New Distribution Centers Popping Up

Even supplies distributor Daisytek plans to open new distribution centers in Tejon Ranch, Calif. and Albany, N.Y. by Jan. 1, executives say. The company also hopes to retrofit of its Memphis center by early December and add three more new regional centers next year.

Why the surge for more distribution power? Faster order-processing speed and efficiency help lower the cost of doing business, say distribution executives. The latest generation of distribution centers makes it easier for distributors to receive greater volumes of product, organize and store it more efficiently, and ship orders out the door faster than ever before.

"That's what's so fun about this. We've been able to take so much time out of the [order process," says Terry Tysseland, senior vice president of operations, North America, at Ingram Micro. The basic charter for Ingram Micro's operations group is to provide the best possible product at the lowest possible cost, and the new distribution center helps achieve that directive, he says.

The Southern California facility is equipped with five miles of automated conveyor systems and barcode scanners that handle the brunt of the work. A quick scan of a shipping label tells an order picker where to locate the product in the warehouse. Bar-code scanners at key points on the conveyor system ensure that products stocked in different corners of the warehouse get shipped together. The whole system also enhances order tracking. Ingram Micro knows where every order is in the warehouse at any given moment.

The bar-code scanner and conveyor combination also ensures that boxes get routed to the correct shipping lanes and freight carrier's trucks. The technology saves time and money by using less people to physically move orders around the warehouse. And the scanners ensure the orders are accurate, which helps reduce RMA costs and customers' time and money.

But the technology doesn't stop there. Ingram Micro has a special machine which pumps out boxes that are taped on one side and ready for packing. Its Dallas center is also loaded with lots of skylights which direct natural light to the warehouse floor and save money. A machine measures the amount of light inside the warehouse. As day turns to night and natural light diminishes, the facilities' internal lighting system kicks on.

The winners of all this investment are Ingram Micro's vendor and reseller customers. Although Ingram Micro won't reveal exactly how much money its saving itself and its customers. All product received at Ingram Micro's new Southern California facility goes to stock within 24 hours. The picking, packing and shipping processes are done with a near paperless system, using Symbol handhelds on a RF wireless network. Customer orders can be received and shipped out in 4.1 hours.

Reseller CAM Commerce Solutions looks for value from its distributor relationship -- a combination of price, service and reliability, executives said. The reseller believes Ingram Micro's newest distribution center enhances its value proposition. "At this point in time, they've just done a fantastic job, and they're definitely the best at what they do," said CAM Commerce's Greg Loubet.

Ingram Micro's new 800,000 square foot distribution center is capable of processing 56,000 orders a day, however its current output is about 12,000 orders a day. Still, that kind of processing power will enable the distributor handle the 30-40 percent increased annual growth its experiencing.

Tech Data's new 300,000-square-foot Miami distribution center was built with an infrared and conveyor system, as well as handheld and wireless technologies, to enable efficient order processing and tracking. The center, which serves the Southeastern U.S. and Latin America, was designed from the ground up using Tech Data specs and expertise. For example, new software helps the distributor stock its top-selling SKUs closest to the conveyor system to save the time and energy of its order pickers. Order packing stations employ ergonomic systems so employees are more comfortable and safer. Order-filling machines and automatic taping devices save even more time.

"Orders are getting put together and going out the door faster," says Yuda Saydun, Tech Data's senior vice president and president of Latin America. The distributor wouldn't reveal how fast orders get shipped out, but it has a list of SLAs or "metrics" which measure how well the distribution center is operating. Tech Data reaches a 99.99 percent level in each category, said Saydun. "It's all part of an ongoing effort to improve processes," he added.

D&H Distributing has made "significant investments" in technology and automation in its distribution centers, specifically in its new Dallas center, said Dan Schwab, vice president of marketing. "It gives us the ability to be more effective at picking, packing and shipping across the country," said Schwab. The company has experienced 25 percent annual growth and needed a distribution center to help keep up with demand.

Engineering design and new technology enable the 153,000-square-foot Dallas center to make shipments later in the day and increase operational efficiency. Customer orders are now going out the door in 3-3.5 hours and LTL shipments can go out as late as 8 p.m. The distributor will be rolling out RF wireless technology in its centers next year.

Schwab believes that all the logistics improvements also help distributors show vendors that the channel is the best way to bring product to market. Vendors lack the "pick, pack and ship" expertise as well as the flexibility to ebb and flow with demand during market changes, he says. "Distributors, D&H specifically, continues to invest to become the most efficient means to get product to market," says Schwab.