The Iconic: mix and batch

By: Ruza Zivkusic-Aftasi


Stocking over a thousand brands and 60,000 products on its site, Australia’s largest online fashion and sports retailer The Iconic offers speedy deliveries thanks to its ever-growing warehousing footprint and automated systems

The Iconic: mix and batch
Anna Lee (right) and The Iconic CEO Erica Berchtold

 

The Iconic’s transformation from a start-up e-commerce online retailer in 2011 continues to disrupt and define the future of fashion and sports retail across Australia and New Zealand through technology, innovation and brand partnerships while investing in its people, infrastructure and operational capabilities.

Most recently, it announced the opening of a 15,000-square-metre Yennora 2 expansion at its south west Sydney Fulfilment Centre.

"This new addition to our site brings our total fulfilment space to 46,000sqm and means we can now hold a massive 3.75 million units ... making our FC one of the largest mezzanine and pick towers in the southern hemisphere.

"This event marks not just the opening of extra space but also another exciting chapter in our Iconic story.

"A big thank you to all of our operations, tech and key business partner teams for all the incredible work put into this project."

Chief operating officer Anna Lee says: "As part of a multi year expansion and development plan, we’ve successfully implemented some exciting innovations.

"We were Australia’s first online retailer to integrate ASRS+tray sorter technology which complements our manual processes significantly increasing our throughput capacity.

"We designed and wrote our own picking app into upgraded wearable android devices. And in Y2, we boast one of the largest mezzanine and pick towers in the southern hemisphere.

"But we’re not done yet with more optimisation to come!"

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ONLINE REVOLUTION

With eight out of 10 Australians shopping online, online retail is responsible for nine per cent of all retail sales.

At a time when consumer demands are rapidly changing, trends in supply chain are driving technology and automation in three different ways – labouring in warehousing, growth in online shopping and industrial land pricing and availability.

The country’s 18 to 36 age demographic now represents 26 per cent of the total Australian population, who value flexibility, transparency and new technology. 

Fulfilling online orders comes with its challenges, according to SSI Schaefer Australia – the solution provider of material handling products and systems worldwide.

Its business development manager for automation, David Morahan, says fulfilling online orders can be hard due to many small orders made with a low number of order lines. The nature of business also includes high number of individual products – or SKUs, high percentage of returns, special packing requirements, fast response time requirements and very high order peaks compared to average order days.

SSI Schaefer Australia business development manager for automation David Morahan

Online orders also have unpredictable growth rates.

The privately-owned company which has eight production sites and 70 offices around the world, has two local factories in Malaysia producing both industrial storage products and conveyor systems.

Adding automation has always been a way to reduce labour and warehousing costs, and increasing safety.

While e-commerce is bringing a boom to business, traditional warehouse picking in general aren’t designed to handle the output, online shopping and same-day shipping requirements.

Morahan believes that staying ahead of the game doesn’t just mean being fashion-forward, it also means thinking about the warehouse and supply chain in a tech-savvy manner, and evolving it to handle higher throughputs.

One of the simplest ways to compensate for the inefficiencies of picking small orders is to batch them together for the purposes of picking. Batching by SKU means that orders are batched together such that during the picking of that batch, each SKU location is visited only once, providing an enormous boost to picking productivity by maximising the quantity per pick. This minimises the travel time between picks.  

"What we do is we batch the orders together by the SKU, the idea is to pick the total quantity of different products or SKUs required for a batch of orders," Morahan says.

"It doesn’t matter if they’re a store order or an online order, the idea is to visit each peak location only once during the picking of the batch.

"The bigger the batch the better picking efficiency you can achieve. It also means that the SKUs you’re picking can be put into a sequence in which they’re stored and which means they simply go from one location to the next, picking as you go."

Following this a put wall or set of shelving locations or pigeon holes are used by operators to individually place the batch picked items separating them into individual orders prior to despatch, he adds.

Three examples of how warehouse footprints can be reduced include: high-bay warehouse, mobile racking and multi-tier mezzanines

High bay warehouses have a smaller footprint and higher pallet storage density

"They [Highbay warehouses] allow significant footprint reductions we compare to a traditional warehouse – we can build them up to 45 metres tall and 160 metres long," Morahan says.

"They can be built as rack-clad warehouses where the pallet racking actually forms the structure of the warehouse so you don’t need to really build around it.

"Multi-tier mezzanines have always been a great way to gain extra floor space within a warehouse and SSI Schafer build mezzanines out of structural steel and our range of industrial storage products, up to four levels high," he says.

"We’ve recently built a mezzanine for The Iconic in Sydney, a structural steel mezzanine, which is the fourth large project we’ve done for The Iconic since 2016 to assist in their stage growth and increase their capacity.

"It’s a very impressive mezzanine and has over 585 tonnes worth of steel, or 460 Toyota Corollas, and around 5,000 sqm per level and a total of 15,000 sqm of entire space.

"It includes 10,600 shelf locations and we can store 128,000 items, which has roughly doubled the existing storage.

"Technologies are ever changing, new product and solutions are constantly being developed so when planning your next warehouse and modernising your existing one, don’t be limited by your current operations or practices because the opportunities really are endless."

ICONIC RISE

The Iconic launches over 200 products daily and offers speedy delivery options such as three-hour deliveries in Sydney, same-day deliveries to Melbourne and Adelaide.

The operation is led by COO Anna Lee, who joined the company in 2014, spending the first three years as CFO.

Anna Lee

"I was really grateful that in 2017 I was given the opportunity to move into the COO role which was a completely different change to everything that I had done for over 20 years," Lee says.

"Being able to be given that opportunity to do something quite different which is looking after the operations all the way from the inbound logistics to fulfilment to customer service was a pretty big change for me but it really is a testament to the business in terms of appreciating that perhaps someone with a lens looking at a particular functions would see things differently rather than bringing in the same kind of knowledge and everyone agreeing with each other.

"I think it really makes for some really great conversation and really good debates that happen within the business, it challenges us quite a bit to make better decisions."

The concept of online shopping in 2011 was different to what it is now, with The Iconic wanting to give the Australian consumer a real feel of how online shopping could be the same, if not better than a physical retail experience, she explains.

"The retailers at the time had kind of lost their way around understanding consumers and I think really the story around The Iconic is understanding the customer so when you come and shop with us a lot of the functionality that we have onsite and on our mobile app is very much tailored to making that navigation seamless and with our content being inspiring," Lee says.

"It really is about making that shopping experience convenient, seamless and much easier to fit into your lifestyle."

The Iconic has three hubs of which one is a fulfilment centre, with all located in Sydney. For any particular season there are up to 80,000 SKUs and styles.

The Iconic has implemented automated pallet picking, fully-automated case picking and semi-automated and robotic piece picking of individual items

"For most SKUs we have four to five different size depth and that multiplies out to almost 400,000 different unique items and the complications associated with winning that stock across a number of different sites and working out the different combinations adds a level of complexity," Lee says.

"We’ve kept it pretty simple and centralised and have just pushed 46,000sqm of actual fulfilment space because of our multi-level mezzanine."

The company’s major freight partner is Australia Post, with cut-off time for parcel delivery being 11.30am.

"We’ve worked with a number of carriers but Australia Post is one of the most important partners and one we have partnered with from day one who have helped us really with the city market which represent 35 per cent of customer base," Lee says.

"Really, up until this year for the last eight years we were the only online retailer that Australia Post actually has a midnight truck for, we’ve managed to convince them that they should come and pick our parcels up at midnight to be able to deliver them the next day and that’s been an amazing partnership and was a huge benefit and impact to the growth of our market share, particularly in Australia."

The company also works closely with Australia Post for return deliveries, where a label gets automatically printed and shipped back to The Iconic for free.

GROWTH

The Iconic has grown on average 50 per cent year on year, with its success dependant on key partnerships, such as Australia Post.

With automation being only a small component of its fulfilment, most orders are still being picked manually, Lee says.

The company has recently deployed a new picking software and moved on to android devices for certain functions.

"A lot of businesses tend to kind of want to work on implementing the perfect software or the perfect automation first time and I think given how quickly the world changes I think by the time you think you’ve rolled out the perfect system your world has probably changed," Lee adds.

"Most of the time things are scoped five years and then five years later it’s delivered and then all of a sudden five years later all the things you decided five years ago were no longer relevant.

"The big learning for us which was I guess in a good way is actually how do we continue to develop and continue to maximise and optimise the investments we’ve made including automation, so understanding every season that our SKUs will change – one season it might be a SKU with strategy which is increasing the amount of assortment and introducing new categories and then another season our strategy might be increasing depth, so selling a tighter group of SKUs but more depth.

"So depending on how that market is responding our customers are wanting to shop, it’s actually realised on our team being very agile and adaptable to what the market conditions are."

Batch picking and sorting with a put wall

The company has doubled in size over the last year – growing to a four million unit storage capacity.

Lee believes the retail market is still volatile - the company stays ahead by reacting rather than being set in its ways.

"We have to find the right balance because obviously if we don’t respond to the market conditions then the customers will find somewhere else to shop, so we need to make sure the product that we have is the right product and that the price is right, plus we have to deliver on the fulfilment and the service capabilities, and that’s the reason customers stay loyal because it’s reliable and they known they can come to The Iconic and find whatever they need for whatever occasion they need and get it delivered on time."

With 100 people in customer service, 50 of them are based in Sydney and the rest offshore who look after The Iconic’s chat and email systems around the clock, delivering a satisfaction score of 90 per cent.

The Iconic’s workforce was 200 when Lee started, which is up to 1,000 now, of which 60 per cent are females. At the executive level, six out of the seven are women.

 

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