Apparel retailer Urban Outfitters Inc. is increasing its warehouse picking speed and shipping online orders faster thanks to a warehouse management system upgrade, said Mike Sparks, manager of supply chain systems and information technology at Urban Outfitters, at the Manhattan Associates Momentum Conference in Phoenix in May.
Urban Outfitters, which includes apparel brands Free People and Anthropologie and wedding brand BHLDN, knew it was shipping online orders to shoppers faster than its promised five to seven days, but it wasn’t sure how much faster and couldn’t confidently promise a faster delivery date, which it knew shoppers would appreciate.
It also knew that its warehousing system needed an overhaul if online orders kept increasing at the rate they were, which was roughly 20% a year for the past few years, Sparks said.
“The move to digital is just massive,” Sparks said. “It’s putting a lot of pressure on our centers. When we hit peak season sales, with that kind of volume, it was proving to be difficult,” he said about picking ecommerce orders alongside store replenishment.
For ecommerce orders, Urban Outfitters has three primary fulfillment centers—one on the East Coast in Gap, Pennsylvania, one on the West Coast in Reno, Nevada, and one in the U.K. It also uses two third-party logistic facilities to support online furniture orders—in High Point, North Carolina and in Los Angeles.
Why Urban Outfitters chose Manhattan Associates
Urban Outfitters vetted one vendor that exclusively worked on warehouse execution systems. After the vendor looked at Urban Outfitters’ current operations, it said it could improve the retailer’s throughput (or how fast orders are shipped out of its warehouse) by 30-40%, but it would take four years to overhaul the system. Urban Outfitters did not want to wait four years and, instead, reached out to Manhattan Associates, which it already used for other aspects of its warehouse operations.
After Manhattan Associates looked at Urban Outfitters’ system, it said it could provide the same kind of benefits as the other vendor—except it would only take about a year and cost less than $1 million to implement, which was less expensive than the other vendor, Sparks said.
The retailer selected Manhattan Associates’ order streaming and dynamic chute operation software and piloted it at its East Coast fulfillment center.
The upgrade involved switching its warehouse system from “wave” picking to “order streaming.” In the traditional wave system, the warehouse software releases all the orders that need to get picked that day at one time—in a wave—and the warehouse employees pick and pack for four, six or eight hours, however long it takes, says Chris Shaw, director of product marketing at Manhattan Associates. If an ecommerce order comes in during this time and the shopper who placed the order has selected rush shipping, there is no way to stop this process and prioritize this one order until the wave is complete.
With order streaming, the warehouse systems doesn’t pick in waves; instead, the software analyzes the orders coming in, the must-ship-by dates, available chutes for picking products and available labor and then prioritizes which orders are picked first, Shaw says.
For Urban Outfitters, this approach allows it to better prioritize orders as it picks store and ecommerce orders simultaneously in the warehouse. The retailer implemented order streaming in October 2018 for about 20% of its ecommerce orders at its East Coast fulfillment center for online orders via UrbanOutfitters.com, FreePeople.com, Anthropologie.com and its BHLDN.com wedding brand. It plans for 100% of its orders in this facility to use the order streaming in June, Sparks said.
Urban Outfitters’ results from order streaming
With the upgrade, Urban Outfitters increased its order throughput by 32%, which means the distribution center ships orders 32% faster on average from the time they enter its system to the time they leave the distribution center. Brian Rosenbaum, senior manager of North America centralized planning at Urban Outfitters, says it now takes Urban Outfitters 40 hours to get an ecommerce order picked, packed and out its door, compared with its previous 59-hour average.
The new system also allows the warehouse to pick more orders per day. On average, the center can now pick 62,500 orders with order streaming, up from 55,000 orders per day with wave picking, the retailer says.
The efficiencies will become even more apparent during peak seasons, Rosenbaum says. During the holiday season, Urban Outfitters may hire 900 seasonal employees for its warehouse, and it is hoping that it can reduce that by 20% this year with the new system, he says.
With its warehouse system now operating more efficiently, Urban Outfitters can let web shoppers know at checkout what date they can expect their package, as opposed to the generic “five to seven days from now.” Showing the exact date required Urban Outfitters to expose its store-level inventory to its ecommerce system. Previously, if a nearby store was fulfilling the order at a faster rate than the warehouse, the back-end system would default to five to seven days. Now, the system will know where the product is coming from and, regardless if it is the store or warehouse, it can promise a defined delivery date to the customer.
Urban Outfitters’ store growth and international expansion plans
For its store expansion plans, the retailer aims to keep it at a sustainable level, Sparks said. “We don’t want to over-saturate in any market,” he said.
Across all of its brands, Urban Outfitters operates 609 stores. It has 245 Urban Outfitters brand stores, and the retailer will likely not open any more stores under its flagship brand in the U.S. anytime soon. And at 228 stores, Anthropologie also is “getting to its limit,” Sparks said. Although with 136 stores, its Free People brands still has room to open more stores, he said.
“Our opportunities are going to exist in Europe and Asia,” said Sparks of growth.
Urban Outfitters plans to open a franchise store in China soon, said Brain Horton, global supply chain, senior manager, international. The brand has a handful of franchisee-owned stores across the globe. The franchisee approach works well in international markets where local employees familiar with each market run the operation, he said.
Urban Outfitters is No. 46 in the Internet Retailer 2019 Top 500.