Are you impressed by operational efficiencies? I am. And I consider a warehouse that operates at an e-commerce processing cost per unit (CPU) of under one dollar ($1.00) and a store replenishment cost per unit of under ten cents ($0.10) very impressive.
Ascena Retail Group is a leading national specialty retailer offering clothing, shoes and accessories for women. Ascena may not be a household name, but the company’s brands certainly are. Ascena owns Dress Barn, Catherine’s, Lane Bryant, Justice, and more recently, Ann Taylor, LOFT and others. The company has grown both organically and through the acquisition of many brands as outlined above. In connection with Ascena’s acquisitions, it acquired a number of distribution centers (DCs) and legacy fulfillment operations. As a result, the company set out to rationalize its distribution network, integrate its fulfillment operations, and migrate to common technology platforms in an effort to obtain operational synergies.
Prior to 2010, the brands operated 5 separate DCs. Also, pre 2013, the company utilized four 3PL companies with disparate order management systems to handle its e-commerce fulfillment operations. The Justice division had a technologically advanced facility in Ohio, and as a result, the company chose to move other store replenishment operations to that location along with centralized IT departments. The company also decided to transition its Indiana distribution center from a Lane Bryant brick-and-mortar replenishment center into a centralized e-commerce fulfillment center for all of its brands.
Store Replenishment Operations – Investment and Outcome
Ascena dramatically changed its distribution network and the technology it uses to support its store replenishment operations. It converged all brands into two centralized DCs. In 2012, the company upgraded its WMS and labor management systems from Manhattan Associates and installed a yard management system. The Ohio store-replenishment DC was expanded to include 40 miles of conveyor and what may be the largest automated storage and retrieval system (AS/RS) in the United States (The AS/RS is 65 feet tall with 11 aisles and cranes, and 425 thousand case locations). They also installed 16,000 store pack locations equipped with pick-to-light systems.
The operational efficiency metrics they obtained are impressive. They are supporting over 4,900 stores, have the capacity to perform 9 million inbound/outbound movements per day, and reduced the processing cost to less than ten cents per unit.
e-Commerce Fulfillment – Investment and Outcome
Ascena also transformed its e-commerce fulfillment operations. The Indiana DC was transformed into a centralized e-commerce fulfillment center. From 2014 to 2016 the company migrated all of its brands’ e-commerce operations into the facility. The company implemented a new instance of Manhattan WMi in the facility and subsequently integrated it with a wide-range of warehouse automation. The automation integrated with WMi includes a multi-shuttle system, tote-buffer, two 600 chute unit sorters, 120 light packing station, and a shipping sorter. The facility’s storage capacity is 475,000 cases and 10.6 million units. The active pick area is 2 stories tall and includes 102,000 separate pick locations.
The operational metrics at the e-commerce fulfillment center is equally impressive. Overall productivity at the building is currently at 60 units per man hour with 2000 hours worked per day. Meanwhile, the processing cost has been reduced to under $1 per unit. These operational improvements have received recognition at the organizational level, as the initiatives and accomplishments have been outlined in Ascena’s corporate annual report (10-k).