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Warehouse Consolidation Case

Furniture World Magazine
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Article Summary: ApplianceMart found that a single distribution facility would result in many economic advantages in areas of inbound freight, manpower, product damage, time spent preparing and loading trucks from multiple warehouses, service costs plus capacity to grow the business.

View all articles by Dan Bolger


Furniture and ApplianceMart Builds to Serve.

Vince Fonti started his furniture and appliance business in 1985 with a basic philosophy that his business would grow one satisfied customer at a time. Consistently meeting that goal has resulted in outstanding referrals and repeat business.

By 1999 his retailing locations in Wausaw and Stevens Point Wisconsin were supported by five warehouses. Corporate functions were scattered in several locations within the stores. Three sons and son-in-law had joined the management team. They decided it was time to investigate building a central distribution facility and to select a consultant to assist them in meeting their goals.

After a preliminary review of existing facilities, the management and consulting team agreed on a consensus summary. They found that a single facility would result in many economic advantages in areas of inbound freight, manpower, product damage, time spent preparing and loading trucks from multiple warehouses, service costs plus capacity to grow the business. While savings in these areas could be estimated, benefits relating to improved inventory accuracy and customer satisfaction were considered as intangibles that would ultimately show up on the bottom line.

The obvious site for the new distribution facility was within the new Portage County Business Park located just off the Interstate and reasonably close to Furniture & ApplianceMart’s Stevens Point store. Vince and Joe Fonti had obtained preliminary information and the team inspected a spec building erected by the developers. It didn’t meet the requirements, so other available sites were reviewed. One stood out because a lake across the street assured continuous visibility from the Interstate as the park is built out. A contract for its purchase was executed within hours.

The site covenants and site dimensions resulted in a 70,000 square footprint and side facing docks. With 32 feet clear height, corporate offices of 6,000 square feet were placed over the customer pickup lobby, service department, break rooms, restrooms and shop. An expansion wall was incorporated in the design for future business growth.

Four general contractors were interviewed in depth for the design build project before selecting one with an exceptional record for cost control and on time delivery with quality. Column spacings were determined to provide superior open spaces and to conform to the rack layout. In essence, the building is a shell over the material handling system. Construction began in July 2000 and rack installation commenced in January. Some of the appliances are rack stored and the balance are block stacked immediately behind the receiving area. By April 2001 all shipping was from the new location and clean up of the five former warehouses was nearing completion.

When reflecting on the whole process, Joe Fonti offered a number of factors that were critical to achieving his objectives. The first was detailed planning of every aspect well in advance of deadlines. Responsibilities for each task were assigned and a system for follow-up instituted. Their old warehouses operated in different ways, so responsibilities for each job function were developed prior to the move, especially those regarding prep before delivery. Trash handling and processes for recycling junk appliances were also addressed.

He also commented on their satisfaction with their decision to update their Storis System with bar coding and radio frequency data transmission. There are 2,800 storage slots and 50% are now verified each month. Location accuracy is 97% and steadily improving. If a unit is even one slot off, it is counted as an inventory error.

With six months of operation, the management team is tweaking things here and there but the entire project is a huge success. They have new neighbors, including a Land’s End call center and distribution center, whose employees drive by Furniture & ApplianceMart’s distribution center each day. The new facility continues to emphasize Vince Fonti’s original business plan. Grow the business by satisfying customers, one at a time.


Daniel Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. Questions can be directed to Mr. Bolger care of FURNITURE WORLD at dbolger@furninfo.com

 


Contributing editor Dan Bolger of The Bolger Group helps companies achieve improved transportation, warehousing and logistics. See many other articles by Dan in the Operations Management article archives on the furninfo.com website. You can send inquiries on any aspect of transportation, warehousing or logistics issues to Dan Bolger care of Furniture World Magazine at dbolger@furninfo.com  or call him direct at  740-503-8875.

View all articles by Dan Bolger

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