With a startling 20 percent sustained store growth in the North American retail industry over the last three years, there is a movement afoot to rethink supply chain strategies.

      For Dallas-based Michaels Stores, Inc., the world’s largest retailer of arts and crafts, a supply chain must do more than get the right product to the right store on time. It also needs to squeeze new levels of productivity upstream from its vendors to the downstream in-store operations to enhance customer satisfaction, meet growth goals and gain new levels of profitability.

      By 2003, Michaels was achieving record growth with approximately 820 stores in North America and a planned expansion in the Midwest and Canada was on the table. With its supply chain bursting, the retail giant was rapidly outgrowing its inventory information systems and warehouse capacity. Michaels senior management called on its logistics team to develop a scalable long-term solution.

      “We had four distribution centers that were completely out of capacity,” says Les Gardner, Michaels vice president of logistics and distribution. “We had to go back and reengineer the entire supply chain process.”

            Michaels began its redesign with a set of transportation and logistics innovations devised to cut costs, control truck loading and manage the routing of 35,000 core products between its suppliers, warehouses and stores. This new supply chain and inventory management plan was designed to streamline product flows to the stores and shorten order fulfillment times throughout the distribution network. Michaels understood that any new DC or material handling equipment installation would...

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