Off-Price Specialty Retailer CASE STUDY
As many retail chains, the client began with rudimentary, manual distribution processes in whatever space was available in facilities serving the mothership brand. With the continued success and growth of the off-priced concept, the client had quickly grown beyond the capacity available in the department store distribution centers. The manual processes had become unmanageable with the growing volume. Recognizing their core competencies and desiring to learn more of the best practices for serving off-price retail stores, the client engaged Johnson Stephens Consulting to plan and design a Central Distribution Center to separate supply chain functions (excluding transportation) from the client’s full line retail network.
JSC utilized the JSC Space Plannersm tool which develops a business growth plan for five years noting distribution center requirements and cost by year. The basis of understanding provided by the space planning tool then allows JSC to evaluate multiple automation technologies to determine which MHE options provide a meaningful ROI for the client. JSC recommended the use of Very Narrow Aisle (VNA) storage as the increased space utilization efficiency significantly outweighed slightly increased labor cost and greater initial capital investment. JSC also recommended moving away from a tilt tray sortation system used elsewhere in the company to a 6 module, 30-zone Put to Light solution which provided more flexibility to pack by category and the potential for increased product mix through packing. Lastly, JSC introduced the client to an Open/ Sort/Count process to facilitate more efficient and organized use of space and labor for the very manual process of identifying and sorting mixed SKU cartons of merchandise being received.
The client’s Distribution Center includes storage capacity for 4.2 million units and 10 miles of conveyor for Receiving, Processing, and Shipping. The client states this is the “First of their facilities to operate on Google Cloud, allowing further streamlined inventory management. This new technology will ensure that merchandise is accurately and efficiently received, sorted, ticketed, picked, packed, and shipped from the distribution center to all the client’s locations.” Design of the process, selection of the MHE systems, and documentation of the standard operating procedures prepared the client for the successful implementation of the facility. JSC’s Off-Price Retail expertise, frequent communication with the client, and flexibility in cooperation with the systems integrator, enabled the project team to meet deadlines and deliver the desired results.
JSC leveraged their extensive knowledge of off-price retail gained over the last 30 years while also serving the leaders in off-price retail. Beginning with process design, JSC was able to design a merchandise flow which reduced processing and delivery from 10 days to less than 5 days for in-season merchandise. The improvement is based on the age-old Theory of Constraints to balance the flow of product and the work content / cycle time for multiple, sequential workstations. What make off-price retail unique is the need to identify the merchandise and quantity received upon receipt then following that series of steps with ticketing and value-added services to prepare for merchandising. The process was completed in 2018 and the facility began operation in 2019. Currently serving over 250 stores and rapidly growing, the distribution center is a classic off-price model of open/sort/count, reticket, prep, and allocate for in-season merchandise as well as long-term storage of off-season merchandise for future allocation.