VARGO® Partnership Featured in North Bay Business Journal

VARGO®’s partnership with Wine Direct on a new high-technology wine-fulfillment center in Napa Valley was featured in the North Bay Business Journal. See the full article below:

WineDirect opening big high-tech Napa Valley fulfillment center


Nearly two years and multimillions of dollars in development, a new high-technology wine-fulfillment center in Napa Valley is set to roll out its first shipments to consumers next month.

Napa-based WineDirect said the goal of building and tricking out the 268,000-square-foot American Canyon facility is allowing vintners to offer Amazon-like responsiveness to orders, while upping the game in how much more special wineries can make the experience of opening their packages.

“The direct-to-consumer wine channel grew 17 percent in 2016 and is poised for explosive growth in the next few years,” said Joe Waechter, president and CEO of WineDirect, in a statement.

The biggest challenge for wineries will be keeping up with rising consumer expectations.

“Our new fulfillment center is designed to do just that,” he said.

WineDirect has noticed that consumers who are buying wine online want more customization and personalization in orders, according to Jim Agger, vice president of marketing and business development.

And consumers have “superhigh” expectations about the speed of delivery, he said. It used to be that “fast shipping” was four or five days. Now it’s two days or less.

Getting the immediate confirmation of orders, rather than a day or more later, is expected in the e-commerce world led by the Seattle-based giant. That can be handled by WineDirect’s software for client vintner websites and point-of-sale venues such as tasting rooms.

But working in customization or orders or club shipments and speeding the process to get them out to couriers for delivery in as little as two days was something that required more than an upgrade of WineDirect’s 18-year-old main fulfillment center in American Canyon.

That 130,000-square-foot facility was state of the art at the time, with about $200 million spent by previous ventures on software and systems, but a lot has changed in fulfillment-center tech, particularly in the past decade, Agger said. WineDirect also has fulfillment centers in Paso Robles and Santa Maria on the California Central Coast and in Ohio for the East Coast.

WineDirect is preparing to move wine into the hulking new American Canyon building on 10.6 acres at 450 Green Island Road. Testing of software and the more than a mile of conveyors and automated sorting systems has gone well enough that the company plans to have the first orders ready to ship on Aug. 7, according to Karin Ballestrazze, senior vice president of operations.

Because of more-efficient systems and processes, the new warehouse will have three times the order throughput, she said. The company averages 7,500 orders shipped daily, but peak output is about 40,000 from the four facilities, including up to 25,000 from the current Napa Valley facility.

At the heart of making that happen logistically is a roughly $7 million software and mechanical warehouse execution system by Vargo, a Hilliard, Ohio, company that has designed such systems for big-volume companies such as Amazon. Vargo’s Continuous Order Fulfillment Engine, or COFE, is shifting WineDirect’s pick-and-pack approach to a waveless method, according to Ballestrazze.

“Instead of manually processing orders in waves based on criteria like time in transit or destination, the new waveless technology uses intelligent software to continuously push orders through the system,” she said. “It’s faster, more efficient and greatly reduces the possibility of human error.”

Currently, a team of four or five plans waves of orders to be packed for the day, such as for two-day delivery or for Illinois destinations.

And wine-fulfillment companies often have to slot many wines for the pick-pack team, because it’s not always communicated which promotions a vintner has going.

The new system uses on-demand inventory replenishment, and only what’s needed for the orders of the day is slotted.

“With pick to light we eliminate the need for slotting,” said Adrienne Stillman, marketing manager. “When the wine comes in, it is moved into inventory. The software identifies the total quantity of each wine needed for that day’s batch of orders and sends it up on the conveyor to the “matcher” who then puts the correct quantity of wine into each order and then sends the remainder back to inventory. This means there is less handling of the wine and therefore fewer chances for breakage, temperature or light damage, and less chance for dust to accumulate on the bottles.”

By eliminating the staging area between inventory and order-picking, wineries can be more flexible and allow for more on-the-fly customization, Ballestrazze said. That greatly reduces the lead time necessary to prepare for large shipments, such as promotions and wine clubs, she said. There’s also less handling of the wine because each case is moved only as it is needed for an order. As a result, there are fewer chances for breakage or damage.

Orders will be assembled with a pick-to-light system, also called put to light. That means when a given wine snakes down the 6,500-foot conveyor to the pickers, they will see lighted indicators under each order box showing how many bottles goes into each box. Once the bottles go in a box, the picker presses the lighted button. After all the lighted buttons are pressed, the next wine for the orders arrives on the conveyor.

Currently, staff in the pick area walk along bays to locate the wine then pick the appropriate quantity, said Ballestrazze. With WineDirect’s new system, the wine will come to the picking staff instead. The correct wine is delivered on the conveyor for the picker, also called a matcher, to place into each order as needed. The goal of such a system is to reduce mistakes and potential breakage, and that’s achieved by eliminating the step of searching.

Construction began in September 2016. It will be the new company headquarters, moving from a south Napa office. WineDirect seeks to fill 16 positions in sales, software engineering and customer support.