Great customer service is one of the hallmarks of any successful company. The one aspect of customer service that can break a company is not delivering product in a timely and cost-efficient manner. Many companies have experienced challenges with this in the wake of a growth spurt or while facing business decline as the economic climate changes. The trick is to stay in front of the changing landscape—plan for the future, and fit your operations to handle growth and the cycles of the future.
With that in mind, JAFRA began an extensive analysis of its distribution operations last year. We sought to answer: Are we fit for the future growth we are expecting? Should we maintain two U.S. distribution facilities, one on each coast? Or consolidate the two facilities into one centrally located operation? Do we go with a third-party logistics (3PL) provider or remain an in-house operation? We had to explore our alternatives and make some constructive yet effective decisions that would be infallible to everyone concerned.
Making the Decision
After analyzing our two options—3PL or remain in-house—and considering the costs, such as overhead, fixed labor, inbound freight from our Mexico manufacturing facility and outbound freight to our consultants, along with the service impact, capital requirements, one-time expenses and consideration of the employees at the two facilities, it was evident that consolidating the distribution operations into one, centrally located facility was the smart way to go.
Overall, the consolidation would be more cost effective, with an annual savings of more than $1 million. Duplication of resources, such as rent, utilities and personnel can be avoided, and it’s easier from an inventory management perspective. But, on the minus side, with only one facility we wouldn’t have secondary backup in the event of a natural disaster or a catastrophic event, such as a fire. That’s why we established new contingency and disaster-recovery plans with a third-party logistics company to ensure limited interruption in service to our consultants and their customers in the event there is an emergency.
We also had to consider the fact that, with closing the two facilities in Bridgeport, N.J., and Westlake, Calif., we would lose employees. Both facilities had employees who had been with the company for more than 25 years. They helped make JAFRA the company it is today. JAFRA prides itself on treating its employees very professionally and with respect. We were very sensitive to the disruption the employees would experience due to our strategic decision. Our No. 1 priority was to provide a fair and comprehensive severance package, including outplacement services plus ample notice—the majority of our employees were given more than five months’ notice.
With the decision made to go with one, centrally located facility, next was to determine where, when and how we would make this happen. We started with the where.
Choosing the Location
Many aspects were considered in the selection of location and the actual space—size and availability, competitive pricing, cooperation from the local city government, flexibility by property owner to make improvements and confidence in their ability to provide quality and timely services in the future, and the availability of qualified candidates.
We found the Dallas, Texas, area to have what we were looking for, including overall lower costs and more competitive supply conditions than New Jersey and California. In addition, there was a very good base of professional and qualified candidates with strong work ethics. Space for the new facility was found in Lewisville, a northwest suburb.
This central location also afforded us the opportunity to deliver more balanced service levels to all our consultants across the country. Delivery to the majority of states from Texas takes between one and three days, well within our service commitment of 7–10 business days.
When and How to Make It Happen
We wanted to complete the project and be in full operation by June 2010. We had selected the space in July 2009 and built out the office areas, conference and training rooms and break room, as well as installed heating, air conditioning and lighting, plumbing and electricity throughout the warehouse—all by early April 2010.
All key personnel were hired, including an operations manager, picking line supervisor, warehouse supervisor and imports/exports coordinator. We pulled together a phenomenal core team who are dedicated to developing and training for improvements to drive excellence. Progress at the new facility has been advancing at record speed, with a team of leaders on-site who have high-performance attitudes and standards.
Operations were ceased at the New Jersey facility in April, and at the California facility at the end of May, and all viable equipment and inventory were transferred and incorporated into the Lewisville operations.
Employing Best Practices
The improvements built into the new facility will allow us to employ 5S and Lean Six Sigma processes to ensure we are operating under continuous improvement and best-practice procedures, and running an overall efficient and lean operation.
his will guarantee the highest level of service possible to our consultants and a safe and productive work environment for our employees. It also presents opportunities for exposing non-value-added activities and cost savings, resulting in additional process improvements.
Our goal, given the single-site location, was to design a line that would provide both the flexibility and capacity to support our current business and service requirements as well as our expected future growth.
The facility was also designed to give optimum natural light through skylights and energy-efficient T6 lighting, allowing us to operate in an environmentally responsible manner. This provides more pleasant working conditions for our staff in the warehouse and on the pick lines.
From just a vision to now a reality, the new JAFRA distribution facility is where our commitment to world-class customer service will continue to be evident to our consultants and their customers—by employing best practices for continuous improvement from lessons learned, and always delivering product in a timely and efficient manner.
Connie Tang is President of JAFRA USA Inc.