Dive Brief:

• Bed Bath & Beyond announced a partnership with Ryder to develop and operate two regional distribution centers. The partnership is part of the retailer's $250 million supply chain turnaround.
• The first distribution center is a one-million-square-foot facility in Frackville, Pennsylvania, located near the state's Lehigh Valley region. The warehouse will open in the fall and replenish stores in the Northeast.
• The second distribution center will open next year in Southern California. Together, the two centers will help drop replenishment times from 35 days to fewer than 10 days — a goal COO John Hartmann has described to investors and analysts.

Dive Insight:

Bed Bath & Beyond began a request for proposal process in 2020, as it sought to modernize its supply chain, reform its inventory model and speed replenishment times. Hartmann knew outsourcing was the way to go to best tap into logistics expertise.

"It makes both financial and partnership sense to use someone's capabilities as opposed to try to build them yourself," he said this year. It also gives the retailer more financial flexibility and is a lower capital expense.

That RFP process culminated in the selection of Ryder to manage two regional distribution centers.

Bed Bath & Beyond isn't tasking Ryder to reinvent the wheel on logistics and supply chain management. In fact, Hartmann previously described the retailer's approach as a "common-sense model" for retail supply chains, with distribution centers and visibility via a control tower.

Before embarking on its transformation, the retailer relied on dozens of cross docks to consolidate vendor inventory, rather than distribution centers to replenish stores. Centralized distribution is a marked pivot for Bed Bath & Beyond and one that will require the retailer to lean on the expertise of a 3PL.

Outsourcing logistics management has gained popularity over time, and the trend accelerated during the pandemic, CEO of XPO Europe Malcolm Wilson (who will become CEO of GXO Logistics once the spinoff is complete) said in May. Corporations have become more aware of "the potential vulnerability of handling logistics completely in-house," he said.

That vulnerability amplifies when the point of sale is multifaceted, from last-mile delivery to curbside pickup to in-store shopping. Bed Bath & Beyond describes its strategy as "omni-always," which makes it imperative for the retailer to have inventory in the right place at the right time.

The two distribution centers Ryder will operate are strategically located near dense population hubs on the two coasts and will allow inventory to quickly reach store locations.