Filling a gap in Gap Inc.’s distribution strategy

In late August, Gap Inc., a company I’ve covered over the years in Modern Materials Handling, opened its newest Customer Experience Center in Longview, Texas. The 850,000 square foot distribution center is dedicated to e-fulfillment for Old Navy in the Southwest and is part of Gap Inc.’s continued focus on enhancing the quality of its customer service; earlier this summer, the company also expanded operations at its facility in Fishkill, New York, adding automated receiving, multi-level pick modules, enhanced returns processing capabilities and more.

Along with filling a gap in Gap Inc.’s distribution strategy, the facility also adds an additional distribution node for GPS Platform Services, a new fulfillment service Gap Inc. is rolling out to share with retailers that are struggling in their fulfillment processes the expertise and capabilities it has developed over the decades.

The new facility brings the number of U.S. e-commerce fulfillment centers to 7 plus an additional DC in Canada. The list includes facilities in Fresno, Phoenix, Columbus, Fishkill, the new Texas facility plus two DCs in Gallatin, Tennessee. You can read our previous coverage of Gap by clicking here, here and here.

At the grand opening, Kevin Kuntz, head of supply chain at Gap Inc., noted that the new facility will have the capacity to process an additional 1 million units per day, or roughly 250,000 to 280,000 orders, for a total of more than 4 million units per day during this year’s peak season. In a follow-up interview, he told me that the facility features the technologies that have long been part of Gap Inc.’s stack, including mini-loads and shuttles for automated storage; Kindred.ai robotic putwalls used to aggregate multi-line orders; and robotic storage and retrieval from Exotec to optimize returns handling.

Gap Inc.‘s Texas facility builds on processes the retailer has honed across its network.

He added that the retailer recently completed a pilot with Boston Dynamic’s Stretch robot for automated trailer unloading in Fishkill and has ordered its first two units to be deployed in Gallatin. “We’re going to start with trailer unloading,” Kuntz said.

Gap Inc. was an early adopter of Kindred.ai robotic putwalls, and has since deployed over 200 across its network.

Now, two units in one facility may not sound like a lot. But Gap Inc. started with just Kindred.ai robotic putwalls in Gallatin during the 2017 holiday season. Less than 5 years later, there are more than 240 units at work in multiple facilities across the network. Similarly, Gap Inc. launched Exotec in Gallatin and is now deploying that technology across the network. Kuntz expects to follow a similar playbook with the Boston Dynamics technology. While retail DC’s will likely still rely on people for years to come, Gap Inc.’s growing portfolio of robotics “is inching us closer to a dark environment,” Kuntz said.

Why is Gap Inc. successful at adopting new technologies when other companies often struggle to innovate. Kuntz’s first answer was that innovation isn’t always a homerun. “People hear about the things that work,” he said. “They don’t hear that we pilot a lot of things that don’t work.” Still, the key to success, he said, identifying quickly whether a technology can be integrated into the flow; creating a team that believes in the technologies that do move forward and then having the organizational patience to move slow, learn and improve. “When we put in our first shuttles from TGW, it wasn’t easy because we were going from 100% human control to managing 44 shuttles,” he said. “The first 3 months weren’t easy, but our organization is really good at change management, and we were able to adapt the management of our flow to meet the need.”

Gap Inc.’s experience with robotics also illustrates how this space is evolving. Kuntz noted that the first foray with Kindred involved fixed robots that did one thing. Exotec’s robots are being used to process returns, for now; however, the technology is mobile and could be applied to other processes. Similarly, while the company is just getting started with Boston Dynamics for trailer unloading, those units are also mobile. “Today, we’re going to use them for inbound but in the future it might be outbound. The processes aren’t that different.” The key, of course, is mobile and flexible technology versus fixed and rigid systems.

The new Texas facility will serve as an important node to service the Southwestern U.S. as Gap Inc. continues to work on its on-time delivery, especially during peak. “We call our facilities customer experience centers for a reason,” Kuntz said. “We’re working on bringing our delivery times down, especially during peak season.” And while the facility was built for Old Navy, other brands may be introduced into the mix if the need arises.

It also adds one other fulfillment node for the new Logistics-as-a-Service program that Gap Inc. will begin offering to other retailers, especially smaller brands and startups. GPS Platform Services by Gap Inc. will offer e-commerce and B2B fulfillment services, storage and warehousing, parcel shipping and returns processing and post-purchase experience. It is a trend identified by Accenture and American Eagle in the September issue of Supply Chain Management Review.

“We will use our existing network, intermingling with our own freight and our own building,” Kuntz explained. “We can offer a single node if they’re a smaller retailer or we can offer multiple nodes and move orders for multiple brands if they want to do that. We already service four huge Gap Inc. brands and segregate and segment that data.”

“We think it’ll be game-changing for some of these brands that are struggling with fulfillment,” Kuntz said. “Who better than someone that already owns and understands retail fulfillment. It’s a unique opportunity.” 

SC
MR