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Supply Chain Risk

Keeping the fabric flowing at JOANN Stores

You’ve heard the expression: Fighting with one arm tied behind your back, right? Now, imagine what it takes to sell and distribute enough fabric and supplies to make over 300 million masks during a pandemic, while half your stores are closed; your systems are stressed as the daily volume of e-commerce orders is three times Black Friday; and critical supplies like fabric, elastic, corrugated and even barcode scanners and label printers are difficult to find.

Those are some of the challenges that confronted the supply chain team at JOANN Stores, the Ohio-based category leader with more than 865 stores, according to Varadheesh Chennakrishnan, CIO and supply chain leader for JOANN. “There were a lot of late-night calls to suppliers in India, Pakistan, China and other Southeast Asia countries,” Chennakrishnan recalls. “There are a lot of substitutions for different types of fabric, but no substitutions for elastic. We had to do some air lifts, and we changed the way we sold it. Instead of packages with 12 inches of elastic, we bought rolls and sold it by the yard.”

The shortages – and the rapid increase in e-commerce orders during the pandemic shutdown – coincided with the launch of JOANN’s Make To Give campaign, launched with a goal of making 200 million masks to support frontline healthcare workers and those most at risk due to supply shortages. The retailer featured free tools and resources on its website for anyone interested in making masks at home. And, it was a success: To date, it has far exceeded the original goal, logging some 309,473,209 masks. All of that led to a big surge in demand for the products sold by JOANN as the pandemic forced the shutdown of half the retailer’s stores – fighting the battle with one arm tied behind the retailer’s back.

According to Chennakrishnan, JOANN did what it could to keep stores open. “We worked with local governments to get exemptions because we were a supplier of essential products that you needed to make PPE,” Chennakrishnan says. “Our customers wanted to shop.” The result was a hodgepodge of operating procedures, with some states declaring the retailer essential; some saying no; some saying yes, then no; and some permitting JOANN to operate with reduced hours. With stores closed, and consumers reluctant to venture out, online orders exploded. And, for a time, that was a 3X increase in orders every day, Chennakrishnan recalls.

For most retailers, that surge would have fallen back on their distribution centers. And as we know, dealing with the explosion of online orders was a challenge for everyone, even behemoths like Amazon and Walmart. What made it more challenging for JOANN is that pre-COVID, 95% of its online orders were filled from about 100 stores, with just 5% shipping from a distribution center or drop shipped from a vendor. What’s a retailer to do?

In this case, it was a quick pivot. One of the first steps, according to Chennakrishnan, was to double the number of stores capable of doing ship-from-store to about 200. That led to a scramble for Zebra handheld scanners and label printers. With manufacturing in China, there were issues getting equipment. “We worked with multiple vendors to get what we needed,” Chennakirshnan recalls. There was another hunt for corrugated boxes. “Normally, we’d just order what we need online as we needed it,” he says. “But with everyone buying everything online there was a shortage of corrugated.” What’s more, while JOANN already had processes in place for order online, pickup in store; a number of states were allowing curbside pickup, even if customers weren’t allowed inside the stores. That meant quickly developing a process for this new service offering.
 
That was the analog side of the ramp up. There was also a digital side: How do your IT systems handle all that additional traffic; decide how best to allocate the orders; and then manage the pick, pack and ship process? Chennakrishnan’s team worked closely with IBM Sterling to ramp up its digital capacity. The IBM Sterling distributed order management system, or DOM, is the backbone of JOANN’s e-fulfillment solution. “The DOM system is our system of record for inventory position by store and by item in something that is close to real time,” Chennakrishnan says. “When you browse online, it will automatically go to your nearby store to see if it has that product in stock. Then you have the option to pick up in store or ship to home. If you choose ship to home, it goes to the broader network.”

Chennakrishnan notes that because the solution was Cloud-based rather than on-site at JOANN, IBM Sterling was able to add servers and scale up to handle the additional volume and traffic. The solution provider was also able to trouble shoot performance issues “and uncovered things that were probably always there but never presented a problem because we didn’t have the volume,” he adds.

In the months since that initial surge, order volume has tapered off, relatively speaking. It’s no longer a 3X Black Friday every day of the week, but volume is still 2 to 3 times the normal volume for the time of the year. “Customers prefer online shopping more than they did last year,” Chennakrishnan says. “We believe that’s the steady state now.” To that end, JOANN is focused on beefing up its brick-and-mortar fulfillment processes, especially with the holiday season coming.

One initiative is to get more granular information about inventory, and its location, in the stores to streamline picking while customers are shopping. “We are piloting a system in one of our stores that will show the shelf location and number of items at that location for orders that need to be picked,” Chennakrishnan says. “Our plan is to roll that out in four hub stores.”

Second is to refine the curbside pickup process. To get it rolling, a sign in the parking lot advertised a number in the store customers could call for their pickup. But you can only have so many telephone lines going into the store. Now, the team is working on geo-positioning technology for the parking lot. The system will allow store personnel to see that a car is in a spot in the parking lot waiting for a pickup. “It will provide a seamless experience for the store and is something we’re going to pilot in the next 6 to 8 weeks,” Chennakrishnan notes.

Last to come is a platform for last mile delivery, especially for delivery from the store to a local area. “We are talking to a number of last mile service providers and trying to understand their capabilities. But there is also a cost of providing that service, and we don’t want to upcharge the customer,” he says. “This is something we’re working on but is unlikely to happen in the next few months.”

I’ve talked to a number of name-brand retailers recently with stories similar to JOANN of dealing with shortages of critical supplies and resources as their e-fulfillment volume went through the roof. Like Chennakrishnan, they are all betting that COVID has accelerated trends that were already taking place and this is their new steady state. At JOANN, they’re no longer fighting with one hand tied behind their back.

About the Author

Bob Trebilcock

Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.

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