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Supply Chain Management of JWP Inc.

Supply Chain Management of JWP Inc.

Discuss Supply Chain Management of JWP Inc. within the Elements Of Logistics forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; J.L. Hammett Company is the oldest and largest independently owned school-supply retailer and distributor in the United States. Once known ...

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Supply Chain Management of JWP Inc.
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Netra Shetty
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Supply Chain Management of JWP Inc. - January 12th, 2011

J.L. Hammett Company is the oldest and largest independently owned school-supply retailer and distributor in the United States. Once known for its chain of retail outlets--Hammett's Learning World--the company also maintained a popular print catalog for educators. In the 2000s, however, the company was restructured as strictly an Internet retailer of school supplies. As such, Hammett supplies public, private, parochial, and chartered educational institutions with a complete range of core school supplies, including art materials, office and paper goods, furniture, equipment, and products to facilitate early learning and instruction. The company was the first full-line educational distributor to offer electronic commerce capabilities and remains a family-owned operation.

19th-Century Origins

The history of J.L. Hammett can be traced back to 1863. Rhode Islander John L. Hammett was a schoolteacher who had authored grammar books and worked as a representative of a publishing house, all roles that developed his sensitivity to the needs of educators, tapped his potential as an innovator, and developed his business sense. In 1863 he established a small school-supply shop in Rhode Island and, two years later, moved it to a single store location in Boston, Massachusetts. Hammett was an inventor as well, having developed a "slating paint" which could be applied to the slates children used in school, prolonging the life of the boards. The paint could also be used to turn a wall into a chalkboard. Furthermore, Hammett invented the chalkboard eraser: during a presentation, when he could not find a cloth to wipe his slate, he picked up a carpet remnant and discovered that it cleaned the slate much better than the cloths he had been using. With the help of his assistant, Hammett began to nail pieces of carpet to blocks of wood which were then sold as erasers. Invention and manufacture was a concern of the company from its inception until the 1950s, as the company would make ruled paper, mix ink, and manufacture various other school products. By the end of the 19th century, increased production made paper more affordable and accessible for schools and teachers, and the demand for slates and related products diminished. In 1890 Hammett sold his business interests to a new generation of owners composed of Massachusetts investors led by Harry H. Young.

Hammett's merchandise line soon expanded beyond schoolbooks. In 1891 the company formed a partnership with game-producer Milton Bradley of Springfield, Massachusetts, and pioneered the production of kindergarten materials in the United States. Young and his associates brought J.L. Hammett Co. into new fields and product lines: they opened facilities in New York and New Jersey and established a paper-converting and bindery plant in Cambridge, Massachusetts. After spending some time abroad, Hammett attempted to return to the education business but he failed.

New Directions in a New Century

Young's grandson, Richmond Y. Holden, Sr., entered the family business in 1948 as a sales representative in the New Jersey division, became vice-president of the Cambridge, Massachusetts, plant in 1953, and was elected manager/treasurer/clerk of the corporation in 1958. Chosen as president of the company in 1961, with new educational tools he expanded Hammet's services to private, parochial, public, and chartered schools.

In 1967 Holden moved the company's headquarters from Cambridge to Braintree, Massachusetts, and began to explore the concept of retail outlets. In 1974 he opened the first Hammett's Learning World retail store to sell all kinds of educational supplies and teaching materials. The customers were teachers who used their own money to buy educational supplies and parents who wanted what Holden called "industrial strength" learning products.

In 1978 Richmond Y. Holden, Jr. (Rick) joined J.L. Hammett Co. A modest growth rate and several retail acquisitions expanded the Learning World chain; by 2003 there were more than 62 stores of this kind in the United States. Parents who home-schooled their children came to the stores for text books and teaching supplies. J.L. Hammett was a big player in the school supplies arena and gradually changed the way teachers and schools bought their supplies. Since many of the company's stores were located in shopping malls, even teen-agers went there to evaluate and buy educational products. Teachers and parents were no longer the only ones to search for school supplies.

Rick Holden succeeded his father as president and led J.L. Hammett Co. into a wave of technical change. In addition to its 808-page general catalog, the company created several sub-catalogs for needs related to early childhood and materials for the arts. As his first order of business, Holden chose to update the company's antiquated distribution system in order to cut the costs of writing orders for supplies that had to be tracked through every phase of entry, picking, packing and shipping. He explored the possibilities the Internet offered for improvement of business margins.

As support for the company's mission to recognize excellence in education, the J.L. Hammett Foundation was established in March 1997 to promote educational innovation in the nation's public and private school system. The Foundation focused on teachers and institutions of Pre-K through 12th grades to award cash grants ranging from $1,000 to $5,000 for innovative use of new technology or creative use of simple curriculum materials. The Foundation emphasized the need for discovery and support of projects, people, and schools where bright new ideas were conceived and implemented.

The company's first venture into e-commerce was a modem-based program called EO, for electronic ordering. J.L. Hammet sent disks containing the company's catalog to customers to load onto their school computers for placing orders. In all, about 2,200 schools used EO. Although Internet surfing was still in its infancy, Holden realized that "at least a third of his business ... had to come through Net marketplaces in the next two years," wrote Richard Karpinski, in B to B's April 2000 issue. In the mid-1990s, Holden had at great expense set up an Internet ordering system for his company's website: (www.Hammett.com).

Net marketplaces quickly multiplied and made life difficult for suppliers who not only had to figure out affordable means of connecting with Internet marketplaces but also had to decide which marketplaces were potential gold mines or possible sink holes. Furthermore, information had to be delivered not only to the Web site but also to aggregators, exchanges, and customers' buying systems. Holden did not want to go through more time and expense to hook up with a marketplace. To obtain a technology solution, he turned to server-vendor Ironside Technologies Inc. of Pleasanton, California. One of the trickiest issues was to bring the back-end of the operation into the electronic age. Additionally, the company had to focus its business plan on ways that would eliminate inefficiencies, cut costs, and operate in real-time. "Let's get a standard here; give us some tools and a methodology to hook up to any exchange we want," said Holden to Ironside, according to the Karpinsky article. Holden had already "teamed up with exchanges 'in stealth mode' for more than a year and was linked with Epylon.com, Simplexis .com, and Eschoolmall.com." Ironside had helped to make these connections and soon released its Ironside Network. With Hammett's former paper-based model, it took three weeks to process orders. The new Ironside-powered automated system reduced this task to a maximum time of three hours.

At the heart of Hammett's e-commerce strategy was eZone, an electronic-sell-side procurement system based on Ironside technology and designed for institutional buying. eZone provided access to the Hammett catalogs and offered procurement tools and services, thereby allowing business managers to see the orders in their company's system, to manage purchase orders, and to control various users' authorizations for purchases. About a year after the installation of eZone, some 26,000 schools placed orders for supplies. Average orders increased from $200 to $510, and shipments were faster. Clients who had formerly placed complicated, paper-based orders could reach the ordering system by means of an easy-to-use browser. For example, according to Julia King's "At the Head of the Class" story in the Computerworld issue of September 18, 2000, a purchasing clerk who bought thousands of items for her district of four schools and 325 teachers in Penn Yan, New York, claimed that she could now do in one week all the ordering that had formerly taken her eight weeks to complete.

Hammett invested in several technology ventures, namely Beansprouts.net, an Arlington-based child-welfare network, and PC Build, a company that wired schools for the modern age. From seven partners/advertisers, Holden collected fees that covered about 30 percent of the cost to maintain and update the company website. According to the August 2000 Heller Report, another one of Hammett's strategies was to develop "multiple venues for online penetration, primarily agreements with school procurement sites--such as Epylon (Hammett's flagship and first customer)--and alliances that created online stores for other web sites." Holden believed that customers could receive better service via the Internet; and with his brother Jeff as vice-president, he led the company toward a new millennium while safeguarding Hammett's long-held educational traditions. The company sold primarily to preschool and K-12 schools through its catalogs and sales force. "J.L. Hammett is the resource teachers have used and trusted for years," Rick told the Journal in a July 1999 interview. Hammett Director of Marketing Dave Merigold commented that "We are in the vernacular now of school supply technology. With an advanced procurement process like eZone, dealers of educational products will need to follow Hammett's lead in order to keep pace."

The company's website gradually became an extension of Hammett's retail stores, thereby enabling teachers and parents from all over the nation to browse and shop in the comfort of their homes, offices, and classrooms. Orders by traditional means--such as phone, fax, and mail order--continued to surpass the company's Website output, but Hammett executives thought that its eZone would soon handle a quarter of the company's bustling summer ordering season. Educators and teachers used eZone as a tool to search and compare products as well as to track purchases and review their accounts.

When an order reached Hammett through the Internet, it was assigned an invoice number on the company's IBM AS/400 and sent to the warehouse where it was received with a radio frequency (RF) scanner, picked, and packed. The warehouse triggered an order to refurnish inventory and sent out an invoice. "We're not rekeying anything, so our order accuracy is up, and there's no place for orders to get backlogged," said Merigold. "We're also stripping out a lot of costs on our side and on the customers' side" because schools can generate orders more quickly than formerly, he added. Hammett included its 80-person salesforce, who still made sales visits to school districts, in its online strategy by awarding them bonuses and commissions for migrating customers to online ordering. In the May 1999 Catalog Age, Paul Miller commented that RF scanners not only received catalog and online orders electronically but also read the product barcodes and rejected items when their codes didn't match those of the requested merchandise.

1999 and Beyond

Hammett continued to refine its Internet strategies and its online activities rapidly expanded. According to the Heller Report, President Holden pursued multiple venues for online penetration, primarily agreements with school procurement sites such as Epylon, and alliances that created online stores for other web sites; he worked with several sites to host more co-branded, online stores "powered by Hammett.com." Many of Hammett's sales came from its Learning World stores. Holden eschewed plans for franchising, and refused to go public. J.L. Hammett Co. was to remain family-owned. "There's a mentality here about family ownership and full participation in the business," he said.

In 1999, Hammett sold school supplies and equipment from three different venues: the Hammett catalog, the Company's website, and a chain of over 62 Hammett's Learning World retail stores. For 1999, Hammett posted annual revenues of $165 million and was the only company that sold school supplies and equipment from three different sources. Business soared. In 2000, two years after J.L. Hammett Co. entered e-commerce as a cost-cutting strategy, e-commerce had yielded a $9.5 milllion increase in sales, a 200 percent increase in average-size orders, and a 46 percent reduction in transaction costs, from about $130 to $70 per order," according to the September 18, 2000, issue of Computerworld.

In 2000, Hammett sold its catalog and wholesale businesses, as well as its three distribution centers, to School Specialty Inc. (formerly its most aggressive competitor) for $82 million but retained the early education and chartered-schools businesses on which it planned to focus more intensely. Holden had hoped that moving Hammett stores out of enclosed malls into strip malls would increase sales but positive results did not materialize quickly enough. "We just ran out of time ... to get that done," Holden told Associated Press. To Bill Lane of Boston Business Journal, Holden said that over the years teachers had spent much of their own money to buy educational materials from Hammett. However, the economy was bad and tightened school budgets did not allow for reimbursements to these teachers. Furthermore, as Lenny Liebmann commented in his February 5, 2001 article for NETWORK MAGAZINE, "Despite the fact that Hammett opted for premium placement on several B2B shopping portals ... [Hammett Marketing Director David Merigold said] only 18 percent of our volume comes from new business and, of that, only about 10 percent has come through marketplaces.'"

In Januray 2005, President Holden announced that the company's retail division "would fold up and leave only 'a small retail operation.'" His efforts to sell Hammett's remaining 52 stores did not succeed. "There wasn't a fit for either the buyer's interests or the company's interests," he told Business Journal's Bill Lane. "Since we were the largest [independent provider of school supplies], it was difficult to find someone else in the same business," Rick said. J.L. Hammett Co. had to consider ending its brick-and-mortar operations after 141 years in business but opted to remain in Braintree as an online operator under Holden's leadership. About 30 to 40 percent of the Hammett stores were sold to regional and local retailers of school supplies. According to a story in The Patriot Ledger of December 31, 2004, the company had already sold the 42 acres of land it owned in Braintree to a builder of luxury condominiums. "We'll move to a much smaller office with a smaller staff," said Holden.

Principal Competitors: ABC School Supply, Inc.; American Teaching Supply; School Specialty, Inc.: U.S. School Supply, Inc.
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