QVC the multi-channel retailer

QVC the multi-channel retailer, familiar to TV viewers for its shopping and entertainment channel, was founded in the United States in 1986. Today it is the second largest television network in the US, has annual revenues of $8.6 billion (2013) and services the needs of over 11.8 million customers across Britain, Germany, Japan, Italy, the United States and China.

In 2010 the company launched operations in Italy. Its headquarters located in Brugherio combines state-of-the-art recording studios and a hi-tech call center in a 15,000 sq.m environmentally designed building. To cater for QVC’s rapid expansion, in October 2013 order fulfilment was consolidated in a new highly automated distribution center in Castel San Giovanni, under the watchful eye of Michele Andreucci – Logistic Manager QVC Italy.

After less than three years in the Italian market QVC decided to invest in a new, highly automated 24,000 sq m Distribution Center. What were the drivers for this ambitious move?

From October 2010 to June 2013, order fulfilment for the Italian market was handled by QVC’s distribution center in Hukelhowen, Germany. Following the success of the business in Italy and the increases in volume, it was found to be strategically viable for the company to establish a logistics platform in Italy. The principal reasons for the decision were to reduce delivery times – thus offering a more efficient service to our customers – and, in parallel, contain logistics costs by delivering to anywhere in Italy within 3-5 days, very often sooner.

The project was designed to be ‘future proofed’. What did you do to cater for future demands?

The Italian Distribution Center was started in June 2013 and became fully operational in ‘October 2013. During the design phase it was decided to implement a logistics solution that would meet the needs of the business until at least 2016. The scalability of the operation had to take account of the wide diversity of our product range and the strong fragmentation of our orders to the end customer. QVC sells products with greatly different characteristics – clothing and accessories, home and garden, beauty, jewelry, electronics, DIY – requiring careful considerations for product type and size. Therefore, the drivers of possible growth scenarios were evaluated for the type of items, the volume and the type of order. For this reason, for the start-up and initial implementation of this three-year period, we opted for a solution that combines flexibility and simplicity. We applied solutions from SDI Group such as Put-to-Light and automated Carton Sorters to prioritise and speed the execution phase of the pick & pack operation. I would say that, after the initial phase, we can be satisfied with the results regarding our choice.

In the design phase, you worked with a logistics partner with international experience. What were the major benefits you received from this partnership?

Geodis is definitely among the best players in logistics operating in Italy. QVC decided to create a strategic partnership with a company that could provide us with the expertise in logistics management, and in operational performance in the distribution center. Geodis has dedicated itself to creating efficient operations, relevant to each area of the project – preparation, engineering, computer science and management – to ensure that the management of the DC is focused in one direction – to the benefit of QVC and its customers. Geodis is a guarantee for QVC, helping to meet the present and future logistics needs of the company in Italy.

Distribution operations at QVC are geared to fulfilling orders placed by consumers shopping from home. What are the major challenges that you face in logistics?

For our customers, the opening of the package is one of the most important moments of their shopping experience. Accordingly, the composition of the order and how it is brought together in the DC is not only logistically important but also commercially critical. The operational complexity of this process, as I mentioned before, is due to the wide variance and diversity of the products we sell and the highly fragmented structure of the orders.

Basically we have to combine a pick and pack of product types with greatly different dimensions and volumes, taking into account the fragility of some items – and I am referring in particular to jewelry products – and possibly the weight of other items. In this perspective, the solution provided by SDI Group using Put-to-Light technology provides us with the flexibility you need to assemble orders and deliver on time in a way that reflects our brand values on customer service at QVC.

Finally, one must not underestimate the need to maintain the highest levels of quality inherent in the process leading to the completion of the order. If in fact the process adopted has any problems, it would be a “cost” for the company. But more importantly, it could introduce a risk of not meeting the expectations of the customer and possibly even losing that customer. At QVC the customer is at the center of everything we do and therefore, such a situation is not acceptable.

What is the next phase of the project?

Customer service and our fulfilment operations at QVC are central to the growth of our business. At this stage we are monitoring processes to find areas of optimization and to ensure customers receive the best possible “customer experience”. We are constantly looking at ways of increasing their satisfaction and loyalty. Accuracy, Speed and Quality are the commercial factors that logistics can offer customers of QVC.

Therefore our next project phase is aimed at ensuring and supporting the development of our company in Italy. The technical solutions will be developed with our partners – Geodis and SDI Group.

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