This Month in Modern: Stretching the limits at lululemon

You’ll quickly see that “flexibility” is the core theme in this month’s System Report. As we’ve been covering the last few years, the ability to design and implement a dynamic, flexible, automated distribution facility—one able to bend and respond to demand and cut freight costs—is a critical element to success in meeting the multichannel fulfillment challenge brought on by the evolution of e-commerce.
However, we may have been overlooking the importance of instilling a “culture of flexibility” inside our facilities in this process, one that fosters employee growth both inside and outside the four walls—until now, that is.

Executive editor Bob Treblicock shares the story behind the development of lululemon athletica’s 310,000-square-foot distribution center near Columbus, Ohio, that went live last summer for e-commerce fulfillment. Creating and maintaining industry-leading, direct-to-consumer business levels was at the core of the design and location of the facility, the company’s third DC and first east of the Mississippi—a region were the company is seeing explosive growth.

The Ohio facility is the yoga wear retailer’s most ambitious foray into supply chain software and materials handling automation after practicing more conventional processes in its other facilities in the Pacific Northwest.

The team implemented a flexible automation system that relies on a warehouse management system and mobile data collection technologies with conveyor and sortation to tie together the functional areas. The idea was to increase efficiency, drive throughput and lean out processes while having the ability to flex up or down with demand.

“Rather than implement a high level of automation, we have a system and processes that allow us to bypass the automation altogether if we get an urgent order for a store,” says George Tsogas, vice president of international distribution and logistics.

At the end of the line, the team installed automatic weighing, labeling and bagging technology to streamline packing and shipping. With this efficiency plus the location in Ohio, lululemon product is now a one-day drive from 65% of the U.S. population and can service 85% of its stores and customers in two days, greatly reducing freight costs.

“This is a perfect example of a trend we’re seeing more and more,” says Trebilcock. “This is an enlightened retailer implementing distribution solutions driven by the need to be ever more responsive to customers both inside the store and direct to the customer’s door.”

But the most intriguing part of this story is how lululemon’s culture makes a tangible difference in its operations. They don’t just talk it, they practice it. “Culture is the epicenter of who we are,” Steve Berube, the company’s senior vice president of global distribution and logistics tells Trebilcock. “And, one of the ways we build strong teams in our DCs is to sweat together.”

Indeed, yoga and exercise classes are offered every day at the facility in an effort to help employees live happy, healthy, fun lives—the core of lululemon’s overall mission. “A big part of that culture is having fun together as a team,” adds Trebilcock. “Looking at the photos of lululemon associates, I noticed they were all smiling, even as they did mundane tasks like picking and packing. I always wonder why more companies aren’t focused on their culture and not just their metrics.”