What follows is the story of how one company upended every square foot of its warehouse operations—its interior layout, day-to-day shipping and receiving practices, the equipment workers used and the IT systems enabling it all—and reduced its warehouse labor costs by 30 percent, saving more than $250,000 a year and vanquishing many inefficiencies that had plagued its operations.

But the road to success wasn’t without bumps. "There are things we didn’t do right," Dulle admits. For one, he says, the project team pushed too far, too fast on the wireless implementation. As a result, the company didn’t meet the initial March 2005 go-live date, which negated the first return on its investment.

What’s most notable (and applicable for other CIOs), however, is what Dorfman Pacific did do right: The business side took full responsibility for the project’s success; a cross-functional project team determined the overall plan, chose the appropriate technology and managed workers’ expectations throughout; and a non-IT sponsor shepherded the entire project. IT was there at every turn but "this was not an IT project. No way," Dulle emphasizes. "This was strictly a business project." Which is why, he believes, it was such a success. Here’s how the company did it.

Examine Existing Processes

Dorfman Pacific’s steady growth in the ’80s and ’90s bolstered its status as one of the world’s largest headwear and handbag companies. (You wouldn’t know it but you’ve probably seen their hats, which are worn by celebrities and featured in People and InStyle.)

Then, in the late ’90s, Highsmith pushed his company to grow even more. Dorfman Pacific took aim at the growing women’s headwear market and what Highsmith calls the resort business—straw hats and other protective headgear worn in summer or at tropical vacation destinations. The company also pursued private-label and specialty work for Orvis and others. Dorfman Pacific had contracted out some manufacturing to cheaper countries in Asia; now it accelerated the process. It still serviced its smaller customers, but now it received orders from much bigger companies that wanted thousands of different items and box types.

To accommodate demand, the company expanded over the years to a 275,000-square-foot warehouse. But the bigger warehouse "wasn’t set up for the growth we had had," says Dulle. And neither were its processes. Warehouse personnel received a paper order or "pick ticket" from a supervisor for, say, a Scala Western hat, drove a forklift to the bin where they thought it was located and manually picked the boxes off the rack. They brought the items to the packing area, put them in a box, stuck a label on the box and put it on a truck. However, merchandise bins were manually labeled and not easy to read. Workers knew the box types and had a sense of what they held but weren’t always right since items were sometimes mixed together. The route that each worker chose to accomplish his pick work was up to him.