Solution Profile: Major retailer revamps distribution process 90,000 SKUs, 400,000 square feet Overtime decreased by 90% Record number of goods shipped SCE Provider: Manhattan Associates

In order to efficiently ship to its 630 stores across the United States, American Eagle Outfitters needed to re-evaluate its distribution center (DC) operations and make significant changes.

"We lacked visibility, which made shipping and receiving a slow and manual process," said Michael Fostyk, VP of Distribution at American Eagle.

The retailer could not anticipate what product was arriving at its doors, causing DC employees to unload cartons, separate merchandise by SKU, and count it based on the purchase order (PO) that was sent to the supplier. This caused cross-dock merchandise, which is scheduled to go directly to the shipping department once it arrives, to take as long as a half a day. Other jobs, such as picking and packing, could take two-to-three days, causing the flow of merchandise to lag, and costing American Eagle time and money.

Distribution Back on Track

To overcome these distribution challenges, American Eagle implemented a supply chain execution system (SCE). The supply chain execution system plans the path of each carton before the trailer even arrives at the door. It predetermines whether and how many cartons are cross-docked, picked and packed, or sent to the reserve replenishment area.

The new system enabled the Warrendale, Penn., facility to ship a record number of goods in its first week. Since then, the company has been able to eliminate the entire third shift at this facility, even before opening a second DC in Ottawa, Kan. American Eagle also decreased its overtime by 90%, another major cost savings.

With the SCE, cartons that used to sit in American Eagle's facility for two or three days now flow through in hours, and cross-docked cartons that used to putter through the system in half a day, are now on a truck, ready for shipping in a matter of minutes.

"In terms of payback on our investment, we expected it would take a year and a half, but it took six months," Fostyk said. The company's increased capacity allowed for some activities that American Eagle outsourced to a third party, like reverse logistics, to be brought back in-house.

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