Lionel Racing: An Omni-Channel Case Study

“Everybody we deal with has a different set of requirements, and if we’re going to be a successful partner with them, we’ve got to be able to meet their requirements.”

That’s how Rick Gemereth, CIO at Lionel Racing, set the stage for describing his company’s omni-channel strategy and journey in a video interview I conducted with him a few weeks ago at the Descartes’ Evolution 2016 conference (Descartes is a Talking Logistics sponsor).

Lionel Racing produces and sells diecast NASCAR collectibles and is part of Lionel LLC., a 116 year old company known for its model trains and railroad sets. Lionel acquired the NASCAR collectibles business in 2010 and merged the two operations in 2012, which greatly increased the scale and complexity of its order fulfillment and logistics processes.

Prior to the merger, order fulfillment for the train side of the business was managed by a third-party logistics provider (3PL), while the NASCAR collectibles side of the business managed its own fulfillment from a 75,000 square foot warehouse in North Carolina. After the merger, the operations in North Carolina grew from $4 million in inventory to $20 million, which meant adding a second 75K sqft. warehouse, and the company now receives over 300 containers annually and ships over $75 million in products annually.

Dealing with that type of expansion was challenging enough, but Lionel also had to align its operations to meet the unique requirements of customers across five different channels — E-Commerce, Mass Retailers, Dealers/Wholesalers, Direct-to-Consumer, and Corporate.

For example, “many of our Direct-to-Consumer [drop ship] customers want everything branded as if the order is coming from them even though it’s coming from our facility,” explained Gemereth. “So, we have to make sure the packing list, the box, and everything else looks like it’s coming from them.”

Then there’s the ecommerce channel, where within minutes of a NASCAR race finishing, fans can order replicas of the winning car online. In the short video clip below, Gemereth describes the ecommerce order fulfilment process, which involves receiving a container of products at the warehouse and shipping out 1,000+ orders in under 8 hours.

From a technology standpoint, Lionel faced a similar challenge to the one Brian Hodgson from Descartes described in a guest commentary from earlier this year:

While companies are investing heavily in applications to support e-commerce, cloud-based ERP and mobility, these applications are not, however, tightly integrated and they often lack all of the features necessary to fully automate order management and fulfillment processes, especially across new fulfillment models. This often leads to pockets of manual work or gaps in automation, which creates labor-intensive clerical tasks, error-prone data entry and compromised customer service.

In Lionel’s case, the company needed to better integrate its various applications, including NetSuite (ERP), SPS Commerce (B2B connectivity), and UPS WorldShip (shipping), to create more streamlined order-to-delivery workflows; it also needed to add new logistics software functionality, such as the ability to generate branded packing lists and customized shipping labels.

Lionel Racing originally turned to Descartes (previously Oz Development, which Descartes acquired in November 2015) to address these needs. For example, Descartes enabled the cross-docking batch process for the ecommerce channel described earlier, which reduced processing time by 73 percent (22 hours).

After the acquisition, Lionel started using Descartes to streamline and automate the fulfillment processes of its other channels. For example, Descartes enabled the multi-order consolidation, picking, and shipping process used in the Dealers/Wholesaler channel; the process consolidates multiple orders for each customer into a single shipment and generates shipping labels for all products for each customer.

Why Descartes as a technology partner? Watch the clip below for Gemereth’s response, where he points to Descartes’ ability to tailor its solution to meet Lionel’s specific requirements as a key factor.

I encourage you to watch my full interview with Rick Gemereth for additional insights about Lionel’s omni-channel journey.

But here’s my main takeaway, plain and simple: there’s nothing easy about omni-channel fulfillment, from strategy development all the way down to printing shipping labels, and the more channels you sell through, the more complexity you have to deal with. How do you succeed? That’s just it — there is no one-size-fits-all response or solution. The easier question to answer is, How do you fail? There are many ways, including not fully understanding the needs, requirements, and expectations of each channel; relying on outdated, poorly integrated, and inflexible technology (or no technology at all); and going at it alone instead of working collaboratively with customers, suppliers, technology providers, and other partners to reach the omni-channel promised land together.