Family Dollar 2009 Annual Report Download - page 13

Distribution and Logistics
During fiscal 2009, the manufacturer or distributor shipped approximately 7% of our merchandise purchases
directly to stores. The balance of the merchandise was shipped to one of our nine distribution centers listed
below. To provide consistent, cost-effective service, we enlist the services of several national transportation
companies throughout the U.S. as well as our own private fleet of trucks to deliver merchandise to stores from
our distribution centers. During fiscal 2009, approximately 90% of the merchandise delivered to our stores was
delivered by common or contract carriers. At the end of fiscal 2009, the number of stores served by each of our
distribution centers was as follows:
Distribution Center
Number of Stores
Served
Matthews, NC ........................................................ 762
West Memphis, AR .................................................... 590
Front Royal, VA ...................................................... 807
Duncan, OK .......................................................... 767
Morehead, KY ........................................................ 807
Maquoketa, IA........................................................ 806
Odessa, TX .......................................................... 727
Marianna, FL ......................................................... 731
Rome, NY ........................................................... 658
Total ........................................................... 6,655
Technology
We utilize a variety of technological systems to manage our business, including point-of-sale technology,
inventory management tools, supply chain systems, and financial and human resource applications.
We are upgrading our point-of-sale technology to provide better customer service and to improve the
communications infrastructure in our stores. The upgraded technology facilitates the acceptance of additional
payment types, including credit cards and food stamps, and includes a number of computer-based tools designed
to provide our store managers with better training, analytics and work flow management. At the end of fiscal
2009, approximately 74% of our stores operated with the technology. We expect to complete the rollout of this
technology to all stores during fiscal 2010.
We maintain by-item inventories for all stores and employ a demand forecasting system for replenishment
of our distribution centers. We also utilize software applications for centralized store replenishment of basic
merchandise and for allocation of non-basic merchandise. We have a centralized Merchandise Financial Planning
application and process that is utilized to plan and forecast sales, cost of sales and inventory metrics by product
category to position us to achieve our financial goals and to ensure proper flow of inventory. These systems
allow us to optimize merchandise in-stock positions in stores, reduce markdowns and improve inventory
turnover.
To minimize transportation costs and maximize our efficiency, we rely on a web-enabled transportation
management system to track shipments, to maximize trailer loads and to secure low rates from our trucking
partners. To maximize the productivity of our distribution centers, we utilize voice-recognition software, radio-
frequency technology and high-speed sortation systems in each of our nine distribution centers.
To manage our extensive library of store leases, we utilize a lease management system that contains the key
terms and conditions abstracted from our active store lease contracts. This electronic repository provides us with
better visibility to key property management issues such as property taxes, common area maintenance and
renewal options.
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