In Spain customers visit Zara stores 17 times per year on average compared to 3 times per year for competitors. Because their clothing designs change often, it is harder for people to see them clearly on the Internet and thus they are encouraged to come into the stores instead and try on the unique fashions that Zara offers.

Suzy Hanzel, production technician associate, Zara Clothing Company

Agents for the company are always scouting out new fashion trends at clubs and social gatherings. When they see inspiring examples they quickly send design sketches to the garment designers at the Cube. New items can be designed and out to the stores in 4 – 6 weeks, and existing items can be modified in 2 weeks. Clothing items are priced based on market demand, not on cost of manufacture. The short lead times for delivery of unique fashion items combined with short production runs enable Zara to offer customers more styles and choices, and yet still create a sense of urgency to buy because items often sell out quickly. 

The company’s core market is women 24 – 35 years old. They reach this market by locating their stores in town centers and places with high concentrations of women in this age range. Short production runs create scarcity of given designs and that generates a sense of urgency and reason to buy while supplies last. As a consequence, Zara does not have lots of excess inventory, nor does it need to do big mark-downs on its clothing items. Zara has 12 inventory turns per year compared to 3 – 4 per year for competitors. Stores place orders twice a week and this drives factory scheduling.

Inventory visibility is crucial. Warehouse inventory has to be able to interface with the production side of the business and they have to be able to connect within the supply chain to know what is in the warehouse and what is on a truck or stored in a trailer.

Dave Bushee, vice president of logistics technology, Penske Logistics

As part of its work, Penske manages one 150,000-square-foot internal distribution center and one 400,000-square-foot external distribution center. It provides receiving, storage, sequencing, kitting and repacking. Penske handles large parts and modules as well as shipping racks and the trailer yard. Penske also designs and produces the material sequencing racks in-house, saving production space and reducing downtime.

The actions inside a distribution center are the catalyst for speeding deliveries, managing inventories and cutting costs. Penske’s proprietary technologies track the flow of inventory through and around the distribution center, monitor product velocity, and provide advance notice of arrivals. Since coming on board, Penske has focused on reducing and controlling inventory, improving the receiving area and boosting productivity. Penske leverages a data repository that provides a single, high-level, comprehensive view of the manufacturer’s overall operations, which allows the team to increase efficiency. Information about incoming and outbound products can be transmitted electronically between supply chain partners, and the information is automatically loaded into the core system.

Creating a positive experience for the distributor’s customers started with improving visibility and communication. Success within the supply chain depends on connectivity, and technology suite ensures everyone involved in a shipment has visibility into what is happening.

Lora Carson, join CEO, Warehouse Company

The distributor turned to Logistics to help streamline and improve its deliveries to warehouses, houses, job sites, apartments and businesses. The partnership has allowed the distributor to improve customer service, reduce the size of its in-house fleet and tap into dedicated capacity. Utilizing expertise also enabled the distributor to focus on its core business rather than transportation concerns.

The distributor’s parent company uses transportation-as-a-cost-of-sales as a metric to compare business units, so managing costs is critical. ClearChain technology allows customers to centralize their data, giving them the ability to see and understand their total transportation spend. The technology has also helped optimize the network and streamline deliveries, driving overall cost savings. Moreover, the distributor saw added value in efficient, professional drivers that arrived at its customers’ sites on time. As part of its communication, team members from Logistics and the distributor meet regularly to discuss metrics, data analysis, priorities and plans. The increased visibility enables data-driven decision making, and regular meetings give both parties clear direction for the future.

The simple rule in traditional supply chains was to store “maximum possible quantity of every product, everywhere, every time”. This rule had to be followed because of lack of information flow and planning mechanisms in the supply chain.

Bill Carston, warehouse selector, Deliver Group Company

Supply chains have evolved and are much different from what they used to be say 2-3 decades back. Modern supply chains equipped with better information & intelligence are able to predict product demand well in advance, plan accordingly and deliver the items close to when they are needed.

You now know the stark difference between a warehouse and a distribution center and how the evolution happened over time. Does this mean that warehouses no longer exist or they don’t serve any purpose? You will be mistaken if you believe that. Warehouses still exist and serve a purpose. A good example would be how inventory is pre-built months in advance to meet the high seasonal demand and is stored in typical warehouses before being sent to a distribution center for customer service. However, the importance of warehouses in supply chain has gone down and the distribution centers have now emerged as the nerve centers of the modern supply chains.

A proprietary system helps design the most efficient routes with a route algorithm. Dedicated staff constantly redesign this QSR’s routes for absolute optimization. Imagine if each shipping line or container operator followed their own specifications without adhering to the ISO Standards set for the industry. A unified shipping approach would have been impossible.

Joe Carlier, senior vice president of Global Sales

The changing supply chain and higher customer expectations will require that you know every detail about where your inventory has been, is going, and when and how it will arrive. With it, you’ll have a more comprehensive understanding for better decision-making around order fulfillment and operations management, as well as transparency throughout the recall process.

Many of today’s best-known food and beverage brands trust HighJump for supply chain management and visibility because we offer unparalleled advanced inventory management capabilities and real-time visibility to critical information. From the supplier to the store shelf and all locations in-between, this level of material and inventory control allows our customers to focus energies on expanding their businesses and building new effiencies into their processes.

What we’re looking for here is a logical sequence of operations within the warehouse where each activity is located as close as possible to that which precedes it and similarly, the function that follows it. We are concerned with the controlled and uninterrupted movement of materials, people and traffic with, if possible, no cross-flow clashes or areas of high traffic or work density.

Lin Padmer, warehouse assistant, DeliverTech

Aside from considering customer service aspects, such as lead times and supply chain velocity, you will also need to think about anticipated throughput and more specifically, receiving, storage, and dispatch volumes, as well as the types of processes that will be performed in your warehouse facilities. Your distribution strategy too, will have a bearing on network optimisation.

If you are already familiar with the FAST concept in warehouse design layout (if not, see the sections below), you will know that the objective of FAST is to ensure each activity-locations are close enough together to enable smooth workflows, but not too close to clutter the process and reduce efficiency. You can apply the similar thinking to the layout of your warehouse network, although the emphasis should be more on locating your warehouses close enough to customers to support your service offering, without introducing difficulties on the supply side.