Boscov’s: Speed regained in retail distribution

Everything runs faster at Boscov’s DC in Reading, Pa., now that its conveyor and sortation systems have been replaced and revamped with new hardware, controls and software.

Combine this complete automation overhaul with a new order processing area that eliminates the need to store some goods in trailers in the yard, and the outcome is a step-change improvement in order fulfillment speed for the family-owned department store chain.

“We really wanted to get to the point where we could streamline the operation and just get everything out on a much quicker basis,” says Robert E. “Bob” Goonan, senior vice president of logistics for Boscov’s.

Achieving speed in its DC is nothing new for Boscov’s. Modern highlighted the DC operation of the retailer twice before, in 2004 and again in 2008. In that era, the operation installed and later reconfigured its conveyor and sortation systems to support rapid flow-through of pallet shipments earmarked for stores using advanced ship notices (ASNs), a type of electronic data interchange (EDI). Our 2004 story focused on how the sortation and ASNs enabled cartons to be crossdocked from receiving to shipping in 7 minutes, while the 2008 story looked at how additional sortation capabilities and more dock doors helped Boscov’s keep pace with its growth and ambitious store expansion plans.

See the layout inside the Boscov Distribution Center here. 

Much has changed since. For one, some of the automation and software had become outdated, so an overhaul was in order after close to 20 years of use.

After the recession in 2008, the company downsized its store network to 40 stores and is slowly building back. The chain has steadily recovered, exceeding $1 billion sales in 2013, and in recent years has returned to stable growth, adding on average one store per year. The chain is back up to 50 stores.

The operation still makes heavy use of ASNs (86% of inbound shipments have ASNs) to permit rapid flow-through, especially during peak seasons, says Goonan, but during non-peak times, the situation flips, and more goods are held at the DC in reserve.

Over the years, this need to hold goods for later order processing led to inventory handling challenges, since there wasn’t enough racked storage and shelving in the DC to hold everything. At one point before Boscov’s latest project, more than 100 trailers were being used to hold stock, which led to inefficient double handling of inventory.

Between the need for a more structured order fulfillment area and the aging automation, by 2020, Boscov’s reached out to a systems integrator (DLN) seeking ways to create a new order processing area, modernize the sortation and other automation to regain speed, and generally increase efficiency for flow-through orders and orders fulfilled from stock.

“We were getting congested in some of our areas due to volume, and we weren’t getting shipments out as fast as we could,” says Goonan. “Gradually, we had to use additional hours or expand shifts to keep up. We also needed to get more product into the building, and just improve throughput and efficiencies all around.”

The overall driver for the project, says Goonan, was growth in volume and in more fulfillment activity from goods held in stock, necessitating a modernization of its legacy automation, as well as a way to order pick from stock more efficiently.

“Volume had outgrown the existing capabilities in the building” says Goonan. “Increases in product, in stock retention, and the addition of stores, made it difficult to handle our peak seasonal volume. The warehouse management system, warehouse control system and the conveyance as it was designed in 2008 was no longer adequate and could not handle the product range and flow effectively.”

The modernization was multi-faceted. While it did not enlarge the 395,000-square-foot DC, the project included:

• all new automation hardware and controls, which began seeing production use last year;
• additional sortation capacity;
• increased storage capacity, with six aisles of pallet flow rack and 24 aisles of shelving in a new order processing area, OP2; and
• a new warehouse execution system (WES) software functionality from DLN to drive order picking from stock retention (went live in February 2024).

The improvements reduced the need for extra shifts and overtime, while bumping up throughput to a level where the DC can now ship 65,000 cartons in 10 hours, whereas previously, it was a struggle to ship more than 50,000 cartons in less than 16 hours. At the same time, that speed at the DC translates into more frequently, finer-grained replenishments to stores.

Those more frequent deliveries, geared more to what stores need at the time, makes shipments easier to receive, stock and manage at the store level, while keeping the stores topped off with right mix of goods, which is crucial for Boscov’s because most of its e-commerce orders are filled from stores.

The improvements at the DC level, including new software to manage order picking, are supportive of a more just-in-time approach to replenishing stores, rather than sending them fewer larger shipments that complicate staffing and stock management at the stores.

“We’re now able to replenish the stores more in line with what they need right now,” says David Krommes, director of distribution. “For instance if we want a store to keep 10 of a product on hand, and the store sold five yesterday, we can just put in a pick and replenish that store with what they need.”

Modernization

Boscov’s is America’s largest family-owned department store, with roots going back to 1914 when founder Solomon Boscov began selling household goods locally in Pennsylvania and later opened a dry goods store in Reading.

That evolved into the first Boscov’s Department Store, with the next generation growing the company into a chain of department stores in the mid-Atlantic.

Today, Boscov’s has 50 stores in Pennsylvania, New Jersey, Maryland, New York, Connecticut, Delaware, Ohio, Rhode Island and West Virginia. The chain’s stores offer a broad range of goods, with the company stressing selection, value, customer service, as well as community partnerships. As a result, the Reading DC must crossdock or stock a range goods including apparel, home goods and seasonal items.

The retail industry has grown more e-commerce focused since the project 20 years ago, and for Boscov’s, this is done by fulfilling most orders through its stores. The ability of the DC to replenish more frequently and in a more pinpoint manner, helps the e-commerce strategy by avoiding out of stocks, and making shipments easier to process for stores, giving staff more time to help customers or fill online orders.

While the older hardware was still working, it was hard to find parts for some of the systems. Boscov’s and DLN determined a full-scale modernization was in order, with all new hardware, warehouse control system software to manage the automation, and use of DLN’s WES capabilities to drive order picking from stock retention.

Some additional conveyor was added to move goods through the building more effectively, but new hardware and supporting technology, like new imager/camera-based bar code readers, helped improve speed by ensuring minimal gaps between conveyed items.

For example, the older automation relied on a large three-to-one merge area to move product into the main shipping sortation area. That was replaced with a six-lane, sawtooth merge that brings six lanes of goods together to move them to shipping sortation areas.

The sawtooth is servo-controlled so each lane of accumulated cartons (slugs of product can be built up in advance) flows into the merge rapidly and sequentially with minimal gap between cases. This allows more volume from receiving or order picking processes without bottlenecking.

“Before, we were not able move that product fast enough and that was impeding our ability to unload fluidly,” says Goonan.

In effect, says Goonan, improvements like the new merge table and additional conveyor infeed lines allow the DC to convey and sort more volume in less time. It’s just one example, notes Goonan, of how the project was like adding new parts and tires to a vintage sports car to restore its speed.

“We tuned up the engine, which you can relate to new controls, and changed to the latest performance tires, which you can equate to new conveyor, so that everything just moves faster than it did before,” Goonan says.

A secondary benefit of the updated automation is that it runs noticeably quieter than the legacy systems. “If you’re standing next to one of these new conveyors, you can have a normal conversation in a fairly normal tone of voice, and that’s amazing,” says Goonan.

Order fulfillment area

Prior to the latest project, the DC had 85,000 square feet dedicated to stock retention, including some floor-based bulk storage and 66,000 square feet of racked space. As part of the DC renovation, an additional 55,000 square feet of rack and shelving was added to reconfigured areas within the building to create the new order processing area (OP2).

During non-peak seasons, relatively more product is stored in stock retention, compared with peak seasons, when about 70% of all shipments are flow-through shipments that never go into stock.

Six rows of pallet flow rack, and 24 aisles of rack and shelving for cartons were installed in this reconfigured space, which was previously an underutilized area of multi-level high-bay racking. This nearly doubled the DC’s internal storage space, and all but eliminated the need to store goods on trailers, which inevitably led to double handling of inventory, as well as more yard activity and costs.

“On any given day, we might need to pick goods off 40 of those trailers to fill orders, and most of the time it was challenging to do that many picks from trailers with all the other order processing goods going on the building. So, if we were going to start developing a backlog, it was usually from picking off those trailers,” says Krommes. “Additionally, we would haven’t room to bring in everything from a trailer, so say there were a thousand cartons on it, and we’d need 200 to fill an order, we take those 200 off, and leave the 800 on there, and three days later, we might need to go back to the trailer to pick another 200 cartons. Now we are able to handle these orders much more efficiently within the building in this new order processing area, rather than waiting on trailer moves.”

Orders picked in OP2 get conveyed and sorted to the correct outbound docks, but the days of constantly dealing with trailers to retrieve stock are gone, save for some larger non-conveyables that might get stored on a trailer. “We’ve been able to eliminate those secondary and third touches,” says Goonan.

The software for order picking is DLN’s WES software. It manages the inventory in OP2, directs pick activity, and provides labor management and productivity metrics.

Boscov’s legacy warehouse management system (WMS), a customized WMS used for decades by the company, still exists and handles some functions, but the WES software provides more fine-grained order picking based on what stores need.

The DC’s new order picking area also sets up the DC to start doing e-commerce fulfillment for single case-pack items that ship in the product carton, such as microwave ovens or vacuum cleaners. Later this year, the plan is to start fulfilling online orders for these single case-pack item from the DC. The Reading DC isn’t morphing into an e-commerce pick/pack operation, but the experiment is expected to help lessen the burden on stores and should help attain better shipping rates for bigger items.

“By fulfilling the single case pack items here and doing it very efficiently, we are freeing up time for a salesperson to be assisting customers or filling other e-commerce orders,” says Krommes.

Efficiency and service outcomes

With the new systems in place, the DC has regained the level of efficiency it enjoyed in the past, while still able to adapt to changes in the business like the need to hold more goods at the DC level, enable more frequent replenishments to stores, and better support e-commerce efforts, beginning with fulfilling single case-pack items.

Due to seasonality, the DC has not measured the throughput improvements across a whole year of production with the new systems but tracking of units per hour (UPH) from August through January shows a gain of more than 15% in UPH, says Goonan, and a reduction in cost per unit (CPU) of more than 10%.

“Overall, the performance is slightly higher than projected,” Goonan says. “We will continue to see improvements in the spring of 2024 as we reach the anniversary of the project.”

The more frequent deliveries did take some getting used to for the stores, says Goonan, but they’ve adjusted their staffing to the more frequent deliveries, which in the long run helps stores because there are smaller batches of stock to put away, geared toward replenishing what is being sold from either in-store sales or e-commerce fulfillment.

For Boscov’s as a whole, the more efficient DC sets the chain up for cost efficient replenishment that can handle peak season volumes without a leap in labor costs, while accommodating efficient order picking. “We’re able to be a lot more effective with less time and resources in getting shipments to our stores,” says Goonan.

The strategic carryover of these internal efficiencies is more timely replenishments to stores to support sales growth and stock availability. “That [ability replenish more frequently] is also part of the aim of this project—to not overwhelm the stores with big shipments and be able to replenish them on more of a just-in-time basis with the DC acting as the fulfillment agent,” Goonan says. “We can now replenish them more frequently and do it very efficiently.”