Corgi’s model costs savings

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Corgi is the leading name in die-cast models and one of Britain’s best known brands. Its scale models are highly sought after and the increasing market for collectibles can push the auction price of limited edition and rare models to reach hundreds of pounds. In addition to the collectibles, there are large volumes of models which are sold through retailers and wholesalers.

The company’s distribution was already handled by a third-party distributor but in a market where peaks and troughs of demand are common, Corgi felt it needed a flexible all-in-one solution _ the toy and collectibles market can be difficult to predict with Hollywood films, Christmas and advertising ventures swaying the balance of demand.

Corgi is moving into mass market toys with brands like; Batman, Little Red Tractor, Starsky and Hutch and the Dukes of Hazzard (which has come out to coincide with the film out on general release). With its forthcoming 50th anniversary in 2006, Corgi needed to secure a distribution package that had a flexible approach and could handle the kind of fluctuation that the market was likely to produce.

A chance meeting at Logistics Link North last year provided the solution. Corgi operations director Peter Johns, who was visiting the exhibition, had walked onto Clandestine Software’s stand. A discussion with Clandestine’s director of business development, Mike Smith, led to Johns being introduced to Leicestershire-based distribution business C S Ellis. At Corgi’s request, Clandestine arranged a site visit to C S Ellis and Corgi was impressed with the potential that it offered a five-year contract. Gary Schofield, sales and commercial director for C S Ellis, takes up the story, explaining that part of the deal entailed providing a very narrow aisle (VNA) warehousing operation. C S Ellis handles all of Corgi’s UK distribution, apart from small parcels, and a DirectMail operation in Southampton. The company uses its general transport service for large consignments and the pallet distribution network Palletline for smaller ones – CS Ellis is a partner in the Palletline network.

To give an idea of the scale of the Corgi business:

  • It ships around 30,000 units a day to a wide range of customers, with a new release coming out every two weeks for wholesale and key retailers.
  • It has a 21-day shipping line with Maersk from its manufacturers in China.
  • Exports are to Europe and the rest of the world.
  • The company uses 28 UK wholesalers and retailers.
  • The normal product range covers about 1,200 products.
  • Four containers of product enter the UK via Felixstowe once a week and are taken to the warehouse. From there, product can be shipped out the next day, as some products are very time sensitive for wholesalers.

Three is never a crowd when it comes to cost savings and Corgi, C S Ellis and Clandestine have proved just that. Initial savings of 38% is forecast over the five-year contract where at the end all asset write-offs from the equipment and racking will be complete. “We could also forecast not only a saving during this five-year period but the next period after it if they [Corgi] wanted to stay with C S Ellis,” Schofield emphasises.

Corgi’s previous operation incurred some problems in that the previous 3PL provider’s distribution centre was about 40 minutes away from its head office, located at Meridian Business Park, Leicester; the racking system was a traditional double-deep system, which it felt was not ideal for the product; and the system had no RF facility.

To monitor the efficiency of the new distribution system Corgi imposed Key Performance Indicators (KPIs). Schofield comments: “Monitoring systems are critical in our industry and Corgi put in a number of monitoring processes to ensure that the collaboration remains on track.” Corgi requires a 99.7% level of accuracy – classified as three-sigma (three errors per thousand), the industry measure for world-class performance. To achieve this result requires incredible efficiency throughout the system as a whole otherwise the error multiplies. To ensure it maintains the high level of accuracy C S Ellis uses Clandestine’s LocateIT software, which strengthens any weaknesses in the existing production control or ERP solution concerning warehousing, inventory control, track and trace and complex picking issues.

Smith says LocateIT enables customers to know not just where the batch is at any time, but when it came in how many pallets the warehouse has got left and where everything has gone. Corgi already had its own sales order system which it did not want to replace and with LocateIT, it integrated seamlessly to order profiles with total transparency. The level and type of partnership was very important to Corgi and C S Ellis offered a complete bespoke package in terms of distribution and warehouse management.

Clandestine’s LocateIT software offered an efficient package that could deal with the storage and warehousing requirements. Schofield comments that LocateIT is sophisticated and customisable. It was transparent in passing information across to the transport software and integrated seamlessly with their existing transport system. Smith spoke about Clandestine’s LocateIT warehouse management system and said that by design LocateIT is a standard package but has built in flexibility.” On the pace of the industry and the speed at which programmes have to be resigned or upgraded, he comments: “It’s very much driven on the speed of the market.” He comments that the market is driven by customers who are willing to expand to meet their business demands and remain flexible to their needs. This drives software to be equally flexible and drives everything forward. He comments: “The underline redesign is already happening, though it’s seamless from the point of view from the customer base.”

Rather than having a system that was spaced out in different locations it provided everything under one roof, helping to lower costs. Schofield attributes the total solution that C S Ellis offered as “absolutely key”. Modern regulations regarding building new warehouses can be strict on height and line-of-sight. C S Ellis already had an established warehouse in place which was once part of the GEC site where Sir Frank Whittle pioneered the invention of the first jet engine. Although the 25,000sq ft dedicated warehouse was derelict at the time, Schofield says: “The site was originally derelict. It needed imagination and Peter Johns could see it.”

Using the same 25,000sq ft footprint, C S Ellis has increased the existing 3,500 pallet locations to 5,000 – they can be stacked nine high. Also, C S Ellis offered a blank footprint when planning the Very Narrow Aisle (VNA) setup in the warehouse. Schofield says: “When you go high and narrow that floor hasn’t just got to be slightly level, it has to be dead level. One degree out at 18ft high does not work.” When speaking about the level of equipment required he comments: “We selected the best flooring people and the best narrow aisle people and the best VNA people, but we managed it [the project].”

Corgi and C S Ellis shook hands over the deal in December 2004. The system went live in July 2005 but C S Ellis achieved its part (the floor and racking) in just 12 weeks with the assistance of Jonathan Munton, a director of the company, and who worked closely in partnership with Corgi and Clandestine.

Schofield feels that being a medium-sized firm, it can offer far greater flexibility than one of the big distribution firms. Michael Smith backs this, saying: “Because they are big they have to have a rigid structure to function. They cannot operate on the basis of saying “Oh here’s a good idea lets bring it in,” because it doesn’t fit in with their structure. There is a real potential market for second-tier companies working at this level.”

Customer service is key to Corgi’s needs and C S Ellis maintains a traditional approach. C S Ellis is a family-run business and Schofield comments: “Many of our staff has over 12 years of service and that is fundamental. So when people ring us they know who Andy is, they know who Anita is. When they’ve got a problem they can put a face to a name. In transport you have problems everyday. The key to it is informing the customer.”

And Corgi has been so impressed by C S Ellis’ operation that it nominated it for the “Warehouse team of the year” in the UKWA 2005 awards. C S Ellis won.

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