Fast-growing Lowe’s seeks expansion through “driver friendly” freight

John Schulz, Contributing Editor -- Logistics Management, 10/24/2006

AMELIA ISLAND, Fla.—Transportation and logistics planning are key components behind the double-digit growth of the Lowe’s Cos., the national home improvement chain that is expected to hit $50 billion in revenue this year.

Lowe’s designed its distribution centers with “driver friendliness” in mind and has a written policy to be friendly and courteous to all drivers, according to Steve Palmer, vice president of transportation for the Lowe’s Cos. “What does being friendly and courteous cost?” Palmer says. “It doesn’t cost us anything.”

Friendly DCs
Lowe’s DCs are designed to be clean, friendly “visitor centers” to work with drivers to lower their turnaround costs and reduce idling time. Lowe’s measures all gate turn times in order to maintain timely receiving cycle times, he said.

“It’s friendly to the driver but it makes sense to us to reduce these cycle times,” Palmer said.

Palmer is a 31-year veteran of Lowe’s, which has 1,300 stores, 200,000 employees with sales in excess of $43 billion last year. Lowe’s is the second-largest player in the $725 billion home improvement industry.

Lowe’s is projecting 16 percent growth this year to reach $50 billion revenue this year, and Lowe’s is opening about 155 stores each year.

The “R3 Initiative”
Lowe’s has an ongoing transport strategy that goes by the internal name of “R3 Initiative,”—for “rapid response replenishment”—which is designed to improve service, and increase profits improving inventory productivity. The average Lowe’s store receives 6.2 deliveries a week through 11 regional DC’s and 13 flatbed DC’s. Two more regional DC’s in Illinois and Oregon are planned next year. Most of the 13 flatbed DC’s are also served by intermodal rail networks.

“With a lot of our freight in the flatbed DC’s being commodities, transportation is really a driver in where we decide to put them,” Palmer said at the annual membership meeting of the North American Transportation Employee Relations Association (NATERA).

Lowe’s is the sixth-largest importer of goods into this country. It operates 11 import transload DC’s. Lowe’s transportation group includes a centers focusing on TL, LTL, international and DC outbound.

“Carriers are the glue that holds our transportation group together,” Palmer said.

Facing shipper obstacles
Lowe’s is facing many of the same issues affecting all shippers—fuel, new cleaner engines, hours of service and driver availability and turnover.

“Driver availability and turnover has been a long-term issue—we’ve been hearing that   for 10 years,” Palmer said. “Getting and keeping drivers is a big issue. Being a truckload driver is one of the toughest jobs in America: It has long hours away from home for days or weeks at a time and, by the way, forget your biological clock. Your sleeping patterns are going to change.”

Lowe’s believes in long-term relationship with its carriers. It uses consistent lane assignments for carriers and plans for loop routes where possible to reduce empty miles. Lowe’s sold its private fleet in 1986 after a corporate decision to focus its business on logistics. Instead, it uses more dedicated services to ensure extra service where it’s needed, Palmer said, from its roster of 150 carriers.

“We have driver friendly freight,” Palmer said. “That’s music to our ears when we hear that drivers really want to haul our freight.”

The carriers respond in kind. Lowe’s measures its inbound carrier deliveries and Palmer says it has a majority of its carriers report more than 99 percent on-time inbound deliveries. “It allows the carriers to be more efficient with their drivers,” he said.