E-commerce has become a booming business with sustained 20-30% growth each year. The Fashion industry is expected to become the largest subsection of this e-commerce market growth. Within the Fashion industry, Urban Outfitters Inc is a well-known, specialty retailer which offers a variety of lifestyle merchandise to highly defined customer niches. Headquartered in Philadelphia, Pennsylvania, it operates in the USA, Canada and Europe through various sales channels, such as stores, catalogs and online store fronts. The company’s brands Urban Outfitters, Anthropologie, Free People, Terrain and BHLDN are experiencing strong growth in its Direct-to-Consumer business. Urban Outfitters’ logistics processes needed to adapt to meet the increase in orders from their growth in e-commerce sales. Therefore Urban Outfitters reached out to Vanderlande Industries to design and install their new e-commerce distribution system located in Reno, Nevada. Vanderlande brings years of knowledge and experience to designing and implementing automated order fulfillment systems.
Urban Outfitters operates a distribution center in Trenton, South Carolina, which was primarily responsible for serving their expanding Direct-to-Consumer market. The Trenton warehouse logistics flow was not originally designed to handle the modern day order profiles. Urban was faced with either renovating an outdated facility or investing in an entirely new facility. The warehouse also needed to account for unique processes, which other legacy distribution centers may not face on a regular basis, such as short delivery times for a wide range of customers, high accuracy, efficient returns handling and significant peaks during the year.
The e-commerce, on-line shopper is increasingly demanding. Shoppers expect multiple product choices, good pricing and fast delivery of their selected products. To compete in this demanding market Urban Outfitters offers its customers a wide variety of goods with drastically different product characteristics at competitive prices. Internally, the Urban logistics group requires a high level of attention in order to support this business model. So, their distribution channels must operate not only in a way to support the vast array of products with unique characteristics, but must also allow for the necessary value-added logistics processes required to remain competitive.
Another important aspect of serving the Direct-to-Consumer market is the footprint of the customer base and how it matches against small package carriers’ capabilities. Since Direct-to-Consumer orders go to many more destinations than one might see in a traditional retail distribution network, a successful e-commerce distribution center is strategically located close enough to its targeted customer base as to optimize next day or 2-day small package carrier delivery footprints.
Why Vanderlande Industries?
Urban turned to Vanderlande Industries to develop a solution for their challenging logistics model. Urban chose Vanderlande on this project, firstly because of their vast experience in designing and implementing order fulfillment systems for other Direct-to-Consumer businesses, such as Tesco. And secondly, because of Vanderlande’s previous success on two other new Urban facilities in the UK. These two other facilities were a Direct-to-Consumer order fulfillment center, one being a retail fashion DC. Both facilities exceeded expectations and went operational in 2011.
“We preferred Vanderlande because they demonstrated that they clearly understand complex logistics challenges, are able to design appropriate solutions through mixing and matching their proven sub-systems, and are able to provide full scope integration,” says Ken McKinney, Executive Director of Logistics for Urban Outfitters, Inc.
“Vanderlande used a very flexible approach and demonstrated a desire to understand our business needs and culture and to provide us with the appropriate end-to-end automated material handling solution that meets our needs. Their engineers took our preliminary conceptual design and substantially improved it, providing increased performance levels and aligning the different elements of the system with our strategic business objectives.”
Urban Outfitters and Vanderlande developed a new distribution center that is strategically located in Reno, Nevada and utilizes state-of-the-art picking and sortation technologies, specifically designed and optimized for the Direct-to-Consumer market. The new system takes care of all warehouse processes, from receiving to shipping. It is a tote based picking and transport system with unique features allowing for high operator performance and maximum efficiency. It allows for maximum flexibility while accommodating all of the unique products that Urban Outfitters sells. Both single piece and multi piece orders can be sorted, consolidated and shipped in the most cost effective, streamlined method possible. The system is based on a batch picking concept optimized for Urban Outfitters. Picking is done in totes, which are subsequently transported to infeed workstations at a packing sorter where the products are manually placed on the sorter. The sorter then sorts pieces to the corresponding order chute. Once all the pieces for a batch have been sorted, the pieces are packed per order by an operator into poly bags or cartons. Value added services, such as inserting promotional flyers can be done here as well. A conveyor system transports the packages to a shipping sorter. The material handling system is managed by Vanderlande’s VISION Warehouse Control System, which is integrated into Urban Outfitters’ Manhattan Associates WMS system. VISION dynamically assigns orders to chutes and directs orders to the appropriate areas for consolidation.
Urban Outfitters is aiming to see significant benefits from the new project. Compared with previous design iterations, the Vanderlande solution offers a faster Return on Investment. The new facility also has commonality with another system in Urban’s network (a Direct-to-Consumer order fulfillment center in Rushden, UK which went into operation fall of 2011), enabling the company to compare and benchmark logistics performance indicators. Vanderlande’s worldwide presence allows companies to achieve synergies that are not possible with regional providers. The new warehouse process also brings significantly improved performance in terms of operating costs, efficiency and customer service levels.
The new Reno facility went live in September 2012 but this is not the end of the partnership between Urban and Vanderlande. “Their life cycle management approach is very appealing to customers like us, looking for a one-stop shop,” says McKinney.