American Eagle: Pioneering retailer maintains lead

It’s strangely appropriate that Modern would feature American Eagle’s seminal omni-channel distribution strategy the same month that sister publication Logistics Management publishes the results of its “25th Annual Study of Trends and Issues in Transportation and Logistics.”

The study—which focuses on operations outside the four walls—finds a large number of logistics professionals saying their companies are at a crossroads in terms of expanding and improving the e-commerce distribution and delivery networks they’ve built to manage this phenomenon—one that’s growing by double digits every year.

LM’s research lead Karl Manrodt, professor at Georgia College and State University, and the team warn that “waiting too long on these critical decisions will only result in a competitive disadvantage that will be difficult to overcome in today’s digital economy.”

Well, it’s pretty clear that this warning shot was heard by the team at American Eagle more than a decade ago—and they haven’t stopped innovating since. Starting on page 16, executive editor Bob Trebilcock brings us up to date on the pioneering retailer’s omni-channel journey, a story that first appeared in Modern back in 2007.

“When I visited American Eagle’s facility in Ottawa, Kan., in 2007, it was the first time I’d seen a warehouse execution system (WES) in action in a multi-channel DC—although no one was using the terms ‘WES’ or ‘multi-channel’ at the time,” says Trebilcock. “But, it was exactly those attributes that distinguished the facility from any we had visited in the past.”

Having a firm grasp of the future, American Eagle designed that facility from scratch to handle three distinct retail brands. The operation was able to crossdock cartons and mixed cartons, replenish stores, and fill direct-to-consumer orders across the brands for its burgeoning e-commerce business.
“What really set the facility apart was a unique software system that was referred to by American Eagle and the solution provider as an ‘optimization engine,’” says Trebilcock. “Today, we’d call it WES.”

That “optimization engine” managed order fulfillment without traditional pick waves. Instead, it assigned work based on the workloads at the various picking and packing stations, while the WMS managed receiving, inventory and shipping, and communicated with the order management system.
Today, Trebilcock offers us a peek at how the retailer has applied a decade’s worth of experience to its 1-million-square-foot, omni-channel DC in Hazle Township, Pa.

And while one of the hallmarks of the new operation is an inbound conveyor and sortation system that routes incoming merchandise to where it’s needed most, the heart-and-soul of its performance still resides in the functionality of its WES—an upgraded version of the original that makes real-time decisions about how product should be routed through the facility and manages operations on the floor.

“They were ahead of their time back then, and now the new facility demonstrates that American Eagle continues to stay out in front,” adds Trebilcock. “While so many companies are still trying to solve the issues they confronted back in Ottawa 10 years ago, they’re now ready to make the next step into distributed order management, ship-from-store and put true omni-channel operations into practice.”