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Transcript of Brian Shepherd
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8/6/2019 Brian Shepherd
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Accelerating Order Fulfillment and Profits
through Material Handling
Brian ShepherdMajor Systems Sales Manager
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Online Order Fulfillment RequiresSupply Chain Responsiveness
Key Online Order Performance Parameters
Inventory management
Order management
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Supply Chain Responsiveness
Inventory Management Performance Metrics
Cost-efficient fulfillment of orders from in-stockinventories
No bulk storage everything goes to a pickablelocation directly from receiving
Order Management Performance Metrics
Cost-efficient transport of product to/from DCinventory locations
Reduced wait times
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Zappos.comA Study inResponsiveness
Founded in 1999 byentrepreneur, NickSwinmurn
Dissatisfied with
traditional retail outlets
Opportunity: $40 billionfootwear market$2billion via mail order
Key differentiator:selection and servicethat Wows customers
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Zappos.com Vision
One day, 30% of all retail transactions inthe US will be online
People will buy from the company with the
best service and the best selection
Zappos will be that company
A service company that happens to sell
shoes (and eventually, any category)
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The Zappos.com Business Model
Direct-to-consumeronline retailer
Competing with the storeexperience
Zappos shoppersexperience the Wowfactor
The best shoe selectionanywhereover 2 millionpairs in stock
Free next-day shipping
365-day return policy
110% price protection
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Responsiveness Leads to RapidGrowth
Zappos gross merchandise sales
1999: Almost nothing
2000: $1.6M
2001: $ 8.6M
2002: $ 32M
2003: $ 70M
2004: $184M
2005: $370M
New DC project launch
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A New Fulfillment System toAccommodate Rapid Growth
A New Fulfillment System toAccommodate Rapid Growth
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2005 Reality Check: Old DCInadequate
Conveyor-fed, primarily manual orderfulfillment
SKUs picked from paper lists
No growth potential to handle futurevolume forecasts
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Objective: A Fulfillment System toAccommodate Rapid Growth
Move fulfillment operations into a461,000-square-foot section of an800,000-square-foot DC
New material handling andfulfillment system to automate
processes Decrease order cycle time to handle
the volumes required for thecompanys rapid growth
Support the wow factor thatZappos promises to all of itscustomers, e.g., extensive liveinventory, next-day delivery
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Challenge
Design and build order fulfillment systemfrom scratch
Overcome learning curve for personnel who
have never worked in a high-volume,automated environment
All new styles must be photographed foronline store
Ability to process an order in one hour orless
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Solution
End-to-end, integratedsystem for fast,optimized orderfulfillment
Automated receiving,presort, put-away,picking, packing andshipping
Overlapping receivingand shipping systems
Dedicated returnssystem
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Solution
Design by globalconsulting firm, Arup
Integration andinstallation by FKILogistex
Static-racking systemstores each SKU inpickable location
Built-in photo studio toshoot new products upon
receipt Extensive in-house
customer service andwarehouse training forevery new hire
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Result: Wow
5-hour average cycle time from orderreceipt to loading onto truck
Ability to process an order in under an hour
All orders received by 8 p.m. are on thetruck for next-day shipping
Orders processed, packaged, shipped, and
delivered in less than a day
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The What Behind the Wow
Zappos.com Distribution Center
Shepherdsville, KY System Review
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Design Consideration
Design Based on Goals and Criteria Provided
Expandability / Flexibility
System Availability / Reliability
Simplicity of Design & Technology
Order Accuracy / Speed of Delivery
Ease of Implementation
Ergonomics
Noise Abatement
Minimize Labor Requirements
Reduce Distribution Cost
Shipping Efficiency / Flexibility
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Zappos DC System Layout
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System Components
High-speed induction andmerging
Four high-speed FKI LogistexUniSort XV sliding shoesorters
Seven UniSort IV pop-upwheel sorters
9,000 feet FKI LogistexAccuglide live-rolleraccumulation conveyor
8,000 feet FKI Logistex belt
conveyor 1,300 feet FKI Logistex
Accuzone 24-volt motorizedroller conveyor
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System Components
Truck unloaders
Truck loaders
Racking System
Warehouse Optimizersoftware
Answer SystemHuman-MachineInterface Software
(HMI)
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System Operation Overview Receiving
At receiving docks, cartons are unloaded usingautomated truck unloaders
Cartons then placed on conveyor and routed toreceiving unpack stations or returns unpack
stations
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System Operation Overview Storage
From Receiving Stations,SKUs are routed to shrinkwrapping lanes by a high-speed FKI LogistexUniSort XV sortation
system
Packages then redirectedto another UniSort XV forput-away to storagelocations
New merchandise routedto full-service photo lab
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System Operation Overview Order Picking & Packing
Orders picked from storage locations
Routed via high-speed FKI Logistex UniSort XVsliding shoe sortation system to packing areas
SKUS distributed to single- or multi-pack area
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System Operation Overview Shipping
Completed packages routed to Print-and-ApplyModules for labeling
Ready-to-ship packages sorted by UniSort XV at+100 cpm to shipping lane, conveyed to truck via
truck loaders
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System Operation Overview Software & Controls
FKI Logistex Warehouse Optimizer softwaredrives system
Integrated with existing, home-grownwarehouse management system (WMS)
FKI Logistex Answer System monitors alarmsor jams; provides productivity information
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Results?
Record daily shipments 2006/2007 holiday season
42,000 peak daily shipments (twice previous peak)
Reduced distribution and labor costs
Record-low order cycle times 1-5 hours
Keeping ahead of astronomical growth
Repeat customers account for approx. 50% ofdaily sales
20% of daily new customers via referrals
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Return on Investment?
1999: Almost nothing
2000: $1.6M
2001: $8.6M
2002: $32M
2003: $70M
2004: $184M
2005: $370M 2006: $597M
2007: $800M(projected)
Zappos.com gross merchandise sales growth
Zappos.com gross merchandise sales
0
100
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300
400
500
600
700
800
900
1 99 9 2 00 0 2 00 1 2 00 2 2 00 3 2 00 4 2 00 5 2 00 6 2 00 7
Year
Sales(inmillionsofdollars)
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Built to Handle Future Growth
Utilizing 416,000 square feet of 800,000square feet building
Many pre-built divert points for future
expansion
Receiving platform only 2/3 built
Singles pack area scalable to 2009 future
demand
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Zappos.com and FKI Logistex APerfect Fit
Automated material handling solutions wowZappos.com
Zappos.com service wowing more customers
The wow factor is very important to us and tothe success of our business. Offering the bestservice and selection while getting our goods tothe consumer as quickly as possible is the onlyway to compete with the store experience.
- Vice President of FulfillmentOperations, Zappos.com
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For More Information
www.fkilogistex.com
Tel +1 877 935 4564
FKI Logistex de Mexico, S.A. de C.V.Avenida Homero 1343, Piso 3Colonia Los Morales, Seccion Palmas
MexicoD.F. 11540Mexicophone: +52 55 5281 5376fax: +52 55 5281 8109