Viewpoint: Stein Mart proves power of transportation innovation

One of the most satisfying results of any management objective is when the benefits not only exceed your departmental expectations, but also unexpectedly flow to other parts of the organization—thus creating operational improvements across the board.

While this may sound like the introduction to the latest best-selling management book, this is just what unfolded for the supply chain team at Stein Mart—a fashion retailer with 260 stores and $1.2 billion in sales in 2010—when it re-engineered its transportation operations over the course of the past two years.

Prior to 2009, Stein Mart had been having some success in shipping product directly, and quickly, from its vendors to its network of stores via small parcel carriers. But while those carriers where doing a commendable job, the retailer was bumping into issues with packaging requirements compliance and floor-ready guidelines, freight visibility was limited, and store delivery times didn’t always mesh with store hours.

“It was getting expensive,” Gregg Sayers, director of supply chain transportation tells our John Schulz in this month’s cover story (page 24). “There were expenses at the stores to get merchandise ready to sell; and there were also problems with managing the receipt of our product and the ability to reconcile anything that was not in compliance.”

Newly appointed Vice President of Supply Chain Rick Schart reviewed the situation with Sayers and Bill Stover, his two new recruits at the time, and the team went to work to re-organize the retailer’s transportation operations. First, the parcel carriers were replaced with a network of LTL and TL carriers, creating dedicated and pool transportation lanes. Then the team spent six months educating vendors on the new process just to get the ball rolling.

Beyond the expected benefits of the new transportation process, the team started to see considerable labor savings at the storefront because managers could staff accordingly now that they knew when freight would arrive. Meanwhile, improved communication with vendors had merchandise ticketed and floor ready, thus cutting more time and expense once on the store floor.

According to the team, the overall cost savings is now rolling in at about $20 million annually. “It came down to having the right team in place, the right carrier and 3PL partners, and having the Stein Mart organization, especially IT, aligned to support the new concept,” say Schart.

This dramatic example of how a supply chain re-design can improve overall operations has earned Stein Mart the 2011 NASSTRAC Shipper of the Year Award, the highest honor bestowed upon the council’s membership and awarded in partnership with Logistics Management.

According to NASSTRAC Executive Director Brian Everett: “Stein Mart’s innovative approach epitomizes the transportation and supply chain best practices that we encourage in our industry.” And once you read this month’s inspiring cover story, you’ll find it tough to disagree with Everett’s sentiments.