January 2004 | Case Studies | DC Solutions

Belk: Consolidation to the Max

Tags: Warehousing

For Belk department stores, consolidation was the path to modernization

Imagine the challenge involved in reducing 97 merchandise receiving points to just one central distribution center. For many companies, it might be too much to even consider. But for Belk, the largest privately held department store chain in the United States, that immense challenge was the path to streamlined operations.

The $2.5-billion retailer operates 220 stores in 14 states, mainly throughout the South. Most of its sales volume involves apparel for men, women and children, although it also carries smaller home and accessories departments.

While the company has a long history—more than 100 years in the retail business—until recently, its old-fashioned distribution practices cut into profits. Competitors were getting merchandise from the same vendors to their store shelves much faster than Belk.

"It took us 15 days to move product from the vendor to the store, and we handled product eight to 12 times," says James Harvey, executive vice president at Belk. "Our system was very costly and full of errors."

It's easy to see how the system was bogged down. Belk received shipments from around the world into one deconsolidation facility in North Carolina. Employees unloaded and reorganized the shipments into separate store piles for delivery. Then they loaded the shipments onto trucks, moving them to 91 store locations and six small distribution centers. At the stores, staff manually unloaded and processed the shipments to put product out on the store floors.

Clearly, Belk needed to do something to bring the company up to speed. Harvey and his team determined that the answer was to build one highly automated central distribution center that could speed processes and minimize merchandise handling.

From 97 to One

The Belk team began the huge process of updating its network with help from a real estate company and a consultant. Background research also included a look at how some of the best in the retail business—Wal-Mart, Saks Fifth Avenue and others—carried out their distribution operations.

In its search for the right type of DC, Belk wanted a central location and a strong, high-quality workforce. After careful analysis, Belk chose Blythewood, S.C., as the location for its centralized DC, a state-of-the-art facility that would total more than 300,000 square feet when completed.

Helping Belk along the way were Atlanta-based engineering consultants DCB and Company, and systems integrator W&H Systems, based in Carlstadt, N.J. Harvey asked the team to help him design a facility that was flexible and adaptable, and that could interface with existing systems, such as Belk's WMS from Manhattan Associates.

The resulting new DC delivers all that and more. At the center of its design is a sophisticated crossdocking operation where more than 90 percent of inbound goods are directly cross-docked.

All that crossdocking heavily depends on 35,000 total feet of conveyors, supplied by FKI Logistex Buschman. "Based on Belk's specs, we recommended 36-inch-wide conveyors for handling a wide variety of carton sizes," explains Ron Quackenbush, executive vice president of W&H Systems. "We also recommended accumulator conveyors so that the operations could accumulate cartons without skewing."

The receiving dock was also designed with flexibility in mind, able to receive both conveyable and non-conveyable merchandise. When conveyables are received, the system allows cartons to flow automatically from the trailer to processing or to crossdocking and shipping. Belk's staff handles non-conveyables manually through shipment.

In addition to a crossdocking facility, Harvey required that the new DC turn out nearly all of its merchandise floor-ready. This means receiving information in advance electronically, and adding items such as hangers and human readable price tickets to products. The DC exchanges information with vendors through EDI, and receives Advance Shipping Notices (ASNs).

"The ASNs speak to the specifics of the shipment, using fields for ship date, weight, carton contents to the SKU level, and other information," says Harvey. "Some organizations pay for the shipment using the ASN as the mirror image of the invoice."

Again using industry leaders as a benchmark, Harvey set the goal of getting Belk's floor-ready merchandise as close to 100 percent as possible, noting that Wal-Mart turns out about 97 percent of its products floor-ready. Belk has made remarkable progress, going from just three percent of goods being floor-ready a few years ago to 90 percent today.

In the new modern facility, Belk employees are able to unload shipments quickly and flow floor-ready shipments through the DC in less than seven minutes. This is a big improvement from the days when employees manually opened each carton, checked products on a manifest, and gave them a price mark.

Belk's new distribution center gives the company about a week of extra selling time or "cycle time." Where the time from vendor to store floor used to be more than two weeks, it's now less than seven days.

Since its grand opening, things have only improved at the new DC. "The facility, equipment, and process improvements have changed exponentially," says Harvey. "We've become more efficient and accurate, cost effective and faster. We've removed hundreds from involvement in the distribution process, making it more focused and simpler to accommodate—almost to the point of being automatic."

On the Fast Track

One particularly challenging aspect of the Belk project was that Harvey was in a hurry, wanting to open the facility within 10 months.

"We were on-site for about 10 weeks," says Quackenbush. "We had to design, buy, and get the equipment there in time for Belk's schedule. There wasn't even a floor as we waited for the equipment—workers had to pour it as our equipment arrived."

Another challenge that arose during the fast-track project was carton-recognition issues between the WMS and conveyor system.

"Our software and controls group was able to merge the two software systems to work together. We also installed Accusort scan tunnels that can scan all surfaces and transmit that information back to the WMS so it can direct the cartons," says Quackenbush.

All told, Belk was able to successfully get up and running in the new DC within that 10-month period. And it did so with entirely new equipment, save for the existing WMS and legacy system that were kept on.

Since opening three years ago, the new Belk DC has been able to increase its crossdocking from 65 percent to better than 90 percent. The new equipment has performed with virtually no downtime, allowing for smooth operations since day one, Harvey says.

To ensure the company continues on the right track, Harvey asked W&H to return to the facility and perform an audit. "We determined that Belk should add two high-rate combiners, which take two conveyor lines at high speed and merge them together," says Quackenbush. "That prevents any slowdown or waiting."

The project originally aimed for achieving ROI in about 24 months, but was able to do so within the first full year of operation, according to Harvey.

Through it all, Harvey learned some valuable lessons and offers this advice to others undertaking a large-scale project: "Involve the other shareholders in the requirements, expectations and deliverables," he says. "But do as much of the planning, building and project coordination as possible outside the day-to-day business operations."

He adds that communication is key to pulling off a project this large. "Communicate a lot," says Harvey, "even to the point of assigning someone who owns the communication aspect as part of their goals and performance evaluation."

Clearly communication was in place for this project. Even with the challenges of a fast turnaround, Belk and its partners managed to significantly improve the company's operations.

"Belk was interested in the final product and worked to ensure that it was both on schedule and on budget," says Quackenbush.