August 21, 2005

The Largest Distrbution Center

Traffic World has an article($$) which talks about Wal-Mart now having the largest distribution center devoted to a single company:

Wal-Mart Stores is not known for doing things in small degrees. When the world's largest retailer launched its new inbound distribution center outside Houston this summer, it opened a new front in its ambitious direct import strategy that reverberated far beyond the immediate area and likely will be felt well outside Wal- Mart's own operations.

At 4 million square feet, the complex in Baytown, Texas, about 25 miles from Houston, is the largest distribution center in the country devoted to a single company, logistics industry experts say.

It's a site so big - 18 football fields, by one measure - feeding a supply chain so large that the impact of boxes hitting the floor can be felt in the Panama Canal, at California ports and even across the Pacific Ocean.

This is part of an overall strategy to link imports with key distribution links:

"The sheer size of Wal-Mart, they have the ability to force changes in the industry," said Satish Jindel, president of the SJ Consulting Group, a Pittsburgh-based transport consultancy. "They're letting the people in (the ports of) L.A. and Long Beach know, 'You don't control how we bring shipments into this country.'"

"The strategy is not unique to Wal-Mart," said Steve Banker, supply chain service director at the Boston-based ARC Advisory Group. "But 4 million square feet, that's a big statement."


For Wal-Mart, the distribution center is part of a larger strategy to fine-tune its supply chain pipelines to match its sourcing from outside the United States with distribution to its sprawling network of stores in this country.

Under what Wal-Mart calls its "direct import" plan, more volume is being spread to defined gateways, including Charleston, S.C., Los Angeles-Long Beach and Houston, where goods are staged briefly before moving to regional warehouses closer to final transport to stores.

Wal-Mart would not comment for this story, but in announcing the award a major logistics contract for the Texas site to UTi Worldwide in February, Tim Yatsko, vice president of direct imports for Wal- Mart, said the facility "will serve our Central U.S. distribution centers as part of our expanding direct import network."

There are some other reasons Wal-Mart may expand this further besides the congestion at West Coast ports:

Labor should also take note, Jindel said. By selecting a right- to-work state for its biggest new distribution center, Wal-Mart is signaling it is ready to work around logjams created by labor problems. However, he said the company could be opening itself to a backlash if unions try to organize dockworkers and thousands of other employees expected to take jobs as the region develops.

Posted by Bob on August, 21 2005 at 04:06 PM