Getting DC Size Right

Apr 16, 2008 6:38 PM  By

No multichannel marketer wants to be stuck with a distribution center that’s too small Excess capacity in a facility that’s too big is just as much of a problem. Just ask Lillian Vernon.

The struggling gifts mailer–sold last month to Current USA–was not only dealing with rising costs and slowing sales, its DC in Virginia Beach, VA, was much more than the cataloger needed.

Lillian Vernon had moved to the 1 million-sq. ft.- facility from White Plains, NY, in the fall of 2006. Former CEO Michael Muoio told Multichannel Merchant in an interview this past February that the company “can’t handle the infrastructure here. It’s too big.”

Indeed, getting facility size right is crucial. During the NCOF session, “Exclusive O&F Results: Benchmarks In Operations And Fulfillment — 2nd Year Results,” Edward Frazelle, president/CEO of Logistics Resources International, discussed the question of distribution center size.

Based on results from fulfillment center surveys, Frazelle said the median size of a DC is 60,000 sq. ft. And operations managers should keep in mind that “the bigger the facility, work grows exponentially,” he said.

“Size has a lot to do with productivity,” Frazelle noted, adding that the optimum size for a distribution center should carry a length-to-width ratio of 2-to-1. “You want it longer than it is deep,” he said.

But it does seem that more facilities are being supersized: “The trend now is to build large distribution centers,” Frazelle said. He recalled a recent visit to a mail order distribution center in Germany that encompassed 6 million sq. ft. “It reportedly had its own weather systems,” he quipped.