With sales surging, online retailer Zappos.com needed an order picking technology that could be up and running quickly. The answer? A system that uses robots to bring goods to order pickers.
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
Ask its customers what type of company Zappos.com is, and they'll likely tell you it's an online retailer of shoes—and maybe accessories and apparel. But Zappos itself would tell you something different. As it explains on its Web site, Zappos considers itself to be "a service company that happens to sell shoes, handbags, and anything and everything."
What Zappos means by "service" is what supply chain professionals would call order fulfillment. In its online profile, the retailer attributes its spectacular success over the past nine years to a commitment to speedy order delivery and a guarantee of product availability (the company says it will not offer a product for sale unless it's physically present in its warehouse). It's hard to argue with the results. Since its founding in 1999, Zappos.com has recorded double-digit—sometimes even triple digit—sales increases every year, and it's looking forward to more of the same. The privately held company expects sales to surpass $1 billion this year, which would mean growth of about 20 percent over 2007 figures.
As gratifying as that sales growth may be to, say, management and accounting, it presents enormous challenges for the distribution centers that must fill all those orders. The company stocks more than 3 million items across 1,400 brands, and runs what could only be described as a high-volume shipping operation. Craig Adkins, vice president of fulfillment operations for Zappos.com, says the retailer moves about 35,000 units daily through its two distribution centers in Shepherdsville, Ky., which include its original 280,000-square-foot building and a new 832,000-square-foot facility. Peak season volumes can hit 60,000 units daily, all shipped directly to consumers. Nearly all items require split-case picks.
In order to keep up with demand, Zappos continues to expand its fulfillment capabilities. But when it comes to installing new equipment, it has to proceed with caution— its very public commitment to prompt order turnaround means there's little margin for error. So it's no surprise that, when it went to choose a fulfillment technology earlier this year, Zappos was attracted to a system that promised rapid deployment.
The company found what it wanted in a technology developed by Woburn, Mass.-based Kiva Systems that relies on robots to move products stored on portable shelves to order pickers. Because there are no racks or conveyors to install (all of its hardware components are mobile), the Kiva system offered the prospect of a quick installation. "One of the challenges of growing fast is that we need a kind of just-in-time installation, which Kiva offers," says Adkins.
In June, the company announced that it had completed installation of a Kiva Mobile Fulfillment System in one quadrant of its new 832,000-square-foot DC. True to its billing, the system proved simple to deploy. The complete installation took about four months from the time the two companies signed a contract until the system was up and running.
A good fit
When it came to purchasing the new technology, Zappos.com started small: Its initial order with Kiva was for 70 robots. Zappos could have used more, says Adkins, but the company wanted to test the system first to validate its assumptions about how it would perform and ensure that its economic analysis was correct.
The actual installation began shortly after the contract was signed—something Kiva was able to accomplish because it already had the groundwork in place. Early in the negotiation process, Kiva asks potential customers for detailed shipping information. "We create an exact simulation of the warehouse environment, including orders and volume," says J.D. Harris, vice president of professional services for Kiva and the on-site manager for Zappos.com's installation.
While Kiva assembled the robots at its Woburn plant, the company sent a team to the Zappos.com site to prepare the floor, installing two-dimensional barcode stickers that the robots use for navigation. Once the configuration work was completed, Kiva delivered the robots, which it terms the "drive units," and the shelving units, or "pods," and the software was configured and tested.
Adkins reports the installation progressed rapidly once the robots, which can handle loads of up to 3,000 pounds, were delivered. "When you take them off the truck and turn them on, they start to communicate," he says. "You can tell them to go out in the grid and start driving around.
"Soon after the bots arrived, we started testing those and bringing in the shelving and deploying that," he continues. "Then the stations were built and assembled; then we tested communications between the software [applications]."
The Kiva system currently handles about 15 percent of the overall volume shipped from the DC, and Adkins expects to buy additional units. "In subsequent years, as we grow," he says, "we will order more." Adding on will be easy, he says, because the Kiva system is highly scaleable."You don't have to buy entire systems," he explains. "You can buy one robot and one shelf. Then it scales with the business. That's a lot of capital cost avoidance."
Fast and flexible
Speedy installation and scaleability are just two of the Kiva system's advantages, says Adkins. Zappos has also found it to be extremely energy efficient. Because the system uses robots, not humans, to retrieve inventory and bring it to the picking stations, there's no need to keep the lights on in the areas where goods are stored. And unlike powered conveyors, it does not use motors that must operate constantly. "The energy savings are pretty huge," he says.
Adkins expects to see other savings opportunities as well. He reports that Zappos' analysis indicates that using the Kiva system should result in about a 40percent reduction in labor costs. He explains that the savings will come from the system's ability to receive and put away simultaneously on the inbound side and to handle picking, sorting, and packing simultaneously on the outbound side. Another labor benefit, according to Adkins: Training is simple. "The learning curve to use the picking stations is very short," he reports. "We can take anybody and train them in 15 to 30 minutes."
Adkins adds that another key advantage of the Kiva system is its ease of reconfiguration. Changing the robots' paths—and thus, the product flow— requires little more than moving the barcode stickers on the DC floor that the robots use for navigation.
Similarly, it will be a simple matter for Zappos to adjust its operation as its product mix changes. Right now, 90 percent of Zappos' business is shoes, Adkins says, but the company expects the balance to shift more to apparel in the coming years. As that happens, it can simply change the items stored on the shelving pods without affecting the way the system works.
And finally, there's the portability advantage. In Adkins' eyes, one of the biggest benefits of all is the ability to move the entire system if need be. "If we have to move," he says, "it is easy to pick up and go."
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.