E-fulfillment fanatics

If you’re wondering to what degree the e-commerce revolution has changed warehouse and distribution center operations, look no further than this month’s System Report.

Not only does Fanatics’ 514,000-square-foot, pure-play e-fulfillment center put up some gaudy numbers, but it’s a perfect example of how e-commerce has pushed the savviest players to rethink some of the very basic warehouse and distribution processes.

In the case of Fanatics, they’ve eliminated reserve storage and replenishment as we typically think of it.

As with any other sports-related business, a quick look at the statistics helps tell the story. Over the past nine years, Fantatics has grown into the leading online retailer for officially licensed sports merchandise for professional and college sports teams. Today, Fanatics stocks 500,000 SKUs and has to be prepared for wild swings in demand that range from 30,000 units a day to 500,000 units during peak periods like the Final Four and the Super Bowl—and ship those units with only seconds left on the clock.

To make this happen, company management knew it needed to design an order fulfillment system from the ground up to help manage these fluctuations. It also knew some of its traditional processes along the way needed to be changed to gain more scalability.

As Paul Chisholm, Fanatics’ vice president of logistics, explains to our Bob Trebilcock, the key to the system is a non-replenishment based order-fulfillment model that offers a more flexible fulfillment process than it was using in the past. While favorites are always stocked, the facility has now eliminated conventional reserve pallet storage. Instead, inventory is stored in one of four different sized bins in a four-level mezzanine in the center of the building where there’s 42 feet of clearance.

In fact, all new receipts go straight from receiving to a pick face ready for immediate picking. “The mezzanine has 1.1 million pick faces and space for 15 million units,” Trebilcock told me when he finished reporting. “Their receiving process may be little more time consuming because incoming merchandise goes directly into picking, but I was awestruck by the sheer number of picking locations they’re managing.”

For fulfillment, a wave-planning tool aggregates orders that are picked and conveyed to a put wall area for multi-line packing and a separate area for single-line orders. The facility has 60 single-line processing stations and 60 put wall pods. According to Chisholm, each pod can handle an estimated 75 orders, for a total of 4,320 orders at a time in the multi-line area.

After only 10 months up and running, Chisholm reports that the system is processing more units per hour at higher units per hour shipped than originally planned. And, as for customer service levels? Well, the crowd is going wild.

“They do replenishment of evergreen items that are always in stock,” adds Trebilcock. “However, when they hit a minimum level that would trigger replenishment it’s for an order that’s going to go into picking. I thought this was very cool and reflects other changes that we’ve seen in the retail System Reports we ran in 2013, like Wet Seal and Gilt Groupe. Any way we slice it, e-commerce is rocking our world.”