Warehouse Upgrade: Of Boxes and Briefs

Tags: Logistics I.T., Retail, Warehouse Management Systems (WMS), E-commerce, Logistics, Supply Chain

Receiving up to 10,000 daily orders and with the busy holiday season approaching, e-tailer MeUndies is replacing a manual process with a WMS to provide better tracking, stricter quality control, and more efficient labor usage in its new warehouse.

MeUndies used to get its knickers in a knot during the holiday rush. But a new WMS has it in better shape.

Buying underwear is rarely a fun experience, something MeUndies founder Jonathan Shokrian wanted to change. He launched the e-commerce underwear enterprise in 2011, attracting customers with sustainable and comfortable fabrics and colorful designs, including his-and-hers matching briefs. The company has since added an optional monthly subscription service and a small selection of casual clothing.

While the e-tailer emphasizes playful and quirky designs, its warehouse operations needed to emphasize efficiency. Warehouse employees manually pick and pack orders from a paper-based system lacking electronic inventory control.

With up to 10,000 daily orders and the busy holiday season approaching, MeUndies realized it had to adopt a more automated, efficient system to provide better tracking, stricter quality control, and more efficient labor usage.

Its challenge is to "support growth in a start-up environment," says Jason Bang, head of fulfillment operations, MeUndies. In early 2017, the company began a quest to find the best digital solutions to do that.

Searching for Support

The Los Angeles-area company anticipates sales will reach 5 million units by the end of 2017, including individual $16 pairs of underwear, underwear multi-packs, and even a customized $4,000 set of daily underwear for one year (the 365 pack).

As part of this growth, MeUndies is heavily investing in infrastructure and operations.

It recently expanded into a 50,000-square-foot California distribution center, implemented an enterprise resource planning (ERP) system, and is now revving up for its warehouse management system (WMS) launch.

The underlying reason for the upgrades? MeUndies had reached a tipping point where manual operation costs were too high. "We spend between $7,000 and $8,000 every month on paper to print 160,000 to 200,000 monthly orders," Bang says. "Every transaction involves a piece of paper."

New Warehouse, New System

While the increased warehouse space is efficient for holding products, it doesn't provide extra room for hiring more pickers and packers. The expanded warehouse can easily handle more products by stacking them, but it can't stack people. Adding more workers to the space would diminish return on investment and increase errors, says Bang.

When the operation was smaller, it was easy for a clerk or a few administrators to validate orders. But at the current volume, it's difficult to ensure workers tag every order correctly and ship on time.

"There's no visibility into our operations, except at a high level," says Bang. By implementing a WMS, MeUndies aims to get more granular data and better focus on quality control.

Searching for Solutions

The e-commerce company initially considered ERP systems with warehouse management as part of the solution. After realizing the best option was using a third-party platform for the warehouse management portion, it chose NetSuite's ERP product. It then added a handful of third-party WMS vendors to the RFP process.

MeUndies found a solution to grow with the company in Snapfulfil, a cloud-based, Software-as-a-Service (SaaS) WMS developed by Synergy Logistics Ltd., headquartered in Loughborough, United Kingdom, with U.S. offices in Chicago and Charleston, South Carolina.

The e-tailer liked that the Snapfulfil WMS did not require a capital outlay, and its SaaS subscription is all inclusive. "We have access to and will utilize everything the system is capable of," Bang says.

Another advantage of the SaaS model is the subscription cost is tied to units. In the November and December peak season, with almost twice the sales volume, Bang will hire temporary workers. The Snapfulfil SaaS model is flexible, allowing MeUndies to add users during the crunch.

Countdown to Launch Date

After running numerous time and efficiency tests at the warehouse and discussing its efficiency needs with Synergy, the e-tailer greenlighted the Snapfulfil implementation in late spring 2017.

As part of the implementation process, the Snapfulfil team visited the MeUndies site in summer 2017 to assess the warehouse for workflow, and to discuss integrating with its other platforms, such as NetSuite. The administrative staff received training a few weeks before the go-live date, scheduled for September 2017.

Preparation is key to successful implementation, Bang says.

He anticipates training the pickers and packers will require only one hour, the Monday after the system's weekend launch. The system is simple to use, and pickers follow a directed workflow.

"I don't anticipate a difficult transition," he says. "The system is easy enough that we'll see immediate gains, without a transition period where we're less efficient ramping up."

Before the launch, the inventory manager will perform a full physical inventory, auditing every carton and ensuring proper labeling. Workers will scan every carton in every location. "We warehouse 1.2 million units of product, but our inventory is fairly simple," Bang says. The company holds 6,000 to 8,000 cartons at any given time, so it can scan each carton and bay location in one weekend.

From Bang's analysis, the new WMS will increase efficiency and save receiving, quality control, picking, packing, and inventory management costs.

By the end of 2017, using the Snapfulfil WMS will increase warehouse efficiency by 25 to 30 percent, without eliminating current jobs, Bang says.

Calculating Big Gains

Bang bases his projections for time and cost savings on anticipated big wins.

Here's one example of how the WMS will help. If MeUndies gets 300 individual orders for one SKU, the clerk currently prints a paper order and manually dispatches them to multiple pickers who grab the individual items. With Snapfulfil, "rather than 300 picks, it's one pick," Bang says.

One person grabs a carton or several cartons at once, with all 300 orders. "We don't have the capability to do that with our current packing process," Bang says. The WMS, on the other hand, will dispatch picking paths, optimizing where it sends warehouse workers. "There are huge efficiency gains to be made there," Bang says.

Packing also provides efficiency opportunities. Packing is currently manual, and the team cross-checks the product against the order sheet before packing. That's the quality control check workers perform before sticking on the label.

With the WMS, the packer will scan the code, quickly confirming the order at the packing station. Bang did time studies on packing at the MeUndies warehouse and when visiting other Snapfulfil customer warehouses. "We'll see 30- to 50-percent gains in packing efficiency," he says.

The company is banking on indirect labor savings as well. The clerk who currently prints out orders all day will be redeployed, most likely to the picking or inventory team.

Bang anticipates gains in inventory management and quality control as well. The company has quantified its error costs, and because the Snapfulfil WMS will increase accuracy, more cost savings will ensue.

While the company normally warehouses approximately 1.2 million inventory units, that rises to 1.7 million during peak season. It currently has no electronic inventory management system, making it difficult to manage cycle counts or maintain accurate inventory numbers. "Managing that much inventory will improve dramatically with a WMS solution compared to a manual system," Bang says.

Ramped Up for Savings

While vetting WMS offerings, including Snapfulfil, Bang spent a lot of time calculating the potential ROI for each solution, looking three years ahead.

"Snapfulfil is not the least expensive solution," he notes, but using conservative models for savings using the Snapfulfil WMS, he estimates 25- to 30-percent gains initially, even after the SaaS costs.

Between efficiency and cost gains, including labor, quality control, and order accuracy, Bang anticipates MeUndies will save $200,000 to $250,000 in the next 12 months. With no anticipated ramp-up time when launching the system, he expects the savings to begin the first month and increase over time.

Snapfulfil won't solve all the company's supply chain needs, Bang admits. It is still looking to implement other tools, such as demand planning. But with this WMS and other capital investments in equipment, fixtures, and the ERP system, Bang anticipates MeUndies will double its efficiency. And that's a good way to grow in a start-up environment.