Sony Australia Reduces Order Errors And Streamlines Delivery

In the past 20 years, Sony has become the leading consumer electronics company in Australia with a product range spanning hi-fi systems, camcorders, video cassettes recorders, TV’s, portable audio, car audio, recording media and telecommunications.

Sony’s supply chain management objective is to maximise sales, while at the same time minimising the risk for its business partners.  Customers who buy from Sony’s call centre or Web sites will receive their product within three working days of the receipt of their order.  In the future, Sony aims to supply products through “Configure to Order” (CTO) or “Build to Order” (BTO) options.

A problem of volume

In order to meet its own goals, Sony Australia needed a world-class distribution and warehousing system that was seamlessly linked to its SAP R/3 WM system.  It chose TIG International to provide this solution, which included the implementation of TIG International’s Material Memory Tool (MMT) warehouse management solution.

The challenge for TIG International was not insignificant.  Sony’s consumer and professional goods warehouse in Chullora, NSW, which distributes to all of Australia, is huge.  It received up to 2,000 pick orders per day and subsequently has a massive turn over of goods both in and out of the warehouse.

With such a large scale operation, Sony Australia has, understandably, already made some moves towards streamlining its warehousing function, prior to engaging TIG International’s expertise.  The existing system was not, unfortunately, compatible with Sony Australia’s new SAP platform and so efficiency levels from order receipt were not being maximised.

The existing system had to go, but Sony Australia was reluctant to completely abandon its previous investment.  The radio frequency (RF) scanning stations, for example, where replacing completely serviceable pieces of hardware would have been costly as well as time-consuming.

Fortunately for Sony Australia, TIG International is in the unique situation where its MMT system, like most of its mobile data capture solutions, will work on practically any hardware platform, be it a scanning station, the latest state-of-the-art hand-held unit or a PC hooked up to a bar code reader.  With this inherent flexibility of its solutions, produced by the fact that TIG International develops its own applications for each solution it builds, Sony Australia was able to identify some big cost savings straight away.

External standards

A particular challenge for TIG International for this project, was the implementation of the bar coding element of the Myer-Grace Bros ScanPack.  As a dominant player in the Australian retail market, Myer-Grace Bros has published a set of methodology standards that wholesalers have to use if they want to supply its retail outlets.

One of the standards Myer-Grace Bros insists upon is that the wholesaler deliveries are packed by scanning.  This system is based on the EAN system, which means that individual items requiring serial number capture can be scanned and the serial number recorded as it leaves the warehouse.

TIG International was able to completely manage this process for Sony Australia and ensure that the system complied 100% with the requirements of Myer-Grace Bros.  To achieve this, Sony International installed eight supermarket checkout style consoles, which have a bar code scanner linked to a PC running TIG International’s MMT software.

Daunting task

TIG International first became involved in the huge project in 1998.  It tackled the project in two phases.  Having completed Phase 1 of the project in late 1999, Phase 2 was also nearing completion in the fourth quarter of 2000.

Phase 1 involved migrating all Sony Australia’s single item pick orders to the MMT system.  Single item pick orders are those orders that are consisted of a single product line, such as a pallet of 34cm televisions.  This involved the conversion of Sony Australia’s existing 26 RF scanning stations and bar code readers to run on MMT.

Phase 2 dealt with the far more complicated issue of mixed pick orders, where multiple product lines are all in one order.  These are smaller orders and logically, far more common.

Phase 2 also involved serial number recording.  For very little effort, every serial number on a product will be recorded.  This will assist Sony in cutting back on grey market costs.  This is the situation that occurs when somebody purchases a Sony product overseas and then wants warranty serviced by Sony Australia, which is obviously a cost for a product it never received the revenue from.

Until now, there has been no simple way of identifying a product as being one that was sold in Australia.  By making serial number recording part of the4 standard scanning process, from now on significant cost saving will be realised for Sony Australia.

Delivery accuracy

However, the single biggest benefit that Sony Australia has achieved from TIG International’s MMT solution is delivery accuracy.  Delivery inaccuracy is a problem for almost all players in the wholesale distribution market.  I any warehouse with such high volumes of turnover, simple human errors can result in the wrong product being shipped.

The major problem arises if a retailer receives a 70cm television, for example, as opposed to a 34cm television - more often than not- the retailer would not inform Sony Australia that they has received the wrong unit and simply pay for the cheaper unit.  While almost impossible to quantify the number of errors in the past, the scanning process has highlighted problem areas and vastly reduced error rates.

This article first appeared in MHD Supply Chain Solutions (March/April 2001)