Going for the logistics gold

Going for the
logistics gold

Event-driven demand is one of the most difficult logistics challenges a manufacturer or retailer can face. As a vertically integrated manufacturer as well as a retail distributor, apparel maker Roots faces those challenges from both ends.

Roots gained national prominence when, in 2002, it was able to quickly respond to unprecedented — and underanticipated — demand for U.S. Olympic apparel during the Winter Olympics in Salt Lake City. With the 2004 Summer Olympic Games coming up, Logistics Today checked with Roots to see how the company plans to apply what it learned in 2002 as it deals with a whole new set of logistics hurdles.

Roots was no stranger to the Olympics when it was contracted to supply U.S., Canadian and British teams with sports apparel for the opening, closing and medal awarding ceremonies at the 2002 Winter Games. It had already participated in the Nagano and Sydney Olympics, so Roots thought it had a handle on event-driven fulfillment and the logistics demands that entailed.

Roots’ expectations were 100 calls per day and 5,000 orders per month. However, hosting the Olympics in post-9/11 America, the country went wild for USA-Olympic logo items, and Roots’ call centers had to cope with volumes approaching 1,500 calls per day and 50,000 orders per month.

Original plans to ship orders directly to customers from Roots’ Toronto facility had to be scrapped as shipment levels approached 5,000 per day (with peaks as high as 10,000). Roots worked quickly with its call center provider PFSWeb to reconfigure its entire fulfillment capability, including its logistics network.

In quick succession, Roots and PFSWeb added fax capacity for orders and launched a web site capable of receiving customer orders. PFSWeb expanded phone capacity by adding call centers in Memphis, Tenn., and Plano, Texas.

Original plans to ship orders direct to customers from the Toron-to facility via UPS were quickly replaced with less-than-truckload (LTL) shipments to PFSWeb’s distribution facility in Memphis, where orders were prepared and shipped to customers via the U.S. Postal Service.

Roots manufactures to demand, explains James Connell, manager of new media and e-commerce. “Because we are vertically integrated and manufacture our own products, we were able to change orders, stop orders, or add different orders,” he continues. “We didn’t overextend ourselves for inventory, and we didn’t have a huge surplus as demand tapered off.”

But in 2002, with the surge of orders Roots had to cope with, supply issues did crop up. Roots wasn’t able to make some popular products fast enough. Its business decision to ship only complete orders had to be modified.

Records and reports on product and inventory had to be accurate. “Roots was procuring product based on what I was telling them,” recalls Tamy Butterfield, general manager of PFSWeb Canada.

“There were always one or two problem items or situations that would come up,” explains Connell. “If, for example, someone ordered a hat that had a longer-than-normal lead time, we’d partial-ship orders that contained the hat. We’d release all the other orders that didn’t contain that hat, and wait until those orders were actually completed to ship them.”

“We didn’t ever take from stockpiles,” adds Butterfield.

The two organizations established checkpoints with auditing processes that allowed the Memphis distribution operation to feel very secure with what product it had and the information on what was coming. “We always felt like we were under control,” Butterfield notes.

Customer preference forced Roots to develop a hybrid strategy to fill incomplete orders on a case-by-case basis. This necessitated changes in policy and process. In effect, Roots and PFSWeb added rules-based exceptions to a rules-based environment.

Roots’ distribution department was in constant contact with PFSWeb, expressing its concerns when and where they cropped up. Butterfield says there was never a desire to restrict the visibility of any of the operations people because the levels of authority were established and respected. That was critical for Butterfield in Canada because she was directing activity in the U.S.

Since the 2002 Olym-pics, Roots has expanded its international presence, which puts PFSWeb and Butterfield in contact with other international locations that have their own management structure. Clear lines of authority and open communications help make those transitions smooth.

The information, reporting and auditing systems that were in place or were built during the 2002 Olympic surge helped Roots recognize when the surge was over. This allowed it to continue to fill orders when there was demand and left it with minimal inventory risk as demand tapered off.

An open post-mortem of the response to the Winter Olympics allowed Roots and PFSWeb to be very frank about product, processes and communication, says Butterfield. Both were open about the mistakes they had made, and the discussion ended with agreements on how to handle those situations.

Butterfield notes that Roots was concerned about ramping down and facing another big surge in demand. PFSWeb took a conservative approach but kept the reports coming so Roots had the capability to respond to another surge for about three weeks after order trends were slowing. “Everything is very scalable without a huge additional cost,” notes Connell.

Connell expresses confidence in Roots’ and PFSWeb’s abilities to respond to demand during the 2004 Olympic games, though he says they’ll probably want to manufacture a little more up front. He also says he’ll add more planning time. In 2002, the project really only started a month before the games started, Connell admits.

“There wasn’t a lot of time to put something together, but what we’re trying to do now is be more proactive,” he explains.

In the end, Connell is optimistic, saying, “If we get buried by demand [at the 2004 Olympics], we’re that much more prepared to react this time.” LT

resources

Fashion Links
www.fashion-links.com

ICICI Infotech
www.icici-infotech.com

Koret of California Inc.
www.koretsf.com

U-Freight
www.ufreight.com

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March, 2004

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at a glance
In this article, an apparel company learns how to fulfill unexpected demand within a very tight timeframe.

Copyright© 2004 Penton Media, Inc.

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