CDW: Making the most of two DCs

CDW’s new distribution center in North Las Vegas works in tandem with its original DC to accommodate growth and a new level of customer service.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 7/6/2007

For years, CDW ran all of its order fulfillment operations from one distribution center in Vernon Hills, Ill. 

But with business growing, especially in California, the technology provider opened a second DC in North Las Vegas last year. “We wanted to get closer to our customers on the West Coast,” says Doug Eckrote, senior vice president of operations. “But we also wanted to create a business continuity plan so that if one facility shut down for any reason, we could still fill orders out of the other.” 

In fact, the second DC came in handy last winter when several snow storms shut down Chicago’s O’Hare Airport. “With the flip of a switch, we were able to shift our overnight orders to Las Vegas and keep shipping,” says Eckrote.

Order fulfillment strategies

That was a big advantage. Now that CDW has been working with two DCs for a year, Eckrote says the company is using its expanded capabilities to create new order fulfillment strategies.

 “Once we saw how efficient the new warehouse is, we realized we could ship another 5,000 boxes a day without adding to our head count,” says Eckrote. “So we worked with our carriers to create a deferred shipping program for customers back east. It takes a little longer to ship to the East Coast from Las Vegas, but we can save the customer up to 20% on their shipping costs if do they don’t need the order right away and we can make better use of both facilities.”

 The first day the program was available, CDW shipped an extra 2,200 boxes from North Las Vegas that would previously have shipped out of Illinois.

 “We were shocked at how many customers picked the deferred shipment program,” says Eckrote.

Shifting inventory

Next, Eckrote’s team looked at what processes the new facility did more efficiently than the Vernon Hills facility. “In Vernon Hills, we have to manually pick and process custom-configured orders, which is inefficient,” says Eckrote. “In North Las Vegas, the process is paperless and automated. Since notebook computers are relatively light, which makes them less costly to ship, we have shifted all of that work to the new facility. The labor savings is more than enough to offset the higher freight charges.”

The result: CDW has shifted an additional 1,000 orders a day to the new facility while offering better service to its customers. “Our competitive advantage used to be that we took and shipped orders the same day,” says Eckrote. “Now, that’s the cost of entry. Using both facilities to our best advantage is allowing us to take a few more hours out of the pick process and provide more value-added services to our customers.”