Audiovox Case Study

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Audiovox Corporation, a leading international supplier and valueadded service provider in the consumer and mobile electronics industries, acquired the audio/video accessories line of Indianapolis-based Thomson Consumer Electronics in February 2007. The purchase agreement required Audiovox to relocate the entire business by May 1, 2007 – including 1500 SKUs and 15,000 pallets of product. The challenge was intensified by Audiovox’s need to separate the business from Thomson both electronically and financially. Included in the transition were all order-to-cash systems and warehousing and distribution facilities, as well as all vendor- and customer-related systems. Further complicating the process was the need to move all customer service and administrative functions from Thomson and be fully operational by May 1, 2007. MD Logistics was awarded the warehousing and distribution business March 1 and accepted the challenge
to complete the transition within 60 days.

SOLUTIONS:

MDL was able to acquire 264,000 square feet of dedicated warehouse space quickly. MDL fixtured the space with rack positions to accommodate 10,000 pallets and bulk space to accommodate another 5,000. Inaddition, MDL implemented and installed its state-of-the-art IRISTA WMS system, including pick facings to accommodate 800 SKUs for package picking and another 240 pick locations for bulk. Also, MDL rapidly recruited and trained eight new management staff plus 60 full-time associates. MDL took an open-book approach, allowing Audiovox to see actual manhours and costs for accommodating the electronics supplier’s needs. The Audiovox and MDL teams worked together cohesively on all tactical details. They tested all operational and technological systems over a 10-day period, and went live May 1. Also, MDL worked with Audiovox to integrate all order transaction details via EDI — as well as created visibility to inbound Asian container traffic and outbound domestic transportation tracking. Once the initial 60-day implementation was completed, MDL took Audiovox through a system stabilization process which allowed for a seamless Christmas season. “We produced a six-month transition in 60 days,” said Mark Sell, CEO of MDL, “and rolled on from there.”

RESULTS

Throughout the integration, “MDL stayed the course, never wavered, never gave up, followed through in spite of tough difficulties and daily struggles,” said Jim Gordon, senior vice president of operations for Audiovox. “It was an aggressive and challenging timeline,” said Sell. “The Audiovox purchase agreement with Thomson dictated the go-live date. And, even though all processes were not stable, we were able to move forward anyway. With open dialogue and consistent communication, we were able to work through the challenges.” Currently, MDL handles 1,500 to 2,000 orders and up to 35,000 outbound cases per day for Audiovox. In order for Audiovox to maintain
real-time visibility of this volume, MDL deployed its web-based tool, MD Net. This capability allows Audiovox to track all inventory throughout the warehouse, including inbound schedule receipts, inventory on hand, and outbound customer orders through to proof of delivery. In December 2007, Audiovox made an additional acquisition of Technuity/Batteries.com, a supplier of batteries to both retailers and direct consumers. The new work from the acquisition was accepted readily and moved smoothly into the MDL facility.
The additional work includes receiving bulk product from Asia, labeling, re-packaging and shipping. “MD Logistics’ distribution capabilities in order fulfillment and its ability to process nearly 35,000 cases per day and ship around the world, as well as their ability to receive product in bulk from Asia and then label and repackage, made them the logical choice for our operation,” Gordon explained.

BENEFITS TO AUDIOVOX CORPARATION

MD Logistics is providing Audiovox with flexibility, says Sell. “We build what Audiovox asks for.” In addition MDL provides speed, state-of-the-art-ready facilities, and an “open-book attitude.” “In other words,” says Sell, “we built trust between our two companies. It was a challenging task, but we responded with open dialogue and worked it through, together.” Benefits MDL is providing to Audiovox include:

• Flexibility to respond and to create solutions
• Speed of implementation,especially on challenging schedules
• Turnkey, state-of-the-art facilities and robust information technology infrastructure
• Retail-compliant services which include retailer ASNs and compliance labeling
• True partnership attitudes
• Solid local vendor relationships
• Decisive, non-bureaucratic executive team
• MD Net, real-time web-enabled inventory visibility
• Capacity of both physical space and of appropriately trained personnel

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