DC Velocity - September 2009

center looking for an item that’s no longer in stock at the warehouse, the call center can check retail inventory. If the needed item is located at one of the stores, that store is assigned to fill the order.

If the needed inventory is found in more than one store, the software will balance work across the network. It also cross-checks the customer ZIP code so that the order can be filled from a nearby retail location if possible.

The process works the other way as well. “Customers often come into our stores with a catalog in hand,” says Holmes. “If the store does not have [the requested] item in stock, an employee can pick up a special green phone and call the Roanoke warehouse. The item is then shipped directly to the customer.”

Now that it has the inventory system up and running, the retailer has taken the next step toward centralizing its operations. It is currently rolling out Manhattan Associates’ Advanced Planning and Demand Planning software to centralize procurement and forecasting.

Redirecting the flow

As part of its initiative, Orvis also began re-evaluating the way goods flow through its distribution network. Then, as now, most of its inventories—regardless of channel—flow through either the company’s warehouse in Roanoke, Va.,

or its counterpart in Andover, England. The remaining items, mainly fly rods and leather goods, are handled by smaller warehouses located adjacent to the Orvis-owned plants that make the items.

In the past, decisions on what to store where were largely dictated by geography. The 300,000-square-foot automated facility in Roanoke handled fulfillment and replenishment for all U.S. sales outlets (with the exception of fly rods and leather goods). Meanwhile, the Andover facility—a manual operation about a third Roanoke’s size—handled European direct-to-consumer orders and U.K. store fulfillment.

As logical as that might sound, the setup created some inefficiencies. For one thing, the company was forced to maintain duplicate inventories for all channels in both Roanoke and Andover, which did nothing to solve its problems with excess stock. For another, Orvis took a big cost hit whenever it went to dispose of overstocks and closeout items overseas. “The liquidation channels are smaller in Europe,” explains Holmes, “so having too much inventory in a nation where it was difficult to liquidate was a problem.”

In the end, Orvis decided it would maintain its existing distribution network but reroute the flow of goods through it. Today, 80 percent of the European orders, including stock for retail stores and direct-to-consumer shipments, come from the Roanoke warehouse, with Andover handling