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Transformers: The Movers

BY Connie Gentry

What is green, lean and loved by DC workers? Robots. Imagine a fun-sized version of StarWars’ R2D2 and you get the picture. Standing about a foot tall, these diminutive mobile fulfillment systems (MFS) have taken Staples’ and Walgreens’ distribution centers to new levels of efficiencies.

How are they green?

Rob Stevens, VP of business development for Woburn, Mass.-based Kiva Systems, manufacturer of the MFS, characterized it by saying, “Noise is wasted energy. Contrast the noise generated by miles of conveyor running through a DC with the quiet of our MFS robots.”

When not moving inventory, the robots automatically assume a sleep mode, which means they use no power and make no noise. Even when mobile, the noise is significantly less than a conveyor system. Theoretically, the energy required to run the robots is also much less than to run conveyors, although those studies are yet to be proved.

Additionally, DCs that convert to an MFS can reduce the amount of lighting in the building. For instance, Stevens described an optimized DC layout where only the periphery of the building, along the four walls, was fully lighted. DC associates worked exclusively in this outer rim, receiving freight, processing orders, packing shipments and loading trucks. Robots transported product to and from the interior of the building, where lighting was kept to a minimum but was certainly adequate for a work environment populated by automated pickers.

As for how the MFS promotes lean operations, consider what Don Ralph, senior VP of logistics operations for Staples North American Delivery said in a prepared statement last year when Staples announced it would extend the use of MFS robots beyond its initial implementation at the Chambersburg, Pa., distribution center to its Denver DC.

“The Kiva system we’ve deployed in Chambersburg has impressed us with both its speed and flexibility, but above all, it’s the most cost-effective solution we have found when it comes to split-case order fulfillment,” he stated. “When we combine the Kiva ItemFetch and OrderFetch shipping solutions in our Denver facility, we will have a new capability to intelligently pull work through the building … this system will help us to further reduce costs and increase our customer service levels.”

Stevens also shared a fun story of how Kiva assisted Staples when it decided to double the size of its MFS deployment and expand into a larger distribution space. Over the course of a single weekend, Stevens, accompanied by a handful of Staples employees, utilized the retailer’s army of Kiva robots to successfully relocate 10,000 SKUs from one DC to the larger, adjoining space.

 

When we talked during the recent National Retail Federation show held in New York City, Stevens likened the steady and efficient progression to an ant trail and the video he showed of the seamless move from one Staples DC to the other reinforced that description.

DC workers appreciated that the heavy lifting was managed entirely by the MFS—and this holds true for day-to-day operations as well. In fact, employees have embraced the MFS to such an extent that robots are touted as a recruiting tool.

Next on the Kiva drawing board is an even cooler solution—an MFS that can function inside a DC’s freezer zone.

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Lampert, the Eli Manning of retail?

BY CSA STAFF

HOFFMAN ESTATES, Ill. The New York Giants triumph over the highly favored New England Patriots in the Super Bowl earlier this month, has become an example of coming from the bottom to win it all. Sears Holdings chairman Edward Lampert is one of the latest to use the Giants win, even going as far to compare himself, and the leaders of his company, to quarterback Eli Manning.

The Giants analogy, and Eli Manning comparison, is applied mainly to the company’s Kmart division. In a letter to investors, posted on the Sears Holdings investor relations Web site, Lampert said during Kmart’s bankruptcy in 2002, the unit was “like an undrafted free agent who nobody thought had a chance to play in the big leagues.” Lampert went on to say, “Like Eli Manning, we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.”

Sears Holdings reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended Feb. 2, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended Feb. 3, 2007. For the fiscal year ended Feb. 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended Feb. 3, 2007.

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Circuit City investor seeks to replace board

BY CSA STAFF

RICHMOND, Va. Circuit City Stores today acknowledged that it has received two proposals from shareholder Wattles Capital Management regarding its board of directors. Wattles holds approximately 6.5% of the outstanding shares of the company’s common stock.

Circuit City reported that Wattles proposed the idea of replacing the company’s Circuit City 12-member board of directors with its own nominees. Circuit City said its board of directors will review carefully the shareholder’s proposals and the qualifications of the nominees in accordance with its fiduciary duties, mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company’s shares.

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