COMPANY BACKGROUND & OVERVIEW
Macon Brock Jr., H. Ray Compton, and Douglas Perry were the founders of Dollar Tree Stores, Inc. (Dollar Tree) in 1986. Dollar Tree’s mission statement states,
“Logistics is committed to provide exceptional service to our stores through continual improvements in operating costs, quality, and safety. By providing solid leadership, superior execution of processes, acting with integrity, and demonstrating teamwork in all that we do, our mission will be accomplished through our most valued asset, our associate.”
Ever since the company went public on the NASDAQ under the symbol DLTR in 1995, Dollar Tree had become a highly successful business in the retail industry. In order to remain competitive in their industry, Dollar Tree continued to price all merchandises in their store at exactly $1.00 which gave them a distinctive positioning against competitors like Dollar General and Family Dollar Stores. This distinctive positioning gave Dollar Tree a competitive advantage which allowed the company to expand in number and size across the United States. By 2004, Dollar Tree had an annual revenue of $3.2 billion, and over 2,600 stores across 48 states. Over the years, Dollar Tree has expanded its stores ranging from 1,500-2,500 square feet of selling space to currently 10,000-15,000 square feet of selling space. In order to maximize sales, their stores are now located in strip shopping mall centers to capture customer traffic. Dollar Tree stores offered three categories of merchandise which included, consumable merchandise, variety merchandise, and seasonal goods.
For Dollar Tree to achieve a high inventory turn at a low cost, the company was geared towards having a well-managed logistics system that was strategically located, large scale and provided efficient distribution centers. As cost control played a crucial part within the operations of the DC; scale, utilization and continuous operational improvement were often considered the essential drivers of lowering cost.
In 2004, Dollar tree had incurred extra expense of renting expensive short term, off site space to handle the peak flow from Briar Creek distribution center. Currently, the Briar Creek distribution center operates at an average utilization of 92%, while peak utilization of 124%. However, the rule of thumb for capacity...