Presented by:

Art Eldred, Vargo Companies

Dan Perry, Vargo Companies

One Inventory, One

Engine, One Labor

Force - True

Omnichannel

fulfillment centers

have arrived

Sponsored by:

© 2015 MHI® Copyright claimed for audiovisual works and

sound recordings of seminar sessions. All rights reserved.

Fulfillment: Retail ≠ eCommerce Retail eCommerce

Desired Order Cycle Time Daily Hourly Order Planning Window Daily Minutes

Errors Correctable Costly SKUs/Order 1000's 1-10's Items/Order 10,000's 1's Cases/Order 1000's 0's

Daily Destinations 1-100's 10,000's+ Peak "Peak" Period 3-5 Weeks 3-5 Days

Daily Orders 100's 10,000's

Value Added Services Ticketing?

Security Tagging?

Gift Wrap Gift w/purchase

Packing 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

Supplier Distribution Center DC

Supplier Fulfillment Center FC

Distribution Center DC

Supplier Omnichannel DC

Retail Store

Home

Home

Retail Store

Retail Store

Distribution Growth & Fulfillment Service Needs

3

2

4 5

1 6

Distribution Center Growth Fulfillment Center Service Needs

Source: U.S. Census Bureau 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

June-

wk1

June-

wk2

June-

wk3

June-

wk4

July-

wk1

July-

wk2

July-

wk3

July-

wk4

Aug-

wk1

Aug-

wk2

Aug-

wk3

Aug-

wk4

Aug-

wk5

Sept-

wk1

Sept-

wk2

Sept-

wk3

Sept-

wk4

Oct -wk1

Oct -wk2

Oct -wk3

Oct -wk4

Nov-

wk1

Nov-

wk2

Nov-

wk3

Nov-

wk4

Nov-

wk5

Dec-

wk1

Dec-

wk2

Dec-

wk3

Dec-

wk4

Jan -wk1

Jan -wk2

Jan -wk3

Jan -wk4

DTC Retail

4 Months PEAK Labor

2-4 Weeks PEAK Labor

Challenges • One Inventory

• Information Systems

• Product Configurations

• Current Infrastructure

Inventory Challenges

Receive Store Fulfillment

Ship

VAS Processing

Storage Challenges

Reserve Velocity Based Slotting

All Active

VS

12

Omnichannel: Ready-Active Storage

4/14/2015 Vargo - Confidential

Pre-Omni Order Processing

Ord

er C

ut-

Off

Stores 15-24 Ecom Order Store 7-14 Stores 1-6

Ecom Order

Retail ORDER POOL

eCommerce ORDER POOL

8AM – 10PM 24 Hrs- After 6PM Heaviest

Shipping Cut-Off

Retail Wave #4

Retail Wave #3

eCom Expedited Wave #2

Retail Wave #1

Retail Wave #5

The Pitfall of Waving

Omnichannel Fulfillment Engine

“Wave-less” Continuous Processing

Ord

er C

ut-

Off

B2C Orders Retail Orders

Store 1 Pieces 1-50

Ecom Order

Store 2 Pieces 50-76

Ecom Expedited Order

Ecom Order

COMMON ORDER POOL

Shipping Cut-Off

The Benefit of “Lean”

LMS

WCS

Item

Sorter

Retail WMS

Pick to

Light

Put to

Store

WCS

Shipping

Sorter

Label

Print

Applicator

Case Pick

ERP & Order Management

TMSLMS

WCS

Item

Sorter

eCommerce WMS

Pick to

Light

Put to

Store

WCS

Shipping

Sorter

Label

Print

Applicator

Case Pick

ERP, Order Management, eCommerce

TMS

Order Management

ERP

Warehouse

Management System

Intelligent

Warehouse Control System

LMS

WCS

Item

Sorter

WMS

Pick to

Light

Put to

Store

WCS

Shipping

Sorter

Label

Print

Applicator

Case Pick

ERP, Order Management, eCommerce

TMS

Intelligent WCS

Order & Inventory Intelligence w/Ability to Balance Work

Across Both Machines and People for All Channels

WORK PULLED TO AVAILABLE PEOPLE & MACHINES

Sort #1 to Put-Walls - Ecom Sorter #1 to Put-Walls Expedite Sorter #2 to Retail Put to Store

Singles – Case Pick

Ecom Rush Wave #14

Wave #13

Wave #12

Wave #11

Autowaving Via the WES

18

Sort #1 to Put-Walls - Ecom Sorter #1 to Put-Walls Expedite Sorter #2 to Retail Put-To-Store

Singles – Case Pick

Fulfillment Center Workflows

30m 2hrs 1.5hrs 2hrs

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

10

m

WES

WES

New Omni-channel Case Study

A

B

C

D

E

G

H

J

K

L

M

N

B

C

B

Receiving

Reserve

Pallet Build

Empty Tote Return

DTC Prepped Ready Inventory

Retail Ready Inventory

Unit Sorter Induction

Pre-Sorter

Cross-Dock

Parcel Shipping

DTC Packing Sorter

Put-To-Store

Case Shipping (TL/LTL)

N

M

H G

K D

B

L

J

E

E E E E E E E E E

A

Real Benefits • Reduce Capital

– Buildings

– Automation

– Infrastructures

• 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: aeldred@vargomail.com

Speaker #2: Dan Perry

Senior Engineer

email: dperry@vargomail.com

Website: www.vargosolutions.com

Or visit ProMat 2015 Booth #3963