Gucci Group - Gucci Recognizes The Sweet Smell Of Distribution Success

Gucci Group is one of the world's leading multi-brand luxury goods companies. Through its brands, including Gucci, Yves Saint Laurent, Sergio Rossi, Boucheron and many others, the Group designs, produces and distributes high-quality personal luxury goods.

Application: Retail Perfume Distribution


Equipment: Three Shuttle VLMs, inventory management software and pick-to-light flow rack


Summary:  Reduced labor costs and increase productivity by 40% while saving up to 80% of otherwise wasted floor space



When the Gucci Group decided to consolidate all distribution into their existing facility, it became apparent that Gucci would have to modify its distribution philosophy. "We merged 200,000 square feet of operation into our existing 100,000 square foot facility. We needed something simple, but very effective, to meet our space and productivity requirements," said Tony Mauro, vice president of operations.

Gucci Group is one of the world's leading multi-brand luxury goods companies. Through its brands, including Gucci, Yves Saint Laurent, Sergio Rossi, Boucheron and many others, the Group designs, produces and distributes high-quality personal luxury goods. The Group directly operates stores in major markets throughout the world and wholesales products through franchise stores, duty-free boutiques and leading department and specialty stores.

"Our old RF controlled carton flow warehouse required too much wasted walk and search time," Mauro added. "We had used RF picking to be efficient, but realized that too much time was being spent walking and not enough time picking. In addition, to meet seasonal peak demand we would need to hire almost 100 temporaries which were costly and required additional time to train and manage."

With over 3800 active SKUs, an analysis showed 25% the SKUs were very active. By moving the fastest movers into pick-to-light flow rack - and the slower movers into three KardexRemstar Shuttle Vertical Lift Modules (VLMs), Gucci was able to reduce their labor costs and increase productivity by 40% while saving up to 80% of otherwise wasted floor space. The three Shuttle VLMs provide approximately 1800 feet of accessible storage space in a 210 square foot footprint.

The Gucci Group ships many million units (pieces) per year to several thousand doors which are comprised of Gucci Group and other retail stores. "Inventory for hot new products could turn multiple times per month so we needed a very efficient and flexible picking system," said Ralph Carangi, operations manager.

Mauro said, "We calculated an 18 month ROI (return on investment) for the VLMs based exclusively on labor savings. In fact we are realizing an additional 40% increase in productivity and some days even up to a 100%. The decision to implement the VLMs was an easy choice based on the labor savings. The space savings and daily productivity gains were a bonus."

Efficient Zones
The Distribution Center (DC) picking area is broken into five zones connected with smart conveyor which routes the orders to be picked and pulled directly into shipping containers. The first three zones use pick-to-light flow rack. Three Shuttle VLMs make up the next zone and the last zone is the "double scan" area which uses shelving and "double" bar code scanning verification for additional security due to those items cost and value.

Integrated software is key to the success at Gucci. Manhattan Associate's PKMS Warehouse Management Software (WMS) manages the DC. Software by Reddwerks (Austin, TX) drives the pick-to-light flow rack zones and the inventory management software operates the Shuttle VLM zone. Both systems communicate with and update PKMS which in turn updates the host system.

Waves of orders are queued at the customer service department. The waves are then sent down to the floor to begin picking. The waves are sorted into zones and inducted at the first available zone. The system is designed with a re-circulating conveyor, and during peak times pickers can induct at any one of the five zones. During non-peak times, the orders simply start at the first zone containing the required SKUs.

When the orders are completed within a zone, they are passed to the next zone automatically via intelligent conveyor by Siemens (Grand Rapid, MI). "Each order will go only to the zone that contain the SKU's required to complete that order, automatically bypassing unnecessary zones to increase the system's efficiency," said Carangi. "We weren't able to batch pick in the old RF and shelving system," stated John Tatulli, warehouse operations manager. "We would send ten people to pick the exact same SKU for ten orders. Now one person picks it all at once from the VLMs."

Orders that are directed to the Shuttle VLM zone are picked in batches of ten. The operator simply scans the barcode on the shipping container label and marries it to a position on the batch station. When the batch is ready to be picked, a VLM's tray is automatically delivered to the pick window. The indicator then tells the operator which SKU and what quantity to pick.

The operator turns and the put lights at the batch station indicate how many items to put in each order. When completed, the operator simply pushes the task-complete button and repeats this process until the batch is complete. Once the batch is complete, the cartons are pushed off onto the take-away conveyor delivering the cartons to the next zone or to the weighing and shipping department.

The entire system is balanced by using a monthly slotting analysis. Based on a SKU's order velocity and physical size, the proper zone is determined. The pick to light flow rack is used to store larger quantities of goods which can be replenished while still being picked. The shelving zone is used for high security items which need to be "double scanned." The VLMs are used for the slower moving items which account for approximately 40% of the facility's SKUs.

Pick, Pack and Ship
"When everything was in carton flow, I had pickers passing hundreds of less used SKUs to find the one item they really needed," said Carangi. The Shuttle VLMs automatically deliver the items to an ergonomically located pick window. The three Shuttle VLMs are comprised of trays stored on both sides of a column with an inserter/extractor platform operating in the center. The items are on trays which are divided into six, eight or 16 sections. One VLM has 60 trays and the unit measure 49" x 32" and is 18' tall. The other two Shuttle VLMs have 80 trays each unit measure 72" x 33" and are 24' tall.

"In the perfume retail business, we are constantly coming out with new products, packages and promotions which affect the amount of SKUs we have to stock and how we pick, pack, and ship," said Tatulli.

Change and flexibility is inherently designed in the KardexRemstar Shuttle VLMs. Their modular design allows the units to be moved or have the heights modified very quickly and cost effectively. Every trays height is scanned when put back into the unit automatically allowing taller or shorter items to be stored without wasting any additional space.
"Our customers want and demand selectivity and we provide them with what they're looking for by picking and selling the exact quantity the customer wants," said Mauro.