By George Anderson
A program going by the name "Remix" is focused on putting an end to empty shelves of fast moving grocery products in Wal-Mart.
The company, which already is widely believed to have the most efficient distribution system in the retail industry, will designate warehouses by distribution need. Slower moving items, such as general merchandise, will be handled through designated distribution centers, while other "high velocity" warehouses will stock and supply fast turners to stores on a continuing basis.
Crews at the "high velocity" facilities will pack items on pallets that can be rolled directly onto stores' sales floors so that shelves can be replenished more quickly. Wal-Mart is looking to eliminate the need for stores to search for product and sort it out in the backroom before moving it into the store and onto shelves. The company believes that continually replenishing stock in this manner will eliminate out-of-stocks and reduce labor on store docks.
Wal-Mart has embarked on this program as it attempts to wring more profits out of every square foot in its stores.
Rollin Ford, executive vice president of logistics, Wal-Mart, told The Wall Street Journal, "We could have done nothing and been fine from a logistics standpoint. But as you continue to increase your sales per square foot, you've got to do things differently to make those stores more productive."
Wal-Mart tested Remix in Florida last year and saw enough to begin a national rollout of the program. According to the Journal report, it will be fully operational by 2007.
Bill Dreher, an analyst with Deutsche Bank AG, believes Remix will help Wal-Mart increase its operating profit at a faster rate than sales. Operating profit growth was below sales for the past two quarters, the first time that has happened since 2001.
Moderator's Comment: What will Remix mean for Wal-Mart? What impact will it have on the distribution system of other retailers?
Target has had a similar, albeit less extensive, program up and running for a couple of years. The retailer has a dedicated express lane in its warehouses for fast moving items. The chain has reduced out-of-stocks as a result of this effort. - George Anderson - Moderator