American Eagle Outfitters Adopts Omnichannel Distribution with VARGO

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American Eagle Outfitters Adopts Omnichannel Distribution with VARGO

By Masha Zager - 08/15/2018

As a specialty retailer of on-trend clothing and accessories, American Eagle Outfitters (AEO) serves the world’s most demanding demographic group — 15- to 25-year-olds — through its 900-plus American Eagle stores, 100-plus Aerie stores and e-commerce sites. Famously lacking in patience, these millennials want their orders now, and AEO is meeting that demand.

More than a decade ago, AEO brought its online fulfillment process in-house, ending its contract with a third-party logistics provider and building a new distribution center in Kansas.

“We realized right away that the reality of processing an online order is more labor-intensive than what distribution is used to,” says Christine Miller, senior director of operations for AEO. What’s more, online shoppers have higher expectations for turnaround. The wave picking method traditionally used to pack store orders was less suitable for the types of orders coming in through the e-commerce sites.

AEO turned to VARGO, a company it had previously partnered with for materials handling equipment, for a solution. The company recommended COFE, its waveless warehouse execution system, which moves orders in a continuous flow. Miller says, “Partnering with VARGO on software provided a solution that would give us a competitive advantage from its efficiency and from turning as quickly as we wanted to.”

The efficiencies in waveless picking come from the system’s maintaining a constant batch size. Each time an order is completed, the system adds a new order to the batch. That means pickers can pick continuously with less traveling, and machines are utilized more evenly. Reducing fluctuations in machine utilization and reducing worker downtime and travel time means that fewer workers and smaller machines are needed for a given amount of work. Trucks can be dispatched more regularly — there’s no need to wait for the stragglers from an incomplete wave of orders. In addition, a waveless picking system can reprioritize orders on the fly, based on business needs.