DC Makeovers

News
DC performance is vital as VF Corp., owner of Lucy Activewear, expects to grow the chain to 300 stores and increase directto-consumer sales from 18% of revenues in 2007 to 22% by 2012.

As retailers ramp up for the 2008 peak season, the spotlight is on distribution center (DC) efficiencies. Although automated processes yield amazing efficiencies, one size, one solution, hardly fits all.

Warehouse + workforce management: Like U.S.-based department stores, the success of London-based John Lewis department stores hinges largely on Christmas-season sales. An estimated 40% of revenues at the retailer’s 26 stores come from peak-holiday shopping.

Prior to the 2007 holiday season, the John Lewis DC in Northampton, England, implemented warehouse- and workforce-management solutions (WMS) from RedPrairie, Waukesha, Wis. Subsequently, sales for the 2008 fiscal year, which ended Jan. 26, were up 5.6% over the preceding year to ?2.8 billion. December sales were 6.4% ahead of 2006, attributed in part to the fact that output at the Northampton DC soared to all-time highs in the 11 days preceding Christmas.

On the warehouse-management side, put-away time was reduced from 28 hours to less than four hours and voice-directed technologies improved picking by 40%. In-stock positioning at the stores was also improved because shipping lead times were cut from 51 hours to 38 hours.

The workforce-management solution equipped John Lewis to automate time and attendance, and analyze performance. During the 2007 peak season, Northampton’s worker productivity increased 16% over the 2006 season while labor costs decreased 8%.

In a prepared statement, Dino Rocos, managing director, distribution of John Lewis, said, “Workforce management provides accurate, real-time intelligence that helps us measure productivity and transform performance through agile, accountable operating practices.”

John Lewis has announced it will implement the warehouse and workforce-management solutions at its remaining five DCs later this year.

Put-to-light replaces paper: Retailers don’t have to implement comprehensive WMS packages to achieve improved efficiencies.

Lucy Activewear, which operates 63 stores in 15 states and an e-commerce site, needed to replace the manual, paper-intensive picking processes in its DC, which along with the company headquarters is in Portland, Ore.

Two years ago, the retailer had 30 stores and an aggressive expansion plan to grow its store presence and its online sales. Associates were manually picking one store’s inventory at a time, which required multiple trips through the 40,000-sq.-ft. DC. It was evident that the growth in stores and sales volumes would increase demand for DC throughput far beyond the retailer’s manual capacity.

In addition to paper-intensive picking processes, the DC had no sortation equipment and minimal conveyors, approximately 300 linear ft. between the packing and shipping stations.

The Lucy stores carry 2,000 to 2,200 SKUs, receive new merchandise twice a month and replenish inventory weekly. Eighty percent of products are cross-docked through the DC to stores, but the remaining 20% have to be stored and then picked from the DC inventory.

Lucy Activewear implemented a put-to-light system from Dematic, Grand Rapids, Mich., that has allowed it to put items for all store locations in a single wave, with the online orders also treated as one store.

In lieu of a more expensive warehouse-management system, Lucy Activewear chose a Dematic software program, which runs the put-to-light system, generates picking lists, manages wave picking and creates tracking reports.

A number of improvements have resulted from the conversion to automation, such as the ability to pick store inventories based on selected styles, colors and sizes.

Barbara Bones, Lucy Activewear’s director of distribution and fulfillment, noted in a Dematic report, “Making the shift from manual, single-store picking to picking in waves has shown a 400% improvement in time for processing orders in the picking process, and the putting system has improved speeds by 100%.”

Overall, the new systems have decreased the throughput time for order processing at the Lucy Activewear DC by a full day.