April 2006 | Case Studies | DC Solutions

A Smart-Money Move

Tags: Warehousing

Technology retailer CDW hit the jackpot with its new Las Vegas distribution center. The facility's automated technology and room for expansion are a winning combination.

Founded 22 years ago as a home-based business, CDW Corporation is today a leading provider of technology products and services for business, government, and education. The Vernon Hills, Ill.-based company generated $6.3 billion in sales in 2005.

CDW is a principal source of technology brands such as Adobe, Apple, Cisco, Microsoft, Sony, and Toshiba. The company's business model offers customers one-on-one relationships with account managers. Customers can purchase the technology by telephone, fax, or through the company's web site.

CDW delivers custom configured solutions and same-day shipping, along with pre- and post-sales technical support.

CDW is a company on the move.

The Right Stuff

CDW has enjoyed dramatic growth since its inception, and has no plans to slow down. The recent opening of a new 513,000-square-foot distribution center in North Las Vegas represents another chip in play as the company strives to continue providing top-notch customer service.

Until the new North Las Vegas facility became reality, CDW supported all its business through a single distribution center in Vernon Hills, Ill.

"We needed to add the new DC to better serve customers in the western part of the country, and support our growth," says Ray Nair, CDW director of western distribution. "Having a second DC also gives us redundancy if one temporarily goes down."

While the new DC officially opened last February, and construction was completed in December, the project has been in the works for more than one year. To get the new DC up and running quickly, CDW worked with long-time integration partner Matco Distribution Inc., Milwaukee, Wis.

"We have worked with CDW on various projects over the last 15 years," says Fred Fischer, an engineer at Matco. "Together, we were able to transform the North Las Vegas DC from an open lot to an operational facility in about eight months."

To get a feel for the new DC's immense size, consider that it is a half-mile walk around its perimeter. Inside, conveyors run for more than seven miles.

The company isn't using all of the DC's available capacity right now, but it will in the future as growth warrants.

"Right now, we are at about 60 percent of capacity," says Nair. "We designed the building for eventual 100-percent build-out—if we need to add more SKUs in the future, the facility and equipment are set up to handle the extra load."

Smooth Operator

CDW transferred many operating processes from the Illinois facility to the new North Las Vegas DC.

"We took what worked at the Illinois facility, improved the functionality, and implemented it at the new DC," says Fischer. "The layout makes it work all the more efficiently. The new DC has a lot of open space, so we can keep product flow moving."

The DC is highly automated and tracks every item with little human intervention. Currently, the company tracks items using a bar-code system, but has plans to upgrade to RFID in the future. CDW's in-house developers custom-designed all the software.

The operation is mostly flow-through, although some storage space is available for replenishment. When items or pallets arrive, the staff checks the purchase order against the internal receipt to ensure the two match.

The distribution center receives two types of shipments: small-parcel items, which account for about 20 percent of all shipments CDW receives, and full pallets.

As parcel items are received, DC workers place them into color-coded totes with bar codes for putaway. When pallet loads arrive, workers again check the purchase order against the internal receipt, then place the pallets in a reserve location.

The reserve location stands immediately adjacent to the DC's six picking modules to allow for rapid replenishment. As items are pulled from a location, workers scan the bar codes to indicate they are moving from one location to another. Inventory is then adjusted accordingly.

Picking is completely paperless, managed by CDW's own radio frequency (RF) technology. "We have built a lot of checks into the picking system," explains Nair. "We refer both to the RF device and a monitor in the picking zone to ensure accuracy."

Matco recommended that CDW set up pick-pack operations on the DC's first floor for maximum efficiency.

"It's tough to develop a way to do that, but we thought it would work best," says Fischer. "We put our experience to work, incorporated lessons learned, and made it happen."

Each picking module is set up on three levels, which is uncommon in the western part of the country because of seismic activity. "We configured it this way, however, because we wanted to make the most of the cube," explains Nair.

Every part of the picking operation is geared toward moving inventory, and the results bear out that effort—CDW turns inventory approximately 25 times per year.

Able Label

Workers pick into cartons set up by an automatic box maker. "The warehouse management system calculates the size of the boxes we need, and sends that information to the box maker," says Nair. "After the cartons are filled, pickers place them on a conveyor, which carries them to an automatic labeler."

The labeler prints and applies shipping and packing slips. If a computer monitor is shipping, for example, a camera system takes a picture of the bar code to identify the product, and conveys the information to the system.

The system then sends the information to the labeler so no hands need touch the products. After labeling, the cartons move down the conveyors to the shipping dock with little human intervention.

Further enhancing the operation is a state-of-the-art tilt-tray sorter—the last stop for products. After items are checked in quality control, they head to the tilt-tray sorter, which scans the bar codes, then directs items to the proper shipping lane.

"We decided to install the sorter because it can handle high volume and grow with us," says Nair.

The new system is extremely automated in an effort to keep accuracy as high as possible.

"If we try to ship a carton that is not 100-percent accurate, the system kicks it out," says Nair. "We achieved 99.9-percent accuracy in our Vernon Hills distribution center. The goal of the new DC is to add a few nines to the end of that number."

In addition to high accuracy, CDW gets its shipping done quickly. "We turn around more than 99 percent of credit-approved and in-stock orders the same day we receive them," says Nair. "We pride ourselves on quick customer response."

Currently, the new western DC's 160- to 180-person staff work five days a week, with three shifts per day. "We receive on the first shift, stock on the second shift, and ship on the third shift," explains Nair.

Room to Grow

The facility's SKU count is about 20,000, but that number will grow now that the DC is up and running.

Overall, the new facility delivers everything CDW could want and then some. "We have been able to combine all our functions into a cohesive package that can grow," says Nair. "And we've designed it so that we won't find any bottlenecks along the way."

CDW took what was already a model of speed and efficiency—its Illinois distribution operations—and improved on it. The company is betting on its North Las Vegas DC to expedite accurate shipments today and well into the future.