Originally Published in Logistics Management
“So, how did this all end up? Well, it must be a good news story because I’m here, right?” Those were questions posed by Steven Hunter, the chief operating officer of Stage Stores, near the end of his presentation today at SELF19, the annual conference hosted by SDI Systems in Las Vegas. The story of how Stage Stores refurbished a largely manual distribution center in Omaha with automation and re-designed processes to support a new business model in just four months was one of four good news stories today. Office Depot described how it transitioned from optimizing distribution centers to optimizing an end-to-end network to better serve its customers; JCPenney shared how it brought up a new 600,000 square distribution center in San Bernadino – it’s first new facility in 10 years; and Carter’s, Inc., the children’s wear icon, detailed how it overhauled a 1 million square foot Georgia omni-channel facility to process more than 600,000 units per day at peak. Listening to them, I was reminded of a poster I saw in an airport on my way to Las Vegas: Tell better stories. Now, each of the projects had a happy ending, or, as Hunter noted, the presenters wouldn’t have been there: No one tells the story of the DC project that blew up. Stage Stores, for instance, realized a 60% improvement in productivity and Carter’s saw a significant increase in the number of units it could process per day during the critical peak period. But each presenter also shared the challenges they faced – from limited budgets, to limited time, to limited resources of talent – and the hurdles they overcame to get to the finish line. They all told better stories. The catalysts that led to the products would be familiar to anyone in distribution and order fulfillment today, such as the increase in the amount of handling to fill e-commerce orders, heightened customer expectations and labor challenges. Carter’s, for instance, had to onboard more than 3,500 temporary workers for last year’s peak at the same time as Amazon was sucking up the workforce to open new facilities down the road. A common lament was that hiring people isn’t the issue, it’s keeping them. That was leading everyone to find the balance between labor and upgrading of automated systems because labor is not reliable. And, for someone who just spent two days at the Reverse Logistics Association conference, I was surprised that each of the presenters was asked how they were coping with the increased volume of returns. The answers to that question showed the most variety. Penney, for instance, has launched initiatives to improve the quality of the merchandise it sells and looking at ways to improve the quality of its order fulfillment processes to reduce miss picks. The idea is that by doing a better job on the front end, Penney can reduce the number of items customers return after the sale. The retailer also encourages returns to stores to mitigate what goes back to the D.C.’s. Office Depot is creating a reverse logistics team to address returns through the lens of its total end-to-end cost to serve a customer model. Carter’s noted that it is lucky, in comparison to other retailers: The company gets very few returns and at least half goes back to a store and not the DC. For Carter’s, returns aren’t an issue. And Stage Stores noted that today, a lot of its returns go back to the stores, where they can be resold. But, for now, returned electronics and furniture are sold in bulk to jobbers. The retailer is looking at opportunities to resell those products through their own stores as open box or scratch and dent items to reap more margin. That was today. I’m looking forward to more better stories tomorrow.