In its second-largest acquisition, Amazon buys the company for $970 million.
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More retailers are forgoing quickly deployed broad IT projects in favor of smaller, phased deployments, says Allen, the Aberdeen analyst. This prevents them from taking on more than they can handle and allows them to better control their strategic direction with technology projects that, if implemented too broadly, would be unlikely to show a quick return on investment. “A phased approach not only generates tangible benefits more quickly, but can also wring value out of separate phases of projects,” he says.
Moreover, the gradual deployment of supply chain projects is more suited to support preferred business processes-such as the way a retailer wants to receive product and shipment data from suppliers-so that the new technology system is made to fit the way management wants a business to operate, instead of the other way around.
In fact, a number of retailers are focusing on particular supply chain problems as a way of supporting their preferred processes while laying the groundwork for broader systems or as a way of adding new phases onto existing ones. At Urban Outfitters Inc., which like Neiman Marcus relies heavily on getting trendy merchandise delivered quickly to stores to satisfy its fashion-conscious, though younger, shoppers, director of distribution Ken McKinney says he’s adding web-based supply chain visibility to a mixture of inventory management and pack-and-ship systems.
Urban Outfitters expects to cut by 10% the number of inbound cartons processed in its warehouse, helping to move fashions faster to stores while opening up more warehouse space for a wider inventory, McKinney says. “That will be a significant savings of cost and time and it will buy us extra space in our warehouse,” he says.
The multi-channel retailer currently runs its distribution center’s receiving operations with a pack-and-ship system from AL Systems Inc. and a software suite from Island Pacific that provides information on inventory levels, store sell-throughs and store product allocations. The overall system organizes how shipments get forwarded to individual stores, but a lack of real-time visibility into suppliers’ advanced ship notices limits the degree to which Urban Outfitters can consolidate shipments to stores, McKinney says.
Without visibility into which products will arrive at the distribution center and when, the company must process each inbound carton for re-shipment to individual stores-resulting in a slower process that gets apparel and accessories in stores later than merchandisers-and often impatient customers-want. Like all fashion retailers, particularly those that cater to younger consumers who may have yet to forge a tie with a single brand, Urban Outfitters knows shoppers may be quick to look in other boutiques for those stretch jeans or platform shoes.
That’s why McKinney plans to implement a web-based system that would enable Urban Outfitters to receive real-time electronic updates of advance shipment notices, providing distribution centers with the ability to better consolidate inbound shipments into store deliveries. The data from web-based ASNs would be added to the Island Pacific inventory management and store allocation applications. McKinney says this will enable the distribution center to cross-dock or forward about 10% of inbound cartons directly to stores without having to break them down for re-shipment based on the different demands of individual stores. “We want to be able to just slap a label on a carton as it arrives at the DC and send it to a store,” he says. “That will save us labor and warehouse space.”
He adds that Urban Outfitters could arrange to have suppliers attach specific store shipment labels on some cartons before they arrive at the distribution center, but that the retailer prefers to attach store shipment labels itself after checking updated sell-through data from each store. “We want to utilize the latest sell-though information, so we can forward cartons to the stores that need them,” he says.
Urban Outfitters, which expects to do $500 million in sales this year, operates more than 90 retail stores and separate catalogs and web sites for its Urban Outfitters and Anthropologie brands of apparel and housewares.
When it comes to keeping merchandise fresh, of course, no retailers struggle more than food merchants-an issue that is bringing more of them into web-based systems that help them overcome problems in getting products with short lifespans into their chains.
The Kroger Co., which operates more than 2,400 supermarkets and department stores in several chains across 32 states, needed better ways of organizing deliveries to its distribution centers. Kroger receives products through three types of freight operations: freight it owns and manages itself, freight managed by manufacturers and freight managed by third-party logistics providers.
But it wanted to replace its old way of relying on a mixture of communication methods to see exactly who was shipping what and when it was likely to arrive because such methods often result in a retailer realizing too late that an expected shipment of 10,000 cans of soda pop is coming in at only 4,000 for the Fourth of July weekend, leaving it little time to order replacement stock.
Kroger wanted a centralized system that could see into the operations of all three freight systems simultaneously. Not only could it then better plan for any disruptions to supplies due to problems such as stalled trucks or inaccurate shipping labels, it could also see which freight operation was the most efficient. In some cases, other freight operations would be able to re-submit lower bids to fill their unused capacity. “They want to be able to select the right carriers at the right price,” says Jerry Overcash, executive vice president and COO of Elogex Inc., the provider of Kroger’s web-based logistics system.
Earlier this year, Kroger began implementing the Elogex OneNetwork, a web-based logistics planning and execution system. The OneNetwork is a hosted application that lets Kroger as well as its suppliers and shippers view real-time information on shipments.