To say the least, Elizabeth Arden's DC in Roanoke, Va. has undergone some significant changes of late.

In the past year, it was expanded from 265,000 to 400,000 square feet. The layout of the facility was completely revamped, and $5 million spent on materials handling from a sortation system to very-narrow-aisle storage. Furthermore, this single DC's customer base for its cosmetics and fragrances increased from 7,000 to 35,000 retail stores and regional warehouses, explains Roy Drilon, senior vice president of distribution.

But that's only the half of it.

While the Roanoke DC was expanded by 50%, the square footage there is 60% less than what the overall company had in January 2001. That's when Elizabeth Arden was sold by Unilever to the public company French Fragrance Inc.

In a reversal of what often happens after an acquisition, the Elizabeth Arden name survived as did its DC in Roanoke. Closed were two French Fragrance DCs in Edison, N.J. and Miami Lakes, Fla., along with six overflow facilities, a total of just over 600,000 square feet. In its first year, the 400,000 square foot Roanoke DC will handle $1 billion of goods, more than what was once handled annually when the company had 1 million square feet of space.

Roanoke now processes many more orders and types of orders than it did before, says Drilon. Daily orders have increased 100% to 4,000 per day. To accommodate that increase, 47 people were added in Roanoke, while 265 positions were eliminated at the other locations. Meanwhile, order cycle time was cut by two days even as the company reduced overall inventory levels.

"Our response to orders is so good now," says Drilon, "that we truly act as the backroom warehouse for stores. We have become an integral link in the supply chain of our customers."

As Drilon explains, the merger of the two companies created an unmanageable mix of distribution schemes and information system infrastructures.

Roanoke serviced only department stores. Miami Lakes shipped only to mass merchandisers. And the Edison DC handled only promotions for mass merchandisers. The result, Drilon says, was extensive duplication of inventory and efforts in the combined company's distribution system.

In addition, the location of the DCs relative to fragrance and cosmetics manufacturing facilities added an extra day and a half to the distribution cycle just to get product to the DCs. Most cosmetics are produced in Roanoke with fragrances at locations in the Northeast U.S.

Something had to be done. "We needed to consolidate the business into fewer warehouses and overflow facilities as well as create a single IT infrastructure for the company," says Drilon.

An initial evaluation of the facilities and their functions immediately identified the Edison DC for closing. While it was the largest of the three primary DCs at 300,000 square feet, Edison did not have nearly the level of activity of the other two and had the most limited functionality, handling only promotions for mass merchandisers. As the timeline shows, Edison was consolidated to Roanoke in August of 2001. Then the real work began, says Drilon.

However, this was not a straightforward linear process. Three months before additional consolidation discussions were started in February of 2002, Drilon launched an expansion study for Roanoke. With the Edison activity in Roanoke, that facility was using all available space and needed to expand, he says.

Meanwhile, the consolidation study considered several factors. These included: overall costs, labor requirements including training, freight issues, operational supply issues, distribution network complexity, corporate requirements, materials handling systems and expertise, and information system functionality.

Drilon recalls that the study even considered closing both Roanoke and Miami Lakes. That would have led to construction of a greenfield site somewhere in the Northeast to stay close to suppliers.

It became apparent as the study concluded in November of 2002 that Roanoke had a substantial edge over both Miami Lakes and the greenfield option. To begin, 80% of the customer base could be reached in 24 to 48 hours from Roanoke, which Miami Lakes could not match. But there was more, much more.

"Roanoke was more economical to operate and required less capital to take on all of Elizabeth Arden's distribution," says Drilon. "In addition, the materials handling equipment and IT system were more advanced and the work force already trained to use the equipment and systems. To cap it off, we could add additional space at less cost, the site was suitable, and the landlord willing," adds Drilon.

A month before the consolidation study was concluded, the company board received a request to expand Roanoke. That sat as the consolidation study was finished, the board approved it, and the final design stage of the consolidation started. This final step did, in fact, cause Drilon and his managers at Roanoke to revise their expansion plans to accommodate all of the company's distribution requirements.

The final consolidation plan was approved in February of 2003 and the Roanoke expansion just a month later. The board approved $5 million for materials handling and related information systems and $6.5 million for the building.

Behind the scenes at Roanoke, there was much more going on than a major DC consolidation. The expansion is also expected to accommodate an anticipated major acquisition in the next two years as well as organic growth. And while Roanoke had long been focused on shipping to 3,000 department stores and regional warehouses, it now ships to 35,000 locations including thousands of Wal-Mart stores around the country.

"The demographics of our orders completely changed," says Drilon. "We went from shipping once or twice a month to regional warehouses and department stores to processing store-ready orders generated by point-of-sale data."

With that shift, Roanoke's picking process was outdated and undersized. Before the upgrade, there were 3,000 pick faces primarily for full case picks with less than a thousand for item picks. Today, there are 13,560 pick faces, each capable of holding eight hours of inventory.

Item picks are from three pick-to-light modules with 3,780 pick faces on the lower level of the three, two-level piece-pick areas (see layout on page 20). There are an additional 9,780 shelving pick faces for the slower movers on the upper level of the piece-pick modules.

Two, full-case pick modules are on the other side of the DC. One module accommodates full pallets only while the new module is equipped with carton flow shelving on the lower level and full pallet flow positions on the upper level. There are a total of 2,100 pick faces between both modules.

Similarly, the number of storage locations was tripled, going from 14,000 to 42,000. To limit the storage footprint as much as possible, standard pallet rack five levels high was replaced with eight levels of high-density storage and very-narrow-aisle turret trucks. Despite the increase in locations, square footage dedicated to storage is only half of what it was previously.

At the other end of the warehouse, the sortation system was upgraded considerably. A pop-up wheel sorter is still used, but the speed increased to 70 cases a minute from 40 cases a minute. In addition, six divert lanes were added, bringing the total to 17.

To coordinate the movement of inventory, a warehouse control system was added to the facility. It directs picking and controls conveyors that move inventory through pick modules and between levels before accumulating prior to sortation. The warehouse control system also directs sortation, ensuring cartons are delivered to the correct shipping lane.

From receiving to shipping, bar codes play a large role in managing inventory. Receipts from Elizabeth Arden's manufacturing sites arrive with bar code labels. All others receive bar code labels at the DC.

Throughout the process, the labels are read automatically. This data is used by the warehouse control system as well as the host that directs putaway in storage and replenishment of pick faces.

Both receiving and shipping were overhauled too. Once both on the same side of the building, receiving was moved to the opposite side next to the new storage area. The number of receiving docks was expanded from 6 to 12 and shipping from 17 to 21.

As the majority of new equipment and systems were installed between June of last year and this past January, the Miami Lakes DC continued to operate, says Drilon. Then in February, that DC was shut down and the remaining inventory transferred to Roanoke.

By March 2004, the newly expanded and upgraded Roanoke facility was fully up and running, handling 3,000 orders a day for all of Elizabeth Arden.

"The past three years have been especially interesting as we went through this process," says Drilon. "But now we are able to process orders more efficiently and are positioned for the company to grow aggressively."