Imagine a facility with the flexibility to handle everything from tissue boxes to bass boats, and you have some idea of what a Big Lots distribution center faces every day.

Big Lots, America's largest broadline closeout retailer, sells a wide range of brand name products, overstocks, discontinued items and special-purchase merchandise. The average item retails for only about $2, so cost-effective handling is necessary for the company to turn a profit. Being a closeout retailer presents additional challenges to a distribution center (DC) where nothing is standard.

Tremont, Penn. is the site of Big Lots' newest DC, currently serving 200 stores in the Northeast. The facility handles some 50,000 cartons daily with greater than 99% accuracy. To do that with such a wide mix of products requires an extremely flexible materials handling system. Tremont features well-designed pick modules spread throughout pallet rack storage, a high-speed sliding shoe sorter, and an effective use of tugger carts to transport its many non-conveyables. The facility is quickly becoming Big Lots' most-efficient DC.

Formerly known as Consolidated Stores, Big Lots currently operates over 1,300 stores under the Big Lots and Pic 'N' Save names. Each of the four Big Lots DCs holds 25,000 stock-keeping units (SKUs). About 500 of these are 'never out' items, such as tissues, paper towels, and cleaners, that are always stocked in stores. The remaining SKUs can be just about anything from ceramics to lawn ornaments.

'Our stores are constantly changing in characteristics based on closeout purchases, but we still have a core group of items that people can count on being there,' says Hal Wilson, senior vice president for distribution and transportation services.

While the range is great, the typical Big Lots stocks food items, apparel, sporting goods, hardware, automotive products, housewares, seasonal goods and furniture.

Often the purchasing department will give the DC a heads up when an unusual item is about to be received, but as Todd Noethen, vice president of distribution support services, observes, 'There is a lot that is unusual, so we are used to it.'

About 95% of all receipts arrive as full truckloads to the facility's 50 inbound docks. Advance shipment notices precede most arrivals, which helps to schedule a specific dock to receive the items. Because reserve storage racks in Tremont are spread throughout the facility and surrounding the pick modules, an attempt is made to receive product at the closest door to where it will eventually be stored. This minimizes the travel distance for putaway.

Half of all items are already palletized when they arrive. The remaining cartons are pulled from the trucks and placed manually onto pallets according to SKU. Information on each SKU is keyed into the terminal and a generic license plate is attached to the pallet. This is scanned to alert the warehouse management system (WMS) that the pallet now contains that SKU.

A check and balance is also performed on the receipt. Once verified, the WMS notifies a lift truck operator that the pallet is ready for transport to storage. The operator scans the license plate of the pallet and is instructed by a radio frequency (RF) terminal where to take the load. The WMS attempts to place the SKU in a location as close as possible to existing product. If the SKU is new to the DC, the pallet is deposited in a position that will best balance the building.

About 80% of items are conveyable. These are placed in the pallet reserve racks. Items that are not able to ride the 30-inch wide conveyors are usually either very large or very small. Some items, such as rugs, are too large to be placed on a standard pallet. Many of these are deposited into stacking racks. Larger non-conveyables are floor-stored on an area under the conveyor spurs that feed down to shipping.

Many soft goods items are sent to a ticketing and re-packing area located on an upper mezzanine. The items are removed here, ticketed, and repacked so that sizes and colors are mixed for store display. They are then sent to reserve storage.

Once all receipts have been placed into storage, they are made available for stores. An allocation group at Big Lots' corporate headquarters in Columbus, Ohio determines which SKUs will ship that day and begins allocations to individual stores. About 250,000 cases ship weekly from Tremont. These are selected according to a 'flight plan' that breaks each day's picks down to three waves.

A batch refill is performed during the overnight shift to stock the picking modules. Lift drivers are instructed by RF devices to pull needed SKUs from the reserve storage areas surrounding the modules.

Additional replenishment of the modules also takes place during the day. After depositing a receipt into reserve storage, lift truck drivers are directed to pull replenishment items from a nearby rack. The idea is to limit driving distance and utilize the driver's time as efficiently as possible. The driver scans the pallet license plate and the location upon pickup and carries it to the back of a pallet flow rack in the four-level module.

Picking is performed from several points in the DC - directly from the pallet racks of the reserve storage areas, the pick modules and the non-conveyable areas.

The WMS assigns full pallet picks and informs lift truck drivers by RF. Drivers scan each pallet and rack location to confirm the pick. They then place a label on the pallet before taking it directly to a shipping dock. Once there, the pallet is staged until ready to be loaded onto an outbound truck.

Any SKU requiring 10 or fewer cartons within a wave is selected using an orderpicker truck. Each 'pick-in-reserve' carton is scanned and labeled as it is chosen. The load is then taken to the nearest pick module where cartons are loaded onto a conveyor belt that eventually feeds the shipping sorter.

Most picks in the facility are full-case selections performed in the facility's six active modules. Picking is directed from labels printed in a central location. These are grouped into assignments for each associate and taken to the modules. The assignments are balanced either by zone, amount of picks, or the overall weight of the products selected. Basically, each group provides about an hour's worth of picks.

The labels contain the pick location, SKU identifier, store number, a description of the item and the shipping barcode. Associates pull the proper cases and place shipping labels onto them. The cartons are then deposited onto the belt running within the module.

Workers on the bottom two levels of module one also perform split-case picking and repacking. This represents only about 3% of the total stock in the facility and typically involves small items, such as candles, where less than a full case is sent to an individual store. Workers here pull out the inner packs from cartons and repack them into a standard-size shipping carton. The carton is sealed and labeled, then placed onto the conveyor belt.

The belt winds throughout the four levels of the module, then joins with belts from the other modules in a four-to-one merge. This feeds a high-speed sliding shoe sorter with 40 diverts down to dock doors.

Extendable conveyors are found at the end of the diverts to aid in loading the outbound trailers. Workers hand stack the cartons within the trailers to maximize the cube.

Non-conveyable items are also picked by store onto three or four flat bed carts pulled by tuggers. Labels direct the picking here also. Workers select needed items, label them, and then take the load to the dock door where they join the full pallets selected and staged earlier from the reserve storage areas. These cartons are then loaded onto the trailers.

To make its processing as cost-effective as possible, each outbound trailer is assigned the maximum it can hold. Because product sizes vary so widely at Big Lots, there are occasions when a carton or two from a wave will not fit within an assigned trailer. Rather than incurring the additional expense of sending leftover cartons by less-than-truckload or parcel carrier, they are sent to a 'lay down' module where cartons are held until the following week's shipments.

Each of the 200 currently supported stores receives one shipment weekly. The facility is designed to eventually handle 350 stores. More are being added as the facility continues to ramp up gradually. Within the next twelve months, Tremont is expected to be at full speed and should be Big Lots' most cost-effective DC.

'Tremont has already exceeded our expectations for the first year,' says Wilson. 'Its accuracy, speed and cost per item have all been better than expected.'

The associates at Tremont are also responsible for the facility's success.

'The design of the facility and our training plan has been very good,' says Jim Davis, director of distribution operations and onsite manager. 'Our people here have a real sense of ownership of their areas.'

Most of the processes found in Tremont will also be replicated at the next Big Lots' distribution facility in Durant, Oklahoma, scheduled to open in 2004.

'About 95% of what we learned here will be rolled into our Oklahoma site,' says Noethen. 'This is our cookie cutter building for all of our future facilities.'

Click here to read about Big Lots' Montgomery DC.

Click here to read how the Tremont site was selected and built (from Warehousing Management)

Read part 2 of the Tremont site selection stories (from Warehousing Management)