CSA Exclusive: Gap Inc. exec talks about retailer’s supply chain transformation

Gap Inc. is leveraging a variety of automated solutions to ensure its supply chain can meet holiday demand and overcome pandemic-related strains and delays.

Chain Store Age recently spoke with Kevin Kuntz, senior VP, global fulfillment and contact centers, Gap Inc., about the specialty apparel retailer’s application of automation and robotics across its supply chain. Kuntz also discussed how automated systems play a key role in state-of-the-art distribution facilities the retailer is building and retrofitting.

“We are preparing for a robust holiday season,” stated Kuntz. “There is pent-up consumer demand. We were seeing explosive online growth even pre-COVID-19. And then like most retailers, through the pandemic we have had explosive online growth. From the customer viewpoint, we are better positioned than ever to meet our online promise.”

According to Kuntz, Gap experienced a steady increase in buy-online-pickup-in-store (BOPIS) and curbside pickup orders during the COVID-19 pandemic.

“BOPIS has a place in our supply chain, but omnichannel business will level off post-pandemic,” said Kuntz. “BOPIS and curbside will continue to be an option convenient when you pass the store on the way home, or need to pick up an outfit the same day to wear that evening.”

Gap is in the midst of a five-year supply chain transition aimed at building out fulfillment capacity. In 2020, the company built out fulfillment capacity at a new supply chain facility in Ohio to 1 million units per day from 650,000 units per day.

On the heels of this expansion, Gap is undertaking three major supply chain facility projects in 2021 – retrofitting a Canadian distribution center with current robotic automation technology, as well as boosting the fulfillment capacity at two distribution centers in the U.S.

“At a distribution center in Phoenix, we are in the middle of a ramp-up from processing 175,000 pieces per day manually to 350,000 pieces per day,” Kuntz said. “And at a parallel development project in Gallatin, Tennessee, we are increasing capacity from 300,000 units per day this year to 500,000 units per day in 2022.”

[Read more: Gap Inc. invests over $100 million in supply chain infrastructure]

Kuntz said that these updates are enabling Gap to cut days out of its distribution centers and stock the facilities quicker. Although the pandemic hasn’t caused “significant” inventory delays, according to Kuntz, he acknowledged the retailer is fortunate to have long-term supplier contracts in place.

“I wouldn’t want to be on the spot market right now,” he said. “There are port delays you have to adapt to. We changed transit planners. In addition, we use technology tools. Our control towers have capabilities from proprietary internal software that allow us to model inventory delays and adjust accordingly.”

Kuntz also reviewed some specific automated solutions Gap is using in its distribution facilities.

“There is a lot of automation in our distribution centers,” said Kuntz. “For automated store retrieval, we installed a robotic arm that scans goods and places them into a cubby. Then the cubby is lit green when it contains an item that needs to be retrieved.”

Kuntz said Gap obtains significant labor benefits from this system, as the retailer now needs only four employees to work four shifts each, instead of the 16 that were previously required.

“It mitigates labor risks, and we’re still hiring for jobs in other areas, such as maintenance technicians for the machines,” commented Kuntz.

He also described how Gap utilizes the Exotec Skypod smart robotic solution to streamline returns processing at its Gallatin, Tenn. facility.

[Read more: Gap extends warehouse robotics to returns processing]

“Today, returns are a manual process at most of our facilities,” said Kuntz. “We credit the customer and refurbish and resell the product. There is manual putaway and pull, with a random mix of up to 10 units per single box.”

However, with the automated Exotec Skypod system, Gap places returned items in totes separated by dividers. For outbound pulls, Skypod automatically tells warehouse associates what cubby in a tote contains the needed product.

“This results in a significant reduction in time to service and labor to service,” said Kuntz.

Looking ahead, Kuntz said Gap will launch three additional distribution center projects in 2022. These include building a new greenfield campus in Longview, Texas, as well as adding capacity to existing facilities in Fishkill, N.Y. and Fresno, Calif.

“The Greenfield site will have optional flow for the online channel and improve our service in the Southwest,” said Kuntz. “It will process an additional 1 million units per day. We’re adding 500,000 units of capacity each at Fishkill and Fresno, for a total of 2 million new daily units in the supply chain. We will also roll out the Exotec Skypod system to focus on returns in Fishkill and Fresno.”