Distribution

Mickey Mouse ears are priced prior to delivery to retail locations on the Disney property.;Top general supply items in 1997 included 25th anniversary identification card, adult bathrobe, 1-day admission ticket, copy paper, and golf balls.

By Staff -- Modern Materials Handling, 4/1/1998

General supplies: 2,000

Walt Disney World Resort offered the first-ever public look at its entire distribution operation for readers of Modern Materials Handling. "Walt Disney World is basically a city of 160,000 people," says Tom Nabbe, manager of Disney World's Distribution Services. "From a distribution standpoint, we supply the city with everything from Mickey plush toys to watermelon, 7 days a week, 24 hours a day."

That gets done with eight on-site warehouses with a total of almost 800,000 sq ft of space, and an additional 200,000 sq ft of leased space in two warehouses outside the nearly 50 sq mi. Disney property. They handle a total of 400,000 SKUs for 262 retail locations and 450 food locations in the Resort.

That's a long way from when Walt Disney World opened in October 1971 with a single 50,000 sq ft warehouse. When the Magic Kingdom opened, there were fewer than 100,000 SKUs spread across retail merchandise, food, and general supplies. That number cleared the 100,000 mark in 1975, 200,000 in 1982, and approached 400,000 in 1997.

In general, warehousing activity is broken down into three categories-merchandise, food, and general supplies. Warehouse management for each category accommodates the needs of its specific customers, restaurants and retail locations at the park. As a result, the daily order-picking and shipping cycle is different for each type of warehouse, even though they typically operate around the clock every day of the year.

Walt Disney World is definitely a customer-oriented company. Says Nabbe, "to give you an example of what that means from a distribution standpoint, consider that we service 262 retail locations. Only a half-dozen of these even come close to matching each other in terms of their SKU mix. No other retailer in the country works like that."

The focus on providing each guest with a special experience and customized service has created a unique culture at Disney World. "We are not a cookie cutter operation," says Bill Turner, vice president of support services. "Unlike a typical retailer, we don't bring in a lot of SKUs by the hundreds of cartons. It is much more common for us to receive five or ten of a specific item," explains Turner. Often, small quantities of items are cross-docked and staged for delivery on receipt.

Disney World faced some major challenges in the 1980s. As Nabbe explains, "We knew we needed a real-time system supported by bar codes and radio frequency data communications to give us the information we needed to manage the operation, and do a better job of forecasting."

But there was still more work to do. Turner was brought in from the outside in 1989. Shortly after, Hal Welsh came on board from a software development company to develop a freight management system. Welsh is now director of Distribution Services.

They also began a search for a warehouse management system (WMS) that would meet the requirements of an increasingly complex business. The WMS is now the central decision maker for activities from receipts to shipments.

Disney put engineered work standards into place for many of the warehousing operations, including orderpicking and stocking. This provided a tool to track the actual costs of handling each unit. The result was a 30% productivity gain.

Welsh explains that since 1991, Distribution Services has broadened its process improvements to include all aspects of the supply chain from suppliers to guests. By being vertically integrated, Disney World can look out across the supply chain to determine the right way to do things.

An in-depth analysis re-vealed that food warehousing costs were several hundred thousands dollars per year less than any outsourcing alternative. In a benchmarking study, the facility compared favorably with industry performance across a variety of metrics, including cycle times and inventory levels.

Improvements are made with an eye for detail. For instance, one simple change made in the dry goods warehouse (one of three food operations) that operators suggested was to raise the cross bar on the first tier of pallet rack. Now the workers no longer crouch in an awkward position under the bar while picking totes from the rear of a floor-stacked pallet.

Welsh expects the engineered work standards that have been in place since the early 1990s will take a back seat as team-based work groups carry through on several initiatives. Or as Turner often says as Distribution Services moves into the future, "we've got to ask ourselves continuously whether we can do something better today than we did yesterday."