March 13, 2012
strategic insight | Systems Integration

High-tech DC revitalizes iHerb's operations

High-tech DC revitalizes iHerb's operations

Online retailer's fulfillment activities get a shot in the arm with the opening of a new automated DC.

By David Maloney

For a dot-com retailer, the distribution center is much more than a warehouse. It is a storefront, fulfillment depot, and customer service center all rolled into one. Unlike brick-and-mortar retailers, online merchants can't offer customers the opportunity to see and feel the product they're ordering. What they can do is offer a much wider selection than can be found in stores and provide superior customer service. aims to excel on both counts. is a pure-play dot-com retailer that offers some 30,000 wellness-oriented health and natural organic products. This includes vitamins, sports nutritional products, supplements, health care items, earth-friendly cleaning products, and housewares.

"Anybody young, old, in shape, out of shape, anybody looking to better their performance, anybody looking to better their health ... that's the kind of customer we are looking for," says Craig Smith, director of operations at iHerb's new distribution center in Moreno Valley, Calif.

iHerb's pledge to customers is that any order received by 1 p.m. PST will ship the same day. That's a tall order that requires a combination of sophisticated voice and put-to-light technology to facilitate swift order turnaround. Adding to the challenge, the operation has to be able to accommodate the small (one- to 10-item) quantities that make up a typical Internet order.

"Our biggest challenge is that while we receive product by the case, we have to turn around and package it and put it into small boxes so that it can survive the transit to the customer's house. So from that perspective, it's a lot more challenging than traditional distribution," notes Smith.

The automated route
iHerb was launched 14 years ago as an Internet-only health product retailer. The Moreno Valley DC, which opened in October 2010, is the third building it has used but the first to be automated—the previous two were manual operations. The new 320,000-square-foot climate-controlled building gives iHerb room to spread out. The company originally occupied half the building, but within three months, it had moved into the remaining portion as it expanded its SKU depth to accommodate its growing business.

The automated system, designed and integrated by Dematic, has made possible this broad reach and speedy order fulfillment. On top of that, it is engineered to provide the flexibility to handle a wide range of product sizes and to accommodate growth and expansion down the road.

The system also helps iHerb track its products within the building. Because many of the retailer's nutritional items are ingested, it must maintain strict control over them, knowing where each item is at any time.

As products enter the building, 100 percent pass through quality control and inspection. Lots and expiration dates are recorded, as many of these will have to be supplied with the customs information for international shipments. Products are then staged for putaway, with a voice system directing their placement within the pallet storage racks. The voice system was designed by Dematic, using Vocollect hardware and software of Dematic's own design.

Approximately 99 percent of the order picking is done in batches within a three-level module and a small shelving area that together provide over 45,000 pick locations. The batching is directed using voice.

The remaining 1 percent of picks are mostly non-conveyable items selected directly from storage. Products for batch picking are first brought from the reserve racks to replenish case and pallet flow racks that contain faster-moving items within the modules, as well for the floor-level shelving that holds slower movers.

Dematic's Pick Director software works in tandem with iHerb's homegrown warehouse management system to organize orders into the batches. The software then directs workers wearing headsets to select the quantity needed for a batch. For instance, if 30 customers each order a bottle of calcium tablets, then 30 bottles will be pulled at the same time and placed into a batch tote. The items will be allocated to individual orders later in the process.

Pick, pack, repeat
Once the batch totes have been filled within the pick module, workers place them onto takeaway conveyors. Elsewhere in the facility, associates gather slow-moving items from the shelves and deposit them into totes sitting on wheeled carts. Voice directs this operation as well. When the tote is full, the worker is instructed to wheel the cart to an induction location on the conveyor line and deposit the tote onto a conveyor. There, the totes are merged with totes coming from the pick module and conveyed to put stations, where steerable wheels pop up to divert the batch totes to their assigned stations based on order profile.

At the put stations, items from the totes are divided up for individual orders. The put stations themselves are arranged as shelving walls on either side that run perpendicular to the conveyor. On the backsides of the shelving walls are pack stations. The arrays of shelving, called "put walls," hold various-sized bins that are used to gather individual orders, with each bin representing an order. The entire wall is wired with put-to-light technology.

As batch totes arrive from picking, workers unload them and allocate the items to bins in the put wall. To begin the process, the worker at the put station removes an item from the tote and scans it. This causes lights and quantity indicators to flash below an order bin that requires that product. The worker simply deposits the items into the bin and pushes a button to confirm that it's the correct tote. He or she then scans another item and repeats the process. The scanning and putting of items into totes, as directed by the lights, continues until all of the items in the batch tote have been assigned. Then, another tote arrives, carrying more products that will be divided among the customer bins. All told, the put system is designed to accommodate 500 puts per hour, per operator.

Once an order is ready for packing, a light flashes at the pack station on the opposite side of the put wall. Employees spend considerable time wrapping individual items, Smith says. "We carry glass, we carry liquid, we carry food goods, and we carry durable goods. All that has to be packed so that it's going to survive that trip to your house." Particular attention is given to international shipments to ensure they arrive intact at the 180 country destinations iHerb serves.

As a purveyor of natural and organic products, iHerb is committed to using environmentally friendly packaging. The company recently moved to a biodegradable, compostable clamshell-design packaging for its breakable bottles. It also uses recycled materials wherever possible.

Once products are packed, they're placed onto takeaway conveyors that pass through stations where void fill is added and the cartons are sealed. The products are also weighed using an inline scale before heading to a sliding shoe sorter that diverts the cartons to 10 shipping lanes based on carrier and destination.

As for how the new process is working out, Smith has nothing but praise for the system. The automated system's speed has allowed iHerb to meet its same-day shipment pledge while achieving an accuracy rate that has cut returns by 60 percent, he reports. "The pick to voice allows us to achieve essentially 100 percent accuracy in what we pick—whatever goes in that box is exactly what that customer ordered."

Editor's note: To watch a video of the facility in action, go to

About the Author

David Maloney
Editorial Director
David Maloney has been a journalist for more than 35 years and is currently the editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.

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