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How Neiman Marcus Built a New East Coast D.C.

Having established a solid presence on the East Coast, Neiman Marcus decided it was time to build its own dedicated distribution center. Steve Johnson, principal with Johnson Stephens Consulting Inc., relates how the project was successfully carried out.

How Neiman Marcus Built a New East Coast D.C.

Neiman Marcus had relied on a third-party logistics provider to run its distribution center in the eastern U.S. for more than a decade. “It was time to look at that and see if we could bring it in-house,” says Johnson. The fashion retailer contracted with Johnson Stephens for a feasibility study, which found that its cost per unit could be improved by 100 percent if the operation were insourced.

The move was prompted by a need to provide better service to the customer, says Johnson. That meant relying on new automation and business processes. Cross-docking had grown from around 5 to 65 percent of operations. The company needed to get cartons from one side of the building to the other, and onto an outbound trailer, in a matter of minutes.

The rise in cross-docking was prompted by the increasing reliance on standardized hangers for apparel shipping, along with pre-ticketing and labeling of merchandise with the carton. Barcoding allowed for quick scanning from the inbound to outbound dock. In the process, says Johnson, the company was able to drive significant labor content out of the operation.

Like many other merchandisers, Neiman Marcus was faced with the requirement to fulfill multiple sales and delivery channels from the same distribution facilities. It also needed the ability to draw inventory from various stores and distribution points, depending on where the demand actually was.

Neiman Marcus took over operation of a dedicated, 200,000-square-foot facility in Pittston, Pa. It was chosen from among 75 candidates. While the building was slightly smaller than the one previously run by the 3PL, the company was able to increase vertical capacity, through the installation of mezzanines and second levels.

The new facility includes more automation to support cross-docking, including a “super highway” of conveyors running through the middle of the building, and garment rail systems. Neiman Marcus still has room to grow at the location, even beyond its current six-year space plan. “This should last them long into the future,” says Johnson.

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