Smoky Mountain Knife Works

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Smoky Mountain Knife Works

• Tana Williams
• Katie Underwood
• Alyce Hill
• John Sourk

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Smoky Mountain Knife Works
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Preview

• Overview of the Company
• Market Strategy and Customer Base as it Relates
  to the Supply Chain
• How the Supply Chain Fits the Market Strategy and
  Customer Base
• Inventory Management Strategy
• Location of Distribution and Retail Facilities

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Preview Continued...

• Use of Information Systems to Coordinate Flows
  Between Supply Chain Members
• How the Transportation is Organized to Move
  Material in the Supply Chain
• Using 3PLs

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Smoky Mountain Knife Works

• Smoky Mountain Knife Works was founded in the
  early 1970s, when Kevin Pipes and John Parker
  started selling pocketknives at flea markets.
• Through the mid 1970's, they worked hard to build
  strong relationships with their vendors and
  customers, and the business grew quickly.
• In 1978, SMKW opened its first Retail Showroom.
• Over the years, SMKW has grown by leaps and
  bounds, outgrowing two facilities before building
  its current retail location in Sevierville,
  Tennessee.

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Smoky Mountain Knife Works Continued...

• Over 1.2 million visitors annually
• Monthly catalogs are mailed to millions of
  mail-order customers
• eKnifeWorks.com is the biggest and best in the
  industry!

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CEO/President
Kevin Pipes
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Company Overview

• Nine Departments
• Accounting Art Marketing
• Distribution eCommerce
• Human Resources MIS
• Order Entry Purchasing
• Retail
• These departments assist in publishing and
  mailing a full-color catalog monthly, operating a
  80,000 square foot Distribution Center, and
  running the "World's Largest Knife Showplace."

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Market Strategy
and
Customer Base
As it Relates to the Supply Chain
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Continued...

• SMKWs marketing strategy varies from different
  events.
• Brochures are sent to surrounding states welcome
  centers and local tourist centers.
• Local advertising is used through the newspapers
  and on the radio.
• Events are hosted annually such as Presidents
  Day Weekend, Zippo Weekend, and Rep Weekend.

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Continued...

• The internet is used to promote events and sales
  on a daily basis at www.eknifeworks.com.
• Smoky Mountain Network, TV Sales, is based out of
  the showroom and uses inventory of Smoky Mountain
  Knife Works.

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Main Marketing Strategy

• The number one advertisement is the full-color
  catalog distributed monthly.

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How the Supply Chain
fits
the Market Strategy
and
Customer Base
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Catalogs...

• Step 1 Catalog Department Creates the Catalog
• Step 2 Art Department Assists and Makes
  Finalizations
• Step 3 President Gives Final Approval
• Step 4 Art Department sends File Transfer
  Protocol over the internet to Dingley
  Press in Maine
• Step 5 Art Department also mails out overnight
  the color proofs of the catalog that is
  sent of a digital file through File
  Transfer Protocol

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Catalogs...

• Step 6 SMKWs MIS Department runs a mail list
  query based on customers buying history and
  sends it to Dingley Press through File
  Transfer Protocol. This list is
  presorted as to designated shipping areas
  in regions.
• Step 7 Dingley Press creates a printing plate,
  prints each form, 32 page section, prints 4 page
  cover and 2 order forms, binds the catalog, ink
  jets the presorted address list from MIS onto
  each catalog.

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Catalogs...

• Step 8 Dingley boxes catalogs and places them
  onto skids.
• Step 9 Skids are loaded onto a 53 footer Dingley
  truck.
• Step 10 Truck takes shipment to USPS Bulk Mail
  Center.
• Step 11 USPS sorts mail and delivers catalogs to
  the customers.

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Catalogs...

• 1.2 Million Christmas catalogs in October
• 3.3 Million other catalogs per year.
• 300,000 catalogs each month
• 0.5 Million catalogs remain in the showroom

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Inventory Management Strategy
How do they decide when and how much to order?
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Inventory Management Strategy

• SMKW uses an AS400, mainframe computer platform,
  with an OS2 operating system. The program used
  is called order power.
• In addition, a min/max query was custom designed
  by SMKW programmers.
• In order to maintain inventory, re-order reports
  are printed by vendor each week.

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Inventory Management Strategy

• Each vendor has a routine day for the report to
  print.
• In addition, min/max reports are ran each day.
• This allows items below the minimum to show on a
  report. If numerous items from one company are
  low, an order is then developed.

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Location of Distribution
and Retail Facilities
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Location

• Distribution Center 80,000 square foot in
  Dandridge, Tennessee
• Showroom 50,000 square foot in Sevierville,
  Tennessee with a 28,000 square foot addition in
  process.

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Use of Information Systems to
Coordinate Flows Between
Supply Chain Members
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Continued...

• In order to form cost analysis of the shipping
  carrier choice, the internet is used.
• Whenever a purchase order is printed, it will
  show the proper methods of shipping for various
  weights and number of pallets.

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Continued...

• Example If shipments are less then 200 pounds,
  customers are advised to ship UPS.
• In addition, vendor notes are entered into the
  AS400 as to the preferred carriers for their
  location.
• Letters are also sent semi-annually to each
  vendor noting his/her preferred carriers.

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How is Transportation
Organized to Move Material
in the Supply Chain?
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Receiving Order

• Step 1 Vendor
• Step 2 Carrier
• Step 3 Warehouse Dock
• Step 4 Receiving (Check-in/Verify)
• Step 5 Reserve Storage or Pulling
  Locations in Bins

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Shipping Order

• Step 1 Order Placed
• Step 2 Order Released
• Step 3 Order Pullers Pull Merchandise
• Step 4 Checkers
• Step 5 Packers
• Step 6 Manifest
• Step 7 Staged and Loaded on Truck

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Specifications of Transportation

• Small Parcels UPS (USPS at customers request)
• Less then 200 pounds Small Parcel (UPS, FedEx,
  DHL)
• Over 200 but less then 2,000 pounds Less then
  Truck Load

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Specifications of Transportation

• A cost and efficiency analysis of carriers was
  used to determine which carrier was best for each
  state.
• Then, a map of the US was created and each state
  was color coded by carrier choice.

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LTL Carriers- Generally Divided Regionally

• Conway (Predominately out West)
• FedEx Freight (Rest of areas not mentioned)
• Service Transport (KY, OH, IN, MI)
• Wilson (Typically Southeast)

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Two Main Types of Trucks Used

• Pup 10 pallets
• 53 footer over 10 pallets

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Continued...

• SMKW receives less than 40 truckloads annually.
• The majority of the freight is send LTL.
• The shipper contacts the carrier for shipping
  unless it is a special order. If this is the
  case, negotiations take place with the company to
  see who chooses the carriers and bares the costs.

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Do they use 3PL's?
NO
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References

• Amy Barnett, Art Marketing Vice-President
• Kevin Pipes, President
• Laurella Rochat, Logistics Coordinator
• Lauri Tanner, MIS Systems Operator
• Matt Turner, Purchasing Vice-President
• www.eknifeworks.com