Integrated Systems Key to Warehousing and Distribution
By TRACY HAISLEY
Minimizing handoffs, reducing inventory and cycle time, improving speed and turns, lessening the pain of chargebacks. all are crucial issues that can make or break an apparel and soft goods company, and all depend heavily on the strength of warehousing and distribution systems ans strategies.
Navigating the waters of warehousing and distribution can be extremely challenging, with factors to confront ranging from customs clearance to cross-docking. The variety and diversity of systems on the market only add to the confusion. From systems for warehouse management to picking and packing to allocation, the software choices are seemingly endless, and yet many companies still opt to create their own systems.
Apparel explores how three companies, running the gamut in type and size, are managing to juggle it all and get it right.
Cole Haan: Homegrown Meets Off-the-Shelf
A wholly owned subsidiary of Nike, Cole Haan markets and manufactures high-end luxury shoes. With 70 percent of its production going to wholesale accounts and 30 percent to company-owned stores, the company has set its sights high, with growth goals of 11 percent anticipated for the coming year. The company plans to accomplish this by extending the brand and growing into international markets, says John Barron, vice president of finance, Cole Haan.
Smooth-running warehousing and distribution will be essential to achieving its goals. In addition to an in-house-developed warehouse management system (WMS), the company uses SAP's Apparel and Footwear Solution (AFS) for distribution. The WMS is a homegrown automated materials handling system built 14 years ago by Nike, with RF scanning at numerous points and movement verification. The system is a typical pick-and-pack solution, which transmits data about picked merchandise to the AFS system for invoicing.
"We inherited the system," notes Barron. "It was built for high volumes, tracking and shipping documentation preparation. At the time it was implemented, it was state of the art." Integrated with the WMS is AFS, which is modular. Allocation Run (ARun), a part of the system, allows Cole Haan to compare overall supply and demand and to prioritize distribution by customer to avoid chargebacks.
AFS also allows the company to segregate its stock according to Cole Haan's various distribution channels, which include small independent stores, large department stores and company-owned stores.
The company also utilizes Avery Dennison Retail Information Systems' InfoChain Express as an application service provider (ASP). Among other things, this solution supports on-site barcode scanning and validation of picking/packing accuracy at global contracting facilities. (For more on this implementation, see "Cole Haan Rolls Out InfoChain Express" in the February 2002 issue.)
When it comes to the U.S. government's increased scrutiny of imports, a major issue affecting distribution for apparel firms, Cole Haan has been able to maintain an even flow and remain unencumbered by many of the problems others have encountered, says Barron. "Our company has been proactive in protecting our lanes. We're a member of C-TPAT. We have implemented enhanced security processes throughout the supply chain. With the exception of a few delayed shipments, we have had no measurable disruptions to our business," notes Barron.
What's in store for Cole Haan in the future? "We are scheduled for a new WMS in 2005," concludes Barron.
SaraMax Apparel: Paperless Picking
New York-based SaraMax Apparel Group is an intimate apparel company that supplies the men's, women's and children's departments of such mid- and mass-market retailers as Wal-Mart, Kmart and JCPenney. The business is comprised of four primary components: branded merchandise; novelty licensed apparel (SaraMax holds about 30 novelty licenses); lifestyle-licensed apparel; and private labels. The firm's replenishment capability is especially crucial to its private label business.
In 2002, SaraMax relocated to a new distribution center (DC) in New Jersey to obtain increased capacity and to enable the implementation of technology and practices to improve distribution operations.
SaraMax uses integrated solutions from AL Systems and W&H Systems to provide a paperless picking environment. AL's DynaPickT pick-to-light solution, supported by conveyors and racks from W&H Systems, is capable of accessing and processing pieces of the same data that are used in managing the design, production and importing of SaraMax's apparel styles.
"We create product and develop styles that are then sold to customers. The same style master information and product description flows seamlessly through the system, so we have virtually risk-free production," notes Stanley Greenstein, president, SaraMax.
The company communicates this style data to its contract-manufacturing network in production packages sent via Web-based systems. Then when product comes into the DC from the manufacturers, it is recognized by an allocation system that compares it to open order files, ensuring that incoming product is queued for allocation and shipment to accounts.
"On our replenishment programs, we retain about a five- to six-week stock level for each SKU. Replenishment orders come in three days before delivery [is expected by the retailer]. We receive the order, process it, allocate it, run it through our pick-to-light system and ship within around a day, day and a half of receipt," notes Greenstein.
SaraMax processes more than 50,000 units per day. Three months after implementation of the AL Systems software, SaraMax was named to Wal-Mart's Direct Store Distribution Center (DSDC) supplier list. To make the list, SaraMax improved its turnaround time and order accuracy and doubled its distribution capacity. The Wal-Mart DSDC program is one of the initial reasons SaraMax turned to AL Systems, explains Greenstein.
Where will SaraMax turn its concentration next? "Our biggest objective operationally is to continually improve all our communication and operating technology. That takes cost out of the system, and we take that cost and pass it over ultimately to the consumer to provide improved value in our product," says Greenstein.
Urban Outfitters: Three-in-One
Almost 30 years go, outside the University of Pennsylvania, Urban Outfitters Inc. began as a hippie shop known as Free People. Now the company is a $423 million nationwide specialty retailer and wholesaler. It offers a variety of lifestyle merchandise through 51 Urban Outfitters retail stores in the United States, Canada and Europe; an Urban Outfitters catalog and Web site; 40 Anthropologie stores in the United States; and an Anthropologie catalog and Web site. Additionally, the company recently resurrected the Free People name for its wholesale division, which sells the Free People and bdg brands of products to approximately 1,100 specialty stores, department stores and catalogs, as well as through one Free People store. The company plans to expand the Free People label by opening more Free People boutiques.
The Urban Outfitters brand is geared to college-bound consumers, with two-thirds of goods targeting female shoppers. Meanwhile, Anthropologie targets 30- to 45-year-old women. Both cater to an upper-middle-class clientele, and offer both apparel and home goods. "Each is distinct in its own way. Shopping is an experience," notes Ken McKinney, director of distribution, Urban Outfitters.
Urban Outfitters' warehousing and distribution systems are as diverse as its brands. The company has invested in three software packages that each run a portion of the business. The retail arm, including all the financials, has run an Island Pacific solution for more than 14 years. "It does everything we need," notes McKinney. "It's weak in back stock locator [functionality], but we don't do that very much anyway."
Two DCs - one in Gap, PA, and the other in Reno, NV - are run on a subset of Island Pacific in conjunction with AL Systems' DynaPackT. Urban Outfitters owns the DC in Pennsylvania, and a third party owns the DC in Nevada, although some Urban Outfitters personnel are employed there. "We found we had so many vendors on the West Coast that it made no sense to [have them] ship [their goods] to the DC in Gap [only] to send them back to the West Coast," notes McKinney, referring to the origin of the Reno facility.
DynaPack, installed approximately seven years ago, brought paperless technology to Urban Outfitters. Since the implementation, paperwork has been eliminated, productivity has doubled and error rates have plummeted, McKinney says.
The light-directed packing system utilizes bright LED displays to guide packers through their job functions. Packers launch distribution instructions by scanning the barcode label on each item's container. Large red and/or green LED displays indicate the quantity to be packed for each store. Packers pack the indicated quantity and acknowledge completion by pressing a "Confirm" button. Exceptions (overages, shortages, closed containers, etc.) are reported using a zone management terminal. Information on packed orders is then uploaded to the host computer for further processing.
Urban Outfitters' warehousing and distribution for its wholesale business is managed by the Apparel Business Systems (ABS) solution. "We're looking at an upgrade of it right now," says McKinney. "It's serviceable, but supports only a $20 million portion of the business, so it's not a major focus."
Finally, warehousing and distribution activities related to the firm's direct-to-consumer business are automated by software from Ecometry. That system was implemented in 1999. Before that, distribution for the catalogs was outsourced. The Ecometry system has user-friendly screens and allows the company to leverage its labor, observes McKinney.
"Ideally, we probably should consider [one] warehouse management system for all three [segments of our business], but what we have works well now," he says.
Still, with three systems in place, Urban Outfitters is not without its share of challenges. For one thing, the systems are running on two different mainframes. The Island Pacific, ABS and AL Systems solutions run on IBM's AS/400 while Ecometry runs on Hewlett Packard's HPe3000. Another challenge is to lower costs per unit and gain more visibility. "We also need to cross-dock more of our products," McKinney adds.
What's next for Urban Outfitters? "As we open more stores, we plan to take advantage of regional clusters in terms of transportation and shipment," notes McKinney.
TRACY HAISLEY is associate editor of Apparel and may be reached at firstname.lastname@example.org.