The company realized early on that the only way to handle its fast-growing volume within those tight time parameters would be to invest in a large-scale automated material
handling system. After weighing its options, it found the
solution it sought in a combination of homegrown warehouse management software and a material handling system that features high-speed sorters.
At the heart of Zappos’ fulfillment operation is a sophisti-
cated inventory management system that essentially treats
each item as its own stock-keeping unit (SKU). “We indi-
vidualize each unit with its own serial number,” explains
Craig Adkins, the retailer’s vice president of services and
operations, who notes that because of variations in size and
color, it’s possible to have 40 SKUs of a single style of shoe.
“That gives us better quality [data] due to the complexity of
size and color variation. We know the life-cycle history of
every item. We know the details of shipping, returns, pro-
cessing, and placing goods back in inventory.”
To make this level of tracking possible, Zappos applies a
unique label to every pair of shoes at receiving. As cartons
arrive (either in truckload shipments from a single manu-
facturer, like Ugg, or in mixed shipments delivered via par-
cel carrier, primarily UPS), they first undergo an initial
sorting. As workers remove the shoeboxes from shipping
cases, they apply labels to the boxes and then scan the labels
before sending the boxes on to pick locations.
“It’s a relatively simple system,” Adkins says. “We don’t
have to worry about palletizing or de-palletizing.” Plus,
there’s no need to make decisions regarding what to keep in
live inventory and what to send to storage. Adkins explains
that unlike many fulfillment operations, Zappos doesn’t
have reserve storage. “Everything we receive goes to a pick-able location,” he says. That’s largely because although it
stocks a lot of SKUs, the retailer carries a limited number of
each particular shoe style, size, and color.
The receiving process is designed with efficiency in mind.
“From the point of receiving to the shelf is measured in less
than hours,” Adkins says. That’s crucial because company
policy states that only goods that are in stock in the DC can
be offered on its website. “It’s really important to have a
short cycle time,” Adkins says.
WHAT’S ORDERED TODAY SHIPS TODAY
To choreograph the fulfillment process, Zappos.com relies
on a homegrown warehouse management system that is
tightly integrated with its order management system.
“When an order comes in, in a short period of time, it’s put
into a pick wave, whether it’s a multi-item or single-item
order,” Adkins says.
The picking and shipping process combines manual
order selection with automated material handling equipment from Intelligrated. At the heart of both the receiving
and shipping systems are Intelligrated high-speed sliding
shoe sorters. As merchandise arrives, high-speed sorters
direct the incoming goods to putaway locations, primarily
static racks. Order selectors pick goods from the racks,
