OPERATIONS

CSA Exclusive: True Value fills need for inventory availability

BY Dan Berthiaume

True Value Company is spending $150 million to ensure products are available in just the right amounts.

James Harrington, VP of supply chain for True Value, recently spoke with Chain Store Age to explain why the Chicago-based hardlines wholesaler launched a major supply chain optimization initiative earlier this year.

“We had been a co-op for over 70 years, but recently turned into a publicly-held company,” said Harrington. “Over the years, we grew, but deferred supply chain investment because our corporate structure made large projects challenging. As we have evolved, our supply chain needs have evolved.”

True Value’s supply chain needs include supporting omnichannel commerce, obtaining enough capacity to support continuing rapid growth, and efficiently supporting the wide range of SKUs carried by its network of diverse independent hardware retailers. That network grew by more than 300 stores in the past year.

“We are not a cookie cutter business,” said Harrington. “Our independent retailers have different business models and needs. We need to find efficient, effective ways of supporting them.”

As part of its supply chain overhaul, True Value is adopting a “hub and spoke” distribution model. All inventory SKUs are stored at regional distribution centers (DCs). Stores only carry the fastest-moving items, while True Value pools inventory of items that have variable or slow demand at the DCs.

“We can strip down hubs of fast-moving products,” said Harrington. “They were over capacity.”

True Value has also implemented demand planning and fulfillment technology from JDA to anticipate demand fluctuations. “With advanced algorithms, we can anticipate demand to enable a high fill rate with low inventory,” Harrington said. “We have a best-in-class leading fill rate while our inventory investment is down. Stores carry as little stock as possible, and are confident we have stock available when they need to replenish.”

According to Harrington, True Value has a fill rate of more than 99%, which he calls “groundbreaking” for the hardlines industry.

As part of True Value’s supply chain initiative, the wholesaler is building a new regional DC in Wilkes-Barre, Pennsylvania that will support its 1,000 stores in the Northeast region. The 1.4 million-sq.-ft. facility is expected to open this fall and employ hundreds of workers. True Value currently operates 13 other DCs in Arizona, California, Colorado, Georgia, Illinois, Minnesota, Missouri, New Hampshire, Ohio, Oregon, Pennsylvania, and Texas.

Looking ahead, Harrington said True Value is evaluating the integration of automation into its distribution processes. The company presently uses some automated picking models, as well as some automated conveying, but does not have a widely automated supply chain.

“Automation makes sense for companies with a small average order size,” explained Harrington. “But our order size can be thousands of dollars, and a lot of our SKUs are not conveyable. The payback not there for us yet.”

However, Harrington does expect that over time, True Value will automate more of its distribution workflows. He gave one specific example.

“We do a lot of cart picking,” he said. “Eventually, we may have automatically guided fork trucks in our warehouses.”

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