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Retailer American Eagle Outfitters reinvented it the supply chain To create an open and shared network and collaborative platform in 2021.
Digital magazine DC Velocity questions whether this behavior could be the wave of the future delivery method,
In 2019, American Eagle Outfitters (AEO) was running out of capacity, by the publication’s count.
Shekhar Natarajan, Director of Supply Chain at AEO, said during an event that the brand has three options: Build a new distribution centerEstablish an open network, shared and collaborative platform, or do both.
The retailer opted to develop a network that would bring its products closer to customers, reduce its dependence on national carriers, and diversify its workforce.
building the supply chain of the future
Natarajan explained during an academic session at the Council of Supply Chain Management Professionals’ (CSCMP) EDGE conference that his intention was to “build a supply chain model for the future.
His model focuses on decentralization logistics operations and create a network supply chain compartida,
As a first step, the company focused on developing three key capabilities: edge fulfillment, middle mile optimization and service delivery. inventory,
AEO acquires Quiet Logistics and all of it logistics centerExpanding the company’s operations from two full-service warehouses to 9 locations of various sizes across the United States.
That acquisition, in turn, increased the company’s fulfillment capabilities and opened up access to a larger carrier network.
role of transport
The second point was to optimize half-mile operations.
This involved building voting lists, sorting algorithms, and managing line transport, along with other partners.
With retailers competing for limited resources, capacity, etc. of people, the decentralization of logistics operations helped AEO to open up and share resources in the physical and digital sectors.
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Positive effects of good inventory control
change inventory services
In developing the inventory services, the brand used machine learning and algorithms to connect branded retail stores, warehouses and fulfillment centers across Quiet.
These services included:
- Classification Selection Scheme
- Efficient inventory placement, planning and rebalancing
- Daily Delivery and Transfer Operations
- non-productive inventory management
“The increase in capacity we now have to support the business — access to additional carriers, greater proximity to customers and a diverse workforce — is tremendous,” said AEO Senior Vice President Rob Carroll at the same event.
Result: 300 basis point (bps) increase in inventory productivity, cost of shipping packages to customers is $1 less than before, 80% reduction in our add With 35% reduction in delivery time to customers.
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Joint solutions for shared supply chain
With this new model, AEO believes that shared supply chain problems need equally shared solutions, that an open supply chain creates a market that provides opportunities for collective adaptation and scale.
Currently, the AEO network includes over 100 partners with access to 40 different operators.
Furthermore, its directors recognized that the model is not only scalable, but also sustainable.
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