SMALL DC DOES BIG JOB FOR CVS

Julie Gallagher

PALM BEACH GARDENS, Fla. -- A new CVS distribution center in Ennis, Texas, which at 400,000 square feet is half the size of a conventional DC, is proving capable of processing and shipping the same number of orders to the same number of stores as a larger facility at less cost.

That was the word from Kevin Smith, senior vice president, supply chain and logistics, CVS, Woonsocket, R.I., who shared CVS' logistics strategy last week at Grocery Manufacturers of America's Information Systems and Logistics/Distribution Conference, held here at the PGA National Resort & Spa. The Ennis DC, which began making shipments in September to stores in Texas and throughout the Southwest, has also reduced order lead times by a day, facilitated more rapid stock replenishment, and eliminated back-room sorting and segregation at stores, said Smith.

The Ennis DC is the first CVS facility to employ an automated storage and retrieval system (AS/RS) called the Dynamic Picking System (DPS), from Witron, Parkstein, Germany. DPS is designed for piece-picked items like health and beauty care and other slow-movers. In CVS stores, 70% of products are shipped in "eaches," according to Smith. "That is one lipstick and one bottle of ketchup at a time," he said.

DPS is being used in the United States by Kroger at its Peyton Southeast facility in Cleveland, Tenn.

The DPS system automates the piece-and-case selection process via a "goods to person" picking methodology rather than the more traditional "person to goods" process, said Smith.

"This process is perfect for the pharmacy business, where 70% of our revenue is generated by 10% of the store space and only 5% of the distribution space," he explained. "[Goods to person] eliminates a significant amount of travel time within the DC. It allows us to do with 400 employees what the competition does with 600 or more."

The process also incorporates the customized layout of each individual store. "We use actual in-store data to drive the selection process," said Smith.