Magazine Article | February 1, 2000

Strengthening The Supply Chain With A Warehouse Management System

Source: Innovative Retail Technologies

Family Dollar, a $2.7 billion, 3,400-store retail chain, was growing at an incredible rate. But, the company needed new technology to bolster its supply chain. That's when Family Dollar turned to a warehouse management system (WMS).

Integrated Solutions For Retailers, February 2000
Family Dollar's merchandising concept is to offer low-cost, basic merchandise for family and home needs. $2.7 billion in net sales and nearly 3,400 stores in 39 states attest to the plan's success. But, good intentions and planning won't keep the chain growing at this explosive rate. In 1999, the company opened 366 stores and increased sales by approximately $400 million. Family Dollar realizes it needs to be vigilant to maintain its growth, and the company recently turned to integrated technologies to strengthen its plans. With a new WMS in place, Family Dollar hopes to bolster its supply chain and maintain its steep growth curve.

The Right WMS For The Job Until 1994, Family Dollar was able to meet its warehousing requirements with a 750,000-square-foot facility adjacent to its headquarters in Matthews, NC. Then, the company opened a second facility in West Memphis, AK in 1995. This rapid expansion was in accord with the company's aggressive plans for growth. However, it soon became clear that managing a large-scale operation was not feasible without better technology. The company was using a homegrown legacy system that it had developed in its original distribution center (DC) in Matthews, NC. But, the homegrown system could not handle the company's expansion.

That prompted Family Dollar to search for a Warehouse Management System (WMS). The company spent six months sending out RFPs (requests for proposals) and interviewing prospective WMS vendors. The company gradually narrowed the pool of candidates with recommendations and reference checks. Family Dollar's final choice was Milwaukee-based Catalyst International, provider of warehouse management solutions. Family Dollar felt that the Catalyst system could best fulfill the company's needs: ship more than 100,000 cases per day, 24/6 operation, and the ability to interface with a picking and sortation system. "We felt the Catalyst system was a good fit for our needs," says Doug Schmidt, regional vice president, "but we didn't stop there."

Family Dollar decided to build a new, 1 million-square-foot distribution center located in Front Royal, VA, to accommodate the new WMS. And, as if building the new facility and implementing a new system were not daunting enough, the company also decided to complete both jobs within the same year. In fact, in only nine months, Family Dollar successfully built the distribution center, implemented the WMS, and interfaced to a picking, conveyor, and ERP system. "Building a new distribution center is a challenge," comments Schmidt, " systems, hundreds of employees. You've got to be well-prepared for that kind of undertaking."

WMS Components
Specifically, the system components installed in the Front Royal, VA, facility are the Catalyst WMS Release 7.0 running on an IBM RS6000, and the Oracle RDMS. The system is fully redundant and has disk mirroring and automatic Oracle archiving. The facility also has more than 100 Norand Radio Frequency (RF) terminals using two controllers. Peripheral devices in the distribution center include 70 PCs running the Catalyst WMS, and 25 dumb terminals. The Family Dollar ERP system is running on an IBM mainframe located at the corporate office. It communicates via FTP (file transfer protocol) over a wide area network (WAN). There are currently 600 warehouse employees running three shifts, six days a week in the facility. Additionally, there are 8,000 SKUs per month, totaling 40,000 and 15,000 alternate item UPCs (universal product codes). Material handling equipment includes "walkie" pallet trucks, sit-down forklifts, stand-up reach trucks, man-up order pickers, walkie rider pallet trucks, and tuggers. Most forklifts use the truck-mounted RF terminals.

A Walk Through The System
The host system in Matthews, NC, downloads information to the warehouse daily. This download includes purchase orders, as well as outbound orders for stores. The purchase orders are assigned receiver numbers before being placed into the Catalyst system. Employees then take the receiving number, purchase order, and item information and begin physically unloading the trailers. The Catalyst system uses Intermec RF technology for real time, online receiving. Each received ticket and purchase order is scanned. This allows the freight to be immediately identified and processed onto build pallets. The characteristics of these palettes are maintained on the master item file on the Catalyst and host systems.

Pallets are sorted one at a time. They are available for put away as soon as they are downloaded in the Catalyst system. At that point, a dedicated forklift driver (dedicated exclusively to put away) scans the pallet, determines the put away location, and delivers it. The driver then scans the bar code label on the storage rack to verify the correct locations and completes the put away. The process then repeats itself as the driver returns for a new pallet.

The replenishment of items in the warehouse is controlled by a trigger point; this point is a percentage of the capacity of a pick location. If an item falls below 20% of the location's capacity, it automatically triggers replenishment to bring that location back to full capacity. The computer plans for these replenishments well before the levels fall below 20%. "For example," explains Schmidt, "we would know that, in our fifth batch of the day, a location is going to fall below its threshold, or trigger point. We assign wave numbers to group and prioritize pallets, so our forklift group works in unison with our selection group. This ensures that items are replenished before they ever run short."

Integrating Technologies With A WMS
In addition to the Catalyst WMS, Family Dollar has also implemented three subsystems from Rapistan of Grand Rapids, MI: pick-to-lite, put-to-lite, and a sortation system. Each day, after Catalyst receives the download from the Family Dollar host system, additional information is sent to the pick-to-lite system, called Rapidpick. The Catalyst system handles the picking of the full-case items. Split cases and repackaged items are handled by the Rapidpick system. Individual store orders are downloaded to Rapidpick, and a batch of bar code labels is also printed per-zone for each store.

The system then takes these raw items and quantities and illuminates display lights for the corresponding locations on the warehouse storage racks. An employee who fills the orders then scans a bar code, and the pick-to-lite system begins lighting the specific racks for that particular store. The employee goes to the first location with the flashing light, reads the LED for the quantity number, selects the items, presses a button, and moves to the next item. Employees pick all the items for one store before moving on to the next order. Rapidpick also manages the put-to-lite operation. Order data is downloaded into Rapidpick, which then prints container labels per store. Containers are set up and preassigned in carton flow racks by store numbers. Products then flow down a conveyor, are scanned, and are then placed into totes for corresponding stores. Like pick-to-lite, the quantities required light up on a panel under the totes. Put-to-lite is used for high-volume, small-sized products which go to a large number of stores.

The distribution facility also has 9.1 miles of conveyor belts for its high-volume sortation system. It sorts approximately 165 cartons per minute. In its full-case picking area, the conveyor system can handle orders for up to 19 stores at once. The system sorts items to the appropriate shipping lane based on the bar code on each carton. Data is then matched against lane assignment information stored in the sortation system database.

Future Technology Plans
"We are on such a fast pace for building facilities," comments Schmidt. "We opened the Front Royal, VA, distribution center in 1998 and Oklahoma in 1999. We are slated to open Kentucky in the spring of 2000." Despite various facilities, Family Dollar does not have the Catalyst system in place in all warehouses, yet. The two distribution centers that preceded the Front Royal, VA, facility do not have the Catalyst system in place. Rather, they have maintained the homegrown legacy systems. "It is a full-time commitment to open a new facility," explains Schmidt. "Because the other facilities are doing a good job of supplying the stores, we haven't felt the need to retrofit them, yet. The Kentucky-based facility will be our fifth, and we plan on opening several more DCs after that. We'll be implementing the new technology in these facilities and are generally trying to plan three to five years out."

Family Dollar's adoption of integrated solutions speaks for its commitment to growing its business. But, when asked to comment on the company's philosophy concerning technology, Schmidt succinctly responds, "In the last five years, we have become very aggressive about implementing technology at Family Dollar. We see it as the future of business, particularly with distribution. As a major retail chain with that perspective, integrated solutions cannot be ignored."

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