Macy's to Open Distribution Center - 1,500 jobs

[sauerkraut]

Rebound made a  interesting post. None the less the more companies and jobs our Governor can bring to Oklahoma the better it is for everyone in Oklahoma. Jobs also mean  health care coverage, some employers even offer dental & eye care. Oh yeah most jobs as standard practice even give ya  an Paycheck!

[heironymouspasparagus]

Supply Chain and Distribution is my gig, so I probably like the minutiae of this topic more than most, but the recent comments related to a retail store versus a DC are really interesting to me.   Just on the surface, a Macy's store and a Costo store are simply not equivalent.  Macy's is a non-grocery traditional retail outlet, with smaller stores, etc, and Costco is a bulk-type storefront.  Closer to a distribution center than a traditional retail store.

Even in store numbers, it's not the same.  Macy's has something like 800 stores in the US, while Costco only has about 400, or roughly half.  Of course, the Costco stores are much larger, employ more people, etc.   But this difference in store size and numbers, as well as industry dynamics like the continuing Omni-channel evolution,  dramatically changes the nature of the distribution network. 

Pause in the action for a comment or two and a question or two....

Traditionally, a distribution center has been a place where the large retailer would receive goods from suppliers for a region, then disburse to retail stores in the region - a sort of a storage hub to simplify shipping actions.  With Sears and Monkey Ward being the most notable "mail order" fulfillment people that I have had familiarity with.

In recent history - probably what...the last 15 to 20 years or so?...everyone seems to be going to a more 'mixed mode' of DC - as a staging facility for store stock, and as an order fulfillment facility for "internet sales" (also whatever is left of mail order).   Even as recently as about 10 years ago, when I would deliver to a WalMart DC, there was only large trucks bringing stuff in from mfr/suppliers and large trucks taking stuff to individual stores - every visit to Wally was one of those two - bringing pillows from Bartlesville to Wisconsin or Michigan DC, or taking a mixed reefer load to a WalMart store (typical).  (Even Supercenters had the "feel" of a DC, just fewer docks and mix of drop and hook with trailer unload - did both.)   Fewer UPS or Fedex vans...as would be used for individual order fulfillment.

Places like Amazon in Coffeyville seem to be mostly the mail order fulfillment model with suppliers shipping bulk product to them, and they shipping out individual orders to customers.

And then there is all the 'blurring' of lines you touched on with the big box warehouse stores....




The above is my impression of what has been and what is now.... how far off is that?  Are the big guys splitting traditional DC from individual order fulfillment centers yet?

What do you supply and distribute?  (Just curious - no need to answer if too personal.)

[heironymouspasparagus]

Rebound made a  interesting post. None the less the more companies and jobs our Governor can bring to Oklahoma the better it is for everyone in Oklahoma. Jobs also mean  health care coverage, some employers even offer dental & eye care. Oh yeah most jobs as standard practice even give ya  an Paycheck!

Still...she hasn't brought anyone to Oklahoma.  In fact, her policies are actively discouraging companies from coming here.  Especially the ones that have insurance of any/all kinds.  And the lower the paycheck, the better for her!

[Conan71]

Pause in the action for a comment or two and a question or two....

Traditionally, a distribution center has been a place where the large retailer would receive goods from suppliers for a region, then disburse to retail stores in the region - a sort of a storage hub to simplify shipping actions.  With Sears and Monkey Ward being the most notable "mail order" fulfillment people that I have had familiarity with.

In recent history - probably what...the last 15 to 20 years or so?...everyone seems to be going to a more 'mixed mode' of DC - as a staging facility for store stock, and as an order fulfillment facility for "internet sales" (also whatever is left of mail order).   Even as recently as about 10 years ago, when I would deliver to a WalMart DC, there was only large trucks bringing stuff in from mfr/suppliers and large trucks taking stuff to individual stores - every visit to Wally was one of those two - bringing pillows from Bartlesville to Wisconsin or Michigan DC, or taking a mixed reefer load to a WalMart store (typical).  (Even Supercenters had the "feel" of a DC, just fewer docks and mix of drop and hook with trailer unload - did both.)   Fewer UPS or Fedex vans...as would be used for individual order fulfillment.

Places like Amazon in Coffeyville seem to be mostly the mail order fulfillment model with suppliers shipping bulk product to them, and they shipping out individual orders to customers.

And then there is all the 'blurring' of lines you touched on with the big box warehouse stores....




The above is my impression of what has been and what is now.... how far off is that?  Are the big guys splitting traditional DC from individual order fulfillment centers yet?

What do you supply and distribute?  (Just curious - no need to answer if too personal.)

Amazon is strictly online order fulfillment.  They have no terrestrial retail outlets.  The releases on Macy's call this an e-order fulfillment center.  Regardless if it were simply collecting and disbursing to retail units, it's all new money imported to the Tulsa area economy through payroll as well as future property taxes.  Simply opening a new big box recirculates the same money in the local economy and exports some to cover the salaries of the people at their distribution center in another city or state as well as corporate staff elsewhere.

[swake]

Amazon is strictly online order fulfillment.  They have no terrestrial retail outlets.  The releases on Macy's call this an e-order fulfillment center.  Regardless if it were simply collecting and disbursing to retail units, it's all new money imported to the Tulsa area economy through payroll as well as future property taxes.  Simply opening a new big box recirculates the same money in the local economy and exports some to cover the salaries of the people at their distribution center in another city or state as well as corporate staff elsewhere.

I agree, I dislike giving places like this public money, but it is the game as it's played today between cities.

Giving money to big box stores to locate in Tulsa is stupid and gains us nothing.

[heironymouspasparagus]

Amazon is strictly online order fulfillment.  They have no terrestrial retail outlets.  The releases on Macy's call this an e-order fulfillment center.  Regardless if it were simply collecting and disbursing to retail units, it's all new money imported to the Tulsa area economy through payroll as well as future property taxes.  Simply opening a new big box recirculates the same money in the local economy and exports some to cover the salaries of the people at their distribution center in another city or state as well as corporate staff elsewhere.

Amazon uses a small part of the Coffeyville place as a kind of depot or hub, too - or used to.  There was some intercompany interchange going on.  But online order fulfillment is what they are all about.  That's kinda (exactly) what I said.....

In the context of big boxes and online DC's, the movement of money is what makes economic activity happen.  A new big box is exactly the same "movement of money" event that online ordering is.  Someone in the box is paid a salary - that money is the same as the person in the DC getting paid a salary.  And rent, utilities, misc. for the care and feeding of those boxes.  All the rest of the money goes elsewhere.  Neither Macy's nor any of the big boxes are located here beyond a satellite presence.

[Conan71]

Amazon uses a small part of the Coffeyville place as a kind of depot or hub, too - or used to.  There was some intercompany interchange going on.  But online order fulfillment is what they are all about.  That's kinda (exactly) what I said.....

In the context of big boxes and online DC's, the movement of money is what makes economic activity happen.  A new big box is exactly the same "movement of money" event that online ordering is.  Someone in the box is paid a salary - that money is the same as the person in the DC getting paid a salary.  And rent, utilities, misc. for the care and feeding of those boxes.  All the rest of the money goes elsewhere.  Neither Macy's nor any of the big boxes are located here beyond a satellite presence.

I don't know why I'm even bothering, but one last time.  First graphic, left pie chart illustrates how much money stays in the local economy when you open a new big box store (completely unrelated to the current topic, it also makes a good case for shopping local):



Now, here's the economic impact of a regional DC to the local/regional economy:

Amazon.com's payroll at two proposed distribution centers in Hamilton and Bradley counties will spur a sizable economic impact, a University of Tennessee researcher says.

Every dollar paid on the more than 1,400 full-time jobs and more than 2,000 seasonal slots will create another 50 cents to 75 cents in regional payroll, said Matt Murray, the UT Center for Business and Economic Research's associate director.

The full-time jobs alone will spawn an annual payroll of about $42.7 million, estimates show.

Using the 50/75-cent multiplier, Amazon's annual economic impact related to the full-time positions could reach from $64 million to $74.7 million regionally, according to figures.

"It will create a significant economic impact for this particular region," Murray said, as Amazon employees, like other workers, shop, buy cars, use financial services and turn over the money they earn.

The seasonal slots, mostly filled during the last three months of the year, also will be "of immense value," he said. While the jobs may pay less than full-time posts and offer no fringe benefits, they'll often be filled by retirees and college students, he said.

Murray said the economic impact numbers are "ballpark." Spending leaks out of a smaller area because it typically doesn't produce as many items as people consume, he said.

He also said the economic impact of Amazon will be less than that of Volkswagen's auto assembly plant in Chattanooga. VW not only pays its workers more, he said, it has drawn some separate supply companies to the area.

"With VW, you get assembly jobs and you get supplier firms," Murray said. "You don't get that with Amazon."

Still, J.Ed. Marston, the Chattanooga Area Chamber of Commerce's vice president of marketing, said Amazon will have "a powerful benefit" on the economy -- if the region wins the pair of 1 million-square-foot fulfillment centers.

Local and state officials continue to try to finalize the project by the Fortune 100 company, which would invest about $139 million in the centers.

In addition to economic impact, the Amazon project would diversity the region's economy, Marston said.

"It offers different kinds of employment to people with different skill sets," he said.

http://www.timesfreepress.com/news/2010/dec/15/amazon-economic-impact-immense/

The point being, whether it's a DC, auto manufacturer, call center, etc.  It imports new money to the local economy, whereas new retailers rely largely on recirculating existing money in the local economy.  Then they ship off the profits to their out of state corp. HQ, pay their out of state vendors and supply chain with money taken from our local economy.

It's the same reason trade deficits are bad.  More money is taken from the U.S. economy than is brought in from outside sources.

[Conan71]

And finally, while doing some reading, I came across an article when the new employment figure was 1500 plus seasonal employees, the economic impact was estimated at $800 million over ten years.  Now that figure may be closer to 4000 permanent jobs, well, do the math.

I don't see a Costco being anywhere close to generating that sort of economic impact.

[heironymouspasparagus]

I don't know why I'm even bothering, but one last time.  First graphic, left pie chart illustrates how much money stays in the local economy when you open a new big box store (completely unrelated to the current topic, it also makes a good case for shopping local):



Now, here's the economic impact of a regional DC to the local/regional economy:


The point being, whether it's a DC, auto manufacturer, call center, etc.  It imports new money to the local economy, whereas new retailers rely largely on recirculating existing money in the local economy.  Then they ship off the profits to their out of state corp. HQ, pay their out of state vendors and supply chain with money taken from our local economy.

It's the same reason trade deficits are bad.  More money is taken from the U.S. economy than is brought in from outside sources.

So, you are saying Macy's is somehow a local independent, while Big Box, Inc is a chain retailer...

Ok...if you think so.... I really wanna hear the explanation on how THAT works!  Do tell....

[Conan71]

So, you are saying Macy's is somehow a local independent, while Big Box, Inc is a chain retailer...

Ok...if you think so.... I really wanna hear the explanation on how THAT works!  Do tell....

Um no.  I told you to focus on the left graphic to point out how little money remains in the local economy from a big box store.

Then compare it to the article posted below which states 50 to 75 cents of every new payroll dollar created by a DC adds an additional 50 to 75% income to the area.

Certainly you cannot be that dense.  Now explain exactly how Costco brings new $$$ to the local economy....

[heironymouspasparagus]

Um no.  I told you to focus on the left graphic to point out how little money remains in the local economy from a big box store.

Then compare it to the article posted below which states 50 to 75 cents of every new payroll dollar created by a DC adds an additional 50 to 75% income to the area.

Certainly you cannot be that dense.  Now explain exactly how Costco brings new $$$ to the local economy....

Your pictures say Independents.  How can you possibly think Macy's is an independent entity in this region??  It IS a "big box entity".  It's all about the 'parsing'....  (splitting things up and picking and choosing what to analyze).


"The point being, whether it's a DC, auto manufacturer, call center, etc.  It imports new money to the local economy, whereas new retailers rely largely on recirculating existing money in the local economy.  Then they ship off the profits to their out of state corp. HQ, pay their out of state vendors and supply chain with money taken from our local economy."

Yes.  And that is the Macy's impact as well as Costco.

And the article says;
"With VW, you get assembly jobs and you get supplier firms," Murray said. "You don't get that with Amazon."

Amazon is interchangeable with Macy's in that sentence.  Even the guy writing the article, with the above comment, says that DC's really are all about the big box thing, even if he was trying to make some other point.  WAG'-ing it.  (Wild A$$ Guess).




Local is always my first choice if possible.  And the smaller the entity the better, also if possible.

[rebound]

Pause in the action for a comment or two and a question or two....

Traditionally, a distribution center has been a place where the large retailer would receive goods from suppliers for a region, then disburse to retail stores in the region - a sort of a storage hub to simplify shipping actions.  With Sears and Monkey Ward being the most notable "mail order" fulfillment people that I have had familiarity with.

In recent history - probably what...the last 15 to 20 years or so?...everyone seems to be going to a more 'mixed mode' of DC - as a staging facility for store stock, and as an order fulfillment facility for "internet sales" (also whatever is left of mail order).   Even as recently as about 10 years ago, when I would deliver to a WalMart DC, there was only large trucks bringing stuff in from mfr/suppliers and large trucks taking stuff to individual stores - every visit to Wally was one of those two - bringing pillows from Bartlesville to Wisconsin or Michigan DC, or taking a mixed reefer load to a WalMart store (typical).  (Even Supercenters had the "feel" of a DC, just fewer docks and mix of drop and hook with trailer unload - did both.)   Fewer UPS or Fedex vans...as would be used for individual order fulfillment.

Places like Amazon in Coffeyville seem to be mostly the mail order fulfillment model with suppliers shipping bulk product to them, and they shipping out individual orders to customers.

And then there is all the 'blurring' of lines you touched on with the big box warehouse stores....

The above is my impression of what has been and what is now.... how far off is that?  Are the big guys splitting traditional DC from individual order fulfillment centers yet?

What do you supply and distribute?  (Just curious - no need to answer if too personal.)

Wow, I'm away for a few hours yesterday and there are so many good back and forth posts...   Again, this is the kind of topic (local and of immediate impact) that I come on here for.

Regarding what I supply and distribute,  I don't.  With the exception of my first job out of college (steel tubing in Sand Springs, 88-89), I have not been on the direct supply side.  My background is in material handling equipment (conveyors, etc)  and distribution facility design and optimization.  For the last two decades I've been on the software side, selling and implementing software for manufacturing, distribution, transportation, etc.  I currently cover NA for a large Supply Chain software house.

Your points above related to the changing operational modes of a DC are spot on, and are continuing to evolve.  DCs (ne'e Warehouses)  used to basically full-pallet/full-truck, in/out.  The advent of packaged WMS (warehouse management system) software in the 80's allowed for much more complex operations, including rise of the mixed-mode type facilities you note.  Later, TMS (transportation management system) software came along to optimize the actual distribution routes and added to the efficiency and complexity of of the supply/fulfillment chain.   Basically, as the software continued to improve it allowed business to offer increasingly complex services and distribution channels. 

(Side note, a product called "Logisticon" started in 1985 and was, I think, the first packaged WMS software product.  One of the founders of Logisticon is a friend of mine and likes to tell war stories of trying to get prospects to understand how a software solution could improve their old paper-based operations.  Today, no large fulfillment operation would consider operations without a WMS in place.  Times change.)   

But all the above changes were still basically "one-direction", i.e. the goods always flowed from supplier/mfg, to a large DC, to smaller DCs, then to stores or the end user.  There was very little cross-channel or reverse-channel shipping.  For example, once a product made it to a store, it was rarely if ever then shipped from that store to another store, or directly to a consumer.  That's where the Omni-Channel concept is changing the game, and it is specifically impactfull to box retail-type distribution like Macy's.   Effectively managing single-direction distribution is hard.  Effictively managing Omni-channel distribution is, well, really hard.  The improved software allows Macy's and companies like them to (in the case of Macy's) utilize 500 of their stores as fulfillment and mini-distribution centers, and avoid the extreme expense of building more DCs like they are in Owasso.  This is much more cost-effective, and allows them greater distribution flexibility, etc. 

There's a decent article in Supply Chain Digital from this past February that gives a good comparison of how warehouses and software have evolved over the years (starts on page six): http://www.supplychaindigital.com/magazines/14441

Related to the benefit of a store versus a DC.  The point I was trying to make is that, generally, a store employs fewer people and is much more easily moved or closed than a DC.  Macy's for example, could relatively easily decide to open a couple more stores in the greater Tulsa area.  Which is great, but the relative employment of those stores is low, and if the stores don't work out they can be just as easily shuttered.  That is not the case with the new DC. It employs a huge number of people and will be there for at least a decade or two.  So just on stability and critical mass, a DC is better than several stores.

But as I discussed earlier, a Costco store is kind of unique.  Costco (and related mega-box stores like Sam's) stores are so large that their attributes are more like a DC than a traditional retail store.  They employ more people, are more expensive to put in, and have a larger and more stable customer base such that they are more likely to remain in place for longer.   So again, it's hard to consider Macy's and Costco in the same argument, because even though they are both Retail, the makeup of their operations makes direct comparisons difficult.

Last thought, and I'm out.  The comments around the monetary flow with a store are valid, although I'm not convinced they are of practical difference.  A store sells product directly to the immediate community.  Most of that (sales) money does not stay local, as the vast majority is taken up in operating expenses of the store and greater retail chain.  The only real money that is generated locally by a store is the wages of the direct employees, which is a small percentage of the sales revenue.  For a DC there are (generally) no local sales, and so there is no net outflow of local dollars.  The presence of a DC only results in a net inflow of money, in the form of local wages and locally sourced support services.  So the immediate conclusion is that a  DC is much better than a store.  But the argument against the store supposes that the store sales are a net increase in the overall local monetary outflow. (i.e., Macy's sales are "new" sales that would not have gone to some other retail outlet if Macy's doesn't exist in the area.)  I don't think this is fair assumption, and instead most of these sales (the money that leaves) would have occurred anyway, just somewhere else.  So if Macy's or any other retailer adds a store locally,  my gut says that the overall effect would be a net increase in the local economy.  Not nearly, of course, as much increase as a DC, but an increase none-the-less.   So stores are not a bad thing, either.

[rdj]

The new DISTRIBUTION CENTER Macy's is opening WILL NOT have a retail storefront for LOCAL customers to visit and buy from.  It will employ thousands of people to ship product to other cities and states, unless a LOCAL person were to buy an item from the Macy's website or catalog.  It is a NON-RETAIL STOREFRONT for a RETAIL ENTITY.  A Costco store is a RETAIL STOREFRONT for a RETAIL ENTITY.  Big difference!

I'm now convinced we are all being trolled.

[Conan71]

The new DISTRIBUTION CENTER Macy's is opening WILL NOT have a retail storefront for LOCAL customers to visit and buy from.  It will employ thousands of people to ship product to other cities and states, unless a LOCAL person were to buy an item from the Macy's website or catalog.  It is a NON-RETAIL STOREFRONT for a RETAIL ENTITY.  A Costco store is a RETAIL STOREFRONT for a RETAIL ENTITY.  Big difference!

I'm now convinced we are all being trolled.

Agreed.  Heir enjoys being a crank.  Either that or he needs ritalin...stat.

[Ibanez]

The new DISTRIBUTION CENTER Macy's is opening WILL NOT have a retail storefront for LOCAL customers to visit and buy from.  It will employ thousands of people to ship product to other cities and states, unless a LOCAL person were to buy an item from the Macy's website or catalog.  It is a NON-RETAIL STOREFRONT for a RETAIL ENTITY.  A Costco store is a RETAIL STOREFRONT for a RETAIL ENTITY.  Big difference!

I'm now convinced we are all being trolled.