Six Months to Success
When online footwear retailer Zappos decided to add apparel to its merchandise mix, the biggest challenge was revamping its fulfillment processes to accommodate garments on hangers and in bags rather than shoeboxes.
Zappos, based in Las Vegas, has a single centralized distribution center in Shepherdsville, Ky., that does an excellent job of processing and fulfilling shoe orders. However, the DC did not have adequate infrastructure or capacity to fulfill orders for clothing.
Half of the 832,000-sq.-ft. DC was equipped for operations when it opened in 2006, but the remaining half was left empty for expansion purposes. At the end of 2007 when the decision was made to add apparel, the portion of the DC that was built out was already operating at full capacity.
Craig Adkins, VP services and operations at Zappos, conducted a lengthy analysis to determine the best course of action, including time-in-motion studies to understand the optimum use of space.
“What we needed was an expansion solution, not a replacement technology,” noted Adkins, but the company also wanted to avoid making a large capital investment in static assets. The most economical and viable plan Adkins determined was to lease a 280,000-sq.-ft. building, already equipped with shelving and conveyors and located conveniently across the street from the Zappos’ DC, and outfit it with an autonomous robot solution from Kiva Systems, Woburn, Mass.
The Kiva solution offered critical advantages: First and foremost was the speed to implementation. The contract was signed in February 2008, and the system was fully operational in July.
“The Kiva system is very flexible because robots can be reconfigured anytime,” said Adkins. “It is a completely portable solution rather than a fixed asset, which is particularly good since we are leasing the building and, if we move, the robots go with us. Also, the system is very granular; we can buy one robot at a time if we choose.”
Currently Zappos has 70 robots; 10 stations and 3,000 storage pods (the 3-ft.-square, 6-ft.-tall shelving system that the robots transport). Although this is a higher ratio of pods to robots than most retailers have deployed, Adkins explained that Zappos operates with a storage-intensive inventory. The distribution complex has approximately 4 million units in total inventory with roughly 500,000 of those units, primarily apparel products, stored in the Kiva pods.
He described the benefits associated with the robots, and the resulting “cost avoidance” as huge: “Kiva robots use about half the energy resources [compared with Zappos’ other fulfillment systems]; the robots are two times more labor efficient, and they are much faster,” Adkins said. “We can easily fulfill an order in 8 to 12 minutes—from the time a customer places the order online until it is processed through the DC and shipped out the door.”