Super Club Music

Super Club distributes recorded music to retail stores. Such physical distribution of music is, of course, a dying enterprise, as it is being replaced by distribution via the web.

The distribution of recorded music poses some special challenges. The most noteworthy is the extremely skewed popularity among sku's: A very, very few sku's will be very, very popular and most sku's will scarcely sell at all. In fact, it is not unusual for 20 percent of the sku's to sell one or fewer copies over a year.

Another challenge is that popularity is very fleeting. For example, there may be a huge surge in popularity of a sku, perhaps because the band is currently touring or because of an unexpected hit record (such as "The Ketchup Song" in Europe recently). Thus, what is a popular product now may be dead in two weeks. The market for so-called "urban music" (rap, hip-hop) is especially volatile.

A third challenge is that there are a large number of returns in the music business. By some estimates up to 25 percent of all recorded music is returned unsold to the distributor. The distributor may then either send it out to another retail store where it may be selling better, or else return it to the publisher for destruction. All this represents double-handling. And by the time product has been returned and re-distributed, it may be past its peak in popularity.

There is one way in which the physical distribution of recorded music is unusually simple: The physical uniformity of the product -- all CD's are the same physical size and most cartons are about the same size -- makes it easy to configure storage so that it can be packed tightly to get full use of the space.

Some interesting facts about the music business:

• There are only six major labels and no competition among them because artists sign with the label.
• Significant new releases are generally shipped directly from the publisher to the stores, bypassing the distribution center. Some new product is shipped to the distribution center so it can replenish stock at stores.
• Musical tastes remain very regional. What is popular in Atlanta may look very different from what is popular in Detroit or Los Angeles.
• Some busy times are predictable but irregular. For example, if a big name band is touring, sales of their CD's will increase. Some busy times are not predictable, as when sales of a popular artist increase following their death. Some busy times are predictable and regular: The busiest recurring season in the US is the two weeks following Christmas, when people who have received CD players as gifts then buy CD's to play. People shopping at this time mostly buy collections of greatest hits.
• One theory holds that cars determine the medium of distribution in the music business! According to this line of thought, vinyl did not die until cassette players were common in cars. Similarly, cassette is almost dead now that cars increasingly have CD players. Will CD die because cars get MP3 players?

Super Club stores are divided in to routes and each route is visited by a delivery truck once a week on a regular day. Each day they pick for about 8 routes, which total about 100 stores. On average each store orders about 50 sku's and about 3 of each sku, for a total of about 15,000 pieces per day. The warehouse knows these orders a day in advance of picking and so can plan its work in advance.

The Super Club distribution center is about 88,000 square feet (8,175 square meters) in floor area. This is augmented slightly by a mezzanine area so that there are two flow rack areas, one stacked atop the other.

Click on any image to enlarge it.

	Product arrives from the publisher as pallets or partial pallets. Each pallet is stacked with cartons of CD's or, ever less frequently, cassettes. The CD's are packed either 25 or 30 to a carton, depending on publisher. The bulk of the product is kept in pallet-rack, from which it is moved, in response to demand, to either shelving (for less popular sku's) or else flow rack (for more popular sku's).
	Most of the warehouse floor space is occupied by static-shelving, from which about 13,000 different labels (sku's) are picked. This represents about 90 percent of all sku's but only about 35 percent of all picks. Order pickers push carts through the aisles, much like shoppers at a grocery store. Since these are the less popular sku's, there is a lot of walking per pick. The top of the shelves are used to store "overstock" so that the shelves can be restocked without having to travel all the way to the pallet rack (visible at the far left).
	Here is a closer view of a typical shelf. Notice that the physical uniformity of the sku's makes it easy to configure the shelf heights to reduce unused vertical space (the space between the top of the product and the bottom of the shelf above). But why is there so much empty (horizontal) space? What is the effect on the efficiency of order-picking?
	The 48 bays of flow rack contain only about 10 percent of the sku's but these account for about 65 percent of the picking. You can see as many workers in this area than in all of the static-shelving area. Instead of pushing shopping carts the pickers are operating like an assembly line, where the products to be assembled are the customer orders. Of the 1,000 sku's in flow rack, about 600 are steady sellers (Tony Bennett, the Rolling Stones, Aretha Franklin, etc.) and 400 are current fast-movers. The middle conveyor is powered and takes the completed cartons away to shipping. On either side of the powered conveyor are passive rollers that make it easy to push work-in-process along the assembly line.
	Here you can see completed and sealed cartons riding the powered conveyor to shipping and open cartons (work-in-process) on the passive conveyor.
	Notice that there is no empty space on the pick face of flow rack. Why? How does this affect picking efficiency?

Copyright © John J. BARTHOLDI, III. All Rights Reserved. This is material to supplement the textbook Warehouse & Distribution Science.

Last revised: 12 Feb 2015