Jo-Ann Crafts a New DC To Serve Super Stores

This fabric and craft distribution center stretchesservice to fit a new retail model.

byTom Andel, chief editor

Retailersare turning shopping into an experience. They have to if they’re going tocompete with the convenience their e-tail brethren offer on-line. For example,Jo-Ann Stores, the world’s largest fabric and craft retailer, establisheda superstore format called Jo-Ann etc. Its new stores are not only larger, butthey carry a wider variety of goods and services.

Thesestores also offer a variety of classes on sewing, scrap-booking, rubberstamping and other crafts. After class, customers can purchase all the suppliesnecessary to complete their class projects.

Almostall new Jo-Ann stores follow the etc format. That makes them easy to serve froma distribution center perspective because they place larger orders and havesubstantial dock areas to receive those orders. Jo-Ann’s older, smallerstores don’t have this luxury. Most of their space is devoted to selling;therefore, back-room space is at a premium. As much as possible, inventory isdelivered just in time to get it out on the floor.

Thiswasn’t much of a problem until Jo-Ann acquired the “House ofFabrics” chain, which had a significant West Coast presence and raisedthe number of stores in Jo-Ann’s network to more than 1,000. These newstores exceeded the service capacity of Jo-Ann’s headquarters-baseddistribution center in Hudson, Ohio, and expanded its transportation networkwestward. Eventually it started developing capacity and performance problemsbased on too much work and too little space. It was taking up to three weeks tofill and deliver orders to the farthest destinations in the Western U.S., evenwith lift truck operators using radio frequency data collection (RFDC)technology in the DC (Symbol), linked to its EXE WMS (warehouse management) andSAP-supplied ERP (enterprise resources planning) systems.

Addingto the logistics difficulty was the variety of SKUs Jo-Ann carries (up to30,000) — everything from small packages of buttons and bows tofive-foot-long rolls of fabric to full-case goods of craft items like paint.

Going west

Thecompany hired Deloitte Consulting to help study its DC network andtransportation costs. The goal was to analyze the benefits of adding another DCwest of the Mississippi River versus revamping its Hudson facility. Theconsultants advised Jo-Ann that transportation represented its biggestpotential cost savings and that another distribution center was in order.

Next,consultants from Deloitte & Touche Fantus helped Jo-Ann narrow sitecandidates down to three. Visalia, California, came out the winner, thanks tothree key criteria: workforce skills and availability, proximity to highwaysand site readiness for development. Operations in the new DC were to bere-engineered versions of the systems previously designed by Sedlak ManagementConsultants for the 1.1 million-square-foot Hudson distribution center.Sedlak’s design for the new DC included six selection modules, fouradditional floor induction lines and a Siemens Dematic conveying and sortingsystem consisting of a flex merge subsystem that balances the flow directlyinto the high-rate 620-foot-long sliding-shoe shipping sorter.

“Thiswas an inside-out design process,” says Tom Biltz, Jo-Ann’sdirector of logistics planning. “Instead of concentrating on the buildingfirst, Sedlak helped us analyze our data and material flow requirements, thenbuild the facility around those flows. The building was a big constraint inHudson.”

Jo-Annused Sedlak’s requirements specifications documents to select equipmentvendors. Once the vendors were on board and the material handling and datainfrastructures were designed, ground was broken in April of 2000. Constructionbegan in June, and Jo-Ann moved into the 630,000-square-foot building onJanuary 2, 2001. Shipping began in April, once all inventory was slotted andpick locations identified in the warehouse software.

Contractors in concert

“What helped us get the buildingup and running so quickly was coordination between our general contractor,Haskell, and the equipment vendors, Siemens Dematic [then known as Rapistan]and Frazier Industrial,” explains Bruce Nicotero, general manager of theVisalia facility. “Normally Haskell would build the building and leave;then the racking vendor would come in and put in the racking; then they wouldfinish and the conveyor supplier would install their equipment. This place wasbuilt in quadrants. Quadrant A was first, then the construction guys moved overto quadrant B to install the lighting and sprinklers. Frazier came in behindthem and Siemens Dematic went into section A. The building was completed muchquicker with everybody working together.”

ChrisDeibel, account executive with Frazier, the racking supplier, explained thathis company’s three West Coast plants helped satisfy the fast-tracknature of this project.

“Wehad to guarantee that when we started this job there would be material on siteand it would go up as scheduled,” he says. “That meant having fourweeks of manufactured racking ready to go before we were cleared to come intothe building. This job consisted of six storage modules, each with a differentprofile. We understood how critical that first startup date is, because if wemissed it, it could put the project a week or two behind. That’s tough tomake up.”

On-sitemaintenance capability was important, too. The facility’s maintenancemanager was on site from October on, and was responsible for maintaining allthe equipment as well as the building infrastructure. The maintenance mechanicswere the first hourly team members hired, and they worked side by side withSiemens Dematic, pulling wire and connecting conveyors.

“Themechanics learned how the systems worked together so we could be selfsufficient when Siemens Dematic left,” Nicotero explains. “Wefollowed a master plan and had weekly meetings with all the vendors, our peoplein Hudson, and all the different areas between transportation, warehouseoperations, security and systems. We’d discuss what percentage wascomplete and what was yet to be done. We tried to make this transparent to thestores, although we did take digital photos every week and post them on ourcompany-wide intranet site.”

DC flow

Everynew item that comes into the DC must first be weighed and measured for the WMS.A Quantronix cubing and weighing system sends those figures to the EXE system.This helps Jo-Ann personnel gauge how much merchandise can fit into a shippingcontainer and also helps them build the most efficient trailer loads.

Thereceiving dock on the north side is split between notions and crafts on oneside and fabrics on the other. The warehouse is laid out alphabetically.Less-than-full-case items go into aisles A through K. Aisles A through C arefor notions and crafts. A holds the slower-moving products while C holds thefast movers. Aisle D is home decorating and aisle E is open floor space forfuture module installation. Aisles F and G are for palletized fabrics, aisle His the full-case module, aisle J is the seasonal module and aisle K is fornon-conveyables. Aisle R is pallet reserve fabrics and yarn and S is forseasonal fabrics. Both of these aisles have their own induction lines.

Ordersare driven by historical demand and periodically updated according tocurrent-year plan, advertising programs and other changes. Once they aredownloaded to the WMS, picks are sequenced in waves so products can be loadedinto the outbound trailers.

Ordersare picked in full-case and broken-case quantities while fabrics go intocartons or totes. Bar code labels are attached, identifying contents anddestination.

Everypick module has four levels of carton or pallet flow rack and an inventorycontrol clerk familiar with the merchandise in that module. Trash lines on thefirst and third levels of the broken-case modules convey discarded packaging toa cardboard compactor and baler.

Pickingis done on all four levels, taking up 50,000 square feet of mezzanine space.But according to Jack Bonanno, vice president of Sedlak Management Consultants,the project team decided to reduce the number of conveyor lines in thebroken-case pick module. This module was originally designed with carton flowlanes down both sides. Instead, due to lower volume, conveyor now goes down oneside while the other carton flow lane was replaced with pick carts and deckedrack.

“Wewent with a pick-to-cart process on each level of one of the picktowers,” Bonanno explains. “That saved money and we were able toshow some efficiency in picking to cart versus trying to use the conveyor forthe velocity of SKUs profiled there.”

Frazier’s Chris Deibel adds thatbecause Jo-Ann deals with such a variety of items in high-bay storage, hiscompany had to come up with different divider techniques and designs toseparate the bays.

“Ona 96-inch-wide beam they can devote one side of the bay to one type of bolt ofmaterial and the other side of the bay to something else,” he explains.“They can stack that material in a 48-inch clear configuration.”

Tenconveyor lines carry products away from the pick modules and floor areas andmerge into two lines that lead to a scanner. Once scanned, orders go to theshipping dock.

Anend-of-wave tote is placed between each wave of products picked to a conveyorline. A photo eye positioned before the flex merge at the end of every linesees a reflector on the tote and stops the next wave from advancing. This tellsthe sorter operator that every item in front of the tote is on its way to theshipping dock and that once there’s a tote at the end of all the conveyorlines, it’s time to release the next wave.

Theend-of-wave totes are then diverted down a special collection lane anddispersed back to all the pick areas while the waves of product that were infront of them are scanned and sorted onto the appropriate takeaway conveyor anddiverted to the correct trailer.

SiemensDematic’s RapidROUTE software enables tracking, routing and confirmationof product movement on the conveyor system and stores it for periodic uploadingto the host computer. The system also indicates if there’s a jam andpinpoints its location.

“Theinterface with the WMS supplier resulted in a seamless link to our warehousecontrol system,” says Ken Ruehrdanz, manager of marketing for SiemensDematic. “Through the WCS, RapidROUTE operates in conjunction with theWMS to allow the operation to pick multiple waves simultaneously. Jo-Ann picksnine to 15 waves per shift.”

Picklocations are replenished by lift truck operators equipped with RF terminals.Once he receives an assignment, an operator will go to the appropriate primarystock location, select the necessary quantity and deliver it to the destinedpick location. Before placing the load in the appropriate slot, the operatorwill scan a bar code on the rack to update inventory.

Non-conveyableitems are picked manually and brought to the dock. These represent about 10percent of the orders. The Visalia DC uses 10 double-deep Crown reach truck forputaways and replenishments, and 13 Crown man-up stock pickers in itsnarrow-aisle modules.

Improvements

EXEwill upgrade its WMS early next year. This will help Jo-Ann improve all aspectsof receiving and identifying product.

“We’llhave printouts of all items listed on the P.O. so we won’t have to open acase in receiving to make sure an order is correct,” says Nicotero.

On theoutbound side, the RapidROUTE software will enable Jo-Ann to do zone routing ofsplit-case orders, routing orders to only the zones where there are picks. Atthe dock, trailers are floor loaded manually, with cases and totes making useof every square inch. Why ship in totes?

“Productsget to stores in better shape because they’re not crushed ordamaged,” Nicotero answers. “We don’t have to buy as manycases and we can use the totes over and over. Corrugated is a big expense forus. Plus, our truck and trailer loading is more efficient because they stacknicely in the trailer.”

Abouttwo-thirds of Jo-Ann stores receive totes; those farthest from the DCs stillget corrugated because of the logistics of returns. The carrier will pick upwhatever empty totes each store has. After accumulating totes all along hisroute he’ll bring them back to the Visalia DC.

TheVisalia DC has 32 shipping lanes, with room to expand to 42. Right now thefacility is loading about 12 to 15 trucks a day on one shift, but as businessramps up, Jo-Ann anticipates adding a smaller second shift. Jo-Ann contractedwith JB Hunt as the dedicated carrier on all outbound deliveries. Nicotero sayshaving the same driver appear at the store’s dock, helping unload thetrailer, gives stores an added level of security.

“Before,when shipments were coming from Ohio, subcontractors wouldn’t necessarilybe willing to help,” he says. “Now our stores see the same facearrive at their dock every week, and with the shorter lead times, it adds alevel of predictability for the stores.”

Thestores scan the labels on each case and tote to verify they received everythingon the manifest. Because the totes and cartons are filled according to eachstore’s layout, unloading and putaway are made that much simpler.

“Wecame up with a way to pick and pack a store order by that store’slayout,” explains Sedlak’s Jack Bonanno. “If I’m shippingthree cases to a store, those cases may have product for one or two particularaisles. That facilitates product delivery. The lesson is, if you understandyour store network plan-o-gram, and the cost and timing associated with yourshipments, you can leverage those capabilities as core competencies.”

Anotherproject on Jo-Ann’s horizon is a work measurement study. Explains TonyLago, Jo-Ann’s director of DC operations: “We’re looking atmotion and time studies for all DC functions. It would utilize the labormanagement system of the EXE package, with worker input via Intermec operatorinterfaces.”

Jo-Annhas already developed a score card, positioned at the end of each aisle, thatgives operators an idea of where they are in the picking sequence of a wave.Because the pickers don’t use RF at this point, this shows them how longit should take to complete a wave.

JackBonanno adds that some of Sedlak’s other clients have achieved a 30percent efficiency improvement by establishing engineered work standards intheir DCs.

Ready to grow

Jo-Ann’snew Visalia DC enjoys advantages that the Hudson, Ohio, facility can’t.First, the Ohio facility was originally a GM assembly plant. That restrictedgrowth options. As Jo-Ann’s store network grew and order volume increased,flow efficiency declined. The Visalia DC was designed to handle Jo-Ann’sproducts and projected volumes. Flows were improved, with everything coming inon the north side and going out the south side. And because many employees havedifferent retail backgrounds, the company benefits from a breadth ofexperience.

“That’swhy headquarters gave us free rein to embellish and improve the originalprocesses and procedures — so we could be more efficient,” Nicoteroconcludes. “They are currently remodeling in Ohio, and we’re infriendly competition with them to see if we can keep improving our efficiencyand performance.”

Jo-AnnStores’ desire to meet and beat internal and external benchmarks willguarantee high-quality service to its growing chain of growing stores. Itshould also motivate every material handling professional in all retail supplychains to do the same. MHM