Supply Chain Management Stand (Pick) and Deliver

FRAMINGHAM (04/18/2000) - It ain't rocket science: The faster and more accurately a company can fill an order, the more likely it is to satisfy the customer and keep him or her coming back for more.

Two online companies--Toysmart.com and Garden.com Inc.--face similar fulfillment challenges. But with dissimilar products and supply chains, they deal with those challenges differently. Toysmart.com has less than a month--from Thanksgiving until just before Christmas--to receive, process and ship more than 95 percent of its annual orders from its warehouse. Garden.com, on the other hand, has several peak selling and shipping times throughout the year, but the majority of products offered on its site--ranging from plants to fish to topiary elephants--are processed and shipped by more than 70 suppliers across the nation.

This story looks at how these two companies fill an order, from the customer's initial click of the "send" button to the package's arrival at the customer's doorstep.

TOYSMART.COM NELSON ORDERS TOYS At 1:10 a.m. on Dec. 1, 1999, Pat Nelson, who hates malls, was on the phone trying to reach an actual person at KBKids.com.

Her frustration had boiled over because, despite repeated tries, Nelson couldn't get the link from the website to the secure server to work, meaning she couldn't place her order. While listening to a seemingly endless Muzak loop, she decided to see if she could get better service elsewhere. Nelson doesn't remember why she ended up at Toysmart.com: "A TV ad maybe?" Nelson, a technical writer in New Hampshire, liked what she saw at the site. She ordered a Where the Wild Things Are Puzzle Maze Game ($15.99) and a Boggle Junior Game ($9.99) for a niece.

Because of a $10 promotional discount and free shipping (like many dotcoms, Toysmart is not yet in the position of having to turn a profit, so it can eat the cost of things that a brick-and-mortar cannot), the total was $15.98. She says the discount was so seamlessly applied to her order that she didn't realize she was getting it until she checked out. A short while later she received an order confirmation, along with a confirmation number, by e-mail.

This was a Christmas order for Toysmart, which did more online business in the first 30 hours of December 1999 than it did in all of December 1998, before the company transformed itself from Holt Educational Outlet--a catalog company that sold mostly to teachers and day care professionals--to an online company aimed at selling creative and nonviolent toys to the general public. Toysmart's best week for sales was Dec. 4 through 11. While the company will not say how much revenue it took in, Patrick Rafter, director of public relations, says the site had 500,000 visitors that week.

THE WAREHOUSE OPENS From Toysmart's host servers, located at its headquarters in Waltham, Mass., Nelson's order was routed to the company's warehouse/order fulfillment center 36 miles away in Worcester, Mass. Toysmart's warehouse takes up one-quarter of a 600,000-square-foot facility that used to house a U.S.

Steel plant. Giant vestiges from its steel processing days remain, including an enormous overhead crane with a hook the size of a ship's anchor. Toysmart's warehouse operation opened in August of last year. Wayne Teres, the company's director of logistics, spearheaded its design and construction. Teres, who had previously designed facilities for high-end merchandisers like Sharper Image and Robert Redford's Sundance furnishings catalog, had a tall order: He had just 70 days to move the company into the space and have the staff ready to take its first orders.

MAXIMUM EFFICIENCY In those 70 days, Teres oversaw the creation of a system to track the million inventory items in 75,000 different categories, from the moment they reach the warehouse to the moment they're shipped; the installation of enough shelving to hold the toys; a system that allows items to be found quickly and easily; and a veritable interstate highway of conveyor belts to carry toys from the person who checks that the order is correct, to the person who packs them up, to the FedEx employee who ships them out.

When a tractor-trailer carrying a load of Harry Potter books, Thomas the Tank Engine train sets and pipe cleaner weaving looms pulls up at one of the loading bays, workers check each shipment to see if it's correct, then use Toysmart's warehouse management software to create bar-code labels to track and "license plate" each product. These labels contain the product's name, its SKU number (assigned by Toysmart) and its UPC number (assigned by the manufacturer).

The product then moves into the picking area. This consists of enormous shelves that reach halfway up the warehouse's two-story-high ceilings. In the ceilings are rows and rows of skylights, which Teres loves: "I get fatigued when I go into most warehouses, but it's unbelievable here. You feel like you're working bathed in sunlight."

Designing a picking area is a science in and of itself. The goal is to maximize the efficiency of the order-fulfillment process by figuring out what arrangement will enable the pickers to find things as quickly and easily as possible. Teres has designed the picking area to be like a U-shaped racetrack, with the highest-demand products closest to the track going around aisles of shelves. But for all its utility, the picking area is also a wonderland of toys, says Teres. "It's very hard to walk down an aisle without touching or feeling something."

PICKIN' AND GRINNIN' Nelson's order for the Wild Things and Boggle Junior games is bundled with a wave of 499 other orders and printed on picking manifests at one of several printers near the picking area. Items on the manifest are listed in an order that gives pickers a fixed route through the warehouse. The manifest is then assigned to a picker who wheels an enormous tubular metal cart through the picking area, filling it with merchandise as he or she goes. The cart is about six-and-a-half feet high and divided into 12 separate bins, each of which holds all the items in an individual order.

"At the height of the 1999 Christmas season, the orders came out nonstop," says Joyce Pelletier, a picker at Toysmart. Pelletier was an order picker at another company before coming to Toysmart last September. That experience makes her one of the senior people working the floor. At the beginning of 1999, the company had only 28 full-time employees. When the year ended, it had 210 full-time employees in the headquarters and the warehouse, and 300 seasonal ones in the warehouse. Because of her experience and ability to solve problems, Pelletier is what's known as an "exception picker," someone who can find exceptions--items that others can't find. Having one person find whatever items are missing--usually because a bin is empty, an item is misstocked or it's too high, and a cherry picker is needed to reach it--means that pickers don't have to hold up the other 11 orders on their cart while waiting for one or two items.

When Nelson's order is complete, it's scanned and confirmed, then rescanned and rechecked as a packer puts the items into a cardboard shipping box (bearing a bar code unique to her order). Had Nelson ordered gift wrap for her packages, the box would have been routed to one of the 20 gift-wrapping tables. The company offers three different kinds of (non-denominational) holiday paper and one type of wrap specifically for baby shower gifts.

ONE HAPPY NIECE Nelson's order is then sent by conveyor belt to a station where another packer adds recycled paper packing materials and seals the box before sending it on a conveyor belt to the FedEx station in the warehouse. During the holiday rush, FedEx had five full-time employees in the warehouse just to handle the volume of business coming from Toysmart. They enter each package into the FedEx shipping system, which assigns a tracking number to each package before it is placed on a FedEx truck.

Nelson's order shipped before 5 p.m. from the Worcester warehouse on Dec. 1, approximately 17 hours after Nelson clicked "send." When the order was shipped, Toysmart sent Nelson an e-mail with her tracking number, allowing her to know exactly where her order was until the moment it was delivered to her house. The order arrived at Nelson's house in New Hampshire two days later, at 10:29 a.m.

Nelson then personally delivered the gifts to her 5-year-old niece.

GARDEN.COM YOU DO BRING ME FLOWERS Yvonne Schueller wanted flowers for her husband. Not a bouquet, but living, growing, keep-'em-alive-if-you-can-type flowers, specifically daffodils, tulips and paperwhites. So as a busy Los Angeles legal secretary with little time to hoof it to a flower shop, on Dec.

14, 1999, at 12:21 p.m., she went to the Garden.com website and ordered them.

Garden.com doesn't grow its own products. While the company does have a test garden in West Des Moines, Iowa, it doesn't sell anything from there. And the warehouse operation at its Austin, Texas, corporate headquarters mostly handles garden-theme items, such as rake-shaped earrings, scented hand lotions and the like. What makes the company successful is its ability to link to more than 70 suppliers of seeds, plants, tools, shrubs and even snails around the country through its proprietary software.

So even though Schueller's order is initially handled by Garden.com's servers in Texas, it is swiftly routed to the appropriate suppliers: The daffodil and tulip orders go to McClure and Zimmerman in Friesland, Wis., and the paperwhite order goes to W.R. Vandershoot in Chesapeake, Va.

A FERTILE OPPORTUNITY One of the things that attracted Garden.com's founders--Cliff and Lisa Sharples, Jamie O'Neill and Andy Martin--to the gardening business was that they wouldn't have to train suppliers and customers in a new way of doing business. Unlike, for example, selling books, where many people consider browsing the shelves of a bookstore an essential part of the purchasing process, gardening companies have long operated as catalog businesses. Buyers are used to ordering without having to see the actual plant, and suppliers already have systems in place to process and ship orders.

When Garden.com's quartet of founders began tossing around the idea of starting an online company, they knew little about gardening--they were not green thumbs but business school graduates with backgrounds in IT. Lisa Sharples, a home crafter, threw out the idea of selling beads online. After rejecting that idea, they considered selling seeds, which eventually led them to consider gardening.

"The gardening industry is absolutely massive," says CEO Cliff Sharples of the $47-billion-a-year industry. "But it's so highly fragmented that nobody perceives it as being a big industry."

After some research, they found out that gardening had no dominant national retailers, meaning the company wouldn't have to go head-to-head with an established brick-and-mortar competitor. In 1996, they scooped up the URL Garden.com for a paltry $2,500.

"When we started looking into the gardening industry we said, 'Wow, here's an industry with thousands and thousands of local growers of great products all around the country and no way to get that product efficiently and effectively out to a national audience,'" says Cliff Sharples. "The only way to do it is to electronically tie together the inventories of these farms and growing fields."

THE PERISHABLE PROBLEM Long before Schueller could place her order, someone had to plant and grow the flowers until they were hardy enough to be shipped.

Unlike manufactured products, which can be kept on hand indefinitely and consume only shelf space, plants have a limited shelf life and consume resources--water, electricity and the labor to tend them.

At Milaeger Gardens in Racine, Wis., which supplies perennials to Garden.com, the flora are grown in 85 greenhouses spread over three acres. Plants are grouped according to their growing needs, for example, those needing the same temperature or similar amount of light.

One of the trickier aspects of working with perishables is that they are so, well, perishable. A crop of plants, even ones grown in carefully controlled environments like greenhouses, can die suddenly for any number of reasons--diseases, insects or watering problems, to name just a few.

"Occasionally something dies en masse, like a whole variety," says Kevin Milaeger, whose family has been running Milaeger Gardens since 1960. "The availability can change almost overnight sometimes." When that happens, Garden.com has to be notified immediately, both so that it can tell customers who have ordered those plants and so that it can update its website.

PULLING ORDERS The suppliers receive the orders in batches through an extranet created and run by Garden.com, print the orders and then give them to order pullers to fill. The orders are arranged so that pullers pushing large carts can get them done as quickly as possible. While Milaeger Gardens has about 1,000 varieties of plants, the bulk of the orders are for just a few of those varieties. So as much as possible, all the big sellers like day lilies, hostas and clematis are stored together.

Not surprising, the work is very seasonal--this is, after all, the industry that invented the whole seasonal idea. Milaeger says that during the peak weeks in March and April he splits his 25-person crew into two and sometimes three shifts to keep up with all the orders.

Unlike inanimate products, plants are frequently ordered months before they are ready or wanted. "You might not want the plant for three or four months, so you order today and you get it some months down the road," says Milaeger. During the time when that variety of plant is growing, the suppliers keep track of orders to see if they either increase or drop off suddenly. If they increase, the farms will try to grow more plants for later sales.

In order to have this virtual supply chain work, Garden.com has built from scratch a software system that routes orders to appropriate suppliers and tracks what products those suppliers have on hand and how much they cost. The system also plans for future inventory. The company uses that information to keep the website current.

Another key reason Garden.com built its own system was that off-the-shelf software it looked at couldn't update customer order information in real-time.

Now Garden.com and the customer can find out the status of an order anytime, day or night.

SCAN AND SHIP Plants do not take kindly to conveyor belts and other assembly line mechanisms, so at Milaeger the person who pulls an order is also responsible for packing it and labeling it for shipping. Once the order has been labeled for shipping (but before the box is sealed), it goes into a greenhouse holding area, and the order pullers will check the contents again.

It is here, says Milaeger, that computer technology has made his business a lot easier. "Each item is bar coded, so [order fillers] don't have to read all these fancy botanical names that are in Latin," he says. "What used to happen is that there'd be this 15-letter Latin word and maybe someone misplaced one of the letters, and then it wouldn't match with the invoice." In short, order fulfillers don't have to know the difference between Pelargonium denticulatum (pungent peppermint geranium) and Pelargonium crispum (Prince Ruppert variegated geraniums) or Rheum rhabarbarum (rhubarb) and Armoracia rusticana (horseradish). Now, they just scan the bar code that's on the front of each pot, place the shipping label on the box and send it on its way.

Which is exactly what happened with Schueller's daffodils, tulips and paperwhites, which she received on Dec. 17, two days after she placed her order. The bulbs made their way back into the ground shortly after that.

Do you have any good, bad or ugly order fulfillment stories? Senior Editor Todd Datz wants to know at tdatz@cio.com. Constantine von Hoffman is a Boston-based freelance writer.

HOW THE GRINCH STOLE ONLINE CHRISTMAS It was not a happy Christmas for many folks attempting to play virtual Santa Claus. Last Dec. 4, Jennifer Teig went to KBKids.com to order a Teddy Roosevelt G.I. Joe for her husband, a T.R. aficionado. On Dec. 23, she was informed it was back ordered. On Jan. 11, Teig called the company to try to find out what had happened to the toy soldier, only to be told that orders not filled after two weeks on back order were canceled. She was then promised a $20 gift certificate for her troubles. Two months after her order, the certificate had yet to arrive.

She was hardly alone with her problems. In January, a disgruntled customer filed a class action suit against Toysrus.com, alleging the company accepted Christmas orders despite knowing it wouldn't be able to fill them. In addition to fulfillment problems--which bedeviled online retailers as well--the cyber-Christmas was also thwarted by purely electronic snafus. Andersen Consulting reported that fully one in four cyber-purchases failed either because the sites could not take orders, crashed in the process or were otherwise inaccessible.

With the clock already ticking toward the 2000 holiday season, e-tailers are hoping to avoid repeating last year's glitches. And lawsuits.

Join the newsletter!

Error: Please check your email address.

More about AndersenAndersenAndersen ConsultingCherryFedExKBKids.comSharper Image

Show Comments