A Case Study of Bare Escentuals’ Omni-Channel Distribution Center

Within 10 minutes on her first guest stint on the QVC network back in 1994, Bare Escentuals (BE) creator and executive chairman Leslie Blodgett sold out her entire inventory of mineral-based cosmetics—literally conquering television as her first direct-to-consumer retail channel.

Since then, the California-based cosmetics company has never looked back. It now services wholesale customers such as Macy’s, Sephora, Ulta, more than a thousand spa salons, more than 230 company-owned boutiques, and consumers directly through its Website, infomercials and catalog operations. (read the article “Macy’s Enable Higher Sales, Greater Efficiencies & Lower Costs with RFID - The Macy’s Way”).

Marketing three brands—bareMinerals, BUXOM (exclusive to Sephora) and md formulations (mostly in spas)—this retailer stands in an elite club because it services a multitude of channels from just a single 400,000-square-foot distribution center in Columbus, Ohio.

But it wasn’t always that way. In 2006, BE operated a 100,000-square-foot West Coast DC that handled a rapidly growing wholesale and spa salon business, while simultaneously supporting a small retail network of 50 boutiques. A 3PL-run DC in Plymouth, Mich., handled its direct-to-consumer business from the infomercial and the catalog.

“As we grew, it became that much more expensive to operate a smaller facility from which we were bursting at the seams,” recalls Michael Thompson, BE’s vice president of operations, Americas. “The cost of the 3PL side grew as well. With basically the same product assortment for all channels, we had to split our inventory across multiple places. And, since we were growing so fast, we were at a point where we couldn’t meet the demand.”

With a Web site launch pending in 2007, the company’s logistics team knew that bringing the fulfillment for all the channels into one facility would enable the retailer to make sure that they got the right product to the right people at the right time.

Partnering with supply chain consulting firm Tompkins International, Bare Escentuals planned, designed and launched its new consolidated facility in 2007. In the operation, full-case, wholesale orders are picked by workers on lift trucks using handheld RF devices while direct-to-consumer orders are batch picked 20 orders at a time directly to shipping cartons by voice-directed pickers with carts. Retail store replenishment and spa salon orders are picked using pick-to-light technology.

Since then, the DC team has been hard at work in search of a tool that could support these two companies in a multi-channel, multi-company distribution model. In early 2012, they selected RedPrairie’s warehouse management system (WMS), going live last July.

“We’re less than a year in with the WMS, but we’re already learning the power of having all that information. When you walk through this DC, you see a lot of subsystems in operation,” says Tompkins’ principal Kevin Hume. “Many of these pick-pack operations are channel-specific, leveraging operational processes and equipment designed to reflect the order profile.” In 2010, the team faced even more challenges when Bare Escentuals was acquired by the Shiseido Group in the largest cosmetics related transaction ever. “Shiseido was bursting out of its current Americas facility, so with the acquisition they decided to take advantage of the infrastructure that BE has already built, thus essentially creating a shared services model for all of the Shiseido Group brands,” says Thompson.

For BE, this consolidated model has been an excellent fit. “There’s more flexibility to meet the needs of the business,” says Thompson. He cites how during Cyber Monday when the e-commerce business was processing three times the amount of orders, he was able to quickly leverage workers from the other channels. “E-commerce customers want their orders immediately. With consolidated multi-channel facility, we can support demand peaks quickly and internally, achieving that critical speed to customer.”

Read About Utilizing your WMS and Shipping Processes for Omni-Channel Distribution