European outdoor clothing and equipment specialist Jack Wolfskin’s distribution operations had been growing by more than 20% every year. Its warehousing and logistics systems were bursting at the seams.
The company eventually moved into a new logistics center located in Neu Wulmstorf, Germany (near Hamburg). The facility relies completely on direct carton handling. Pallets, trays or other additional load carriers are not needed. Jack Wolfskin’s logistics manager Uta Mohr explains: “Very early in the planning process, it became clear to us that we wanted to work without trays or additional load carriers since that would not be a solution for us, but rather merely an aid for AS/RS technology.”
The decision to invest in a completely new distribution centre did not come easily to Jack Wolfskin. After all, it was the largest individual investment in plants and equipment in the almost 30-year history of the company, as CFO Christian Brandt explains. “Until now, we have always moved every 5 to 10 years. From a certain operations size, however, moving is no longer feasible. We needed more capacity and consistency on a permanent basis and thus a more scalable solution.”
The new logistics center’s 323,000 sq. ft. footprint can be expanded by an additional 215,000 sq. ft. and is designed to allow the company to grow at this site for more than 10 years so that all of Europe can continue to be supplied from this point. In the process, it does not play a role in the case of the implemented concept whether the business “grows in the depth and width of the product range, in the number of points of sale, or in the requirements of our customers: we can either add storage capacity or expand and scale up our order picking and service areas,” Brandt says.
New handling process, new IT system
The new logistics center brought Jack Wolfksin not only the use of new material handling automation technology, but also led to extensive changes in the organization and to a complete replacement in the old IT system. For so many changes, it was necessary to put the entire project in the hands of one general contractor.
“We do not want to be at the interface; otherwise, we would always be in the situation that every subsupplier makes excuses to the others,” Mohr says. “The integration of technology and IT is also the decisive point that makes such projects a success or failure. We exchanged the IT systems and technology and radically changed the organization and process, all while moving to a new distribution center. None of our customers noticed.”
The main warehouse of Jack Wolfskin now serves about 3,000 points of sale in all of Europe. These include both traditional outdoor merchants, like specialized athletic shops and clothing shops that can guarantee a high-quality presentation of the products and corresponding consulting and service. The company’s franchises number about 270 and the company’s catalog of products is distributed in shops and sent out by post in a print run of more than 1.7 million copies at the start of the season.
Unplannable sales orders
The start of the season is the greatest challenge for logistics because all points of sale want to be provided with the basics of the new product range in the shops at this time. Mohr says, “For this reason, we deliver the new goods to the shops first and then send out the catalogue.” Each season, about 8,000 different articles are available, including all sizes and color variants. With an overlapping of both seasons, about 16,000 SKUs are permanently available in the main warehouse.
“The business at the beginning of the season gives us plannability to the extent that we can add this volume to the plan up to four weeks in advance,” Brandt says. The greater challenge, however, is delivery from stock, which makes up about 70% of all sales orders. “In this case, the shop spontaneously orders what it needs and we deliver these articles up to 30% on the same day and the rest usually on the next day.”
The bandwidth of order sizes varies and ranges from one-piece orders up to the initial stocking of a shop with more than 3,000 different articles or the order of more than 1,000 pieces of a jacket by a large customer.
All of these requirements could no longer effectively be met in the old, purely manual logistics solution with sequential two-stage order picking. Brandt says, “We performed a lot of calculations, made plans, and discovered that this concept is simply no longer scalable. It was clear to us that we had to find a radically different solution.”
The Hamburg site: central and close to the harbor
The only site that came into question for the new logistics center of Jack Wolfskin was the harbor of Hamburg since a majority of the goods come from the Far East. In addition, this site also offers an ideal base for the distribution of the goods since it lies relatively centralized within the distribution area. Any move away from the Hamburg region would have also meant that the company would have lost almost its entire workforce, which would not have been a realistic option. Instead, all employees were able to switch to the new site thanks to a newly setup connection to the public transit system.
Jack Wolfskin does not have its own production facilities, but rather has its products produced by about 50 longstanding partners mainly in the Far East. The goods are transported in containers by ship to the logistics center in Neu Wulmstorf. There, the cartons are transferred directly from the container to the automatic conveyor system, automatically identified, measured, weighed, provided with an internal label, and then transported to the carton warehouse. It was thus necessary to shift the labeling of the cartons to the suppliers within the process chain. Mohr says, “We already started early with this process, about 2½ years ago, when we were not even able to evaluate the labels. But we knew that we would need this lead time to train our suppliers.”
Container unloading in 45 minutes
This training has paid off. In the old system, up to a day was needed to unload a container, including the manual inspection, sorting, and item-based palletization of the cartons, labelling, and provision and storage of the pallets. Now this same process takes 45 minutes. “Our unloading logistics are completely lean now. We are also able to process the planned peak of 30 containers a day,” Mohr says.
The core of the new logistics center is TGW’s automatic carton warehouse. It stores the delivered cartons directly and without additional load carriers in the triple-depth storage structure using Twister technology.
“For us, it was decisive that, using a triple-deep solution, TGW managed to create an optimum ratio between storage capacity and storage density with sufficient dynamics at an acceptable relation to the investment volume,” Brandt says. In the first step, a 12-aisle warehouse with 210,000 storage locations for cartons was realized. In two additional steps, the first of which is already being realized, the warehouse can be expanded to a total of 19 aisles and almost 310,000 storage locations.
Triple-deep automatic carton warehouse
The entire order picking process is supplied with goods from the carton warehouse. The goods are conveyed to the order picking zones defined by the system and provided in shelving racks. Order picking itself remains manual, but the entire process is controlled by the new system.
“We have made quantum leaps in development,” Mohr says. “We used to use sheets of paper on which I checked off the goods with a ballpoint pen. Now, everything is under control via RF data transmission.”
With automation, another positive benefit is that articles do not have to stay in a fixed place in the order picking warehouse. The system allows for items to be moved and stored in multiple locations to speed up order fulfilment.
“The distances have become considerably short and we can settle many sales orders at the same time through the pick stations,” Brandt says. “Without the traditional A-B-C distribution, the order picking warehouse can cover the daily dynamics both in depth and width.”
The area of value-added services is a very important function for the business of Jack Wolfskin and its trading partners. Here, the articles are labeled, repacked, specially documented, and possibly ironed or otherwise prepared according to customer requirements. Coming directly from the order picking process, the system routes items requiring such post-processing to 16 ergonomically designed workstations in the value-added services area. The employees at these workstations scan the incoming cartons, and work instructions for that order immediately display.
Finished cartons are confirmed in the system and transferred back onto the conveyor. Value-added services is a very extensive area, as Brandt confirms. For this reason, a support of the process by the new logistics system was necessary to be able to master the increasing volume in the required quality and time.
Finally, all cartons reach the goods-out area, where they are covered with a lid, strapped and labeled for shipping. While the labeling and strapping take place automatically, the lids are placed manually. In other areas as well, such as the carton setup department or order picking warehouse, the company continues to rely on its human workers.
“We have not switched to full automation, but we have consciously decided on this solution,” Brandt says. “We did not want to solve everything at once and overtax ourselves. Our goal was to implement and concentrate on the important things. We still have manual areas and can control the use of employees and various strategies ourselves in a very flexible manner.”
Quantum leap for Jack Wolfskin’s logistics
Jack Wolfskin is proud of its new distribution centre in Neu Wulmstorf, not least because it was completed and fully operational just in time for the start of the Autumn/Winter season 2010. “We have 150 permanent employees here and, now, at the start of the season, about 150 temporary employees with whom we can cover the demand in two-shift operation for the very first time,” Mohr says.