's heading their way. They will confirm receipt all the way to the case, and hopefully in the near future to the item level. And the biggest advantage here, obviously, is inventory accuracy, and the ability to almost not rely any more on manual bar code scanning that has been kind of the practice for the last couple of decades.
Zack Church: Right, and just to clarify for anybody who listens, I know you mentioned consumer electronics, but what sort of products is it that Monster Cable is moving in and out?
Oded Haner: Monster Cable has a big variety of products, mainly for the audio and video market, but the big varieties, all the way from simple stereo cables that all of us, I'm sure, use in our homes through very complex, very expensive surge protection fuses that are worth thousands of dollars, and are almost the ones we have to white glove and handle very carefully, obviously for inventory control reasons, but, more importantly, for quality of service. We want to make sure that the best product gets to our customers, and to their customers, which are the end consumers.
Zack Church: Right, so there are certainly some big ticket items involved here?
Oded Haner: Yes.
Zack Church: Tell me a little bit about the ROI on this project, what you were aiming for, and what improvements and results you've seen because of this?
Oded Haner: Yes. ROI on this project was something that we calculated, or something that we thought of over months. It was not easy, because we did not have a good benchmark to go against. We did not know the quality, overall quality, and often detailed quality of our shipments to our customers. We knew of troubled areas, but we did not know the overall quality. We couldn't calculate the cost of one box shipped out of the warehouse, and, last but not least, we knew exactly what our ability to deliver, to ship, on time is, but it was a snapshot at any given moment. We did not have a good idea of percentage of shipments over a period of, let's say, a quarter or maybe even a year, that were back-ordered, and, even worse than that, out of these back orders, we had great difficulty understanding or finding out which orders we lost because we couldn't fill on time.
So it took us a while to put all these success factors, if anything, or criteria for success, to word it kind of differently, for this project, but once we did, it basically touched those three areas. It was about quality. We wanted to make sure that we are capable of measuring everything to the smallest detail, and we defined a specific KPI for quality. It had to do with quality of service, it had to do with quality of, specifically, inventory control, and it had to do with damaged products that we have in the warehouse. That was one category. Another category was cost. We had to know exactly how much we spend on logistics, and every single function.
Some of our customers require value add work. Re-palletizing is an example. Re-labeling is another. We did not know how much it cost to do it. We knew that we can, and we were doing it tens, if not hundreds, of times a week, but there was no price tag behind it. It was kind of a global overhead cost. Today, we know exactly, all the way to the second, how long a batch of value add orders will cost us, and so we know exactly how to, first of all, make it more efficient than it is today, but, more importantly, how to cost our product more accurately by customer. And the last, which is I think the most important, and where we got the biggest ROI, is being able to deliver on time, or have efficiency.
Ultimately, companies in today's market are required to deliver more, quicker, and cheaper. And Monster Cable is no different at that. The solutions that I was tapped to put in place ultimately required, if I may do an analogy or a metaphor of a sort, require me to put a sports car, but one of the fastest ones that could race to the finish and get first, drive maybe the 24-hour Le Mans, and then, at the same time, being able to haul the capacity of an 18-wheeler. And so the solution that we had had to be measured in its scalability.
We had to be able to fulfill very big orders or very small orders at the same time. It had to do with the ability to scale to three or four acts in high season. Monster Cable is in a market that's very seasonal, all the way from about early August through beginning of January is our high season, then it drops off to a low season from January to about May, maybe June. And so the difference between low and high season is significant, and we had to put together a solution that would fulfill obviously both, and be efficient at both.
So KPIs were put into place to do that, and, last but not least, the ability to --- and that may be the biggest challenge --- to think what the business will be three, four, five years from now, and make sure that the solutions we put today will fulfill the needs we have down the road.
Zack Church: From the conception of this project through the completion, how long would you say it took?
Oded Haner: About an eight month project. The DC consolidation or DC engineering or logistics engineering project, it was about a year in the works, but actively from the planning phase, or from the analysis phase that we started, about eight months ago.
We're live now, and it's about an eight month start to implementation. I do think it will take another two, three months to refine all the standard operating procedures that we have in the place, and make sure that all the rough corners are polished properly, and the ultimate, or the high efficiency that we're expecting, are truly delivering. We will be able to test the system, or test the system truly this coming August, when high season will start.
Zack Church: Right. That will be the test. Well, it sounds like you have a lot more visibility in the business now, and should really be able to see how things operate.
Oded Haner: Yes.
Zack Church: Another question, just a final question aside from the project, that we're asking the winners, is what sort of technology do you see coming into your data center or IT department that you think will be important over the next coming three years or so?
Oded Haner: So the project is a good example of what I think will be needed more and more, which is the right visibility, or the ability to make information out of data. All of us have been collecting data in our earpiece systems and other systems over the years for decades now, and it was fairly hard to harvest that information, aggregate it the right way, summarize it, and then make it accessible to the right people at the right time wherever they are. So that need will become increasingly greater as time passes.
We need to be able to make decisions very quickly. Obviously none of us can make good decisions without having the right information, and so accessibility of information is key, almost paramount, to operating a business today, and so I think the information that we will need, or the technology that we'll need will obviously have to do with getting the right data correctly, making information out of it or maturing that data into something that is comprehensible, depending on the level, and accessible, and then, last but not least, make it accessible to those that are remote.
More and more of our operations are overseas. Monster Cable is a global company with many warehouses and manufacturing facilities in multiple continents, fulfilling orders for different types of customers, different languages, on different continents. So we need to be able to make sure that all the data that we have is converted to information, and then made accessible to all of these people that request it for the course of their business.
Zack Church: Right, and I see that you're in California, Reno, Las Vegas, Ireland, London, Hong Kong, so you are around.
Oded Haner: Yes, and we have customers anywhere from Africa through the Middle East, obviously Europe, the Far East, and North America and South America.
Zack Church: Well, thank you for taking the time and joining me today for this conversation. Congratulations again on your win.
Oded Haner: Thank you.
Zack Church: We look forward to seeing you CIO Decisions Conference.
Oded Haner: It was my pleasure. Thank you very much.
Zack Church: All right, thanks very much.
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This was first published in June 2008