World Duty Free, the largest airport retailer in the UK, and wholly owned subsidiary of BAA plc, has over 60 shops in Heathrow, Gatwick, Stansted, Glasgow, Edinburgh, Aberdeen and Southampton airports. The company’s shops sell both duty and tax free goods that are typically high-quality, brand name merchandise such as liquor, tobacco products, fragrances and luxury gifts. In addition, World Duty Free also operates specialty airport shops, including World of Whiskies, The Cigar House, The Wine Collection The Beauty Studio and Bon Bon Voyage.
World Duty Free is unlike any other retailer and therefore has unique requirements from its IT systems. All World Duty Free shops trade 365 days of the year, many being open from first flight to last flight, 5.30 am to 11.00 pm, with some never closing at all, meaning that the shops must always be well stocked.
All the UK stores are served from a single warehouse in Surrey. Two years ago, World Duty Free realised its existing warehouse management systems needed to be upgraded as part of a wider logistics strategy.
This aspect is key to World Duty Free as achieving the highest degree of inventory accuracy within its bonded warehouse is critical. Whereas most retailers provide an allocation for shrinkage as stock moves through the supply chain, the duty implication on World Duty Free’s stock requires the company to maintain 100 per cent inventory accuracy and end-to-end visibility of goods as they move throughout the supply chain.
The accounting capabilities of the systems were also limited, with the result that World Duty Free was not easily able to estimate the costs of each separate function.
David Hunt, logistics director at World Duty Free, says: “Because we were running old technology, re-coding to add new functions was proving difficult. As most of the tasks were paper-based, this meant that we could not easily match demand to employee schedules.
In putting together a request for proposals from vendors, World Duty Free took the opportunity to define its ideal system, which would include a radio frequency capability that would cut down on the volume of paper processing, would improve workflow and would allow a faster turnaround of orders.
World Duty Free shortlisted all the leading warehouse management systems vendors but Hunt says: “We chose PkMS from Manhattan Associates because it has a strong presence in the UK and is the number one supplier in the market.”
He continues, “In looking closer at the solution, Manhattan Associates proved the closest fit with our business, which would mean that we could avoid costly and time-consuming development. We also liked the range of solutions on offer that other candidates did not have or could not integrate.” World Duty Free were also given the confidence to proceed because of what Manhattan Associates had achieved within other organisations, some of them with similar operations to their own.
The project went live category by category starting with tobacco and then moving on to liquor and confectionery. In the event, the go-live phases went without a hitch.
Mobile radio-frequency technology in the form of hand-held and vehicle-mounted computers from LXE improves the speed and accuracy of intra-warehouse product movements. Operatives use the mobile computers for receiving instructions about picking/put away movements and for capturing and recording confirmations of completed activities as they happen. Because this information is gathered and fed into PkMS in real-time, World Duty Free have a ‘live’ picture of their entire warehouse inventory.
The Surrey warehouse handles over 20,000 SKUs and because PkMS interfaces with World Duty Free’s merchandise management system (from JDA), the flow of goods can quickly and accurately meet store demands.
World Duty Free has described the benefits as increased productivity compared to the old manual system. The company has also reported greater stock accuracy that has in turn reduced leakage and duty penalties. Moreover, increased accuracy of data has led to greater availability of products to stores, moving 1 per cent from 98.4 per cent to 99.4 per cent. Hunt adds, “We have reduced the number of nil picks, which are picks where the item cannot be found and we were losing 3-4 per cent on demand in the warehouse. The Manhattan Associates system has resolved this as we now have full location control.” Further, the new system gives World Duty Free complete stock visibility, because PkMS is integrated with its JDA merchandising system. Merchandisers now have daily instead of weekly stock positions - this has given them the confidence to hold less stock in the warehouse, because they know they can react more quickly to demand.
In talking about Manhattan Associates, Hunt says that, “They responded well to our needs and proved very capable. They were able to make a small number of modifications swiftly and completed the project on time and on budget.”
He adds, “PkMS has already enabled us to increase product availability and we feel confident that it can continue to help us meet the growing demands of our customer base, while also meeting our stringent inventory accuracy demands. The accuracy of the new system has enabled us to iron out delivery problems.”
Following the success of Manhattan Associates’ WMS, World Duty Free has decided to make further improvements and is reviewing various additional software solutions from Manhattan Associates. These include SlotInfo to optimise put-away and picking, SmartInfo, to improve reporting on the performance of the supply chain, and infolink, a tool that enables retailers to collaborate with their suppliers. Hunt explains, “A lot of time is currently spent identifying and breaking down supplier deliveries because we use purchase order numbers, whereas, with infolink, we could move to Advanced Shipment Notices.”