Anna's Linens positions itself as a home furnishings value leader. As it grew, however, the chain began to pay a premium for inefficiencies in its supply chain.
                
Named for the mother of founder and CEO Alan Gladstone, the Costa Mesa, Calif.-based chain sells fashions for the home, including bed linens, window coverings and bath accessories. Operating 258 stores in 18 states, Anna's Linens needed to boost the efficient movement of stock to its stores to keep pace with formidable national competitors like Bed Bath & Beyond, J.C. Penney and Wal-Mart.

The company's supply chain was "much like a large, V-8, gas-guzzling automobile," says vice president of supply chain Miles Tedder. "It works, but not quite as efficiently as one of the modern hybrids."

Since its inception more than 20 years ago, Anna's Linens has supplied its units by means of store-level purchase orders. As the chain expanded, it became clear that a more consolidated approach was required.

"We were writing over 750,000 purchase orders a year," Tedder says, and the company "felt there were economies of scale that we should be capitalizing on at this point in our growth cycle."

Anna's Linens decided to transform its supply chain with an outsourced, third-party logistics and managed-services solution. Key to the plan was managing transportation opportunities for its 45,000 to 50,000 inbound and outbound shipments annually without adding staff or significant technology infrastructure.

The goal was to utilize strategically placed servicing locations that would receive consolidated store purchase orders, then sort and transfer product to the stores. What drove the decision to outsource "was the fact that we wanted to be able to leverage a broader base of systems, capabilities and experience in transportation management," Tedder says, adding that opting for an internal solution may have taken two to three years to set up and launch "under the best conditions."

Anna's Linens contracted with Frisco, Texas-based Transplace, which deployed an on-demand system for order management, shipment planning and optimization, execution, tracking and visibility and performance monitoring.

Transplace offers "the ability to negotiate rates for hundreds of thousands of shipments with carriers, versus our 50,000," Tedder says. "We wanted to select a company that had the software and analytical capabilities, including the engineering capacity to do what we felt was necessary, and had the scale … to leverage their buying power."

Cutting transportation costs
For Anna's Linens, Transplace is controlling transportation costs by consolidating inbound/outbound orders to take advantage of multi-stop truckload opportunities, reducing pickup-to-delivery lead times and streamlining delivery processes and communication with the stores. The Transplace model also holds the promise of reducing chargebacks, better use of warehouse shelf space and increased participation in promotions and strategic collaboration.

Central to a successful implementation is developing a customized solution to fit the needs of a particular retailer by gaining an understanding of its business challenges and strengths and weaknesses, says Bill Hale, vice president of marketing and business development for Transplace.

"It is really imperative for us to get behind our customers' eyes," he says. "We look at the supply chain and at the challenges from their perspective. To do that successfully, you must get a good feeling for their culture and what they are trying to accomplish."

From there, "we have to focus on supply chain predictability," Hale says. "It's not a guessing game: everything is very specific. You can't carry too much inventory and you can't carry not enough inventory — it has to be spot on. The technology and the reporting are absolutely critical; the on-time performance is absolutely critical."

Transplace designs what Hale calls a "glass pipeline" that provides clients with 360-degree visibility into their supply chains. We look at it as every step of the way they need to have visibility. It can't be reactive. It has to be pro-active," he says.

Working with Transplace has helped Anna's Linens enhance the logistics culture through its organization, Tedder says.

ROI via hurricane
Immediate payback on its investment occurred last fall, when, in the midst of the system implementation, Hurricane Ike hit Houston and knocked out telecommunications to a distribution center that serviced more than 50 stores. The DC was without power for three weeks, impacting the retailer's busy shipping season and throwing a wrench into plans to stock 14 new-store openings.

"In the midst of what should have been a routine sequential inbound implementation transitioning into an outbound implementation," Tedder says, Anna's Linens was "knocking on Transplace's door, saying, ‘We know we had this great plan, but guys, we're in trouble. So, forget all of that. What can we do immediately?'"

Generally speaking, maintaining complete control over the supply chain "gives you the greatest degree of confidence," Tedder says. "But, by the same token, the degree of potential control that may or may not be lost is far outweighed by the benefits of … being able to leverage the experience, software, and engineering capabilities of a company three, four or even five times our size."