NFI, a Key Partner in Staples Supply Chain

Staples Retail Store Distribution Operations

Hagerstown, MD

December 3, 2003

By

Evan Armstrong

Key Personnel:

Ron Rice, Project Director, NFI

Paul Geosano, Manager – Inventory Control System, Staples

When a 3PL enters a three-year agreement with a customer and is an integral part of the operation seven years later, it says a lot about the level of service being provided. NFI and Staples have developed a solid partnership through hard work and ongoing process improvement. In this partnership NFI manages transportation, supports warehousing operations, and provides direct store delivery for the Staples distribution center (D.C.) in Hagerstown, MD on a 24x7 basis.

NFI’s processes begin each day with the receipt of five to seven batches of orders via systems integration with Staples order management system. At approximately 2 a.m. every morning NFI uses its Supply Chain Management System (SCMS) to optimize all outbound transportation orders from the Hagerstown D.C. destined to 430 Staples retail stores. (Staples is planning to increase the number of stores served from Hagerstown to 500 in 2004.) Once the optimization is complete and orders have been consolidated into truckloads, NFI generates pick schedules for the warehouse operation.

Utilizing a fleet of 55 power units and approximately 85 dry van trailers, NFI handles dedicated store delivery of shipments to approximately 200 to 280 Staples stores daily. Traffic flows to stores located from NY to FL and as far west as Columbus, OH. Each power unit is equipped with Qualcomm satellite tracking. Shipments not routed onto the NFI dedicated runs are delivered with contract carriers. As part of a total transportation management service, NFI also provides reverse logistics services for all of the stores served by the D.C. and inbound transportation from vendors within a 250 mile radius of Hagerstown. In addition, NFI uses its SCMS to manage the D.C.’s yard and provides trailer switching services via three “jockey” tractors.

NFI's central dispatch office keeps the 24x7 operation running on schedule.

Much of the workflow in Staples 840,000 square foot, 24x6 warehouse operation is driven from pick schedules received through NFI’s systems integration with Staples EXE warehouse management system (WMS). Approximately 10,000 SKU’s are stored in an “ABC” configuration with faster movers stored in close proximity to shipping. . The majority of product is stored in seven position high racks in a narrow-aisle configuration flowing vertically from receiving to shipping. Fifteen to twenty percent of product is directly cross-docked from receiving to shipping. Staples utilizes approximately 600 to 700 direct warehouse personnel depending on the time of year; the busiest seasons are “back to school” and “tax time”.

The less-than-case pick module utilizes pick-to-light technology for improved order accuracy.

All receiving, putaway, picking, and shipping activities are directed and/or captured via handheld RF scanners and overhead scanners linked to EXE. This provides Staples with real-time inventory visibility. The majority of Staples volume flows from two full-case pick modules and one less-than-case item pick module which utilizes pick-to-light interfaces. Conveyors move product out of the modules to shipping. Approximately 50,000 to 60,000 units (cases and totes) are picked, packed (totes), and scheduled for shipping each day. In this high production environment, Staples is averaging between 25 and 26 inventory turns per year.

Overhead scanners linked to Staples EXE warehouse management system drive diversions off the main conveyor line to the delivery lanes.

The high productivity of the Hagerstown D.C. shows the benefit of a long term relationship between a multi-faceted 3PL and a “new era” retailer. It provides the kind of competitive advantage necessary for a company like Staples to stay on top.