Dana Dubbs describes how Lamps Plus replaced manual processes with automation, bringing its facility Into the Light
DAZZLING GROWTH IN ONLINE SALES is driving big changes at the Lamps Plus warehouse in City of Industry, CA. A new order fulfillment system, new pick-pack methods, a redesigned shipping area — they’re all part of the specialty lighting retailer’s plan to move out of the dark ages of manual processes and into the more efficient world of automation.
And none too soon. Online order volume, currently more than 10% of Lamps Plus’s total sales, is the fastest-growing segment of the 30-year-old retailer’s business. It includes orders placed through the company’s Web site, phone orders driven by the Web site, and orders placed at electronic kiosks inside the company’s 40-plus superstores in seven Western states.
Lamps Plus launched its Web site in 2000. Online sales skyrocketed from $5,000 the first year to $13 million in 2003, and are expected to reach $35 million by the end of 2004. “Right now, we’re at about 500 orders per day,” says Bill Gratke, director of supply chain management and planning for the Chatsworth, CA-based retailer. “We have estimated that in December we’ll be at 1,000 orders per day.”
Lamps Plus ships chandeliers, floor lamps, ceiling fans, and other residential lighting products to consumers throughout the U.S. and re-supplies all of its stores from a 350,000-sq.-ft. warehouse. The retailer sells product from domestic suppliers, but is also doing more manufacturing and importing of finished goods with vendors in China.
GEARING UP FOR EDI Gratke is currently working on getting an import EDI system up and running. “As we go from being a domestic manufacturer to an importer of goods, we’re forced to be more electronic with our Chinese vendors,” he says. “For the bulk of the product that we manufacture for ourselves, we want to make sure that we are getting the best response time from China.”
Earlier this year, Gratke overhauled the Internet fulfillment side of Lamps Plus’ business. A new e-commerce solution from Escalate Inc., in tandem with revamped pick-pack processes and a redesigned Internet shipping area, has created order out of chaos.
Lamps Plus stores merchandise in random locations throughout its warehouse. When orders are filled for a particular store, pickers take a serpentine path through the warehouse and bring the goods to a staging area for that store. The items are then loaded onto a truck and shipped out. The system works well for a pile of boxes going to the same store. But when an Internet business is considered a store, and all orders going to myriad individuals are dumped in that one location, well, it’s anything but efficient. And that’s how Lamps Plus used to do it.
“With a serpentine pick, the bulb could be here, the harp could be there, the table lamp could be in another spot, and then you’d have to sort through all the merchandise before you could send it out,” says Gratke. “One of our big goals was to combine multi-item orders in one box so we didn’t have to pay $8 for shipping on the light bulbs, $8 for shipping on the harp, and then pay even more for the table lamp,” says Gratke. “To achieve that, we needed everything to come together at one place and be able to sort.”
DOING THE WAVE These days, Lamps Plus picks in waves. “It’s not what you normally would call a wave,” says Gratke. “We use the term to describe the number of items going to a customer.” So, the first wave would be to pick orders with only one item, the second wave would be to pick two items, and so on. A wave could conceivably go up to 100 items.
Instead of one big 12,000-sq.-ft. dumping ground for all Internet orders, Lamps Plus now has a 20,000-sq.-ft. flow-through space with 16 staging areas and eight packing stations. The fulfillment system can assign orders to specific staging areas, which further assists in sorting.
“The pick label that goes on the product tells the pickers which staging area to bring the item to for packing,” says Gratke. “Every item has an order number, and so they can quickly match up items that are part of the same order.”
The packer combines the items, prints out a pro forma packing list, and comes up with the most economical packing scheme. “The packer then puts the size into the Escalate system, generates a ship label, pops it on, moves the package onto the ‘done’ conveyor, and then it’s taken over to the UPS truck,” Gratke says.
Box sizes vary wildly. “Fifty percent of the product has a shippable pack,” notes Gratke. Beyond that, he says, “You could be shipping a $20,000 chandelier that’s the size of a small car, and then you have a light bulb.”
Gratke estimated that Lamps Plus would see a return on its investment in the Escalate solution within 90 days. The facility is now shipping orders in half the time, using 30% fewer boxes, and with greater order visibility.
Impressive gains, to be sure, but Gratke isn’t finished. On his agenda for next year is an automatic reorder system: “We have to order the best way we can, so we can minimize the amount of stock we have to carry at the warehouse.” Furthermore, the Internet side of Lamps Plus’ business needs to be integrated with the home-grown legacy system used for the retailer’s brick-and-mortar stores. “We’ll get to that when we implement a warehouse management system,” says Gratke. “That’s our goal for 2006.”
Dana Dubbs is a freelance writer who can be reached at email@example.com.
From Paper to Pixels
Lamps Plus has long conducted business using faxed purchase orders and other paper-based processes. That’s changing — fast. “Everything we did was manual,” says supply chain director Bill Gratke. “We did not use technology to our advantage. Because of all this Internet business and the way that we were going to have to compete in the future, we needed to move into the electronic age. We had a great front end, but our back end needed work. We had to make sure that our back end could support our front-end Web site and that we could continue to fulfill large increases in order volume.”
In 2003, Gratke launched a four-year plan to automate the retailer’s systems. The first step: implementing an EDI solution with domestic vendors. Bye-bye faxes. Hello, electronic purchase orders, invoices, advance-ship notices, and other data.
Headquarters: Chatsworth, CA
Phone: (818) 866-5267
Fax: (818) 866-1011
Web site: www.lampsplus.com
Warehouse: City of Industry, CA; 350,000 sq. ft.; 150 employees
SKUs: 6,000 in stock; 75,000 in the system
Volume: currently 500 orders per day; estimated 1,000 per day by December 2004
Computer: IBM AS400
Printer: Printronix T5000e
IT Systems: Escalate Fulfillment, Escalate Inc., Redwood Shores, CA; EDI (domestic), SPS Commerce, St. Paul, MN; InfoChain Express, Avery Dennison, Framingham, MA
Racks: Industrial Hardware and Equipment, Ontario, CA; Crown Equipment, City of Industry, CA; Interlake Material Handling, Naperville, IL
Conveyors: Industrial Hardware and Equipment, Ontario, CA; W. T. Billard, Santa Fe Springs, CA
Forklifts: Industrial Hardware and Equipment, Ontario, CA; Crown Equipment, City of Industry, CA; Yale/Chase Materials Handling, City of Industry, CA; Johnson Lift/Hyster, City of Industry, CA; Clark, Fullerton, CA
Corrugated: Pak West Packaging Systems, Santa Ana, CA
Fill/packing materials: Storopack Packaging Systems, Downey, CA
Labels: Avery Dennison, Westlake Village, CA