CASE STUDY
Shaping Up Warehouse
Operations
Medifast Partners With JDA to Improve Efficiency and
Reduce Costs in Its Distribution Centers
OBJECTIVE
Leverage the power of JDA Warehouse
Management to automate processes, increase
efficiency and cut costs in two distribution
centers.
SOLUTIONS
• JDA® Web Commerce
• JDA® Warehouse Management
Founded in 1980 and headquartered in Owings Mills, Maryland, Medifast is a
leading manufacturer and distributor of healthy living and weight management
products. With 2013 revenues of $356.9 million, the company sells its products
and programs via four unique distribution channels: the Web and national call
centers; the company’s Take Shape For Life personal health coach division;
Medifast Weight Control Centers; and a national network of physicians.
In addition to its headquarters and manufacturing facility in Owings Mills,
Maryland, Medifast also has distribution centers in Ridgely, Maryland and in
Coppell, Texas, to support client orders in the eastern and western regions of
the United States and international areas respectively.
SERVICES
• JDA Consulting Services
REAL RESULTS
• Decreased labor costs in shipping function by
30 percent
• Saved 15-20 percent in annual shipping costs
• Reduced unloading time for trucks from four
hours to 30 minutes
• Increased employee productivity and optimized
headcount
As Medifast started to experience greater volume in each of its distribution
centers, it was important to scale the company’s ERP system to accommodate
its growing business. Part of this new distribution strategy involved updating
its current systems. “We realized that if our customer orders grew to the point
of needing a multiple-shift operation, we would need to develop a strategy to
update our current systems,” said Jim Munafo, director of logistics for
Medifast. “Our process was very manual and required halting work in one area
of the business to begin work in another area. The manual processing of 2,500
to 4,000 daily shipments often resulted in quality issues because of lost or
damaged packages.”
Medifast implemented a warehouse management system (WMS) to optimize its
distribution center operations by taking pressure off of its main ERP system
and improving the functionality of its other systems. While JDA Software was
a natural candidate because Medifast was already using its web commerce
solution, the company also considered four other software providers. In the
end, by conducting site visits with existing JDA customers and attending JDA
industry events, the team at Medifast decided JDA was the right partner.
“Just in the shipping function alone,
JDA has created a labor cost
savings of approximately 30 percent
— and also allowed us to save 15-20
percent in shipping charges. Our
financial savings in shipping fees
are probably three to four times
greater than the labor cost savings
because we’ve reduced our overall
package volume.”
Jim Munafo
Director of Logistics
Medifast
Following a seven-month implementation process,
the company went live with JDA Warehouse
Management, from JDA’s Intelligent Fulfillment™
solution. “It was seven months of revamping almost
every process from the ground up,” said Medifast’s
Texas Operations Manager Ross Irving. “Sixty days
after launch, we were back to running at 100 percent
capacity and starting to reap the benefits. That’s a
real quick turnaround time.”
An Exercise in Improved Efficiency
Today, both Munafo and Irving are proud of the
results Medifast has achieved from its investment.
“Before, there were many hiccups and bottlenecks.
But now, thanks to JDA Warehouse Management, it’s
all one smooth, automated flow,” said Irving. “As
you’re pushing orders out the door, you’re bringing
orders up to the floor pick space. At the same time,
you’re receiving product and putting it exactly where
it needs to be. Our people are now working on
fulfilling orders instead of working on all the
paperwork needed to fill an order.”
With the direct-to-work queue in JDA Warehouse
Management, about 40 percent of Medifast’s
distribution employees are working on what the
system is telling them to do. The solution has
eliminated the paperwork and all of those movement
transactions — and now Medifast’s employees are
working in real time. Across its distribution centers,
the company has been able to optimize headcount,
while maintaining quality and efficiency.
“By providing the right tools and resources to
support our employees in their jobs, we improved
productivity across both our distribution centers and
greatly enhanced employee morale,” said Guy Sheetz,
executive vice president of supply chain of Medifast.
“JDA has been a tremendous partner through every
phase of implementation and continues to provide
ongoing, stellar support to our team.”
Medifast has increased its productivity largely as a
result of newly integrated pick-to-light systems, as
well as weigh-in-motion and inventory tracking
capabilities. Real-time visibility into what is
happening and what needs to happen on the
warehouse floor has empowered Medifast’s staff to
make quicker and more effective decisions. There
have also been improvements in the receiving
function.
“Before we implemented the JDA Warehouse
Management, the unloading process often took up to
four hours. Now it takes just 30 minutes to receive a
truck, including calculating all of the put-away
locations,” said Munafo.
Impressive Financial Results Take Shape
While Medifast has achieved cost savings on labor,
the real financial payback comes via lower annual
shipping expenses. “If customers reach a certain
dollar amount on their order, we pay the shipping,
and this happens quite often,” said Munafo. “If a
single order requires more than one box, we actually
end up paying the shipping costs for a second
package, which is not cheap. We pay our carriers by
the package, not by the order, so it is imperative for
us to minimize extra packages.”
Previously, Medifast employees would gather all of
the items in a given order in a tote, and then pack
them in a shipping box. Their efficiency was rated on
how many boxes they would fill every hour. Because
they were hand-selecting boxes and focusing on
speed, they would often pick boxes that were too big
or too small, resulting in excessive use of void fill or
delays from repacking if they had chosen a shipping
box that was too small. Then it took two employees
just to scan the packages, weigh them and apply
shipping labels. Considering the company ships an
average of 2,500-3,000 packages per day per site, it
was a very labor-intensive effort.
“Just in the shipping function alone, JDA has created
a labor cost savings of approximately 30 percent —
and also allowed us to save 15-20 percent in shipping
charges. Our financial savings in shipping fees are
probably three to four times greater than the labor
cost savings because we’ve reduced our overall
package volume,” said Munafo. “We used to ship
about 1.5 packages per customer order, but now
we’ve reduced that to 1.10 packages per order. This
savings helped increase the ROI on the project and
will put us in a great spot moving forward as our
carriers move to a ‘dimensional weight’ pricing
system.”
Now the company has the product weights and
dimensions loaded into the WMS. It can choose the
right box and apply the shipping label on the front
end before the order is picked. Products go right into
the shipping box, instead of into a tote first.
jda.com
[email protected]
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