Fashion has been one of the big hits of online shopping, but for the retailer the cost of getting the goods to the customer and then dealing with the returns is a significant issue. Malory Davies looks at how automation can reduce the cost to serve.
The growth of online shopping might offer new opportunities for fashion retailers, but it is also forcing them to look hard at how they manage their supply chains. Logistics systems designed to serve a network of stores are generally ill-equipped to handle single item orders for home delivery. And that has implications for both service quality and cost to serve.
Major retailers such as John Lewis and Marks & Spencer have implemented sophisticated automated systems, but to what extent are such systems appropriate for smaller operations or further back along the supply chain?
Online sales represented 17.4 per cent of total non-food sales, up from 16.2 per cent in May 2014, according to the latest Online Retail Sales Monitor from the British Retail Consortium and KPMG.
Online sales of non-food products are continuing to grow rapidly – the 12-month average is 11.9 per cent up on a year ago.
As a result, retailers are having to make some hard choices: can existing facilities be modified to handle the online business, or should they add a separate facility to handle the online business; or should they go for a new all-in-one omni-channel operation to handle everything. And nowhere is that challenge more apparent than in fashion retail.
Managing stock across multiple channels is a big challenge in such a fast moving market, and then there is the problem of the high level of returns generated in the online channel.
Catherine Thornley, supply chain consultant at Indigo Software, points out that dramatic seasonal fluctuations are a big issue in the apparel market, and this combined with weekly, daily and hourly fluctuations create interesting challenges for fashion distribution.
“Fluctuations make it hard to recruit and retain suitable warehouse operatives for peak periods in a non-automated warehouse,” she says.
At the same time, product characteristics within the apparel market, especially weight and size make it easy for automated systems to be integrated.
“Full automation can be cost effective for high volume facilities, but for lower volume facilities full automation is not always the answer,” she says.
Stuart Stables, managing director of Dematic Northern Europe, highlights the fact that while you may be picking the same items, the order profiles are very different for store and internet channels. So, how do you suit both requirements?
“The answer does not lie in the automated hardware but in the intelligence of the software. You can’t solve a problem like this with pure mechanics. Automation is part of the requirement when you have scale, but the profiles are so different for each channel that it’s a matter of using innovative, intelligent software which can reduce the need for mechanical equipment such as buffers and sorters,” he says.
Stables says: “Apparel sites are often so large that there is a significant ‘dwell time’ for items passing through an automated system. But to hit the latest possible cut-off, a fast manual process may be required, and so intelligent software is needed to make better decisions on whether to use automation or manual picking – albeit at a higher cost.”
Raffaele Destro of TGW Logistics sees a shift in the application of technologies for the apparel market since the shrinking of batch effect, due to the rise in omni-channel. “This means that solutions based on pure sortation will have less application and solutions based on Pick and Put stations, including Put Walls, will become predominant,” he says.
Thornley points out that hanging garment systems enable delivery of product ready for store display minimising the creasing of garments. However, she says: “Hanging garments automation is still relatively expensive, and often used for higher value delicate items so many warehouses still supply other garments flat packed. Garment sortation is a big issue in the apparel industry, as retail stores decrease stockroom space, suppliers are under increased pressure to deliver stock in the exact sequence for store merchandising. As all customer requirements are different, it’s not as simple as sorting the pick-face layout to suit. Automated sortation systems are therefore something our customers are investigating and investing in.”
The development of the “fast fashion” concept has had a significant impact on the way goods are handled within the warehouse.
“For fast fashion the key is speed, from the design to getting the products onto the shelves before your competitors,” says Thornley. “With fast fashion the traditional spring/summer & autumn/winter seasons goes out of the window. New lines can be introduced in stores every week or even many times a week which often means styles have a very short life cycle – a store will receive an initial order for a particular line and the window for repeat orders could be small, unless it’s a core line. One of the attributes of fast fashion is the turnaround of stock with many thousands of new lines each week. This is a challenge in the distribution centre as a traditional pick-face layout is too cumbersome, therefore automated systems with slotting is key to the speed and success of efficient delivery to store.”
And Destro says: “The birth of the ‘fast fashion’ business model prompted a move towards the abandonment of pick faces and Person-to-Goods solutions in favour of Goods-to-Person systems. Having no pick face is indeed an advantage with high SKU churn eliminating the need for replenishment.
“Fast fashion with its “Initial Allocation” large volumes pushed to the stores used to be the best application for pure Goods-to-Person solutions based on Automated Storage of SKU cartons and unit sortation.
“Today sortation is still effective, although we expect a reduction of the batch effect also in this business model.”
Returns are a major issue in online fashion. The JDA/Centiro study “Customer Pulse 2015” found that 22 per cent of fashion shoppers were buying more than one size or colour of the same item in a typical order; this compares to 29 per cent in 2014. While that is a fall, more than half of respondents (55 per cent) who bought clothes online were still returning a least one item per year. Some 28 per cent were returning one or two items a year, but almost a fifth (17 per cent) were returning three to five items. The study calculated that this is potentially losing UK online fashion retailers up to £3.2billion annually.
“Retailers need to move away from treating returns as simply a cost-recovery exercise, instead they need to adapt their processes to take into account consumers’ ever-changing buying habits. Today, it is common for customers to buy multiple items online with the intention of sending some back. The research clearly shows the returns experience is having an increasing bearing on who consumers shop with online,” says Niklas Hedin, CEO of Centiro.
“Retailers should look at returns as a further opportunity to enhance the customer experience. In the same way that today’s omni-channel environment is allowing consumers to buy items where and when they want, they would like the same flexibility when it comes to returns. This could be returning goods to a store or specifying a location and/or time for a courier pick up. By capturing this information, retailers can start to personalise the returns experience and create more value for the consumer and themselves.”
Strategy: Time for manufacturers to team up?
For many apparel manufacturers, especially where they are focused on niche or luxury brands, automation might not be the best or most cost efficient approach. Indigo’s Catherine Thornley says: “Before investing in automation it’s essential to consider the volume, size and diversity of the order profiles. If you are sending smaller orders to hundreds of stores and a variety of retailer types each with different delivery and value add requirements, it’s very difficult to fully automate efficiently. Instead it may be preferable to introduce a level of automation, which is designed specifically for each requirement.”
Case study: Pocket power drives C&A’s online operation
Dutch Fashion retailer C&A uses Arvato to handle its online orders for several European countries.
The operation, based at Arvato’s distribution centre at Langenhagen near Hanover in northern Germany, uses an automated handling system supplied by Knapp.
When a customer places an order online for either home delivery or ‘click and collect’, the automated solution picks the single items in the warehouse and supplies them in the correct sequence to the packing stations using Knapp’s Pick-it-Easy Pocket matrix sortation system.
This uses bags – the ‘pockets’ – suspended from an overhead conveying system. Items that would fit into a shopping bag, such as shoes, accessories and flat-packed clothing, are picked into the pockets, which are then sequenced by the matrix sorter.
In this process, goods are passed over an integrated scanner for their barcode to be read. The unique article data is allocated to the pocket’s RFID transponder and used to track and identify the item as it travels through the warehouse.
Hanging garments can also be attached to the pockets via a special device. The solution – which can process up to 10,000 items an hour – uses a matrix sorter to ensure that the pockets arrive at the packing stations in the correct sequence to collate each customer’s order.
Returns are checked, repacked and then put back into the system at special goods-in stations. Buffer conveyors transport the pockets to the matrix sorting area, which sorts the returns together with the pockets of other picked goods, with the returned items being given priority for fulfilling customer orders.
The introduction of the Pick-it-Easy Pocket system at the Arvato DC, eliminated the manual sorting processes and walking distances were slashed, to give faster delivery speeds and higher picking performance.
Technology: Software for endless batching
Dematic Group has developed a concept called RapidPut that uses software to remove the need for the high levels of automation normally demanded by e-fulfilment operations. The software creates a dynamic ‘pick and put’ process – which it describes as a wave-less or endless batching system that removes the requirement for sortation equipment.
RapidPut brings together ‘Put Walls’, conveyors and light or voice technology in an integrated solution. The iQ software behind RapidPut considers picking and putting as part of a continuous integrated process, creating a dynamic batching solution without the need for a picking buffer. “The software is the buffer,” says Dematic’s Stuart Stables.
“Intelligence designed into the RapidPut solution continuously monitors resource utilisation and dynamically adjusts and prioritises work orders and flows to reduce cycle time, labour and unit costs,” says Stables.
“This helps to minimise the peaks and valleys associated with traditional wave-based fulfilment solutions,” he says.
Dematic says that depending upon the SKU range and size of the products picked anywhere between 250 and 450 items can be processed per hour.
Dematic has also expanded its portfolio with the acquisition of SDI, which developed the ‘MonaLisa’ pouch sortation system, along with a range of mid to high-speed sorters, and Goods on Hanger solutions.
MonaLisa is a hanging pouch system that enables the carriage of both hanging and flat product in a single pouch. It has proved particularly useful for handling returns.
Case study: One stop shop for e-tailers
Hallett Retail Logistics offers a one-stop-shop for e-tailer needs from its warehouse in Manchester. The 110,000 sq ft warehouse has a three storey pick and pack facility that can service hundreds of e-tailers and which is capable of completing thousands of picks per week, moving them quickly through the system and despatching on the same day if required.
Garment and product processing includes use of the Veit ten chamber steam tunnelling system capable of servicing 3,000 fashion garments per hour. This integrated system can quickly move volumes of garments through the warehouse and is capable of handling high quality garments including leather and other high end fabrics.
To support the operation Hallett implemented the Calidus Warehouse Management Software system based on a Solution as a Service model.
Through the Calidus online portal, customers can review the stock position, place their order and track its status through to despatch, and can obtain the tracking number for the carrier with which it has been despatched. Wendy Hallett, managing director, said: “We aim to cover all aspects of retail solutions and our warehouse is geared up for the expansion of e-fulfilment, high quality processing and pre-retail solutions.”
Awards: Lightweight winner
Gebhardt European Conveyor Systems won a 2015 UK Intralogistics Award for the innovative design and construction of its Cheetah Eco mini-load crane. A key feature of the design is a mast constructed from a composite of materials, including fibre reinforced plastic. This allows for a mini-load of very strong yet super-lightweight design, reducing the weight of a typical mini-load from 3,000kg to just 1,500kg. It is able to achieve high throughputs through both high accelerations, and reduced positioning times. It also reduces annual energy use by up to half, while the very stiff mast offsets the need for anti-pendulum drives.
Case study: Goods to person for sports retailer
US sport group LIDS has implemented a goods-to-person solution at its Indianapolis distribution centre, using Swisslog’s AutoStore robotic storage system.
LIDS sells apparel, headwear and accessories covering both professional and college sports teams. The solution will allow it to expand the storage capabilities and throughput for its extensive product assortment within an existing building.
“LIDS and Locker Room by LIDS offer products from any team, any time, to any where and with the new Swisslog solution, our company is better equipped to continue to live up this promise,” says Tony DeFrench, vice president of operations at LIDS. “Most importantly, this solution grows with us so our customers can receive the same quick and efficient order process as our company continues to expand.”
Swisslog was commissioned during 2014 to implement the new system at LIDS Sports Group’s existing facility. It is includes 22,246 storage bins, 30 robots and five pick stations.
