News From Terre Haute, Indiana

February 6, 2009

Staples Distribution Center showcases shipping power

By Howard Greninger

TERRE HAUTE — When it comes to handling office supplies, Staples Midwest Distribution Center in the Vigo County Industrial Park is a dynamic orchestra of constantly moving forklifts, conveyors and semi-trailers.

It’s one of just four U.S. distribution centers for Staples, the world’s largest seller of office supplies, and is second-largest in size at 840,000 square feet. Indiana State University students studying operations management and analysis, along with some MBA students, got a firsthand tour Thursday of how this distribution center works.

“Hands-on experiential learning is a hallmark of ISU. We can read about warehousing issues in textbooks, but interacting with professionals really highlights the importance of learning the material because students see it being applied in the real world,” said Kurt Hozak, assistant professor of operations management and analysis.

“… I think everyone was impressed by seeing firsthand the size and automation of the Staples facility. The Staples managers we met with were impressive because they had a great balance of functional, technical and people-skills knowledge,” Hozak said.

The Vigo County facility, built in 2000, has an inventory of about $74 million and produced an estimated $1.8 billion in sales in 2008, said Rick Popp, shipping manager at the center. The center, with nearly 350 workers, serves more than 400 Staples retail stores, covering an area east to the Appalachian Mountains, south to southern Texas, west to the Rocky Mountains and north to North Dakota and the upper peninsula of Michigan.

The distribution center has 48 receiving doors, 40 shipping doors, seven return doors and four miles of conveyors. The center has 175 to 200 semitrailers shipping items daily.

The center was expanded in 2006 by 280,000 square feet and the company now is in the process of adding a new parking area covering about 10 acres, allowing trucks and materials to be stored until processed, Popp said.

Staples, founded in 1986, last year bought Corporate Express NV, a Dutch office supply company, for $2.65 billion. That company had large online and catalog sales.

“Corporate Express had $8 billion in sales, and prior to that Staples $19 billion in sales,” Matthew French, human resources manager at the center, told ISU students.

“Our goal is to be at $30 billion [in sales] by 2010,” French said. “We didn’t buy Corporate Express just for the added revenue. They had a large presence in Europe and we had a small presence in Europe. Their list of customers also did not match Staples customers in the United States.”

“We are now the second-largest online retailer next to Amazon.com in sales,” French said.

Staples also has about 23 small facilities nationwide that distribute for online sales. If an online order is made in Terre Haute, the item actually comes from London, Ohio, French said.

The Vigo County facility uses technology such as a “Pick to Light system,” which uses a light to show a worker where a product is located on a series of storage shelves in their work zone. A LED (light emitting diode) counter shows the worker, known as a picker, the correct number of items to load into a tote or box, reducing errors on orders as they move along a conveyor.

In addition, by the end of this year, the center may include a newer “voice directed” system that can allow several pickers to work in the same zone. It would first be used in a bulk item area, then perhaps at the center’s area for returned items, said Bill Gardner, operations manager.

Erin Troesch, an ISU senior in operations management and analysis, said she “enjoyed seeing how the employees are encouraged to volunteer in the community and are rewarded for their suggestions on how to make the facility and or operations run better.”

Mandy Chuo, an MBA student, said she was surprised at the size of the facility and its supply chain management. “It's a great opportunity for us to see how a real warehouse works,” she said.

Howard Greninger can be reached at (812) 231-4204 or howard.greninger@tribstar.com.