Fanatics: Fanatical about e-fulfillment

True sports fans are fanatics. It’s not just enough to watch their favorite teams. They show their loyalty with t-shirts, sweaters, hats, bedding and more. That’s the premise behind Fanatics, the leading online retailer for officially licensed sports merchandise for professional and college sports teams. “If you can put a sports logo on it, we probably stock it,” says Paul Chisholm, vice president of logistics.

That’s not hyperbole. On any given day, Fanatics stocks more than 500,000 SKUs in its new 514,000-square-foot distribution center near Columbus in Frazeysburg, Ohio. The facility was previously home to the Longaberger basket company.

Fanatics shares with its fans a fanaticism, but for e-fulfillment and distribution. Working with a systems integrator (World Source Integration, world-source.com), it designed an order fulfillment engine from the ground up to handle hundreds of thousands of SKUs and swings in demand that can range from 30,000 units a day to as many as 500,000 units during peak periods such as Black Friday, Cyber Monday, the Final Four, the Super Bowl and the World Series.

The key to the system, Chisholm says, is a non-replenishment based order fulfillment model that provides for an extremely flexible and scalable fulfillment process. While many fan favorites are always stocked, the facility has no conventional reserve pallet storage. Instead, inventory is stored in one of four different sized bins in a four-level high mezzanine that takes advantage of 42-foot clearance in the center of the building. The mezzanine has 1.1 million pick faces and space for 15 million units. All new receipts of merchandise goes straight from receiving to a pick face ready for immediate picking.

On the fulfillment side, a robust wave planning tool aggregates orders into 45-minute batches of work that are picked and conveyed to a put wall area for multi-line packing and a separate work area for single line orders. There are 60 single-line processing stations and 60 put wall pods; each pod can handle an estimated 75 orders, for a total 4,320 orders at a time in the multi-line area.

Finally, the facility features a state-of-the-art lighting system (see sidebar, below) that is not only delivering significant energy savings but also delivered an $800,000 tax credit.

While the facility has been live for roughly 10 months, it is processing more units per hour at higher units per hour (UPH) shipped and with improved customer service levels than had been originally planned, says Chisholm. “Less than a year into the new facility, and we’re already planning on an expansion to keep up with growth,” he adds.

The “wow” factor
The Ohio facility was the most recent example of Fanatics’ remarkable growth over the last nine years. The business was launched as a family-owned retailer with brick-and-mortar stores in two malls in Jacksonville, Fla. The owners added an e-fulfillment business in the backroom of one of the mall stores to service snowbird customers who lived in other parts of the country for half the year.

As the online portion of the business grew, Fanatics secured licensing agreements with colleges and universities to create their Web stores and handle their fulfillment. Ultimately, the company built a 540,000-square-foot conventional distribution center in Jacksonville. Then, ownership changed hands.

Today, Fanatics is a Top 50 Internet Retailer, and it powers the e-commerce sites of all major professional sports leagues, and major media brands such as ESPN, NBC Sports, CBS Sports and FOX Sports as well as more than 200 collegiate and professional team properties.

In 2011, following the acquisition of FansEdge, Fanatics developed growing pains. In addition to the Jacksonville property, it was working with a 3PL as well with a fulfillment center in Kentucky. “We wanted to get our distribution under one roof so we could control our customer experience from packaging presentation to door-to-door cycle times and build out a network to complement our Florida DC and improve service levels to other parts of the country,” Chisholm says.

After working on a network analysis with a consulting firm, Fanatics brought in another firm to design the new network. The process included the identification of potential locations for a facility to serve the Northeast, Midwest and Mid-Atlantic. The firm used data such as the location of Fanatics’ vendors, inbound transportation costs, the location of the customer base, wage rates, labor availability and real estate costs in its analysis. In early 2012, it identified the Frazeysburg location. The location would allow Fanatics to reach its target customer base largely by using ground delivery services.

By summer 2012, a deal had been struck for the facility and a systems integrator had been retained to design a fulfillment system for the space. One of the first steps in that process was to dismantle and remove everything but the shipping sorter from the facility.

The Fanatics team set several goals for the new design.

First, and perhaps most important, was the “wow factor,” as Chisholm refers to it. “I’ve been in the e-commerce business since 1999,” he says. “In this market, it’s all about compressing the cycle time from when the customer orders at home until the carrier rings the doorbell with their package. We strive every day to exceed our customers’ expectations in this regard. We’re trying to stay on the leading edge in the wow factor, and we want to do it with a big SKU base and extremely high order volumes.”

That meant the facility had to hold a large SKU base and as many as 15 million units of inventory. Plus, it had to be scalable to maintain customer service levels while putting out 500,000 units a day during peak periods. For example, Fanatics does 40% of its business in the fourth quarter, with traditional spikes during Black Friday and Cyber Monday. However, they also have significant spikes during major sporting events like the Final Four, the World Series and the Super Bowl. “Our system is designed to get orders received today out before the last carrier leaves tonight,” says Chisholm. “That’s how we wow the customer.”

Finally, Fanatics wanted to get as physically close to the customer base as possible to cut down on ground transportation times and costs.

Eliminating reserve storage
The key to making it work, Chisholm says, is a non-replenishment based model that eliminated reserve storage. Regardless of whether an item is a one-time buy or a replenishment item, each individual SKU is systemically driven to the ideal location based on velocity, weight and cube.

However, when new receipts are received in the DC, the receipt is broken down on the receiving dock and prepared for putaway directly into a pick location. First-time items to the facility are weighed and cubed to capture storage and shipping dimensions. The receiver also notes important SKU profile characteristics, such as whether an item is fragile or is conveyable, or is able to be sorted through the put wall. Other services, such as adding bar codes or bagging or folding a product, all happen in the receiving area. Once those processes are complete, items are scanned into one of four different pick bins; all of the bins are 24 inches deep, but vary in width from 4 to 16 inches. The bins are then loaded onto putaway carts that are transported by vertical reciprocal conveyors (VRCs) to the right level in the four-level pick mezzanine.

“By preparing everything for a pick face on the receiving dock, we eliminate all of the tasks and labor associated with replenishment activities,” says Chisholm. “That way no one is standing around during peak waiting for a replenishment task to be completed. And, 100% of our SKUs and units are in a pickable, active pick location with high unit SKUs being located in several storage bins. We also have eliminated fulfillment-related order cancellations almost to zero because we know exactly how many items were put into a bin before we put them into a pick location.” All vendor errors are identified at receiving rather than when the case is opened during a replenishment task.

The process, however, requires a very large number of pick faces. To manage picking across so many SKUs and locations, the picking mezzanine is divided into storage zones. For example, the NHL is in one zone and the NFL in another zone. Another zone is dedicated to the nine top college teams and holds 1.4 million units.

The picking process is driven by a robust wave-planning tool and is based on discrete batch picking to totes. Order pickers receive instructions on their RF guns and pick to one of six totes on their pick cart. When a tote is complete, it’s placed on a takeaway conveyor and diverted to either the single-line processing area or the multi-line put wall area located on a mezzanine over the docks.

In the multi-line area, put walls are enabled by put-to-light technology. Each pod includes a wall that resembles an old-fashioned cubby for shoes or other small items with openings for 75 orders. With 60 pods, or put wall stations, the multi-line area can process 4,320 orders at one time. On one side of the put wall, an associate removes and scans items from a picking tote. Lights then indicate where in the put wall those items should be placed. On the other side of the wall, lights alert another associate when all of the items for an order are ready to be packed.

The display indicates how many items should be in the order and what type of shipping container should be used. The associate packs the items into the shipping container and then conveys them to a services area where the order is finalized for shipment. “Using the put wall process, our associates are averaging 400 to 500 puts per hour,” says Chisholm.

Eight months after going live, Chisholm says the facility is exceeding the initial expectation in terms of efficiency rates. In fact, the company plans to bring many of the new technologies deployed in Ohio to their original fulfillment center in Jacksonville next year. “The company also has plans to expand the network with a facility to serve the West Coast in the near future. Finally, the Ohio facility is large and flexible enough to handle Fanatics’ double-digit growth. “We already have an expansion plan to grow from 60 put-to-light pods to 80 pods,” he says. “Most importantly, we have the ability to control our own destiny.”  

System suppliers
System integration: World Source Integration, world-source.com
Conveyor, shoe and bi-directional belt sortation: Automotion, automotion.com
Poly-bag sortation system: Intralox, intralox.com
Sliding shoe shipping sorter: Dematic, dematic.com
Vertical reciprocating conveyors: Pflow Industries, pflow.com
Warehouse management system: Fanatics
Wave Management, Warehouse control & light-directed picking systems: Pyramid Controls, pyramidcontrols.com/software
Cubing and weighing: Cubiscan, cubiscan.com
Mobile computing: Datalogic, datalogic.com
Lift trucks: Raymond, raymondcorp.com
Rack storage systems: Elite Storage Solutions, elitestoragesolutions.com
Mezzanine platform: Wynright, wynright.com
Network analysis: Fortna, fortna.com
Network design: The Austin Company, theaustin.com
Lighting and fire safety systems: Hy-Tek Material Handling, hy-tek.net