competitive asset. By investigating innovative ways to increase capacity and improve order picking, its order fulfi llment operation has improved at light speed. Here’s how they did it. GROWING PAINS
From its inception in 1999 all the way through 2006, the company had been processing shoe orders in mostly manual operations using paper pick lists with very little automation. By 2006, with sales escalating, the company moved from a 280,000 square-foot building into a 832,000 square-foot fulfillment center in Shepherdsville, Ky., just 12 miles from a main UPS shipping hub. Leaving half of the space empty for expansion, Zappos installed a state-of-the-art, radio-frequency (RF) driven order processing system in 416,000 square-feet of space.
The new system included a four-story, rack-supported mezzanine filled with steel shelving, a four-story, 32-pod horizontal carousel system transporting products to pickers on mezzanines, and a network of powered conveyors and sortation systems to move and sort products from receiving to shipping. This mechanized system was designed to handle larger shipment volumes of shoe orders with shorter order cycle times than previous manual operations.
By early 2008, plans were already underway for the retailer to eventually sell “anything and everything.” But with product expansion came a small issue: According to Craig Adkins, vice president of services and operations, “Over the past year, we’ve seen a significant increase in apparel and we knew we’d eventually be branching into sporting goods like as tennis rackets and golf clubs…and we already had some limited cosmetics,” says Adkins. “But our current mechanized equipment was really just designed for shoes.” Shelving units and conveyors were optimized for shoe boxes and not meant for plastic-wrapped apparel.
The broadening SKU assortment, coupled with triple-digit annualized sales growth, was slowly creating gaps in capacity. Adkins knew it was time to put serious thought to equipping the adjacent empty expansion space with a cutting-edge order fulfillment system that would help the retailer further realize its vision of being the premiere store online.
EVALUATING TRADITIONAL OPTIONS
Together with his project team, Adkins quickly evaluated three tried-and-true options: adding more static racking optimized for apparel; using carousels exclusively; and rolling back into their previous 280,000 square-foot building where they had already static shelving and conveyors built in.
But there were mounting concerns. “As instruments of traditional distribution, these systems weren’t really optimized for our type of business,” says Adkins. The shelving/carousel