Category: Press Release

Call returns to VARGO® to oversee software quality assurance

Gruber hired as systems project engineer

VARGO® has launched the COFE® Partner Program in which it will form alliances with integrated partners, giving them access to COFE®, VARGO®’s software that enables true lean distribution in fulfillment centers.

HILLIARD, Ohio—The supply chain engineering power of VARGO® made history when American Eagle Outfitter Inc.’s distribution center in Pennsylvania went live on June 15 as the only all-waveless omnichannel fulfillment center in the world.

“While the facility will have the capability of servicing all the stores in the chain, the Hazle Township, Pa., distribution center will primarily service 416 stores, approximately 50 percent of the retail inventory,” said Christine Miller, director of operations at the distribution center. The center also will continue to fill all direct-to-customer e-commerce orders for the eastern half of the United States.

The power behind the omnichannel fulfillment center is VARGO®’s Continuous Order Fulfillment Engine (COFE®) warehouse execution system.

“VARGO®I is excited to be an integral part of American Eagle’s growing e-commerce business and proud that COFE® can help the retailer fulfill its goal of meeting or exceeding its customers’ expectations,” said Michael Vargo, president of VARGO®. “What’s most impressive is that the fulfillment center in Hazle Township is capable of reaching 90 percent of American Eagle Outfitters’ retail customers in two days or less.”

When American Eagle built the facility in Hazle Township, Pa., it had plans all along for the omnichannel solution. The system is designed to provide a parallel workflow so that workers can simultaneously pull orders for both customer (or e-commerce) online orders and the store-replenishment orders (called put-to-store).
“What is really different here is that the people doing the picking do not know whether each pick is for a direct-to-consumer order or for store replenishment,” said Carlos Ysasi, vice president of integrated systems for VARGO. “In this distribution center, there is no difference, just one inventory with a seamless transition.”

COFE®’s intelligent warehouse management system provides for true lean distribution.

“As soon as the inventory is inside of the distribution center, COFE® knows where that inventory is located,” Ysasi said. “It knows where the workers are within the building, and it is making real-time decisions to move people and drive the processes.”

The ever-growing e-commerce business drove American Eagle to this point. The 2014 holiday season saw Americans spending $100 billion shopping online, and nearly $300 billion for all of 2014, according to the U.S. e-commerce forecast by Forrester Research.

“We needed the infrastructure to support that growth,” David Repp, vice president of North American distribution at American Eagle told DC Velocity magazine in January.

American Eagle also knew it needed a pioneering material handling system that could simultaneously
handle all of those orders while still maintaining a fairly quick order turnaround. As it has done in the past,
American Eagle contracted with VARGO® to provide the COFE® system in the Hazle Township facility.

COFE®’s customized technology is scalable with growth. The real-time warehouse execution system can manage material handling equipment as well as devices, people and processes. In American Eagle’s case, COFE®’s flexibility allows the distribution system to easily handle consumer orders, which typically involve a large number of orders with smaller quantities alongside the put-to-store orders, which typically involve fewer orders but larger quantities.

VARGO® has spent the past few months updating the system so that it could begin to handle orders to restock store inventory as well as customer’s online orders.

“This is the only all-waveless omnichannel fulfillment operation in the world that I’m aware of,” said Art Eldred, a client executive for systems engineering at VARGO®. “We’re excited to bring the same direct-to-consumer efficiency gains and dynamic work flow management achieved last year to AEO’s retail flow. This has become a model for their network, and we’re looking forward to retrofitting the remainder of AEO’s distribution network.”

The change definitely will add to the work flow in Pennsylvania, Eldred said. In 2014, the facility could handle a peak of 216,000 units a day for direct-to-customer orders, a 50-percent increase above their original goal for the first year. For 2015, VARGO® and American Eagle expect that peak to stretch to almost 450,000 units a day for direct-to-customer orders and a peak of almost 245,000 units a day on the retail replenishment side.

“Once we go live, we anticipate adding about 125 additional hourly positions through the end of the year,” said Miller.
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Before American Eagle opened the facility in Hazle Township, all of its store replenishment orders from the eastern half of the country were filled from a distribution center in Warrendale, Pa. A separate facility in Kansas handled all store orders from the west.

VARGO® is proud to announce our expansion to Grand Rapids, Michigan. Read this article from Grand Rapids Business Journal to learn more.

York, Pa., Facility will be First of Its Kind for High SKU Counts

HILLIARD, Ohio—A new and highly innovative e-commerce fulfillment center is coming to York, Pa. When it goes live and starts receiving and shipping goods in late summer 2015, it will do so with VARGO®’s COFE® warehouse execution system (WES).

One of the largest third-party logistics providers in North America contracted with VARGO® to design and build a warehouse execution system for a client that is one of the country’s largest retailers. The fulfillment center will be a full turnkey facility for this large retailer’s growing direct-to-consumer business east of the Mississippi River. VARGO® has installed its COFE® technology in other fulfillment centers that ship mostly apparel, but this project demonstrates how COFE® can be adapted and scaled for a variety of goods and large volume.

“COFE® will be driving the entire facility, making it the first waveless distribution center for higher SKU counts,” said Art Eldred, client executive for system sales at VARGO®.

“We have been working with them on their e-commerce for a while,” said Eldred of VARGO®’s relationship with the third-party logistics (3PL) provider. “When this opportunity came about, they felt the solution that VARGO® presented was the best product for their client.”

VARGO®’s COFE® warehouse execution system is the first to include automated wave planning for continuous order fulfillment in distribution centers. COFE® is a customizable program that controls all of the processes inside a distribution center, from material handling equipment to the devices, people and processes.

The 3PL’s retail client is experiencing phenomenal growth on its e-commerce side, and the retailer needed an East Coast facility to meet the growing demands of its increasing business. The 3PL supports this retailer’s supply chain requirements throughout the product lifecycle, from kitting and product packaging all the way through liquidation and recycling. After researching the best warehouse execution system, knowing the facility would handle all of the retailer’s business in the eastern half of the United States, the 3PL chose VARGO®.

The facility will process more than 60,000 SKUs with a daily order volume of between 100,000 and 150,000 orders. It could have a seasonal volume of 350,000 to 450,000 orders a day.

The COFE® system that VARGO® is supplying is customized to meet the demands of the higher SKU count. It also is customized to handle a larger assortment of merchandise, from apparel to general merchandise, including cosmetics, electronics, games and small household appliances.

Construction is under way on the York, Pa., fulfillment center. If the schedule stays on track, the facility will open this summer and begin receiving products in July and shipping products in August.