COUNCIL OF LOGISTICS MANAGEMENT CONFERENCE 2000-10-16

DAN ALAIMO

NEW ORLEANS -- The Milwaukee Division of Roundy's, Wauwatosa, Wis., has achieved a 60% to 65% reduction in selection errors and shortages by using voice recognition technology in its warehouse, said Tom Schalk, vice president of distribution.

"We are on target to meet our expected goal of achieving a return on investment in our first year," Schalk said, speaking at the recent Council of Logistics Management conference, New Orleans. As a result of this success, the company will extend use of the system to its Lima, Ohio, division this month and then consider future uses.

Roundy's began a pilot using voice-directed product selection in September 1999, expanded the program in December 1999 and was fully operational with 194 Talkman Computing Terminals from Vocollect, Plano, Texas, in March 2000.

The belt-worn devices incorporate advanced speech recognition and speech synthesis technology, and use integrated spread spectrum radio for on-line communications and real-time transfer of data. Use of a headset allows workers to operate hands-free and eyes-free, improving speed and accuracy.

Explaining why Roundy's went with the voice recognition system, Schalk said he had worked in the distribution center for 18 years, then spent some time in the information systems department where he heard a constant stream of complaints from retailer customers regarding selection errors.

"When I had the opportunity to go back into distribution, I realized that the process had to change. We couldn't continue to do it the way we were doing it with the people that we had. We were asking them to pick by the slot and read the product description, and we expected them to ship the right product. That wasn't working. The process wasn't getting us where we needed to be," he said.

Because of selection errors, Roundy's lost money on pickup of the product from the retailers. "By the time we write the pickup notice, have the driver pick it up at the retail store, get it back, check it in, get it to the right warehouse and get it stocked, we've already spent the value of that case in that whole process," he said.

Reducing the selection errors was the main reason for going with the voice recognition units, but reducing shortages was another key factor. "The shortages were bottom line dollars that we were losing," he said. There also were the sales that retailer customers lost by not having the products.

With the reduction in shortages, and the resulting confidence in its own systems, Roundy's is able to do a better job of investigating shortage claims by retailers, Schalk said.

"This gave us the opportunity to really dig into these shortages and find out whether they were real. Now we are comfortable that we are shipping the right product and we can go out to the retailer and look for that specific product and work with them on their check-in process," he said.

The system has also enabled efficiencies in the variable-weight-meat billing process. Roundy's had been printing two labels, one for the case and the other to record the weight of the product. This was time-consuming and also created multiple potential points of error, he said.

In implementing the voice recognition system, Roundy's kept the paper labels. "We were convinced that we weren't going to be able to take the selection labels away from our retailers. They use the labels to check in product, to look for selection errors, plus there is information on there that tells them the invoice number," Schalk said. However, the selectors in the warehouse would be happy to get rid of the labels, he noted.

Roundy's established the Vocollect system as separate from its warehouse management system from EXE Technologies, Dallas, although they could have been integrated. "We wanted to have them separate so that changes in one wouldn't affect changes in the other," Schalk said.

Treating the voice recognition system as a stand-alone was much less complicated and resulted in a faster implementation, he said. "If we see an advantage to tightly coupling these in the future, we can, but we didn't see that as a reason to wait," he said.

A future use for voice recognition is inventory control, he said, but Roundy's is looking at that as just a future possibility. "Right now the idea is to move voice recognition out into the selection world, and get the benefits out of that. As we are doing that and as we finalize our plan, and we complete our roll-out plan, then we are going to start looking at other applications for the product," he said.