VARNER AS Building the world’s best WAREHOUSE Building the world’s best WAREHOUSE

That was the goal of Scandinavian retailer Varner. The result is a most highly automated, omni-channel retail distribution center, that is also flexible, cost-effective, ergonomic and sustainable.

rom the start of the project, we mated garment-on-hanger (GOH) stor- F declared that we wanted to build age and robotic goods-to-person piece the best warehouse in the world.” So says picking. What’s more, it was designed not Anders Eriksson, the supply chain di- only with growth in mind, but also to be rector for Varner AS, one of Scandina- ergonomic and sustainable. via’s largest retailers. Eriksson oversaw The solution features a representation the design and implementation of a new of most of the tools from the materials 500,000-square-foot, omni-channel dis- handling tool box, including: tribution center in Vänersborg, Sweden. “Of course, it’s impossible to know or • A cross-belt sortation system capable measure if it is the best warehouse in the of handling 6,000 cases per hour. world,” he adds, “but it • A seven-crane pallet handling was important for automated storage and retrieval us to challenge system (AS/RS) with 48,000 pallet ourselves and locations. our partner.” • A 22-crane case handling mini-load AS/RS with space to store Did they suc- approximately 500,000 cartons. ceed? As Eriks- • An AutoStore goods-to-person picking son notes, it’s tough to system, currently being expanded to 12 say. But the final design, developed decanting stations, with 224 robots and in conjunction with a system integrator the capacity to store 116,300 bins (Swisslog, swisslog.com), is one of the serving 24 pick stations. most highly automated and flexible retail • A three-level garment-on-hanger distribution centers we have come across storage and pick mezzanine. at Modern. The facility can handle the • Automated palletizing and store replenishment needs of 10 unique depalletizing. retail chains, each with its own go-to- • Automated packaging and bagging. market strategy, along with a fast-grow- ing e-commerce business. The materials Eriksson’s take on the facility: “We have a handling systems address robotic pallet- state-of-the-art facility and a supply chain izing and depalletizing, automated pallet organization that is well equipped, highly storage, automated case storage, auto- competent and prepared for the future.”

1 Building the world’s best WAREHOUSE

TAKING CONTROL Volt, Urban, WOW, Levi’s Store, Nike Store In 1962, Frank Varner, a budding Nor- and Days Like This. While the majority of wegian retailer, opened his first store on the stores are located in Norway, Sweden Thorvald Meyersgate in Grünerløkka, and Finland, Varner also operates stores in Oslo. Named for the founder, the Frank Iceland, Denmark, Austria and Germany. Varner store became a huge success. All of the stores and e-commerce custom- Three years later, Varner opened another ers are supplied from the central logistics store in Oslo and one in nearby Trond- center in Vänersborg. heim. In 1967, Varner coined the name Dressmann in connection with another Planning for the new facility began in 2013. new store opening in Oslo. In the ensu- Prior to that, each of the retail chains op- ing years, Dressmann stores opened at a erated their own distribution networks record pace across Norway. independent of each another. These oper- ated from 10 different manual warehouses Today, Varner is a family-owned, val- in Northern Europe, all operated by 3PLs. ue-driven fashion retailer and one of the While the supply chain had evolved over largest fashion retailers in Scandinavia, the years, it had become too complex and with an estimated $1.2 billion U.S. in rev- inefficient to address Varner’s changing enue in 2018. The company describes itself needs. What’s more, Varner did not have as “a progressive workplace… the level of control it wanted [that thrives] on innova- over its supply chain. tive business develop- ment with the cus- “Fashion retailing tomer in constant is a highly com- focus” and adds petitive business, that through its so you have to innovative om- constantly cut ni-channel retail- costs and im- ing strategy, its goal prove your quality “is to become the lead- and control in the ing data and tech-driven supply chain,” Eriksson fashion company in Scandina- notes. The idea, then, for the via.” new facility was to bring all of Varner’s dis- tribution, including e-commerce order ful- With nearly 11,000 employees and 1,400 fillment, under one centrally located roof stores across seven countries, Varner has that would enable efficient last-mile deliv- 10 retail chains operating under their own ery and cut lead times for smaller and more unique brands, including Cubus, Dress- frequent store deliveries, resulting in less mann, Dressmann XL, Bik Bok, Carlings, back stock in the stores.

2 Building the world’s best WAREHOUSE

“When we decided to centralize all of our e-commerce channel as well as more stra- products into one warehouse, the main tegic store replenishment. driver was to become more efficient and minimize our store stock,” Eriksson says. “Part of our company culture is to be All of those factors pointed toward automa- very involved with our partners during tion, as did the tight labor market in Nor- the development phase, and way and Sweden. the warehouse proj- ect was no ex- In addition to design questions, the re- ception,” says tailer needed a central location to serve Eriksson. all of its growing markets. “We did a “We partic- center of gravity analysis, and it became ipated ac- clear that the warehouse should be lo- tively and cated somewhere in the western part of learned a Sweden, near the harbor of Gothenburg, lot about but still close to Norway, where the com- warehouse pany is headquartered,” says Eriksson. In automation. We Vänersborg, the company not only found felt comfortable that the proximity to the port and its markets, we had chosen a great solu- but also a lot of suitable land was avail- tion.” He adds that during the course able for the warehouse and an additional of the project, Varner made consider- lot for future expansion if needed. able changes to the way it replenishes its stores, and that the solution proved Varner worked with its systems engineer flexible enough to adapt to the changes partner for nearly two years to conduct along with the company’s growth. a conceptual study, design the solution and select the partner for the project. AUTOMATION BY DESIGN Swisslog, which conducted the original The new distribution center has been de- study and design process on a consulting scribed as a “complete solution that han- basis before winning the contract, notes dles today’s demands for omni-channel” that it devoted some 8,000 hours devel- and “supply chain operations on the cus- oping three different concepts before it tomer’s terms, whether they buy in the was selected as the implementation part- store or online.” ner. The build and implementation phase got underway in the middle of 2014 and It balances the need for speed and accu- was completed mid-2016. The robotic racy; handling goods at the pallet, carton, goods-to-person picking area is currently each and hanger levels; and to minimize under expansion, growing from 60,000 labor given the low employment rates bins to 115,000 bins to meet the growing and relatively high wages in Norway and

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Sweden. Receiving, palletizing and de- The mini-load, which is automatically re- palletizing, storage, picking and packing, plenished by the pallet warehouse, is the and labeling have been automated to the main engine for carton flow—it brings extent possible. For that reason, the facil- cartons out of storage on an as-needed ity is able to operate with 80 to 100 em- basis and sends them to the area where ployees—a relatively low number given there is demand. That could be a full car- the size of the facility and the number of ton that goes to shipping or a carton that cartons handled per hour. will be decanted into a tote to replenish the robotic goods-to-person picking area. There are five areas of automation: 1. A cross-belt sortation area near The robotic goods-to-person picking area receiving; creates single and multi-line orders for 2. Robots palletize and depalletize e-commerce fulfillment as well as mixed cartons depending on where they SKU cases for store replenishment. Once a are needed next; shipping carton or e-commerce package is 3. Buffer storage at the pallet level complete, the items are sorted by the cross- and case-level storage are automated; belt or a bag sorter to the right area. 4. A robotic goods-to-person picking area further breaks down cartons into And, the garment-in-hanger area com- unit level totes for piece picking; and bines automated storage with con- 5. Garments that are handled on ventional picking in a three-level pick hangers are processed in the three- module for items that aren’t handled in level pick module. cartons or totes.

The cross-belt sorter is essentially the The additional data, as well as the quali- traffic director for the facility, making ty of the data, collected by the automat- sure cartons get to the right area ed system has been a bonus benefit. “We in the facility based on improved the quality of our logistics data where they’re most and we have a better understanding of needed, from the importance of data quality” as a re- crossdock- sult, Eriksson notes. ing inbound merchan- While Varner employees are responsible dise to an for the warehouse operations, the retailer outbound has outsourced maintenance of the auto- truck to re- mation and the warehouse management plenishing the and control systems to Swisslog. “We are robotic goods-to- still in charge of the logistics center, but person picking area. seven technicians from Swisslog work

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full-time in maintenance and their IT way. Whether it’s the best retail DC in specialists support the warehouse man- the world may be difficult to answer, agement system,” Eriksson explains. but for one of Northern Europe’s lead- Swisslog is also responsible for train- ing retailers, it is “a world-class facili- ing associates when needed. The reason ty that we use as a precision tool for is that “we don’t gain any economies of inventory management to deliver the scale doing service and maintenance with correct items to our stores, when they our own staff, so it was an easy decision need them,” Eriksson says. “And, we to outsource those functions,” he says. have the warehouse capacity we need for the foreseeable future. We no lon- The facility has been running for four ger talk about the limitations of our years, with a major expansion of the supply chain, just about how well ev- goods-to-person picking area under- erything runs.”

5 Building the world’s best WAREHOUSE

AUTOMATING FASHION DISTRIBUTION

The 500,000-square-foot distribution center in Sweden handles fast-fashion store replenishment and e-commerce fulfillment in a highly automated setting.

arner’s distribution center was The pallets are then automatically de- V centrally located in Sweden for ac- palletized and the cartons are conveyed cess to ports and the retailer’s network of to the mini-load storage system (6), stores and customers across seven Euro- which is the facility’s main order ful- pean countries. Processes were designed fillment engine for store to manage pallets, cartons and item-level replenishment. SYSTEM SUPPLIERS units and piece picking for e-commerce System design, integration & general contractor; light goods & pallet fulfillment and garments on hanger. Carton receiving: The car- conveyor systems; mini-load AS/RS, pallet-handling AS/RS, WMS, WCS & WES: The facility is divided into several pro- ton receiving area can sort SWISSLOG cessing areas. 6,000 cartons per hour. Cross-belt sortation: Cartons for which there BEUMER Robotic goods-to-person High-bay AS/RS: The high-bay area pro- is immediate demand are picking: vides bulk buffer storage for 50,000 pal- crossdocked to shipping AUTOSTORE Robotic depalletizing: Kuka Robotics lets. The product stored here represents (7) into an outgoing truck Robotic palletizing: a limited number of SKUs purchased in for store delivery. QIMAROX large quantities for one of Varner’s val- Automatic carton erection & closing: Mini-load system: Cartons JOMET ue chains and stored at the pallet level. destined for storage are E-commerce bag sortation: When floor-loaded containers arrive at conveyed to a mini-load QUBICA receiving (1) from the port, cartons are storage area (6) serviced by Mini-load rack system: BITO STORAGE SOLUTIONS unloaded onto extendable conveyor (2) 22 cranes and with storage Pallet racking: and transported to a cross-belt sortation capacity for 500,000 car- STOW area (3). The cartons are sorted by SKU tons. The mini-load serves Order release module for sorting incoming cases: to a robotic palletizer (4). Pallets are au- as the primary carton order DYNAMIC LOGISTIC SYSTEMS tomatically stretch wrapped and then fulfillment system for the Telescoping conveyors for loading and unloading: conveyed to the automated storage and facility. When Varner’s en- CALJAN retrieval system (AS/RS) (5) for tempo- terprise resource planning rary storage. (ERP) system assembles orders, they are sent to the warehouse management sys- When product is retrieved from the AS/ tem (WMS). Cartons are then retrieved RS, it’s conveyed to a manual processing from the mini-load and sent either to the area where the stretch-wrap is removed. shipping area, where they are loaded onto

6 Building the world’s best WAREHOUSE

a truck, or to the robotic goods-to-per- picked, a lid is automatically added, the son picking area (8). box is labeled and then conveyed and sorted into an outbound truck. Items for Robotic goods-to-person picking: Car- e-commerce orders are put into one of 40 tons destined for the goods-to-person different polybags. Finished bags are then picking area may come directly from conveyed to a bag sorter and sorted into a receiving or from the mini-load system. roller cage. Cartons go first to a decant area (9), where VARNER, VÄNERSBORG, SWEDEN the contents are emptied into a tote and Garment-on-hanger SIZE: conveyed to the upper level for storage (GOH) area: 500,000 square feet and handling by the robots. Where there Some incoming cartons ITEMS: Owns 10 retail chains. is demand for product, the robots remove are sorted directly to the Fashion retail. a tote from storage and send them to one GOH area (10). There, SKUS: 50,000 of the workstations. All stations can fill they are decanted onto SHIFTS PER DAY/DAYS PER WEEK: e-commerce orders and orders for mixed hangers that are induct- 2 shifts, 6 days SKU cartons for store replenishment. ed onto the GOH system. Items for store replenishment are picked The area serves a three-level pick module. into a corrugated container. Once all of Associates are directed by voice to pick the items for that container have been items. Those items are placed on a central conveyor line, delivered to a labeling area and then loaded onto trucks.

High-bay AS/RS 5

10 Garment-on-hanger area

Mini-load Palletizing 6 4

Cross-belt sorter 3 Robotic goods- to-person-picking Extendable conveyor 2 8 7 Shipping 2 Extendable conveyor 9 Decant area 1 Receiving

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PHONE 757-820-3400

EMAIL [email protected]

ADDRESS 161 Enterprise Drive, Newport News, VA 23603

WWW.SWISSLOG.COM

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