Centralizing fulfillment

by DailyBriefers
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The hyperacceleration of e-commerce activity over the past few years has led many companies to shift their fulfillment strategy in search of the perfect omnichannel model—a framework that will allow them to efficiently fill retail, wholesale, and direct-to-consumer orders from a single location, all at the same time. It’s no easy feat, but sports company Puma is making good on the challenge, merging the operations of 22 distribution centers (DCs) across Europe into one site that serves all of its customers throughout the region.

“The key [to this project] was the consolidation of 20-plus DCs—the consolidation of multiple channels—into a single DC in Europe,” explains Chad Zollman, chief sales officer, North America, for systems integrator TGW, which developed and installed the automated order fulfillment system that powers Puma’s new Geiselwind, Germany, omnichannel DC. “That was the challenge [presented to] the solutions team and what we had to solve for. That, in itself, was quite an undertaking.”

The nearly 700,000-square-foot DC went live this past spring. It boasts a shipping volume of up to 74 million items per year and the flexibility to handle fluctuating volume across all three high-growth channels.

“It is difficult for Puma to predict how the individual orders will break down across channels on any given day, which [makes] it important for the fulfillment solution to be extremely flexible,” says Maximilian Molkenthin, senior head of logistics at Puma Group. “Therefore, one of the most important design criteria was a high degree of automation to make it possible to react quickly to changes in the order structures—and to do so with consistently high quality.”

Here’s a look at how Puma and TGW are tackling today’s omnichannel fulfillment challenge.

AUTOMATING FOR FLEXIBILITY AND SPEED

Prior to launching its omnichannel DC, Puma operated a decentralized distribution network, with separate, local DCs each for retail/wholesale orders and for direct-to-consumer orders. High inventory levels and the costs associated with this setup prompted company leaders to seek a solution that could handle both B2B (business-to-business) and B2C (business-to-consumer) orders in one centralized facility. Essentially, a consolidated approach would streamline inventory and address the rising costs associated with processing a wide variety of orders across multiple DCs. To accomplish this, Puma needed a system that was flexible, fast, and highly automated.

The centerpiece of the DC is TGW’s FlashPick goods-to-person order fulfillment system for single-piece picking. The system is flexible in that it allows workers to fill orders independently of the order structure—that is, workers can fill e-commerce orders and retail orders in the same workflow. It also allows the facility to scale up or down based on fluctuations in volume. The Geiselwind DC features 27 pick stations that can be turned off or on depending on order volume through the facility.

Puma leaders describe FlashPick as the “powerhouse” of the end-to-end fulfillment solution. It includes a shuttle warehouse that’s as large as nine soccer fields and features more than 700,000 storage locations for shoes, apparel, and fashion accessories. Five hundred shuttles automatically retrieve cartons from their storage locations and feed the pick stations. The system uses more than 13 miles of energy-efficient conveyors to make sure the goods arrive at the right place safely and on time. In all, order processing takes just 10 minutes on average.

The mechanics of the automated end-to-end solution promote a smooth workflow: The shuttle system retrieves the goods automatically and supplies the manual picking workstations. From there, the operator picks goods directly into cartons or totes for further processing. After the pick, the goods are returned to storage in the shuttle system, while the order is sent to the shipping or packaging area. At shipping, orders are either sent directly to trucks using outbound sorters or dispatched to a shuttle buffer for temporary storage. The shuttle buffer is connected to palletizing robots that assemble mixed cartons on pallets for retail orders.

GETTING BETTER … AND BIGGER

The Puma project represents a trend toward more sophisticated and sizable order fulfillment systems, according to Zollman. At 713,000 storage locations and capable of processing 18,000 totes per hour, Puma’s Geiselwind DC is one of TGW’s largest FlashPick installations worldwide. Some of the company’s biggest installations are in the United States, including at fashion retailer Urban Outfitters, which has an 880,000-square-foot facility that includes nearly 50 pick stations. 

FlashPick’s flexibility is the main attraction for these large retailers, Zollman adds. A standard system configuration processes 6,000 totes per hour, referred to as a “6K” system, and clients can scale up by adding capacity in increments of 3K. Pick stations can be augmented with robotic piece-picking modules as well.

“We’ve seen our project size steadily increase over the past three years,” Zollman says. “The size [of the Puma project] is not an anomaly. It’s more the norm of what we are seeing, and it’s because FlashPick can be scaled to any required size. The system is not limited to any throughput requirements and can be applied to any business model.”

Zollman says the size and scope of such projects will soon become the standard in automated order fulfillment.

“Labor scarcity and [demands for] increased service levels, higher productivity, and flexibility across the channels require long-term thinking. This translates into planning proper investments on integrated end-to-end solutions, instead of smaller system upgrades or ‘islands of automation,’ as we call it,” he says. “At full scale, it’s not just dipping your toe in the water for automation. The rewards of this longer return-on-investment [type of project] always exceed the expectation.”

Sustainability matters

Sports brand Puma took environmental sustainability to heart when building its omnichannel distribution center in Geiselwind, Germany. The facility, which replaces a decentralized network of 22 DCs across Europe, is a carbon-neutral fulfillment hub, certified in accordance with the U.S. LEED (Leadership in Energy and Environmental Design) Gold standard. Features include an optimally insulated building and the use of green electricity as well as energy-efficient material handling equipment—including high-performance roller conveyors that reduce energy consumption by up to 30% compared with conventional conveyor systems. Plans also call for the installation of a photovoltaic energy system. The $240 million investment is a testament to innovation, company leaders say. “Fast and sustainable logistics—that’s what Geiselwind is about,” says Maximilian Molkenthin, senior head of logistics for Puma SE.

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