Once a Mexican folk art shop, Chicos is now a boutique retailer of

womens clothing and accessories.

Project Objectives/Challenges
Chicos operated retail replenishment and direct-to-consumer (DTC) out
of two adjacent facilities, both of which had insufficient capacity to
support growth.
Future inventory requirements exceeded retail storage and limited store
put locations could not accommodate additional inventory.
Manual DTC pick operations caused high labor costs.
Chicos acquired a larger local facility and engaged Sedlak to develop a
master distribution plan to improve service levels to stores, return
favorable ROI, allow for expansion options, support growth and provide
flexibility.
What Sedlak Did
Our analyses evaluated splitting brands across facilities, but determined
that retail and DTC should share inventory.
Recommendations assigned DC2 to serve as the primary retail
replenishment center and reserve storage for all brands, and DC1 to
manage PTD system for PO processing, new store processing and deep
reserve for peak storage.
Both retail and DTC operations could leverage the addition of a crossbelt unit sorter.

Inbound merchandise was split to allow for direct delivery to the primary
processing facility.

Results
Merchandise segmentation to stores was improved by leveraging the
existing DC2 pick module and installation of the cross-belt unit sorter.
Revised operations supported projected volumes within the existing
footprints of facilities.
Investment in DC2 automation resulted in significant labor savings and
increased capacity with negligible impact on RONA.
Sedlaks recommendations for a phased approach to adding new
technologies in line with sales growth enabled better investment
management and favorable ROI.
Subsequently, Chicos engaged Sedlak to perform a refresh on the
master plan to account for a new bridal program, increases in VAS, and
growth in new orders, stores and SKUs. Sedlak also provided detailed
design and competitive bid and implementation management for the
previously planned material handling and IT systems upgrades.