K MART CORP. EXPANDS ITS WAREHOUSE NETWORK

K MART CORP. EXPANDS ITS WAREHOUSE NETWORK

The roar of diesel tractors drowns out conversation along the truck bays at K mart Corp.'s Georgia Distribution Center.

Each day, between 60 and 80 trailers laden with merchandise rumble from the warehouse's 26 shipping docks, according to Samuel P. Flynt, the center's traffic manager.The Newnan, Ga., facility keeps 303 K mart stores in the Southeast amply supplied, said Ronnie Beckwith, the center's operations manager.

But that's likely to change soon as K mart continues to expand its distribution network.

The giant retailer has a new distribution center under construction in Ocala, Fla., and in two months will start work on a second in Greensboro, N.C.

They'll be the third and fourth new facilities to join the company within the past two years, according to Anthony R. Mauro, vice president, distribution, U.S. K mart stores.

Besides giving the Troy, Mich.-based company more storage capacity, the new warehouses will reduce the number of stores each K mart distribution center serves, he said.

For example, after Ocala opens in July 1991, Newnan will be responsible for 245 stores, Mr. Beckwith said. Ocala will handle Florida's 149 K mart stores.

Greensboro will serve 194 K mart stores in North Carolina, South Carolina and parts of Virginia, West Virginia, Maryland and Tennessee. Those stores now receive merchandise from distribution centers in Georgia, Kansas, Pennsylvania and Ohio.

But volume at Newnan and the 15 other U.S. K mart distribution centers isn't likely to fall off, Mr. Mauro said. That's because the department store chain plans to introduce new products in the next few years, principally its hard line merchandise, he said.

Besides sporting a beefed-up product line, K mart also plans to cut down merchandise that's drop shipped, according to Thomas D'Ambrosio, K mart's director, transportation.

"As we open up new stores, we can bring in and keep more merchandise in- house," Mr. D'Ambrosio said.

Overall, K mart's traffic patterns remain in place as the merchandiser continues using a mix of less-than-truckload and truckload carriers for inbound traffic. Outbound deliveries still will be hauled by the company's fleet of dedicated contract carriers, he said.

Using a dedicated commercial fleet gives K mart the same flexibility in a contract motor carrier that's built into a shipper's in-house fleet, Mr. D'Ambrosio said.

K mart owns about 1,200 trailers and leases about 250 to 300 tractors, he said. The fleet is parceled out to each K mart's distribution center, he said.

A year ago, the retailer's corporate truck fleet received common carrier authority from the Interstate Commerce Commission.

Though the in-house fleet handles some backhauls, mostly collect freight, the retailer hasn't taken advantage of its operating options, Mr. D'Ambrosio said.

K mart's distribution expansion, which will continue for the next four to five years, comes at a time when the retailer has smoothed its logistics flow by applying bar code scanning.

"We've increased our throughput by 100 percent through faster scanning and diversions," Mr. Mauro said. "We used to be happy handling between 85 to 90 cartons a minute," he said. "Now we do 200 to 250 cartons a minute."

The use of bar code scanners will increase as the retailer gears up to applies the devices to outbound shipments, Mr. Mauro said.

Electronic data interchange also helps the retailer's inventory flow, he said. As stores call in their own orders, stock is replenished faster because K mart captures point-of-sale information from checkout counters.

This data is then relayed directly to distribution centers via EDI, he said.

K mart also uses EDI on inbound apparel shipments to label goods right at receiving docks, enabling faster deliveries to receivers, Mr. Mauro said.

As in its other facilities, merchandise at Greensboro and Ocala will be stored on pallet racks, he said.

This is why K mart's new warehouses will be 40 feet high, enabling them to handle repack modules. "That's enough height to handle three modules," Mr. Mauro noted.

Mr. Mauro expects K mart to start its new distribution with a few stores but hopes to have the new facilities working with their full allotment of stores within four to six months. About 300 to 350 new jobs will be created at each new distribution center.

K mart also plans to open 16 new stores in Florida this year and expand 10 more, said Michael L. Skiles, K mart's vice president, corporate facilities.