Breaking out of the box

To the rest of the world, The Container Store might seem like the ultimate authority on home and office organization. Yet the retailer found itself in need of a little organizational help of its own a few years back. In this case, the area requiring attention was its distribution facility.

What brought the company to this point was rapid growth. Founded in 1978, the Texas-based chain is the nation's largest home organization retailer, with 50 stores around the country. Rather than operate a network of regional distribution centers, the company has chosen to serve all 50 stores from a central DC in Texas. But after decades of double-digit sales increases, it found itself bumping up against the limits of the existing DC's capacity. By the early 2000s, the retailer had run out of space at the 300,000-square-foot building that served as its central DC and was using a 150,000-square-foot satellite facility nearby to handle the overflow. And the arrangement was proving less than ideal.

"When you have satellite facilities, even if they're only two miles apart, you're still dealing with a satellite," says Mike Coronado, the retailer's director of distribution. "If you don't do it right, they might as well be 2,000 miles apart."

And it was clear that the pressure would only increase as business grew. After looking at its options, the company decided to relocate its distribution operations to a 1.1 million-square-foot facility in Coppell, Texas, not far from the Dallas-Fort Worth Airport. Among other advantages, the site is located just eight miles from the previous DC, which allowed the company to keep its entire workforce.

This building should meet the company's needs for the next 10 years and allow it to serve nearly double the number of stores it currently supports. Right now, The Container Store occupies 800,000 square feet of the leased facility, with the option to expand as growth demands. It is using some 720,000 square feet of that for distribution purposes and the remainder for corporate office space.

"Whole brain" thinking
From the outset, the retailer decided against simply replicating the previous system and work flow in the new building. Rather, it would use the move as an opportunity to rethink the fulfillment process from the ground up. For help with that endeavor, The Container Store contracted with Malin Integrated Handling Solutions, an Addison, Texas-based integrator and material handling equipment distributor.

What The Container Store did next might raise some eyebrows, yet it's completely in keeping with the retailer's unique approach to management—an approach that has landed it on Fortune magazine's list of "100 Best Companies to Work For" for 12 years running. It decided to bring in employees to help with the decision making—a strategy Coronado refers to as "whole brain thinking." In this case, it formed teams of some of the people who move the products every day and asked for their input on the design and equipment selection.

The design ultimately selected represents a radical change to the company's approach to storage as well as the lift trucks used in its operations. In the old building, The Container Store utilized narrow-aisle racking, set with aisles five feet wide, and relied on a fleet of eight turret trucks to move goods around the facility. The problem with that arrangement was that it limited access to the aisles to only those vehicles.

"Once the vehicle was in the aisle, no one else could use that aisle," says Coronado.

So when they went to design the new process, the teams from The Container Store and Malin began with a clean sheet of paper, starting with the products the facility would handle and then designing the system around them.

"We designed what we felt the facility's layout should be, then our slotting strategy determined what racking we would need for each SKU type. Once the racking was determined, we then defined what vehicles would be needed to service them," Coronado explains.

The design teams also had to consider the seasonal nature of many of The Container Store's 10,000 products, such as holiday wrapping paper or the office organization products sold during tax preparation season. To help it navigate the slotting complexities, the company uses its Catalyst warehouse management system to assign products to different types of racks, which include pallet, push-back, pallet-flow, and case-flow racks. "The goal is to get our best movers during each time of the year closer to the dock door. It is something you have to keep up with," says Coronado. "You can be perfect today, but it will still need to change tomorrow."

The way the racks are positioned in the new building differs from the setup in the old facility. Instead of the five-foot aisles, the new storage area has 11-foot aisles between racks. This allows multiple vehicles to access the racks simultaneously.

One of the concerns the designers had was that the increased aisle width would increase worker's travel time because products would be spread out over a larger space. To help compensate for this, the new racks, provided by Frazier, are 30 feet high, compared with 20 feet in the prior facility, and most are double-deep, so more products can be stored within the basic footprint.

Truck selection
Once they had settled on the storage setup, Malin helped The Container Store set specifications for the lift trucks to service each function and rack type. Here, as in the design phase, the retailer turned to its employees to help it evaluate potential lift trucks for the new building. As part of the process, lift truck suppliers brought in equipment for team members to test under regular working conditions during a six-week period.

The Raymond Corp. was selected as the supplier for the facility's new lift truck fleet, which includes 51 different vehicles designed for a variety of tasks. The fleet today includes four stand-up counterbalanced trucks for unloading tractor-trailers, as well as 15 Deep-Reach trucks, which are used to move products from the dock to putaway in the double-deep reserve storage racking as well as to move products from storage down to the bottom levels, where primary pick locations are found. Twenty-four rider pallet trucks are used to pick from these bottom-level pallet and flow racks. (Workers in this area are also being outfitted with voice terminals from Lucas Systems to direct picking activity.)

In addition, four order-pickers are used to pick slower movers and specialty items, as well as to conduct cycle counts. Rounding out the fleet are two tow tractors, which move trash hoppers and recycling materials to compactors, and two sit-down counterbalanced lift trucks, which are used to move heavier loads throughout the building.

Big boost in productivity
The new design allows multiple vehicles to work in the same aisle simultaneously, minimizing wait time and increasing productivity.

"The biggest constraint we had before was that we were limited in what we could do in each aisle," says Coronado. "Now that we can get multiple pieces of equipment in an aisle, we can turn products faster. It is common now to see five or six vehicles working at the same time in an aisle." He adds that even with increased volumes, the new facility is 30 percent more productive than the old operation.

In addition, the design provides greater flexibility, as the facility is better able to handle its direct-to-consumer business, which is its fastest-growing channel. Most of the items sold through this channel are delivered by lift truck from reserve storage to flow racks and shelving, where products are picked and packed for delivery directly to end users.

In addition to the big gains in productivity, the facility was also able to achieve some of the company's other goals, like providing a comfortable working environment. Not only is the building well lit and brightly painted, but it's also equipped with 71 large ceiling fans provided by MacroAir Technologies to boost air circulation.

The Container Store's relationship with its suppliers didn't end with the purchase of the new lift trucks. To ensure the vehicles are running at peak performance, the retailer contracted with Malin to provide preventive maintenance and repair services, with Malin staff on site daily to keep the fleet humming. It also relies on Malin to suggest design changes to further enhance efficiency.

"It's about looking beyond the truck," says Coronado. "We look for long-term, mutually beneficial partnerships with our vendors who understand our processes and how we are moving forward."