At the early stages of developing a retail brand, generating demand is the one of the greatest priorities, but as the demand for the brand grows, new challenges emerge around meeting that demand, particularly in a growing global market.
By implementing a new warehouse management system, in addition to expanding its distribution centers (DCs), GUESS? has seen its inventory accuracy improve “through the roof,” while shipments have increased 30% to 40% year-over-year. GUESS? also has decreased its per-unit cost by integrating a bombardier sorter and Put to Light system into the warehouse management solution, resulting in a $1.3 million savings in 2009 alone.
Founded in 1981 by the Marciano brothers, by 1999 the GUESS? brand was “exploding at the seams” due to increased demand. A larger portion of customers were east of the Mississippi River, but the company’s only distribution center (DC) was in Los Angeles, making it more difficult to serve customers efficiently.
With guidance from KSA, a global management consulting firm, GUESS? opened a new DC in Louisville, Kentucky to serve as a prototype for upgrades to the Los Angeles facility. KSA recommended using an advanced warehouse management system to run the new location. In 1999, GUESS? partnered with Manhattan Associates, a provider of supply chain software, to support several different inventory methods. Today the company processes more than 30 million units annually, including more than 21.5 million from the Louisville location.
Back in 1999, each business unit within GUESS? utilized an independent host system: Jesta I.S. (formerly Essentus) for wholesale and JDA for retail. With the help of the new system from Manhattan Associates, when the two businesses shared inventory, retail orders from JDA were passed to Jesta and then sent to Warehouse Management for fulfillment. This offered more control as inventory was allocated from wholesale to retail, giving the wholesale business preference on inventory at crunch time.
Additionally, the new system allowed GUESS? to expand its supply chain network globally, gaining the flexibility to manage multiple channels in several configurations for increased order efficiency and accuracy, and reducing per unit costs.
Previously GUESS? mixed all multi-channel inventory together. Today, the company segregates wholesale and retail (including direct-to-consumer) inventory to better support its company structure as two business sectors under separate Profit and Loss statements (P&Ls). With wholesale and retail inventory physically separated, GUESS? is able to interface each of its host systems directly with the warehouse management solution. Because direct-to-consumer inventory is mixed with retail, consumers can purchase goods online and return them at a store. The flexibility helps GUESS? present a unified brand to its multi-channel customer base.
Since then GUESS? has extended the functionality of its solutions to further increase operational efficiency with suppliers. “Over the last two years we’ve been increasingly relying on the analytical abilities within the warehouse management solution for greater visibility into the quality of our inbound shipments from our suppliers,” said Tom Boyle, Project Manager, GUESS?. “We’ve been using this to develop an in-house report card that we can then ship out to our suppliers to let them know how they’re doing.”
GUESS? has since closed its Los Angeles facility and opened an additional location in Montreal, Canada, as well as two third-party logistics (3PL) locations in Hong Kong and Shanghai. All use Manhattan Associates’ Louisville, Kentucky-based supply chain software, which is managed and administered in Los Angeles. “Without Manhattan’s Warehouse Management solution, we could not have achieved the growth we have to date,” Boyle said. “The scalability of the solution has allowed GUESS? to target our systems and processes to the ever-evolving world of retail and wholesale.”