60 DC VELOCITY FEBRUARY 2015 www.dcvelocity.com
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taken over the fulfillment of e-commerce orders; the facility
expects to begin shipping store replenishment orders in the
eastern U.S. within the next few months. Once the Hazle
Township building is fully functional, the Warrendale site
will be shuttered.
David Repp, vice president of North American distri-
bution at AE, says the driving force behind building the
new facility was business growth, especially with increasing
volumes in its e-commerce channels. “We needed the infra-
structure to support that growth,” he says. “We also wanted
to get closer to our customers, and it allows us to co-locate
our inventory and better optimize that inventory.”
The decision to combine retail store and online fulfill-
ment into one building has its
advantages for a fashion mer-
chandiser like AE. For one thing,
the company no longer has to
maintain duplicate inventories
for its brick-and-mortar and
e-commerce operations, which
holds down carrying costs. But
the strategy also presents some
challenges. Store orders typical-
ly consist of case or split-case
quantities, while direct-to-con-
sumer orders usually contain
one or two individual items.
Because the two types of fulfillment operations require completely different material handling equipment and processes,
many retailers elect to separate
the operations.
In order for its “hybrid” fulfillment strategy to work, the
Hazle facility would need automated material handling
systems with the flexibility to handle a wide range of
orders simultaneously, while at the same time, keeping
goods moving swiftly through the facility. To design the
new operation, AE turned to Vargo Material Handling
Solutions, the same firm that had designed the Ottawa
facility. The result was a process that treats the inventory as
fully available to both channels at all times. The fulfillment
process only diverges at the point of packout and shipping.
STORE NO MORE
A key part of AE’s fulfillment strategy in Hazle Township
has been the elimination of bulk storage. That’s a highly
unusual move for a retailer, but it was a change that has
made inventory more readily available for both distribu-
tion channels. In the Warrendale and Ottawa facilities, AE
receives trucks of floor-loaded products that it then palletiz-
es for placement into storage racks. At the Hazle Township
site, it has dispensed with that process. “Specialized apparel
is not a pallet-driven business,” explains Repp. “Before, we
had to build and then later break up the pallet. But that
process is not a value-add to what we do.”
Instead of being palletized for storage, cartons arriving at
Hazle Township are sent directly to the pick modules. For
that, the operation relies on a vast network of conveyors
(from TGW) and several sortation systems that move cases
and totes throughout the 1,000,000-square-foot facility.
Without pallet racks, there is no longer a need for lift
trucks—in fact, the facility has no powered mobile equip-
ment of any kind.
The conveyors take over as soon as goods arrive at receiving. Suppliers provide all shipments floor-loaded within
their trailers or containers. Extendable conveyors reach
into those trailers to offload
the cases for transport to a slat
shoe magnetic-driven inbound
sorter (supplied by Dematic).
The sorter diverts the cartons
to conveyor lanes bound for six
fulfillment modules. Another
divert sends select product to
a value-added processing area,
where items can be adjusted or
re-ticketed as needed.
As for the placement of
incoming items, the facility’s
warehouse execution system
Once the cases reach the assigned level, they are diverted
to conveyor spurs that run behind the shelving. The spurs
each offer 50 feet of accumulation buffer to temporarily
hold products for replenishing the shelves.
A worker next removes about a dozen cases from the
conveyor and places them onto a cart for transport to an
area with open slots in the shelving. The worker chooses a
“home” for each case, scanning the case as he or she places
it into the back of the shelf location and also scanning the
slot’s ID to notify the COFE system that the stock-keeping
unit (SKU) now resides there. Only one case occupies each
slot. “Once it is assigned to a location, the product is available to pick and to be sold online,” says Repp.
