Last month, True Value opened its newest regional distribution center (RDC), a major component of the company’s $150 million investment in modernizing its supply chain to best serve independent retailers.
The 1 million-square-foot hub facility is located in Wilkes-Barre, Pennsylvania, and is coordinating deliveries with two nearby spokes: a facility in Manchester, New Hampshire, and Cleveland, Ohio. Together, the northeast hub-and-spoke model will serve roughly 40 percent of True Value’s overall customer base.
Advantages for Independent Retailers
As the first ground up new facility in more than 30 years, the RDC represents a renewed focus on supply chain innovation, say vice-president supply chain Lyndsi Lee and vice president-supply chain operations Jim Harrington.
After successfully implementing a hub-and-spoke supply chain model in the Midwest in November 2018, Lee and Harrington say the decision was clear to extend that supply model across the country.
“This hub-and-spoke model gives us the opportunity to grow,” Harrington says. “A lot of our RDCs were at or slightly over capacity. This investment gives us the opportunity to grow in that area, which is such an important region for us.”
Lee and Harrington also point to several benefits for the independent retailers the RDC serves.
Both say retailers will have access to a deeper pool of inventory, which will improve their in-stock rates. The Midwest hub-and-spoke model has averaged 99 percent fill rates at the spokes and improved fill rates at the hub location as well, a figure the team has replicated with the new RDC.
Additionally, retailers will also receive streamlined delivery services. Instead of receiving multiple deliveries for a single order, orders will arrive in a single shipment. True Value expects to soon add e-commerce fulfillment capabilities to the RDC as well.
“Looking at the Midwest, retailers love getting their central-ship items all in one sweep,” Lee says. “As we continue to expand our offering, orders and fulfillment will be seamless for them.”
A Focus on Efficiency
Lee says True Value broke ground on the Wilkes-Barre RDC in the first quarter of 2019 and the facility was up and running by October, a sign the company is committed to delivering results to its retailers.
Under the hub-and-spoke model, only the most popular and fastest-moving SKUs will be stocked at spoke locations, while the central hub will house all of True Value’s nearly 90,000 SKU assortment.
“One of the reasons we’ve chosen a hub-and-spoke model is to better serve our retailers, but one of the largest challenges we have is that they’re all so unique. We love that, but it poses challenges to get the right inventory at the right time across different facilities,” Lee says.
She says the hub-and-spoke model overcomes that aspect by centralizing most inventory in the hub. If the spokes run out of inventory, fulfillment shifts to the hub.
Lee says True Value also invested in innovative fulfillment and replenishment technology to accurately forecast how much of any product the company will sell and where those purchases will take place. That technology is key for seasonal items and products linked to promotions, she says.
‘A Fantastic Fit’
In choosing the location of the new northeast RDC, True Value evaluated the local labor pool. The presence of a local community college that helped with staff recruitment as the facility launched was another attractive characteristic of the region.
“As we looked at different regions, Wilkes-Barre was a fantastic fit, both from the partnership aspect within the local community and the area’s focus on a strong work ethic that matched True Value’s own,” Harrington says.
On the Horizon
Speaking with Hardware Retailing at True Value’s 2019 Fall Reunion, president and CEO John Hartmann says the Midwest and northeast RDCs are just the beginning of the company’s supply chain innovation.
Harrington says in the future, True Value could add as much as 400,000 square feet to the facility. Lee points to a five-year roadmap that includes incorporating new technology and infrastructure to best serve retailers.
“True Value is on its own path,” she says. “For us, it’s all about what our customers and consumers need and we’re building our strategy to support them.”