Good today, better tomorrow
The Container Store's new DC is prepared to handle growth for the next 10 years as the company strives to remain a top company to work for.
By Gary Forger, Editorial Director -- Modern Materials Handling, 10/1/2004
On the one hand, The Container Store and its new DC are quite unconventional.
Four years ago, Fortune magazine named the retailer the #1 best company to work for in America. And it's stayed near the top since then, coming in at #3 this year.
The company, which now has 32 retail stores across the country, is growing at a 25% annual pace and expects that to continue for the next 8 to 10 years.
As a result, it needed more warehouse space. Its new DC in Coppell, Texas is 1.1 million square feet. But the company only pays for use of 575,000 square feet of warehouse space and 75,000 square feet of headquarters space. Not many landlords would make that deal.
But when it comes to measuring how successful that new DC is, Amy Carovillano, vice president of logistics and distribution, is very conventional. As she and senior logistics director Bill Baron will tell you, they have made some real strides in a facility that is almost 65% larger than the company's previous primary DC.
For instance, receipt to stock time has been cut 40%, from 13 hours to 8 hours. Replenishment time has improved 52%, requiring just 40 minutes now. Pick productivity has remained the same even though the picking location footprint is 25% greater than before. And over-the-road truck loading efficiency has increased 20%.
The backbone of this success, says Carovillano, is basic materials handling equipment and a warehouse management system (see System Suppliers list below) combined with extensive cross-training of the DC's work force. 'We give employees all the tools they need,' says Carovillano. 'They understand the business and why they need to do different jobs.'
Building rightTo say the least, The Container Store is on a trajectory that most retailers (and other businesses for that matter) would love to have. But that created its own challenges along the way.
Two years ago, the company had already outgrown its 305,000 square foot DC. So it added a 150,000 square foot satellite facility. And to accommodate still more growth, it added a public storage warehouse.
During the early planning stages for the new DC, Kip Tindell, CEO and president, told Carovillano and others that he wanted the new facility to accommodate 25% annual growth for the next decade. But he was only going to pay for the space the company was actually using at any point in time.
Carovillano explained that leasing warehouse space didn't work that way. Tindell continued to insist. As it turned out, Tindell got his way, thanks in no small part to his real estate department and a landlord not only willing to work with the retailer, but build to its specs.
Come 2007, The Container Store has agreed to occupy 150,000 square feet of additional space in the building. After that it has the right of first refusal on the remainder of the space.
Exactly how that space was going to be used and how it would look was discussed at length with employees when plans were first being made. 'They wanted the building to reflect the personality of the company and be a fun place to work,' says Carovillano.
Atmosphere in the DC is critical, Baron says. To help there, three walls are painted white and the fourth is a giant Mondrian-like mural, stretching 500 feet long and 45 feet tall. That mural, a series of blocks with primary colors, mirrors the much smaller artwork in the adjacent headquarters offices.
Being in Texas, there is extensive use of high-volume, low-speed ceiling fans as well as special dock door fans. There are clerestory windows above dock doors, and lighting throughout the facility is bright. Safety at the docks and elsewhere was given a top priority too. The company has now gone more than 700 work days without a lost-time accident.
Improving operationsDuring the planning stages for the new DC, several areas were targeted for improvement.
Movement of inventory on both receiving and shipping docks was not as swift as desired.
'In our previous operation, we knew we had troubles with putaway too,' says Baron. 'We were picking and putting away inventory at the same time and the two weren't coexisting well.'
Inventory turns were also lower than expected. A target was set to increase turns 3% annually.
As Carovillano explains, one baseline solution relying on manual handling and three additional mechanized solutions were designed. Those three ranged far afield from the baseline, including pick modules, conveyor sortation and even an automated storage and retrieval system.
All were evaluated on cost and operating performance. Details measured included stock keeping unit velocity, flow analysis, travel path and distances, and replenishment frequencies.
The scheme selected is known as the modified baseline alternative. The general design includes a U-shaped product flow. Storage is primarily 30-foot tall narrow-aisle racks with back-to-back, double-deep and single-deep storage.
Seventy percent of full pallets are stored in the storage rack. Another 10% goes to special processing for value-added services. The balance of receipts, about 20%, goes to floor storage, which is for imports and special promotional items that will be shipped on a pre-set schedule.
Forward picking uses five different schemes to ensure ease of access, speed of picking and shortest travel distances for the fastest movers. The original design called only for double-deep rack. However, says Baron, that would have been a mistake. 'We now have a much better mix of storage devices that uses different configurations for inventory with different characteristics,' he adds. See box above.
The modified baseline design also moves inventory with 40 pieces of equipment including order pickers as well as reach, rider pallet and counterbalanced trucks. There is no automated equipment in the facility. And only a few feet of conveyor are used in the direct-to-customer order fulfillment area. But that handles less than 5% of the orders. All others are direct to retail stores. See the layout at left for details.
'What I'm most pleased with is our picking productivity,' says Baron. 'It's equal to our earlier levels yet we have doubled volume and significantly extended travel distances. The foot-print of the picking area is 25% larger than before. We're doing well because we're making such good use of our equipment and people,' Baron adds.
Training allAs Carovillano points out, a good part of the overall success of the DC is due to employee training. In fact, extensive training is a hallmark.
In the DC, new employees receive a minimum of 80 hours of training and as many as 160 hours in the first year. The amount depends on the extensiveness of cross-training and equipment specific courses.
'We assume that working here is a career and people will be here for years,' she adds.
Basic instruction covers the company, its corporate strategy, and how it impacts the DC. There are also discussions about how the overall DC operates as well as specific department and equipment training.
Cross-training is extensive. The target is to have every DC worker trained in three departments. Since startup of the facility in February of this year, 85% of workers are cross-trained in two departments and 70% in three departments.
Looking around the new DC, Baron and Carovillano agree that the facility both reflects how people feel about working there, and performs at the level that The Container Store needs to carry its strong growth forward.
| Locations | Pallet positions | |
| Reserve storage | ||
| Double-deep pallet rack | 7,280 | 14,560 |
| Single-deep pallet rack | 16,059 | 16,612 |
| Pallet floor storage | 253 | 363 |
| Forward case pick | ||
| Single-deep pallet rack | 1,844 | 1,844 |
| Case-flow rack | 1,774 | N/A |
| Double-deep pallet flow rack | 551 | 1,102 |
| Double-deep push back rack | 156 | 312 |
| Single-deep double-wide pallet rack | 185 | 370 |
| Less-than-case picks | ||
| Widespan shelving | 6,595 | N/A |
| Single-deep pallet rack | 659 | N/A |
| Total | 35,356 | 35,163 |
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