August 27, 2000 Systems for Success

Volume 3 | Issue 5

If it’s a store, a catalogue or an e-commerce site, chances are its distribution systems were made by SDI Industries.

What do big-name retailers like The Gap, J.C. Penney and Sears, and notable manufacturers like Levi Strauss and Liz Claiborne, have in common? They all use distribution center systems built by SDI Industries, Inc. From this company’s base in Pacoima, Calif. — home to its network of design, engineering, fabrication and installation functions — have emerged the systems that enable top-selling merchandise to reach the shelves, catalogue pages and e-commerce sites of the world’s most famous merchants.

SDI describes itself as “the distribution engineering systems house.” It is geared toward providing retailers, wholesalers and third-party logistics suppliers with a total-solution package covering consultation, design, engineering, fabrication and installation of materials-handling systems for this clientele. To say that it is a custom manufacturer covers just a small part of what SDI does; it is a complete resource for everything involving distribution and handling.

Vertical Problem Solver

The company began its mission of providing creative, customized distribution solutions in 1977, when co-founders Don DeSanctis and Richard Ursitti opened SDI’s doors for the first time. Both engineering veterans of major retail companies (DeSanctis with Allied Stores, Ursitti with Sears), the two saw the need for major retailers to have a resource for sophisticated, cutting-edge distribution infrastructures. They also saw the advantage of such a company being vertical — of being a one-stop shop for everything from the design of a system to its manufacture and installation.

“We don’t consider ourselves just a manufacturer,” says DeSanctis. “We’re a design, engineering, building and installing firm. Primarily, our business comes through the consulting side (Systems Engineering & Design, Inc., SDI’s independent consulting division).” The consulting area is usually the beginning of the process from concept to final installation of a distribution system. When a retailer or wholesaler approaches SDI, the consulting division provides the design, planning, analysis, interfacing and modeling that eventually results in an installed, fully operational system.

After the consulting is completed, a project goes to SDI’s Design, Build and Install program. This is a turnkey package provided by the company that involves total support for the customer from inception to manufacturing to installation to training of personnel. By providing this package, SDI can provide the best systems solution for the customer, but can also significantly reduce the turnaround time for a project.

SDI’s engineering staff is the linchpin for each of these projects. Not only are the company’s engineers fully cognizant of all disciplines of engineering science, but they also use state-of-the-art computer software tools to prepare systems layouts and merchandise flow models that will provide the most efficiency in materials handling.

Innovations from the Beginning

It is the work of this department that has resulted in the product innovations for which SDI is justly credited. The company began its business life with the creation of the Space $aver processing system for fashion merchandise, which breaks down distribution into manageable elements and uses work stations specially engineered to minimize time and motion. The company is also the inventor of high-speed unit sortation systems, which reduces the number of people who handle both flat and hanging merchandise, but at the same time increases the degree of accuracy in such handling. SDI can also claim credit for innovations in systems governing automatic carton control, space reduction, productivity measurement, merchandising tracking and location, and high-density storage applications.

DeSanctis says, “This company does leading-edge, state-of-the-art work. We have engineered more types of product utilization than any other company in this industry. Our space-saver applications use high-cube production functions. We are now introducing new types of rail application for apparel.”

As an example of the latter, Ursitti cites SDI’s recent project with Sears. “We refitted Sears with all of these applications,” he says, “and we’ve been redoing its apparel distribution centers.” This involves SDI’s most recent innovation, the trolley-less handling system for the sortation of hanging garments. It expedites the receiving, processing, storage, automatic distribution and consolidation, and shipping for garments-on-hanger fashion merchandise. All of these products come from SDI’s highly sophisticated manufacturing facility at its Pacoima headquarters location. Roughly 54,000 square feet on this two and one-half-acre site is dedicated to manufacturing; the total company square footage here is 75,000.

More Rapid than Ever

The increasing velocity of the retail-wholesale business means that companies like SDI, providing the full menu of distribution center services, will be more necessary than ever. This is especially true considering the development of the Internet and e-commerce, which has changed everything involving the selling of consumer products. The Internet has stretched the boundaries of retail beyond brick-and-mortar stores and catalogues, and has given wholesalers — especially the big brand names in consumer products — the means to reach customers more directly.

“The tie-in is becoming very tight now between the wholesaler and the retailer,” says DeSanctis. “There’s a lot of communication going on now that didn’t happen 20, 30 years ago, and this is part of the supply logistics aspect of product distribution. Business is more rapid now. E-commerce is driving wholesalers to deliver more rapidly, and is forcing them to bypass traditional habits of delivery, a lot of the rigid applications they used to have. It’s up to companies like us to create the products to increase these speeds, especially in distribution software.”

Already established on the international market, SDI is looking to become even bigger here. “We have already been in Europe, in France and Italy, and we’ve just purchased a company in the United Kingdom, Greenstone Automation, which provides the same services as we do,” says DeSanctis. “This purchase makes us more responsive to the European market. We’ve also just opened SDI Asia Pacific in Australia with an Australian partner. This will increase our presence in Australia and Southeast Asia.”

A Different Business

De Sanctis also foresees the mix of SDI’s business changing down the road. As of now, 65 percent of the company’s sales are to general-merchandise retailers such as department stores and mass-merchant stores. But the business to specialty retailers and to companies that warehouse and distribute for products that go to specialty retailers should take a fast track in the years to come.

“We have the ability to do work for e-commerce providers and cataloguers, and to manufacturers of products in retail,” says DeSanctis. That 65 percent share to general merchandisers should diminish over next few years, while warehousing and distribution for the wholesale market, for specialty retailers and for non-brick-and-mortar retailers should go up.”

The requirement for total integration had SDI fund and start up its own computer software house, called Real Time Integration (RTI). This division engineers all the software requirements for SDI, and will celebrate its second year in operation at the end of 2000.

DeSanctis’ clear vision for SDI ensures that the company’s business as a whole should go up. With the development of e-commerce and increasingly computerized and sophisticated distribution systems, the services of a company like SDI – which takes its customers all the way from concept to installation of these systems – will be needed more than ever.

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