JCPenney cashes in

JCPenney

By David Maloney, Associate Editor -- Modern Materials Handling, 1/1/2001

$aving on handling costs through automation is a critical piece in JCPenney's strategy to remain competitive in the fierce world of retailing. You can almost say that the company's new national distribution center rivals the automation on display at next month's ProMat show. Nearly every conceivable type of equipment is jam-packed into this 1.1 million sq ft facility set on 100 acres in the heart of Texas.

Two unit load automated storage and retrieval systems (AS/RS), a mini-load AS/RS, a fleet of automatic guided vehicles (AGVs), 8 1/2 miles of conveyors, numerous sortation systems, conventional high-bay storage, high reach trucks, and pick-to-light systems make up this vast retail distribution center.

JCPenney built the new DC in the Alliance Regional Business Park outside Ft. Worth to replace the functions of two aging facilities in North Carolina and California that were 50 and 20 yr old respectively.

"The idea was to have a single large facility that would be far more productive and efficient than our two older facilities," says Tim Troy, senior vice president of supply chain management for JCPenney. "We wanted to increase speed and throughput, while driving costs down about 50%."

In the 9 months since startup, the facility has already achieved dramatic cost savings.

"At just 65% capacity we are achieving a 40% lower cost-per-carton than we did at the other two facilities," notes Troy. "We are very pleased with where this is going and expect to reach our 50% goal shortly."

Besides bringing all inventory under one roof, the facility has lowered shipping costs due to good cube management, reduced labor, increased product visibility, and provided the capability to reduce overall average inventory.

Being in the Alliance park also has its advantages. The site has been designated a free trade zone, which fits JCPenney well because nearly all of the company's receipts come from Asia, Brazil, and Europe. Additionally, the largest intermodal rail terminal in the Southwest is located in the business park. An airport and adjacent Fed Ex hub are also there for rush orders. However, Troy admits that there is not much need for air delivery, saying that if it's used "then we have done a poor job of planning."

A strong work force in the area and favorable tax advantages negotiated by the business park's developer, Ross Perot, Jr., along with easy access to interstate highways, make this an ideal setting for JCPenney's national DC. It is also a short drive away from corporate headquarters in Plano, Texas.

Plenty at Penney

The Alliance Service Center is highly automated (HK Systems, www.hksystems.com ) and feeds 1,200 JCPenney stores in all 50 states.

The facility is situated only one-half block from the rail terminal. JCPenney keeps small truck cabs on hand to fetch trailers once off-loaded from the rail cars.

"We virtually have the containers coming off the train and into the building within minutes," explains Troy.

Advance ship notices are provided on many receipts, which aid in pre-allocating much of what arrives at the 14 receiving lanes. Automated case receiving units extend into the trailers to ease unloading with seven lanes typically used at any one time. The peak season for the facility is between August and October.

Items are conveyed to an upper mezzanine where the UCC 128 bar code label on each carton is scanned. For those few cartons missing a readable bar code, new labels are printed and applied. Cartons are also weighed and measured using an automatic cubing/weighing system.

The warehouse management system (WMS) then directs the cartons to a sliding shoe sorter that diverts cartons by stock keeping unit (SKU) to 34 pallet build stations. Here cases are manually lifted onto slave pallet skids. Upon stacking the last case, a worker hand scans the UPC on that carton and the bar code license on the skid to signal the WMS that palletizing is complete and to marry the SKU to the pallet.

Skids are then conveyed to an AGV pick up station. Thirty vehicles patrol the facility, their paths guided by wires in the facility floor. Electric eyes at the stations alert the management software that a skid is available for pick up. The AGV fleet handles an average of 186 pallets/hr.

Three destinations are possible for the products. About 8% of items are cross-docked now by conveyor directly to shipping. Troy says the eventual cross-docking goal is at least 25%. He expects that as employees become more familiar with the system and new software provides visibility of incoming freight while still at sea, the cross-docking numbers will increase dramatically.

A small percentage of very slow movers and items with less than 10 pallets/SKU go to the second destination, which is a conventional high bay storage area. Here, the AGVs drop off skids at transfer stations, while narrow aisle trucks manage putaway. Wires in the floor guide the facility's three turret trucks while in the narrow aisles, as they travel to 26,138 storage locations. Putaway (and picking) instructions are delivered to the operator by a radio frequency data communication system. Thirteen stock picking trucks also work here.

The vast majority of receipts, however, are transported by the AGVs to two large storage towers that house a pair of extensive automated storage and retrieval systems. Each tower contains ten storage/retrieval machines that roam aisles 100 ft tall and 534 ft long. As with the conventional storage area, AGVs make deliveries to this third destination's delivery stations. From there, the storage/retrieval machines take pallets to the 145,326 pallet storage locations.

Replenishment and pick-to-light

Just as storage at the Alliance Service Center is highly automated, so are the order-processing systems. Featured are an efficient pick-and-pass system, pick-to-light technology, and a mini-load AS/RS.

With the exception of a limited amount of full cases and cross-docked items, nearly every article flows through two pick modules, known as A and B. Module A houses fast movers, while Module B contains the mini-load system and processes slower-moving SKUs and the majority of broken-case items.

Order filling begins with replenishment of the modules with full pallets, full cases, and broken-case products pulled from the AS/RS systems and the conventional high bay storage areas.

The storage/ retrieval machines of the AS/RS remove SKUs requiring full pallets from their storage locations as directed by the WMS. These are then delivered to floor level transfer stations where they are picked up by AGVs. Likewise, order picker trucks pull pallets from the conventional storage area and de-posit them at their AGV transfer stations. Most of these pallet loads contain fast movers that are delivered by the AGVs to Module A.

Partial-pallet and broken-case processing occur in a mezzanine-level de-casing area that resides just above the AGV pick-up stations in the AS/RS towers. The S/R machines are designed to stop at this mezzanine to deliver pallet loads of products from the AS/RS.

Here, the individual cases for partial-pallet SKUs are pulled manually by workers from the pallet. The remainder goes back into storage, while cases pulled are delivered on another pallet to the AGV pick-up station one level below for transport to the modules.

Broken-case SKUs, meanwhile, are pulled from the pallets, de-cased, and repacked into product totes. These totes are conveyed directly from the mezzanine to Module B to replenish the mini-load AS/RS.

A small number of items that ship in their original cartons and items that will be freighted as case quantities are also labeled and sent directly to shipping, by-passing the modules altogether.

Upon arrival in Module A, transfer cars pick up cases of product from the AGVs and load them into the back of flow racks. A pick-to-light system is used for order selection into fulfillment cartons and totes. The WMS directs a worker to select a carton if the order can be filled completely from the fast-movers of Module A, while a tote is chosen for any order that also requires picks from Module B. Only one size of carton is used here. The totes share the same cubic dimensions as the fulfillment cartons, so that items picked into each of them will eventually fill an outbound shipping carton.

"The idea is to maximize the cube of each carton when it is packed," says Troy. "That is the magic of the whole system. By maximizing each outbound carton we bring the cost-per-unit and the cost-per-case down dramatically."

Each carton or tote is assigned to a single retail store, with a mix of SKUs for that store picked into it. Products for each store department are also kept together within the same tote or carton to ease putaway once the shipment reaches the retail destination.

Empty cartons are stored above the flow lanes, while totes are brought by pallet load and staged nearby. Within the next few months a tote conveyor will be installed that will bring the totes to a more favorable position and free up floor space allowing 20% more room for order processing.

Daily updates of items needed by the stores are received and allocation begins. Picking is done by zone, with the tote or carton conveyed only through the zones of the module where product for that store is located. Lights and quantity indicators display which items should be placed within an individual tote or carton as it passes through a zone.

"Sometimes the tote will make two or three stops, and other times as many as seven stops before it is full," adds Troy.

Module A processes about 850 cartons and 550 totes/hr.

Once filled, the totes and cartons pass by a visual scanner that either reads them as brown cartons that are diverted to a carton sealer and then on to shipping, or yellow totes that require additional picks. These are diverted to Module B located one level above Module A.

Module B contains slower movers and broken-case items. The mini-load AS/RS receives products in totes from the broken case area of the tower mezzanine and stores them until required for store fulfillment. Upon request of the WMS, it then delivers the product totes to required flow lanes. Again pick-to-light is used here to signal which items should go into order totes. Once completed, the tote is conveyed to a packing station where all items are removed and transferred to an outbound carton, which is then labeled and sealed.

Conveyors bring the cartons to a merge where they join cross-docked items and cartons from Module A before entering a sliding shoe sorter that feeds 29 shipping lanes. The cartons are sorted based on store location and carrier. About 99% of daily shipments go directly to JCPenney stores. The remaining 1% of outbound goods replenishes stock at catalog facilities.

Accuracy and visibility

Over half a million items are shipped each day with nearly 100% accuracy. Scanners and a smart WMS provide full visibility of all items.

"You can't move anything far without a scanner updating the location of the product," says Troy. "It is virtually impossible to lose product in this building."

Troy adds that he is very pleased with where the facility is, and he expects the eventual productivity of the facility to be double that of the two older DCs.

"It's not there yet," he says, "but it will be soon. Already it is 40% better than what we had."

Benefits at a glance

• Handling costs dramatically lower

• Better cube utilization in storage

• Reduced shipping costs

• Complete visibility of all products

• Reduced labor costs

• Capability to reduce average inventory

System Snapshot

JCPenney
Alliance Service Center
Alliance, Texas

FACILITY FACTS:

Began operation: 2000
Products: retail distribution to 1,200 stores
Facility size: 1,000,000 sq ft, 100 acres
Throughput: 85,000 cartons/day, 120,000 at full capacity

System Suppliers:

Conveyors, sorters, AGVs, AS/RS Systems, materials handling design:
HK Systems, Inc., 262-860-6554, www.hksystems.com

Engineering and Integration:
Lockwood Greene, 864-578-2000, www.lg.com

Warehouse management system:
McHugh Software International, 262-317-2000, www.mchugh.com

High reach trucks:
Crown Equipment Corp., 419-629-2311, www.crown.com

Lift trucks:
Nissan Forklift Corp., 815-568-0061, www.nissanforklift.com

Flow racks and pick-to-light systems:
King-Way Material Handling, 800-554-6632, www.kingway.com

AS/RS tower racks:
Broad Rack Structures, Inc., 313-965-4890, www.broadgroup.com

Pallet racks:
Inca Metal Products, 972-436-5581, www.incametals.com

Fixed scanners:
Accu-Sort, 800-227-2633, www.accusort.com

Hand scanners:
Symbol Technologies Inc., 800-927-9626, www.symbol.com

Totes:
Bayhead Products Corp., 603-742-3000, www.bayheadproducts.com

Labeling machines:
Sato America, Inc., 408-745-1300, www.satoamerica.com

Carton sealer:
3M Packaging Systems, 800-722-5463, www.mmm.com/packaging