System Report: At the Container Store, lift trucks contain the chaos

You would expect a company known as the original storage and organizational retailer to be, well, organized when it comes to storage in its new distribution center. And, that is certainly the case at the 1.1-million-square-foot facility The Container Store built in Coppell, Texas.

The facility stands out not just for its efficient use of storage, but also for the role played by its lift truck distributor (Malin Integrated Handling Solutions, malinusa.com) and manufacturer (Raymond, raymondcorp.com) in the design and planning of the DC. 

The Container Store worked closely with the distributor on the racking layout and slotting. By optimizing the design and material flow through the facility, The Container Store was able to right size its lift truck fleet while simultaneously improving operations and adding 350,000 square feet of space. Among the most important measures of success: a 30% improvement in process time.

“When you’re expanding from 450,000 square feet to 800,000 square feet, one of the biggest concerns is travel time,” says Mike Coronado, distribution director. “The fact that we saw a 30% improvement in travel time while expanding the space our associates cover is the true measure of the success of the project.”

While The Container Store is using just 800,000 square feet today, it has the option of adding the additional 300,000 square feet in the future. The facility enables a centralized distribution concept, servicing the retailer’s 49 retail stores—each of which receives full truckload replenishment deliveries—as well as a growing direct-to-consumer business.

The facility makes the most of conventional warehouse processes with a fleet comprised of 51 lift trucks:

• 24 pallet trucks for floor-level, primary picking to process daily orders,

• 15 double-deep reach trucks for moving pallets from the dock into the racking reserves and moving reserves down to primary locations on the floor level,

• 4 stand-up counterbalanced trucks for unloading tractor trailers,

• 4 orderpickers for a few specified areas with above-ground level picking and cycle counts,

• 2 tow tractors for moving trash hoppers and recycling materials to compactors, and

• 2 sit-down counterbalanced trucks for moving heavier loads.

In addition, conventional materials handling processes are enhanced through best-of-breed warehouse and labor management software solutions as well as slotting, dock and yard management applications developed in-house by The Container Store. 

Most importantly, Coronado says, the facility demonstrates The Container Store’s commitment to long-term partnerships with its vendors and input from all of its associates. “We are an employee-first culture,” he says. “We established focus groups to involve our floor personnel in the selection of critical equipment, such as the lift truck and rack vendors.”

Let’s get organized
The first Container Store opened in Dallas in 1978. The small, 1,600-square-foot space offered a never-before-assembled collection of storage and organization products designed to save time and space and simplify its customers’ lives. In doing so, it originated a completely new category of retailing, that of storage and organization. Since then, the company has experienced continuous double-digit growth. Today, 49 stores across the country average 25,000 square feet and offer more than 10,000 innovative products. Store No. 50 will open soon.

The need for a new distribution center became apparent back in 2002. At the time, The Container Store was operating from a 350,000-square-foot facility, with 300,000 square feet committed to distribution. The remainder housed corporate office space. In addition, the retailer had a satellite facility with 150,000 square feet. A 10-year sales growth projection study concluded that a larger facility would be necessary to contain its distribution center and corporate offices.

That study led to two years of planning to develop and build the new DC. During that time, Coronado and his distribution and logistics management team had the challenging task of designing the DC, filling it with new equipment and getting all systems integrated and running.

One of the questions the team considered was whether to alter the distribution strategy. Instead of offices and order fulfillment activities under one roof, would a network of regional distribution centers be more cost effective? The answer, at least for then, was no. “At this point in our growth cycle, it still makes sense for us to service our business from one central DC, even with high fuel prices,” Coronado says.

A centralized DC also made sense from the viewpoint of The Container Store’s unique corporate culture, a culture that influenced the design of the facility. “Our employee-first culture influences everything we do,” says Coronado. “We believe that communication is leadership. Having all of our operations under one roof is consistent with that philosophy.” For instance, the retailer’s merchandise buying team is located at the facility. “If we have a problem with a product, we can solve it together right here,” Coronado says.

Among the goals for the new facility were to:

• maintain and improve productivity while expanding the size of the facility,

• integrate direct-to-consumer and store replenishment activities in one facility, to keep one inventory that could satisfy both types of orders, and

• create an employee-friendly work environment, despite the high heat and humidity in that part of Texas. “We wanted world-class distribution in an environment that would reflect that we are the best company to work for in America,” Coronado says.

To accomplish those goals, The Container Store worked with a lift truck distributor and materials handling integrator in nearby Addison, Texas.

“We knew that attention to the selection of equipment and the layout of the facility was going to be critical to if we were going to improve productivity,” Coronado says. “They came to understand our business completely, so that we had a real trust when they told us what would work and what would not work.”

Among the major changes implemented:

Lift truck changes: Replacing turret trucks that serviced very narrow aisle racks (5-foot aisles and 20-feet of storage) with reach trucks to service 30-foot tall, double-deep pallet racks with 11-foot aisles.

Storage changes: Implementing a new slotting strategy built around keeping the best sellers close to the dock doors and slow moving items in less convenient locations.

A new slotting strategy has a significant impact on equipment selection, along with productivity. “We wanted to keep a five-day supply of our fastest-moving SKUs in a forward pick location, whether that supply is five cases or 500 cases,” Coronado explains. “The slotting strategy went a long way to determining the kind of rack we needed as well as the lift trucks that would be required to service them.”

For instance, double-deep racks and reach trucks are used for SKUs with multiple pallets in a forward pick location while stockpickers are used for high bay replenishment of slower moving SKUs and riders are used for case picking in zones.

Today, he adds, “We continuously reslot. It is imperative if we’re going to utilize the cube of the space and minimize the travel time of our pickers.”

Coronado credits the slotting strategy with improving material flow through the facility, despite the increased size.

Leveraging associates
The Container Store’s employee-first culture also played a critical role in the design of the facility and the selection of the equipment.

To leverage the insight and experience of the associates who would be using the equipment each day, The Container Store set up focus groups to test, analyze and choose the best equipment and racking to do their jobs. “All of our employees have a sense of ownership,” Coronado says.

For instance, Coronado and his team narrowed down the list of potential reach truck vendors to three. At that point, a focus group of associates on the floor evaluated reach trucks from each of the three vendors for six weeks before making a recommendation. Similar focus groups were involved in the selection of the racking and battery management systems.

That employee-first culture influenced the working environment of the facility. Instead of the industrial grey color common to most distribution centers, The Container Store chose a color scheme based on the Dutch painter Piet Mondriaan, using bright, primary colors. The retailer also worked with engineers to install 71 high-velocity, low-speed fans and 48-inch exhaust fans. The fans are part of a building automation system that controls the lighting and fans in the building to keep it as cool as possible in the Texas heat.

“Sensors only turn on the lighting when someone is working in an area,” Coronado says. “The system also operates the fans based on the temperature and humidity inside and outside of the facility.” For instance, in the mornings, when it is likely to be cooler outside than inside, exhaust fans move warm air out of the building. The low-speed fans, meanwhile, keep air in the building moving. One day last August, the temperature inside the DC was 86 degrees when the outside reached 105.

Staying organized
While the facility has been up and running for several years, The Container Store continues to tweak the design.

In the near future, for instance, Coronado is adding voice recognition to improve picking processes. “We think our productivity will improve, accuracy will improve and safety will improve,” he says.

As with the selection of lift trucks, The Container Store established a focus group of floor associates, who are eager to bring in the new technology. “All of our indicators reflect continuous improvements year over year,” Coronado adds. “But what we also celebrate is that our people feel and believe that they are working in a world-class distribution center.”