E-fulfillment: Finding the Perfect Fit

Tags: Inventory Management, Retail, Warehouse Management Systems (WMS), Materials Handling

Online haberdasher Bonobos focuses on details to guarantee pants that fit. Naturally, it demands the same diligence from its third-party fulfillment partner.

There's a fine line between almost and just right. It's a degree of detail that Bonobos, a New York City-based "e-tailor," has aligned its fortunes to. The company peddles pants that suit the average man better than average. "We sell pants that trump fit as the distinguishing factor," explains John Rote, "ninja manager" for Bonobos.

The idea for a "haberdasher-e" sprang in 2007 when two Stanford Business School roommates with a sewing machine decided to spool disdain for baggy trousers into a new venture. As Rote's job title suggests, the company branded its internal job functions with the same creativity it brings to its broader mission of saving the Congolese Bonobo primate. Its pants deliver to a similar civility.

"The cut is more fitted than most pants on the market," says Rote. "Instead of targeting 100 percent of the male population with a product that is less fitted, we're targeting a portion of the population with a product that is more fitted."

Bonobos' made-to-suit pants took off. But by summer 2009, the e-tailer recognized its capacity to manage inventory and distribution in-house was bunching like competitors' slacks.

"We were a typical startup that had a lot of learning to do," says Rote. "The warehousing, inventory management, and shipping functions were a distraction. Our small staff was doing many different jobs. A computer programmer might be working as a janitor and customer service representative at the same time."

So Bonobos decided to add a new thread to its supply chain by outsourcing distribution to Quiet Logistics, an Andover, Mass.-based third-party logistics (3PL) provider that has been stealthily making some noise of its own.

Bonobos' business is significantly Web-driven. "We're the intersection of good product, service, and technology," says Rote. So when this junction became too busy to direct internally, it turned to Quiet Logistics' outsourced fulfillment solution.

Bonobos was operating out of a New York City office split between administrative and storage space. Its staff was also sharing functional roles beyond creative and marketing. The e-tailer had one in-house employee responsible for handling fulfillment and another to manage inventory—which was essentially making sure boxes were neatly stacked on shelves.

"Our expertise was in marketing and branding the product, not packing boxes," notes Rote. "And we couldn't afford full-time warehouse staff to manage peak season demand."

At the same time, the popularity of Bonobos' products was growing rapidly—as was SKU complexity. Managing inventory, shipping, and exceptions, while also capitalizing on new marketing efforts, presented both a challenge and an opportunity.

"We had been struggling with the decision of when to outsource," says Rote. "But when we met with Quiet Logistics, we knew immediately it was the company we wanted to partner with."

Bonobos has an avant-garde business culture. So does Quiet Logistics. The 3PL has built its value proposition around an automated fulfillment solution developed by Kiva Systems, Woburn, Mass. Quiet Logistics' robotic materials handling setup was the perfect foil for Bonobos' progressive business acumen.

"When we started the business in January 2009, we wanted to take our warehouse expertise directly to the customer with this technology piece," says Jacqueline Riggs, vice president of operations, Quiet Logistics. The company's leadership came from both sides of the third-party warehousing divide. Riggs brings more than 25 years of experience in distribution operations, including stints at Office Depot and drugstore.com.

Pairing this industry pedigree with a proprietary warehouse management system (WMS) and Kiva's innovative robotics materials handling solution created the foundation for a unique, customer-driven e-fulfillment operation.

A QUIET SOLUTION

Quiet Logistics' fulfillment system provides a completely transparent multi-tenant WMS and transportation parcel system that integrates with its customers' platforms. But most visible is the 3PL's automated, and quiet, warehouse operation.

Quiet Logistics currently operates two DC facilities in the Andover area, one of which is supported by Kiva's automated storage and retrieval technology. With the robotic element in play, receiving and putaway, picking, packing, and shipping are fully automated.

Quiet Logistics' materials handling system brings eaches, cartons, or pallets to work stations where employees can receive and stock units. "Product flows to the worker," says Riggs.

The system works as efficiently on the outbound side. The drive units (robots) pull storage pods to pickers who build orders for fulfillment. The system intuitively grabs multiple orders at the same time, and can prioritize items by specific characteristics such as next-day air, first-in first-out, and specialized VIP shipments—all while eliminating human movement between storage space.

The 3PL has also greatly increased the capacity of its distribution facility. Storage pods are squeezed into a much smaller area because there is no need for walk space—and pods can move around at will along the warehouse grid. Quiet Logistics can hold three times more inventory than a traditional warehouse.

Perhaps the only thing more striking than the robotic automation is the lack of ambient noise. "It's a 180-degree turnaround from warehouses with five-mile-long conveyor systems," says Riggs.

The hush of the facility challenges a common misperception. "People often associate productivity with noise," Riggs says. But Quiet Logistics is more than willing to demonstrate the difference.

INTERLACING WITH DEMAND

In the world of e-commerce, "each picks" drive fulfillment, and Quiet Logistics' DC is tailored to that demand. Companies such as Bonobos want product care, speed, and accuracy so they can deliver that service to customers.

With traditional conveyor systems, orders often fall out of sequence. ABC-type warehouse processes add touches to product handling and are also labor intensive.

"In our DC, one person fulfills orders instead of multiple handlers and processes," explains Riggs. "We can also more easily increase and decrease staff based on workflows." This efficiency helps improve turns and reduce errors.

Quiet Logistics currently manages all of Bonobos' fulfillment and shipping. Since the partnership began, efficiencies on the distribution side have had an impact on the e-tailer's customer-facing operations.

"Our error rate has dropped significantly," acknowledges Rote. "We can also handle orders later in the day, so we are pushing our cutoff from 3:30 p.m. into the evening. If a customer places an order, we can say it will ship in one hour. We have greater flexibility to meet customer demand."

VALUE-ADDED BENEFITS

Outsourcing fulfillment and shipping also allows Bonobos to build out its SKUs and grow the catalog. It used to sell pants with different waist sizes. Now it sells pants with different waists and in-seam lengths. Not one to sit on the seat of its signature slacks, Bonobos also sells polo shirts, shorts, and swimwear.

"Quiet Logistics' DC eliminates touches, which helps us reduce order fulfillment time," Rote adds. "Customers aren't just ordering one product, they are purchasing one unit in different styles, sometimes in a few different sizes, to find what fits. The cost and time to fulfill orders has improved markedly."

Because of its automated system, and the fact that inventory is pulled to work stations, Quiet Logistics has the flexibility to scale from one-unit orders to 20 at the same time—depending on demand.

This efficiency presents other value-added opportunities. It allows Bonobos to dedicate packaging materials to specific customers. For example, it can provide a catalog to first-time buyers or include special promotions for VIP customers to inform them about related products and give them the option to make another buy. In this manner, packaging and fulfillment efficiency enhances marketing efforts.

"We're expanding products to different types of customers," says Rote. "Our product is nice, and we think presentation should mirror that quality. Now we can tailor materials to what's in an order."

MEASURED APPROACH TO GROWTH

Together, Bonobos and Quiet Logistics are exploring opportunities to stretch their respective businesses.

Bonobos currently sources most of its apparel from local garment manufacturers in New York City. "But we don't want all our eggs in one basket; we need scale," Rote explains. The e-tailer is already awaiting its first shipment of product from overseas.

Quiet Logistics is looking to build on its early success, too, eyeing expansion into the U.S. Southeast.

Bonobos benefits from its partner's distribution experience and warehouse flexibility. Quiet Logistics, in turn, continues to build its customer portfolio and leverage economies of scale to provide even greater total value.

For example, the 3PL is using Kiva's technology to drive packaging improvements, letting the system dictate what size boxes are most efficient for a specific product—then leverage packaging volume to drive down pricing and share those economies with the customer.

Bonobos is also becoming more sophisticated in managing transportation, from consolidating shipments and batching orders to communicating better with carriers and consequently providing real-time shipment visibility to customers.

"Our partnership with Quiet Logistics has helped us grow up in terms of organizing product delivery," says Rote. "When we were doing it ourselves, we were always tempted to rush things through. Now that we are feeding a sophisticated system, we are more disciplined in how we get product."

For a company that places so much value on making sure its product meets customers' specific needs, finding a logistics service provider that brings a similar attention to detail was important.

Bonobos has a thing for perfect seams. But with Quiet Logistics, it has discovered a seamless solution.