Hat World: Carousels score hat trick
Hat World implemented a horizontal carousel system and a put-to-light put system. The result: tripled throughput, improved quality and reduced labor costs.
By Allison Manning, Associate Editor -- Modern Materials Handling, 11/1/2008
The hat business is like most other retail businesses: The key to success is keeping a lid on expenses.
That was the challenge confronting Hat World, a specialty retail leader of officially licensed and branded athletic fashion headwear, operating stores across North America with headquarters in Indianapolis. Once the chain grew beyond 600 stores, the batch picking processes used for store replenishment no longer worked for the company's 160,000-square-foot DC.
“The only way we could keep up with the increased throughput was to add more and more users and more RF scanning guns,” says Tony Defrench, senior director of distribution. “We were meeting our distribution requirements, but productivity per worker was going down and the aisles were more congested. That's when we started looking at a change in the way we do business.”
The solution was an automated materials handling system (Diamond Phoenix, 888-233-6796, www.diamondphoenix.com), using sortation, six horizontal carousel pods and a put-to-light system that directs operators as they pack nearly 70,000 hats per day for more than 850 stores. A put is a single sort to a store location for one SKU.
The results: Throughput increased more than 750% and order accuracy improved from 99.5 % to 99.9%. These improvements were achieved without adding workers or increasing facility size. The carousel system can expand to accommodate growth—two more pods can be installed, potentially supplying 384 more stores. And with Hat World opening about 100 new stores each year for the past five years, growth is a good bet.
Brimming with success
Hat World has been growing since its founding in 1995. After opening 157 locations in its first five years, the retailer purchased competitor Lids Corp., another headwear-only retailer, in the spring of 2001. With the addition of the Lids assets, Hat World grew to more than 400 stores and two online businesses. In 2004, Hat World was purchased by Genesco.
In the seven years since the Lids acquisition, Hat World has purchased several other smaller retail chains in the U.S. and Canada. Operating primarily under the Lids and Hat World retail brands, stores offer a vast assortment of officially licensed and branded college and professional teams, as well as other specialty fashion categories in the latest styles and colors. Select stores also offer licensed apparel and custom embroidery.
Pick strategies evolve
After becoming part of the Genesco family of brands, the chain's approach to distribution evolved as the number of stores grew. Initially, orders for stores were picked by zone. A shipping container destined for a specific store would travel through a zone, where all the hats for that store in that area would be placed in the container. Once all the hats had been picked from that zone, the container was delivered to a consolidation area, which included a distribution location for each store. The hats in that container would be merged with a master container. When a box was full, it would get a packing slip and be delivered to a store.
As the number of stores and SKUs increased, Hat World went to a batch picking operation. “If we needed 100 hats of a particular style for the stores being shipped that day, we'd pick them all and send them to the distribution area where we'd have a location for each store,” says Defrench. “Then, we'd deconsolidate the containers and sort the hats by store until the container was empty.”
That method worked until the chain grew to roughly 600 stores. Each SKU delivered to the deconsolidation area could potentially go to all stores. Before every put, an associate had to scan a SKU to verify they had the right hat; they'd then be directed to a store location where they'd have to scan a bar code again to find out how many hats they were putting in the store box. It was a lot of walking and scanning, says Defrench.
At that point, the only way to keep up with demand was to add more operators. With the chain continuing to add stores “we knew our productivity would go down if we didn't make major changes,” Defrench says. “Based on the design of the facility, there was a peak as to how much we could put through the system efficiently, and we believed we had hit it. Beyond that, we would get less efficient if we were going to maintain our service levels to the stores and our costs per put would only go up.”
Exploring automation
Using carousels for order fulfillment had always intrigued Defrench. “I liked the idea of an associate standing still while the system brought the work to them,” he says. “That was a good fit for us, given how many stores we have to service.”
Before choosing carousels, however, he explored other automated solutions, including touring a distribution center operated by Hat World's parent company Genesco that was built around a high-speed sliding shoe sortation system. He also considered installing a conveyor system in place of lift trucks and walkies to deliver material from the receiving dock and storage areas to the carousels. “For our purposes, those alternatives were just too expensive,” says Defrench. In the end, Hat World chose carousels and a put-to-light system to direct operators for three reasons:
1) Return on investment: The carousel solution would deliver a return on investment in less than three years.
2) Footprint: The carousel system would fit in Hat World's existing footprint with minimal implementation time. “It was very easy to visualize how this piece of equipment would fit in our facility and how it would work,” says Defrench.
3) Productivity: Since the carousels bring the work to the associates, the solution eliminated steps, increasing productivity. “In a manual process, our associates were sometimes walking with empty totes, working around each other, or walking a fair distance between puts,” says Defrench. “All you had to do is count up the wasted steps to understand why you couldn't improve on productivity without some kind of change.”
Once the decision was made to go with a carousel system, the solution was designed to:
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Sort 70,000 hats and approximately 21,000 lines to 520 stores per day.
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Integrate smoothly with the existing warehouse management system (WMS).
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Fill in gaps in the existing WMS to operate the system.
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Support crossdocking, or the direct sorting to stores.
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Support the sorting of batch and cluster picked SKUs to stores.
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Expand the system easily for quantity of stores and available SKUs.
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Provide a constant status of the operation to the WMS.
Once the design was complete, the system was implemented in three months. “By running our old system in parallel as we came up, we were able to do it without any disruptions to operations,” says Defrench.
While Defrench says the system has improved the quality of orders being shipped to Hat World's stores, the real benefit of the system has been labor savings. “We have more than tripled our throughput and reduced our overall head count,” he says.
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