There's surprisingly little warehousing going on at the new Saks Holdings Inc. distribution center in Harford County.
In a business where money is time, goods are "flowed" or "processed" through the $50 million state-of-the-art building, rarely staying more than 24 hours before making their way to millions of catalog customers or Saks Fifth Avenue stores as far away as Houston.
Transported by nearly 25 miles of automated stainless steel conveyor systems, plastic-wrapped designer merchandise floats through the two-story Aberdeen building on hangers; sophisticated computers track clothes through every inch of the place, and even designate what store requires what products, by size, color or style.
"Inventory is time-sensitive today, especially for a high-fashion retailer like Saks," said Russ LoCurto, a Saks senior vice president and the New York retailer's director of operations, during a tour of the project.
"Customers today want merchandise quickly and so, as a result, we have to be more productive and flexible."
Welcome to the 21st century world of logistics, where speed rules and effectiveness is measured in seconds.
Saks' new 584,000-square-foot center represents the epitome of the technological advances changing the distribution industry, a quiet revolution where new buildings and their high-tech guts are responding to retailers' demands that products get on store shelves faster and cheaper.
The Aberdeen project stands in stark contrast to the way Saks used to distribute its products, from an antiquated former Western Electric facility in Yonkers, N.Y. There, Saks' workers had to manually sort through boxes and tag and label merchandise before deciding where to send it, all until recently without the benefit of computers to assist them.
"Logistics today has become a critical part of the chain of supply," said David W. Baird, a Belt's Corp. vice president and president of the Maryland Distribution Council, a public-private network of industry participants and advocates.
"As a result, distribution centers are being designed from the inside out, rather than the outside in," Baird added. "And the difference in productivity is night and day. The gains are dramatic."
Saks' officials are even more emphatic. To hear them tell it, warehouses -- the main repositories in the shipping trade of the past -- have gone the way of the eight-track tape.
"Logistics today involves so much more than just warehousing," said Larry Bergman, a Saks' vice president and its director of logistics.
"In fact, there are no warehouses anymore," he adds. "When choosing the location and design of this facility, for instance, we had to consider transportation, work force, how quickly we could get merchandise to our stores, airports, ports, Interstate 95 and where our merchandise was coming from. This stuff was unheard of 15 years ago."
While the process is involved and expensive, the improvements brought about by technology save money for distributors. Saks, for instance, expects the Aberdeen project to save as much as $4 million a year, said Brian Kendrick, Saks' vice chairman and its chief operating officer.
At least part of the savings stems from keeping goods moving, the theory being that a product can't be sold until a retailer puts it on its shelves. But in addition, retailers such as Saks cut costs by reducing the amount of money tied up in inventory and by better balancing supply and demand.
"Goods at rest are a drain on profits," said Maryann P. Feldman, a research scientist at the Johns Hopkins University's Institute for Policy Studies. "And with the application of computers and advanced communication systems, productivity becomes enhanced and goods don't have to rest."
Thanks to an abundant work force, its strategic East Coast location, superior transportation network, relatively lower workmen's compensation insurance costs and millions in state aid to companies willing to pop their distribution tents here, Maryland has become a flashpoint for the revolution, according to local commercial real estate experts.
And Saks, a 73-year-old retailer with nearly $2 billion in sales a year, is not alone. Across the state, Fortune 500 companies are snatching up huge parcels of land for multimillion-dollar distribution centers, creating thousands of jobs in the process. Saks, for instance, expects to hire as many as 700 in Aberdeen. By the time its facility is fully operational later this year, Aberdeen will handle roughly 85 percent of all the company's distribution.
Last month, Staples Inc. opened an 840,000-square-foot project
in Hagerstown that is five times larger than the office-supply superstore's next-largest distribution center. The company made the a leap in square footage -- and the largest capital outlay in its 11-year history -- because it feared a smaller center would become obsolete as soon as it opened, said Vito Racanelli, the Massachusetts-based merchant's vice president of distribution.
