Rack & Roll

Sep 01, 2000 9:30 PM  By

What’s trendy, up-to-the-minute, and to die for? A distribution center that’s equipped to the max for e-commerce, of course. Take a tour of SubmitOrder.com’s new facility

If you ask the folks at SubmitOrder.com what sets them apart from other e-fulfillment service providers, they’ll point to any number of things: technological savvy, attention to detail, planning for the future, energy and enthusiasm, and so on. But the secret ingredient that sets them apart may simply be-dare one say it? – intelligence. For what drives every aspect of this operation, from its brand-new, fully automated facility to its heavily high-tech data warehouse, is a hard-driving intelligence that permeates every decision. Even the company’s Web site (www.submitorder.com) is designed for quick and painless access to information, and it includes FAQs on e-fulfillment strategies that any online merchant would do well to read.

For a novice – it was established in 1999 – privately owned SubmitOrder is doing a remarkable job of looking like a pro. It includes as its primary investors Silver Lake Partners and The Barksdale Group, both of Menlo Park, CA, and numbers among its clients such brand-name companies as BlueLight.com, ZanyBrainy.com, MuseumCompany.com, and Limited Too.

At SubmitOrder’s corporate headquarters in Dublin, OH, the mood is upbeat. Everything is humming in the new facility, slated to be fully operational in September 2000. SubmitOrder’s forceful, hands-on president and chief operating officer, J. T. Kreager, propounds a vision radically different from that of a traditional “fulfillment” executive. He outlines his view of an information-technology-based “ECOsystem” at whose nucleus, called a “transaction processing engine,” or TPE, converge the spokes of real-time Web integration, customer response, distribution center operations, and what he calls a “decision support system.” Beginning this fall, he says, the DSS will provide extranet functionality, enabling clients to access real-time information and reports. So crucial is the integration process that Kreager expects to apply for a patent for it.

This is hardly the kind of talk you’d expect from a fulfillment services provider. But then SubmitOrder doesn’t claim to be one. Kreager emphasizes that his company delivers not e-fulfillment, but e-commerce; not boxes, but a whole package of services. It doesn’t do Web site creation and marketing, nor does it handle refrigerated goods, but it has branched out into market research, digital imaging, and Internet-based distribution of inventory to retail stores. By starting out with business-to-consumer merchants, SubmitOrder has been able to shift smoothly to the case quantities and larger merchandise allotments of retail and business-to-business clients. “If you’re already at the unit level, then it’s easy to go back up,” Kreager says.

Uber flexibility Meticulous planning was evident even back in January in SubmitOrder’s older distribution facilities. The large variety of merchandise handled demanded that an area used for one type of product be quickly reconfigured and used for something else. So, for a client whose garments needed to be placed on hangers, SubmitOrder, instead of using slick rails, installed hanging racks that could be removed and changed to bulk racks if needed. Aisles were also designed for maximum adaptability. “The traditional aisle is either narrow or wide, but ours can be either narrow aisle pick or narrow aisle putaway,” notes director of facilities Mark Spencer. “In the GOH area, I could have put in 20-ft. risers, but why? For one client, we go from slick rail to bulk storage to bin pick – all in a 17,000-sq.-ft. area. When clients bring in inventory, we slot it into the warehouse where it makes the most sense. Velocity and profile are very important to us.”

The two older warehouses – which SubmitOrder will continue to use until the occupants move into the new facility – together measure 537,000 square feet and were processing over 50,000 SKUs, with total shipments of 5,000 a day, going up to 15,000 at peak. Full-time employees totaled 150, reaching 500 at holiday peak, and working two to three shifts seven days a week and 24/7 at peak. A typical picking process in one facility handled 96 orders per wave.

As might be expected, SubmitOrder’s new distribution center, located in Groveport, OH, has more than its share of bells and whistles. Designed by consultant Jimmy Wright (whose projects include work for Amazon.com) and equipped mainly with systems from Rapistan and Manhattan Associates, the facility measures 437,000 square feet, can handle 100,000 orders a day at two-and-a-half lines per order, and can accommodate a wide variety of goods, from fishing tackle to apparel. Another DC in Memphis, TN, set to go live in September, is engineered with the same equipment. It measures 629,000 square feet. Both facilities have value-added services such as gift wrap and personalization built in-line. An air exchange system, manufactured by Woods, cools the Groveport facility by bringing in outside air and maintaining an even temperature at all three levels. The Memphis DC is air-conditioned, and clients can choose which location they prefer based on the merchandise they need to store. In the future, Kreager says, SubmitOrder will look to invest in 600,000-800,000-sq.-ft. facilities that can process 100,000 orders a day.

At present, the only client in the Groveport building is dsports.com; plans are for ZanyBrainy.com and Limited Too to move in from their temporary location, and for BlueLight.com to run its holiday business here. More than ten clients are expected to occupy the facility. All the software is completely integrated so that customer response reps can check order status instantly and can even see the availability of a product that is about to come in. Non-conveyable items such as canoes and hockey sticks can be matched up with other orders, and fragile goods are processed in separate areas. Software ties everything together in real time.

Floor layout is designed for flexibility, containing three pick modules three levels tall (using all available building cube) and 90,000 pick bins, providing a total of 150,000 primary and secondary pick locations. With more than 100,000 SKUs, daily shipments are forecast to average 30,000 to 50,000 per facility at peak periods. The number of employees ranges from 125 at off-peak to 500-600 during peak season. A conveyor system, whose speed is three meters per second, runs through all the modules. Pick waves run throughout the day, and operators pick into totes using labels, which are sequential to reduce walk time. The totes converge to 12 induction locations, six at either end of the facility. Individual items are scanned by multidirectional scanners and placed on a cross-belt sorter that drops them into chutes where the items are consolidated with the rest of the order. Wave labels on items are bar coded but also human-readable. If the wave number is face down when scanned, the item is diverted to a quality control chute for operators to read. Similarly, if an operator picks too many of a SKU and the extra item doesn’t have a label, it is automatically kicked off into the QC chute.

The Groveport facility has 400 chutes and 400 packing stations. Packers choose from various container sizes and put the packing list in the carton. The carton, without being sealed, is diverted to one of 114 value-added-services stations – which can be tailored to the needs of individual clients – if gift wrap or personalization is necessary; if not, the carton goes directly to the dunnage and sealing area, then to manifesting and shipping, where it is scanned and routed to the appropriate carrier. The facility has 17 shipping sorters, which afford the flexibility to offer zone skipping, international shipments, and other services in the future.

Special or odd-sized items ship separately; a manual pack-out area is set up for handling fragile products, which join the conveyor line after being packed. Right above the shipping sorters is a mini-manufacturing and production area where special assembly, such as gift sets or kitting, takes place.

Brand awareness may be a cliche, but it’s one of the factors that distinguishes this outsourcing company from its competitors. SubmitOrder.com manages “the strength of the brand online,” Kreager says. “We work with the client on presentation, color, and packaging.” Employees are trained extensively, both internally and externally, to understand what the customer wants. In addition, there’s “a degree of personalization that you don’t normally get in fulfillment,” says Kreager. For example, some housewares are fragile and have to be repacked, a service that traditional fulfillment houses rarely offer.

Since January of this year, SubmitOrder’s customer response center has undergone several changes as well. Six months ago, the CRC had 150 seats; a 24/7 call center was also operational at another site. Both together employed 500 people at peak, 250 to 300 off-peak. The Dublin center used a Lucent G3 switch and Advocate intelligent routing, but was expected to move to a “single unified platform for electronic retailing that can handle all media types,” according to customer response director Lisa Singer.

To a large extent, this dream was realized by July. The 525-seat customer response center has been consolidated in one building in Lewis Center, OH. A second, 500-seat center is expected to be up and running by fourth-quarter 2000. The proprietary software “makes the processes consistent across our clients and helps to lower the time spent on technical training,” says Singer. New systems from Cisco and Siebel have been integrated, and the software enables text chat, page collaboration, and page pushing. The idea is to “have the same information everywhere – a central point of contact.” The rep can see all customer history from all points of contact, including returns. Reps can be dedicated to a particular brand if the client wishes it.

The customer response center uses a system from NICE for remote and side-by-side quality monitoring, but an online monitoring system, set to begin in August, can check what screens reps were on, what e-mails they answered, and other responses. For training, SubmitOrder uses a program called Getting to the Heart of Customer Service, designed by Impact Learning Systems International. SubmitOrder refined the program to focus on e-commerce, and all the company’s reps and supervisors have taken the course.

In recruiting service reps, “we’re going for the cream of the crop,” says Singer. “What’s the biggest issue in customer contact centers? Retention.” To motivate people to stay, SubmitOrder offers a huge variety of incentives, such as monthly awards, movie tickets, barbecues, box lunches, and training programs. Singer emphasizes that training is crucial: “With a paper catalog, if you tick off one customer, it’s not bad, but in e-commerce, one dissatisfied customer can turn off thousands of potential customers.”

Despite a local unemployment rate of less than 2%, the customer response center receives 50 to 100 unsolicited resumes every month, but the majority of CRC employees come through referrals. The 24/7, 365-day center offers flexible schedules and base pay of $10 an hour. Notes Singer, “We have more phone calls now than e-mail, but expect this to change.” Brand reps are empowered to handle everything in one call. In the case of backorders, customers are always called back with the offer of substitutes.

SubmitOrder’s selectiveness in choosing clients has enabled it to avoid being sideswiped by the recent Internet economy downturn. In fact, Kreager has had to turn away about a thousand prospective clients this year already. “We look for aggressive, global companies that do at least $5 million in the first 12 months of sales.” Anticipating at least $1 billion worth of business in 2001, he notes that gauging volume is critical because it justifies the huge investment in technology upgrades. “Technology is key to reducing head count in the future.”

Even when it had just begun Internet commerce, Submit-Order had a sure feel for what the online business was all about. Snippets from interviews with J. T. Kreager this past January:

Focus on pure plays: “We’re specifically built for e-commerce, with a very flexible and scalable infrastructure. Our speed-to-market function – we can launch a client in approximately three months – is very important in a time-sensitive market.”

Forecasting savvy: “It’s a huge risk to invest in a fulfillment operation without knowing what your volume is going to be.”

Reliance on information technology: “There’s a continuous data loop of information about orders, backorders, pick status, order status, all those things. This place is tapped out in terms of wiring and electrical and cabling.”

Smart processes: “We use the right type of material for each order, and over-pack so that the product arrives in good condition.” (The two types of dunnage used are air bags and peanuts, and they are recycled.)

Hip company culture: “The environment is friendly, fun, and exciting.”

At SubmitOrder’s back-up data center in Dublin, OH, chief technology officer Charles C. Fry offers his take on the vision thing. His company has created an “unprecedented level of sophistication” in its IT infrastructure, he says. “Our research showed that Internet buyers want speed and what is not immediately obvious – an extremely high level of information about the entire transaction. They want to see what’s happening all the time.”

Delivering this type of customer experience posed two main technical problems. First, the systems had to be available round-the-clock: “It’s like being a utility company. You’re always turned on.” Second, they had to be scalable. “One client expanded his order volumes by six times in the last holiday season.” SubmitOrder’s response to these challenges wasn’t unique, in that it selected best-of-breed technology and teamed up with such reputable manufacturers as Sun Microsystems and Oracle Corp. What was unique, though, was the relationship that SubmitOrder developed with its hardware and software providers. “We have board-level, primary access to the creators of our foundation technologies, which is rare for a small start-up company,” says Fry. “This access prevents the gap that arises between technology that promises and technology that doesn’t deliver.” The other distinctive thing, he adds, is the way SubmitOrder has customized its information systems, a process that may be patented.

With its primary data center located in Chicago and hosted by Exodus, the Dublin data center has 36 Sun servers (the largest are 64-processor machines), four terabytes of disk storage online, numerous A/S400s, a fully redundant network, and a staff of 200-250 IT professionals, about half of whom are full-time employees. Fry’s goal is to “combine Internet time frames with best-practice methodologies” – something that wasn’t possible until recently. “In the beginning, there was a lot of running and gunning in the technology. You just threw stuff together. You’d build it, break it, rebuild it.”

Now, online IT is starting to resemble its off-line counterpart in terms of planning, projecting, and big-picture thinking. Fry wants to prepare for five- to tenfold volume growth. “We monitor the growth of the Internet industry rather than that of any one of our clients in particular,” he says, revealing a grasp of fundamental business principles that few e-merchants bother to spend much time on. “Technology in most businesses is an afterthought. We have a different approach because we’re a business development partner for our clients. Our company is not looking at what’s new in fulfillment. We’re the part of e-commerce with the dirt under our fingernails. We’re the red muscle of e-business.”

This philosophy allows clients to innovate and reinvent their businesses constantly, he believes. “And as the market changes, we roll with the punches. For instance, free shipping was big last year, but it’s not now. This year, the issue is integration. Is the whole experience what the customer expected? In 2001, consumers will look for innovations, whether it is wireless or interactive TV shopping. We’re ready.”