Casebook 2011: Automated order fulfillment system provides for growth

Dallas-based Michaels Stores, the world’s largest retailer of arts and crafts, was rapidly growing, but the growth had its supply chain bursting at the seams. To handle the growth, Michaels’ senior management called on its logistics team to develop a solution that could support the company’s long-term inventory management initiatives and shorten order fulfillment times.

The team at Michaels aimed to reduce direct-to-store shipments and the overall number of SKUs held in total inventory at any one time. A new 690,000-square-foot automated DC in New Lenox, Ill., was proposed to serve the chain’s Midwestern and Canadian expansion. The cornerstone of the Michaels’ supply chain optimization plan was a change in order fulfillment operations to complement the company’s supply chain initiatives.

To simplify in-store receiving, an order fulfillment system was designed to pick, pack and ship items by departments corresponding to store planograms. This system (Intelligrated, 866-936-7300, http://www.intelligrated.com) dramatically reduced in-store replenishment time and cost, freeing up staff to better serve customers.

The pick-to-light and control system guides eight pickers at 13,100 pick locations throughout the DC, managing both full and split case picking and conveyor zones to maximize efficiency and minimize the number of touches per case. Tight integration with the warehouse management system enables a perpetual inventory fulfillment/replenishment cycle and ensures order accuracy, labor management and real-time information.

The DC also uses pick-and-pass motorized roller conveyor that scans and transfers open items or totes to conveyors feeding product pick zones, minimizing walk times and improving order fulfillment accuracy.

Picking accuracy at the DC now runs at 99.5%, and the system incorporates the flexibility needed to accommodate the company’s continued growth and expansion.