The Lean Blueprint for Modern Pharmaceutical Distribution

Kelsey Cook on April 8, 2026

Case Study: Pharmaceutical Distributor and VARGO®

The Lean Blueprint for Modern Pharmaceutical Distribution

A major pharmaceutical distributor serving national retail chains, independent pharmacies, hospitals, and healthcare facilities required a fulfillment operation capable of meeting strict service-level commitments and nationwide next-day delivery expectations.

To support this objective, the organization partnered with VARGO® to design and implement a high-performance order assembly facility engineered for speed, regulatory control, and cost-effectiveness.

Rather than relying on complex, overbuilt automation, the solution centered on lean process design and intelligent orchestration. This created a flexible operation aligned with the realities of pharmaceutical distribution.

30%

Workforce Reduction

Next day

Nationwide Delivery

Same day

Order processing

25%

Smaller Operational Footprint

Challenge

Speed, Compliance, and Capital Efficiency

Operating in the secondary pharmaceutical market, the distributor fulfills replenishment orders that often arrive late in the day and must ship that same evening to meet next day customer service level agreements.

This environment introduced several operational pressures:

Strict daily shipping cutoffs
Controlled substances requiring vault and cage storage
Full product traceability and serialization compliance
Need to simplify supervision and reduce labor
Desire to increase throughput without a large capital investment

Orders flow directly to pharmacies, hospitals, and healthcare facilities, placing heightened importance on reliability, accuracy, and regulatory integrity. The organization required a solution that could improve responsiveness while maintaining security, traceability, and operational control.

Solution

Lean Fulfillment Orchestrated in Real Time

VARGO® led the full operational design of the new facility, defining layout, storage strategy, and material flow prior to construction. At the center of the solution was COFE® (Continuous Order Fulfillment Enterprise), VARGO’s real-time execution system. COFE® integrates with the distributor’s internal order management platform (TPS), receiving order data and returning confirmation once fulfillment is complete.

The system was designed to:

Prioritize late-arriving and high-priority orders dynamically
Coordinate manual vault and cage picking with conveyor-based order assembly
Maintain secure routing of regulated inventory
Capture and preserve complete product traceability information
Treat people and equipment as unified work resources

The facility incorporates secure storage zones, conveyor transport, manual tote consolidation, automated put wall processing, and outbound sortation, each directed through real-time orchestration. Rather than adding layers of complexity, the design simplifies material flow and reduces work-in-process by pulling orders through the system based on real-time demand.

Design & Implementation:

VARGO® collaborated closely with the distributor’s leadership team and general contractor to align building specifications with process requirements.

The operational architecture was engineered to synchronize manual and automated workflows while maintaining strict inventory control. Sensitive products stored in secure cages and vault environments are seamlessly integrated into standard order flow without compromising compliance or shipment timing.

COFE® manages routing decisions, work prioritization, and serialization tracking, ensuring that each unit is properly documented and directed, while still enabling expedited processing within tight shipping windows.

The facility’s proximity to a major overnight carrier hub further strengthens the distributor’s ability to meet national delivery commitments reliably.

The Results:

Intelligent. Responsive. Scalable.

By focusing on automation intelligence rather than additional capital investment, the distributor achieved meaningful gains in operational efficiency and facility utilization.

Reduced work-in-process simplified material handling requirements and improved flow consistency. Late-day orders are prioritized dynamically without disrupting daily production volume. Secure inventory zones remain fully integrated into standard fulfillment processes.

The result is a compliant, capital-efficient distribution operation capable of adapting to evolving regulatory requirements and sustained growth.

30%

Workforce Reduction

Next Day

Nationwide Delivery

Same Day

Order Processing

25%

Smaller Operational footprint

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Driving Efficiency in a National Tire Retailer’s Cross-Dock Network

Kelsey Cook on January 20, 2026

Case Study: National Tire Retailer and VARGO®

Scaling a National Tire Retailer’s Cross-Dock Distribution Network

A national tire and wheel retailer operating more than 1,200 locations across the United States experienced rapid growth across its store network. To support expansion while maintaining strong service levels, the retailer partnered with VARGO® to refine and scale its cross-dock distribution model.

Building on previous collaborations, VARGO® worked closely with the retailer to design high-performance cross-dock facilities that improved labor efficiency, reduced transportation costs, and increased throughput—without introducing new technology or inventory-heavy processes.

20%

Labor Efficiency Gain

12K

Tires Daily

Daily

Store Delivery

25%

Expansion Ready

Challenge

Supporting Network Expansion Through Distribution

As the retailer continued to open new stores, its distribution network faced increasing pressure. Existing facilities needed to support higher daily volumes, more frequent deliveries, and tighter service expectations, all while operating in a highly labor-intensive environment.

Key business drivers included reducing transportation costs by locating facilities closer to demand and improving service levels through more frequent replenishment. At the same time, the retailer sought to avoid adding storage, excess inventory, or unnecessary complexity.

The retailer needed a solution that could:

Support daily or near-daily deliveries to stores
Reduce transportation expense by positioning facilities closer to customers
Maintain strong in-stock positions without storing product
Improve labor efficiency in a physically demanding operation
Scale capacity to support continued growth

Rather than adopting a traditional warehouse model, the retailer focused on strengthening its existing cross-dock approach.

Service Expectations:

Growing store networks required daily deliveries and dependable replenishment to maintain service levels.

Solution

Cross-Dock Design Built for Speed and Efficiency

The retailer operates a high-volume cross-dock distribution model that aggregates daily store demand and ships product directly from manufacturers to distribution facilities. Upon arrival, tires are immediately sorted and shipped to stores without being stored, minimizing handling and inventory costs.

The VARGO® and customer teams worked collaboratively to improve operational flow, reduce labor intensity, and increase flexibility—without relying on new technology implementations.

A key refinement involved introducing recirculation within the conveyor layout, allowing associates to cover more destination lanes and reducing missed picks. This improvement increased productivity by creating a more forgiving and efficient workflow during peak volume periods.

Together, these changes strengthened throughput and reliability while preserving the simplicity of the cross-dock model.

Design & Implementation:

VARGO® worked closely with the retailer’s leadership and operations teams to design facilities based on real-world operating conditions rather than standardized templates.

The process began with a detailed understanding of daily demand patterns, labor requirements, and service expectations. Facility layouts and workflows were then iteratively refined to support those needs, incorporating flexibility for future volume growth and network expansion.

This collaborative, iterative approach proved critical, particularly when compared to earlier implementations in other markets. By adapting designs to operational realities, the team delivered more consistent performance in newly opened facilities.

The Results:

Designed for daily volume. Built for sustainability.

The newly implemented cross-dock facilities are meeting performance expectations and delivering measurable operational improvements.

By refining processes rather than adding complexity, the retailer strengthened its distribution network and created scalable operations capable of supporting long-term growth.

20%

Labor Efficiency Gain

12K

Tires Daily

daily

Store Delivery

25%

Expansion Ready

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Transforming Torrid’s Direct to Consumer Fulfillment

Kelsey Cook on January 16, 2026

Case Study: Torrid and VARGO®

Transforming Torrid's Direct-to-Consumer Fulfillment

Torrid is one of the largest direct-to-consumer apparel brands in North America for women’s sizes 10–30, serving a rapidly growing customer base across digital and retail channels. As the business scaled, Torrid partnered with VARGO® to unlock additional capacity, improve fulfillment efficiency, and extend the value of its existing automation investments.

By introducing waveless fulfillment, VARGO® helped Torrid transform an existing operation into a scalable, high-throughput system—without major facility expansion or disruptive infrastructure changes.

150%

Increase in pick and matching uPH

22%

labor cost reduction

75%

order cycle time reduction

20K

Sq Ft reclaimed storage

Challenge

Scaling Capacity Within an Existing Fulfillment Environment

As Torrid expanded to more than 600 stores worldwide and continued to grow its direct-to-consumer business, fulfillment operations began to reach the limits of their capacity. Despite prior investments in automation and labor, existing workflows were fragmented and unable to deliver the throughput and consistency required to support continued growth.

Torrid needed a solution that could:

Increase throughput using existing automation assets
Improve picking efficiency and order cycle times
Reduce operational complexity and exception handling
Maximize labor productivity
Scale without significant additional capital investment

Rather than replacing systems outright, Torrid sought a partner who could strengthen how the operation functioned as a cohesive, end-to-end system.

Solution

Waveless Fulfillment Through Intelligent Orchestration

Torrid partnered with VARGO®, a fulfillment systems integrator, to redesign operations around a continuous, waveless execution model.

At the center of the solution was COFE® WES, VARGO’s real-time Warehouse Execution System. COFE® was deployed as an orchestration layer across Torrid’s existing automation controlling mechanical elements while synchronizing labor, inventory, and workflows in real time.

This shift from batch-based processing to continuous flow enabled Torrid to unlock hidden capacity and dramatically improve performance without replacing core infrastructure.

Key improvements included:

Transition from an all-active pick model to a reserve replenishment model
Eliminating mechanical buffer constraints that slowed product flow
Retrofitting unit sortation from sort-to-chute to sort-to-putwall
Implementing COFE® WES to orchestrate continuous, efficient execution

Together, these changes transformed fulfillment into a unified, high-performing operation.

Design & Implementation:

VARGO® worked closely with Torrid’s senior leadership and operations teams to integrate COFE® into the existing technology platform and automation environment.

Rather than introducing unnecessary new equipment, VARGO® focused on understanding process requirements and desired outcomes first and then adapting automation and controls to support those objectives. This included partnering with automation providers to rework controls and sortation equipment to align with the new waveless design.

By orchestrating existing assets under COFE®, VARGO® enabled Torrid to achieve substantial performance gains while limiting incremental capital spend and operational disruption.

Technologies integrated:

Beumer Cross-belt Sorter
Matthews Automation Controls
Highjump WMS
Dematic Conveyor Systems

The Results:

Designed for volume. Built for growth.

The waveless fulfillment model delivered immediate and sustained improvements across Torrid’s operation.

Beyond the metrics, Torrid’s fulfillment operation became easier to manage, more predictable, and better positioned to support future growth.

150%

increase in pick and matching UPH

22%

Labor Cost Reduction

75%

Order cycle time reduction

20K

Sq Ft Reclaimed Storage

Scaling Gap’s High-Volume Fulfillment Operations

Ammar Khawar on January 12, 2026

Case Study: Gap and VARGO®

Scaling Gap’s Fulfillment Operations

Gap Inc. is a global apparel retailer serving millions of customers across multiple brands and channels. Gap partnered with VARGO® to design and deliver a fulfillment system capable of operating at scale, consistently, efficiently, and under peak pressure. Through a long-term partnership, VARGO® helped Gap reimagine fulfillment as a unified, waveless operation; integrating people, automation, and software into a cohesive system that continues to support growth across Gap’s network.

750k+

Daily Units Processed at Peak

<45 MIN

Order Cycle Time

380+

Picking UPH

<0.1%

Error Rate

Challenge

Fulfillment in a High-Volume Environment

Gap’s fulfillment operations faced growing pressure from rising e-commerce demand, labor constraints, and the need to consistently meet commitments across peak seasons. Existing workflows and automation investments required tighter coordination to improve throughput, reduce cycle times, and ensure reliability at scale. Gap needed a fulfillment approach that could:

Support sustained growth across a multi-brand network
Increase throughput without proportional labor increases
Improve order accuracy
Maximize the value of automation investments
Perform consistently during peak demand

To achieve this, Gap sought a partner capable of designing and orchestrating a fully integrated fulfillment system; one that could evolve with the business.

By Numbers:

3,100 retail locations
6 brands sourced from 30 locations
10 distribution centers
Network capacity of 7M+ units/day

Solution

Real-Time Fulfillment, Orchestrated at Scale

Gap partnered with VARGO®, a proven systems integrator, to design and implement a fulfillment strategy supported by multi-vendor automation and real-time orchestration.

VARGO® rearchitected Gap’s online fulfillment operations around COFE® WES, VARGO’s real-time Warehouse Execution System. Rather than relying on batch “wave” processing, COFE® enables continuous execution that coordinates labor, automation, and inventory in real time.

Key elements of the solution included:

Design to optimize space utilization and labor efficiency
Multi-vendor automation integration
Real-time orchestration through COFE®, sequencing and synchronizing workflows to maximize throughput and reliability
Optimization of existing assets, extending the value of prior automation investments while minimizing incremental capital spend

The result was a scalable fulfillment framework capable of adapting to changing demand while maintaining consistent performance.

Design & Implementation:

VARGO® led the full lifecycle of design, integration, and commissioning while working closely with Gap’s teams to ensure long-term scalability.

COFE® orchestrates a diverse set of automation technologies across Gap’s fulfillment network, coordinating workflows from receiving through shipping. This unified execution enables Gap to deploy best-fit technologies while operating on a single system.

Technologies integrated include:

MHS & Dematic conveyors
OPEX® Sure Sort®
TGW ASRS IIRC
Eurosort Bombay-style sorters
Interroll cross-belt shipping sorters
Accutech auto packaging systems
FMH automatic trailer loaders
Exotec GTP System
Ocado GTP System
Ocado ORBS

The Results:

Faster. More Reliable. Scalable.

VARGO®’s waveless fulfillment approach has transformed performance across Gap’s fulfillment network. Most importantly, the system continues to perform consistently, even during peak demand, providing Gap with a reliable foundation for ongoing growth.

750K+

Daily Units Processed at Peak

<45 MIN

Order Cycle Time

380+

Picking UPH

<0.1%

Error Rate

Unifying Omnichannel Fulfillment For American Eagle

Ammar Khawar on December 15, 2025

Case Study: American Eagle Outfitters and VARGO®

Unifying Omnichannel Fulfillment For American Eagle

American Eagle Outfitters (AEO) is a global apparel and accessories brand serving retail and e-commerce customers worldwide. AEO aimed to streamline fulfillment across retail and online channels using a unified fulfillment system. The result was faster delivery, greater efficiency, and a scalable framework to support continuous growth.

2-hr

service level agreement

99+%

unit sorter utilization

540k

Retailer Capacity per unit

750K

E-Commerce Capacity per unit

Challenge

Demand of Omnichannel Growth

AEO needed to serve its fast-moving, digitally savvy customers with speed and precision across both e-commerce and retail channels. As online order volumes increased, the retailer’s legacy fulfillment systems struggled to keep pace. AEO required a scalable, unified fulfillment solution that could:

Process high-volume Direct-to-Consumer (DTC) orders alongside store replenishment
Accelerate delivery times
Increase operational throughput
Eliminate duplicate inventory
Improve labor efficiency

Customer Expectations:

15–35 year-old digital shoppers expect “buy now, ship now.” AEO needed to make fulfillment as fast and seamless as the shopping experience itself.

Solution

Waveless Fulfillment, Unified Operations

AEO turned to VARGO®, its trusted partner, to help design and implement an omnichannel fulfillment operation capable of real-time order execution and dynamic prioritization. VARGO® designed AEO’s omnichannel fulfillment center in Hazle Township, Pennsylvania, to be powered by COFE®, a real-time Warehouse Execution System (WES) that enables continuous processing.  

Unlike batch “wave” systems that release orders in large intervals, COFE® continuously evaluates every incoming order, prioritizing it based on customer need, shipping priority, and inventory position. High-priority orders automatically move to the front of the queue, ensuring faster turnaround and more agile operations. 

The entire facility operates as an “all-active” inventory environment, where every SKU can fulfill both retail and online orders. COFE® orchestrates labor, routing, and inventory allocation to maximize productivity and throughput—without increasing headcount.

Design & Implementation:

Through COFE®, automotion technologies were integrated and synchronized to deliver a unified, seamless fulfillment process from receiving through shipping. Here’s a technology snapshot at AEO:

Knapp Shuttle
Dematic RapidStore AS/RS
OPEX Sure Sort® Automated Putwalls
Beumer Cross-Belt Sorter
Manhattan WMS

By Numbers:

15–35 year-old digital shoppers expect “buy now, ship now.” AEO needed to make fulfillment as fast and seamless as the shopping experience itself.

1 million square foot distribution center
Retail and E-commerce
12 million units of active inventory
50,000+ SKUs Managed
70 minute order processing time

The Results:

Faster. Smarter. Unified.

Even during major peak seasons, the new facility processed as many orders in six days as it once did in three months—all while maintaining service-level accuracy and customer satisfaction.
The waveless fulfillment model has transformed AEO’s supply chain performance.

Today, AEO continues to scale by integrating robotics and automated storage systems under COFE®, increasing capacity without expanding labor or footprint.

2-hr

service level agreement

99+%

unit sorter utilization

540k

Retailer Capacity per unit

750K

E-Commerce Capacity per unit

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