One Inventory, One
Engine, One Labor
Force - True
Omnichannel
fulfillment centers
have arrived
Sponsored by:
Presented by:
Art Eldred, Vargo Companies
Dan Perry, Vargo Companies
© 2015 MHI®
Copyright claimed for audiovisual works and
sound recordings of seminar sessions. All rights reserved.
Fulfillment: Retail ≠ eCommerce
Desired Order Cycle Time
Order Planning Window
Errors
SKUs/Order
Items/Order
Cases/Order
Daily Destinations
Peak "Peak" Period
Daily Orders
Value Added Services
Retail
Daily
Daily
Correctable
1000's
10,000's
1000's
1-100's
3-5 Weeks
100's
eCommerce
Hourly
Minutes
Costly
1-10's
1's
0's
10,000's+
3-5 Days
10,000's
Gift Wrap
Gift w/purchase
Ticketing?
Packing
Security Tagging?
Marketing Collateral
Pack Slips
What does Omni-channel really mean to the
fulfillment center?
Definitions vary, but for purposes of this seminar,
we'll use the term to refer to a retailers' efforts to
integrate their store and e-commerce selling
channels to work seamlessly together inside the
fours walls of a single distribution center.
 One Inventory
 One Fulfillment Engine
 Multiple Order & Product Flows
Evolution of the fulfillment center
Supplier
Distribution Center DC
Retail Store
Supplier
Supplier
Distribution Center DC
Fulfillment Center FC
Retail Store
Home
Home
Supplier
Omnichannel DC
Retail Store
Distribution Growth & Fulfillment Service Needs
Fulfillment Center Service Needs
Distribution Center Growth
1
6
2
3
4
Source: U.S. Census Bureau
5
Source: UPS
What are the benefits of one Omnichannel FC?
•
•
•
•
Speed to Market
Labor
Profit
Infrastructure
– Inventory
– Systems
– Facilities
– Administration
SPEED
LIMIT
AS FAST
AS YOU
CAN!
Retail & DTC PEAKS
4 Months
PEAK Labor
2-4 Weeks
PEAK Labor
June June June June July July July July Aug Aug Aug Aug Aug Sept Sept Sept Sept Oct - Oct - Oct - Oct - Nov Nov Nov Nov Nov Dec Dec Dec Dec Jan - Jan - Jan - Jan - wk1 wk2 wk3 wk4 - wk1 wk2 wk3 wk4
wk1 wk2 wk3 wk4 wk1 wk2 wk3 wk4 wk1 wk2 wk3 wk4 wk5 wk1 wk2 wk3 wk4
wk1 wk2 wk3 wk4 wk5 wk1 wk2 wk3 wk4
DTC
Retail
•
•
•
•
Challenges
One Inventory
Information Systems
Product Configurations
Current Infrastructure
Inventory Challenges
Receive
Store
Fulfillment
VAS Processing
Ship
Storage Challenges
Velocity Based Slotting
Reserve
VS
All Active
Omnichannel: Ready-Active Storage
12
4/14/2015
Vargo - Confidential
Pre-Omni Order Processing
eCommerce
ORDER POOL
Retail
ORDER POOL
8AM – 10PM
Retail
Wave #5
Ecom
Order
Store 7-14
Retail
Wave #4
Ecom
Order
Stores 15-24
Order Cut-Off
Stores 1-6
24 Hrs- After 6PM Heaviest
Retail
Wave #3
eCom Expedited
Wave #2
Retail
Wave #1
Shipping
Cut-Off
The Pitfall of Waving
Omnichannel Fulfillment Engine
COMMON
ORDER POOL
Store 1
Pieces 1-50
Ecom
Order
Ecom
Order
Store 2
Pieces 50-76
B2C Orders
Ecom Expedited
Order
“Wave-less” Continuous Processing
Order Cut-Off
Retail Orders
Shipping
Cut-Off
The Benefit of “Lean”
ERP,
Management,
eCommerce
ERP &
Order Management
ERP,Order
Order
Management,
eCommerce
Order
Management
ERP
Warehouse
Management
System
Intelligent
Warehouse
Control
System
LMS
LMS
WMS
Retail
WMS
eCommerce
WMS
TMS
TMS
Intelligent WCS
Order & Inventory Intelligence w/Ability to Balance Work
Across Both Machines and People for All Channels
Put to
Store
Put to
Store
WCSWORK PULLED TO AVAILABLE PEOPLE
WCS & MACHINES
Label
Pick to
Item
Shipping
Case Pick
Print
Light
WCS
WCS
Label
Sorter
Sorter
Applicator
Pick to
Item
Shipping Case Pick
Print
Light
Sorter
Sorter
Applicator
Autowaving Via the WES
Ecom
Rush
Wave
#14
Wave
#13
Wave
#12
Wave
#11
30m
2hrs
1.5hrs
2hrs
WES
Sort #1 to Put-Walls - Ecom
Sorter #1 to Put-Walls Expedite
Sorter #2 to Retail Put to Store
Singles – Case Pick
10m
10m
10m
10m
10m
10m
10m
10m
10m
10m
10m
10m
10m
10m
10m
Fulfillment Center
Workflows
WES
Sort #1 to Put-Walls - Ecom
Sorter #1 to Put-Walls Expedite
Sorter #2 to Retail Put-To-Store
Singles – Case Pick
18
New Omni-channel Case Study
J
H
G
B
B
E
E
E
E
E
E
E
E
E
B
M
C
L
A
D
A
Receiving
B
Reserve
C
Pallet Build
D
Empty Tote Return
G
DTC Prepped Ready
Inventory
Retail Ready
Inventory
Unit Sorter Induction
H
Pre-Sorter
E
E
K
J
Cross-Dock
K
Parcel Shipping
L
DTC Packing Sorter
M
Put-To-Store
N
Case Shipping (TL/LTL)
N
• Reduce Capital
– Buildings
– Automation
– Infrastructures
Real Benefits
• Reduce OPEX
– Inventory
– Labor
– Facilities
•
Flexibility
– Dynamically react to product flow in the shortest period of time
•
Higher Margins
–
Inventory can Match the Demand
What Can WES do for you?
http://www.mmh.com/article/what_can_wes_do_for_you
WCS Drives Higher Profitability through
Synchronized Pick, Pack & Ship Omni-Channel
Fulfillment
http://www.supplychain247.com/article/wcs_drives_higher_
profitability_through_synchronized_pick_pack
For More Information:
Speaker #1: Art Eldred
Client Executive, Systems Engineering
Speaker email: [email protected]
Speaker #2: Dan Perry
Senior Engineer
email: [email protected]
Website: www.vargosolutions.com
Or visit ProMat 2015 Booth #3963