Sporting goods brand Puma now fills orders for customers throughout Europe from one location thanks to a highly automated order fulfillment system from TGW that ranks as one of the systems integrator’s largest projects worldwide.
Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
The hyperacceleration of e-commerce activity over the past few years has led many companies to shift their fulfillment strategy in search of the perfect omnichannel model—a framework that will allow them to efficiently fill retail, wholesale, and direct-to-consumer orders from a single location, all at the same time. It’s no easy feat, but sports company Puma is making good on the challenge, merging the operations of 22 distribution centers (DCs) across Europe into one site that serves all of its customers throughout the region.
“The key [to this project] was the consolidation of 20-plus DCs—the consolidation of multiple channels—into a single DC in Europe,” explains Chad Zollman, chief sales officer, North America, for systems integrator TGW, which developed and installed the automated order fulfillment system that powers Puma’s new Geiselwind, Germany, omnichannel DC. “That was the challenge [presented to] the solutions team and what we had to solve for. That, in itself, was quite an undertaking.”
The nearly 700,000-square-foot DC went live this past spring. It boasts a shipping volume of up to 74 million items per year and the flexibility to handle fluctuating volume across all three high-growth channels.
“It is difficult for Puma to predict how the individual orders will break down across channels on any given day, which [makes] it important for the fulfillment solution to be extremely flexible,” says Maximilian Molkenthin, senior head of logistics at Puma Group. “Therefore, one of the most important design criteria was a high degree of automation to make it possible to react quickly to changes in the order structures—and to do so with consistently high quality.”
Here’s a look at how Puma and TGW are tackling today’s omnichannel fulfillment challenge.
AUTOMATING FOR FLEXIBILITY AND SPEED
Prior to launching its omnichannel DC, Puma operated a decentralized distribution network, with separate, local DCs each for retail/wholesale orders and for direct-to-consumer orders. High inventory levels and the costs associated with this setup prompted company leaders to seek a solution that could handle both B2B (business-to-business) and B2C (business-to-consumer) orders in one centralized facility. Essentially, a consolidated approach would streamline inventory and address the rising costs associated with processing a wide variety of orders across multiple DCs. To accomplish this, Puma needed a system that was flexible, fast, and highly automated.
The centerpiece of the DC is TGW’s FlashPick goods-to-person order fulfillment system for single-piece picking. The system is flexible in that it allows workers to fill orders independently of the order structure—that is, workers can fill e-commerce orders and retail orders in the same workflow. It also allows the facility to scale up or down based on fluctuations in volume. The Geiselwind DC features 27 pick stations that can be turned off or on depending on order volume through the facility.
Puma leaders describe FlashPick as the “powerhouse” of the end-to-end fulfillment solution. It includes a shuttle warehouse that’s as large as nine soccer fields and features more than 700,000 storage locations for shoes, apparel, and fashion accessories. Five hundred shuttles automatically retrieve cartons from their storage locations and feed the pick stations. The system uses more than 13 miles of energy-efficient conveyors to make sure the goods arrive at the right place safely and on time. In all, order processing takes just 10 minutes on average.
The mechanics of the automated end-to-end solution promote a smooth workflow: The shuttle system retrieves the goods automatically and supplies the manual picking workstations. From there, the operator picks goods directly into cartons or totes for further processing. After the pick, the goods are returned to storage in the shuttle system, while the order is sent to the shipping or packaging area. At shipping, orders are either sent directly to trucks using outbound sorters or dispatched to a shuttle buffer for temporary storage. The shuttle buffer is connected to palletizing robots that assemble mixed cartons on pallets for retail orders.
GETTING BETTER … AND BIGGER
The Puma project represents a trend toward more sophisticated and sizable order fulfillment systems, according to Zollman. At 713,000 storage locations and capable of processing 18,000 totes per hour, Puma’s Geiselwind DC is one of TGW’s largest FlashPick installations worldwide. Some of the company’s biggest installations are in the United States, including at fashion retailer Urban Outfitters, which has an 880,000-square-foot facility that includes nearly 50 pick stations.
FlashPick’s flexibility is the main attraction for these large retailers, Zollman adds. A standard system configuration processes 6,000 totes per hour, referred to as a “6K” system, and clients can scale up by adding capacity in increments of 3K. Pick stations can be augmented with robotic piece-picking modules as well.
“We’ve seen our project size steadily increase over the past three years,” Zollman says. “The size [of the Puma project] is not an anomaly. It’s more the norm of what we are seeing, and it’s because FlashPick can be scaled to any required size. The system is not limited to any throughput requirements and can be applied to any business model.”
Zollman says the size and scope of such projects will soon become the standard in automated order fulfillment.
“Labor scarcity and [demands for] increased service levels, higher productivity, and flexibility across the channels require long-term thinking. This translates into planning proper investments on integrated end-to-end solutions, instead of smaller system upgrades or ‘islands of automation,’ as we call it,” he says. “At full scale, it’s not just dipping your toe in the water for automation. The rewards of this longer return-on-investment [type of project] always exceed the expectation.”
Sustainability matters
Sports brand Puma took environmental sustainability to heart when building its omnichannel distribution center in Geiselwind, Germany. The facility, which replaces a decentralized network of 22 DCs across Europe, is a carbon-neutral fulfillment hub, certified in accordance with the U.S. LEED (Leadership in Energy and Environmental Design) Gold standard. Features include an optimally insulated building and the use of green electricity as well as energy-efficient material handling equipment—including high-performance roller conveyors that reduce energy consumption by up to 30% compared with conventional conveyor systems. Plans also call for the installation of a photovoltaic energy system. The $240 million investment is a testament to innovation, company leaders say. “Fast and sustainable logistics—that’s what Geiselwind is about,” says Maximilian Molkenthin, senior head of logistics for Puma SE.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
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.