OUTFITTING THE WAREHOUSE FOR EFFICIENCY
Byline: Brad Barth
NEW YORK — American Eagle Outfitters has cut inventory turnaround time by approximately two-thirds by implementing a distribution system that allocates and internally routes merchandise even before it enters the warehouse.
In addition, the distribution center can manage 50 percent more cases in a week. The system, installed last March, enables the specialty chain to handle as many as 12,000 cases daily at the facility, which serves all 510 American Eagle stores nationwide.
To accommodate a complicated merchandise allocation process, the retailer needed a distribution system that predetermines where each case must go before the unloading begins.
“We wanted to make this facility more of an absolute flow facility if we could,” said Steve Lyman, director of distribution systems at American Eagle. “We needed to preallocate merchandise before it even hit our doors.”
The distribution system is from Manhattan Associates, Atlanta.
“The advantage is that we can now look at the trailer before we unload it and know toward what part of the building each case will be directed,” said Michael Fostyk, vice president of distribution.
Even though American Eagle wants to allocate its merchandise before the unloading process begins, it behooves the retailer to wait as long as possible before determining the final destination of each product. That way, the distribution solution has access to the most recent demand forecasts and sales data.
The retailer often waits until the day of arrival before having its distribution system create an allocation plan for a particular shipment. “If the allocation department wants orders distributed based on the most recent sales data+the solution would grab yesterday’s sales to determine where the product is going to go,” Lyman said.
As the solution allocates the merchandise, it determines how each case will be routed through the fulfillment center. The system automates the internal routing of merchandise by controlling the conveyor system on which cases are transported throughout the facility. This conveyer setup is from Rapistan, Grand Rapids, Mich.
Fostyk said that the automated nature of the solution has improved overall productivity at the facility and lowered the cost of labor. “We planned for a return on investment that included 10 percent savings in productivity,” said Fostyk. “After just five months, we know we’ll recognize significantly more than that.”
As each case passes along the conveyor belt, an in-line scanner reads its bar code label. The system then identifies the package and directs the conveyor to send that case to the appropriate part of the fulfillment center.
It once took between 24 and 36 hours to fulfill a cross-docked order. Now, cross-docked merchandise typically reaches the store in 12 to 24 hours. Special orders under high-demand conditions can even hit the shelves within an hour, said Fostyk.
Cases that are not cross-docked may go through the facility’s packing department, a break-case zone, a replenishment area and a test-and-extraction area. According to Lyman, the solution also cut fulfillment time along these routes by approximately two-thirds.