Although it had long since joined the ranks of multichannel marketers, the Orvis Co. was still struggling with a supply chain designed for an earlier business model. Would its bold new restructuring plan fly?
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
It may be the nation's oldest mail order business, but the Orvis Co. is hardly stuck in the past. Its tradition of innovation dates back to the 1850s, when Vermont tackle shop owner Charles Orvis started mailing catalogs of his fly fishing rods to wealthy New York sportsmen, becoming a pioneer in catalog merchandising. The retailer still sells fly fishing rods today, but now they're made of space age materials instead of wood. And it's marketing a lot more than fishing tackle. In recent years, the company has branched out into apparel, home goods, luggage, pet supplies, and gifts.
Along with adding product lines, Orvis has expanded into new marketing channels over the years. In addition to its catalog operations (which now include 14 catalog titles with a combined annual distribution of 60 million), the retailer runs a thriving e-commerce business. It also has more than 70 retail and outlet stores in the United States and the United Kingdom, and operates a wholesale division.
Branching out into new lines and sales channels was smart marketing, but it created challenges for the supply chain. As the business grew, it became harder and harder to keep track of the goods flowing through the various streams.
A big part of the problem was a lack of central coordination. Traditionally, each channel handled its own forecasting and stocking, which often led to inventory redundancies and overstocks. And because inventories were scattered throughout the various retail locations as well as warehouses in Roanoke, Va., and Andover, England, Orvis had no easy way to get an overall view of its stock.
"Our size and geographic reach were problems," recalls Mark Holmes, who joined Orvis as vice president of information in 2003. "We just had too much inventory in too many places."
Making matters worse, the company's channel-centric model limited its flexibility to respond to changes in demand. Once product was sent into one channel, it was difficult to recall for use in another.
By the time Holmes joined the company, the problems were coming to a head. "We decided we needed to add some intelligence to our business process," says Holmes. After analyzing the operation, he and his team launched a distribution restructuring project that has drastically changed the way Orvis does business.
Channel surfing
Going into the project, the retailer set three main goals for itself. It wanted to rein in excess inventories, pare operating costs, and, perhaps most important of all, bring a multichannel mindset to the operation. Translated into operating terms, what Orvis wanted was a failsafe process that would ensure it never again lost a sale due to a stock-out when the desired item was available in another channel.
The first step was to centralize its inventory management. To that end, the company developed its own software to track inventory across all channels, balance needs across those channels, and give employees access to inventory information systemwide. Today, if a catalog customer phones the call center looking for an item that's no longer in stock at the warehouse, the call center can check retail inventory. If the needed item is located at one of the stores, that store is assigned to fill the order.
If the needed inventory is found in more than one store, the software will balance work across the network. It also cross-checks the customer ZIP code so that the order can be filled from a nearby retail location if possible.
The process works the other way as well. "Customers often come into our stores with a catalog in hand," says Holmes. "If the store does not have [the requested] item in stock, an employee can pick up a special green phone and call the Roanoke warehouse. The item is then shipped directly to the customer."
Now that it has the inventory system up and running, the retailer has taken the next step toward centralizing its operations. It is currently rolling out Manhattan Associates' Advanced Planning and Demand Planning software to centralize procurement and forecasting.
Redirecting the flow
As part of its initiative, Orvis also began re-evaluating the way goods flow through its distribution network. Then, as now, most of its inventories—regardless of channel—flow through either the warehouse in Roanoke, Va., or its counterpart in Andover, England. The remaining items, mainly fly rods and leather goods, are handled by smaller warehouses located adjacent to the Orvis-owned plants that make the items.
In the past, decisions on what to store where were largely dictated by geography. The 300,000-square-foot automated facility in Roanoke handled fulfillment and replenishment for all U.S. sales outlets (with the exception of fly rods and leather goods). Meanwhile, the Andover facility—a manual operation about a third Roanoke's size—handled European direct-to-consumer orders and U.K. store fulfillment.
As logical as that might sound, the setup created some inefficiencies. For one thing, the company was forced to maintain duplicate inventories for all channels in both Roanoke and Andover, which did nothing to solve its problems with excess stock. For another, Orvis took a big cost hit whenever it went to dispose of overstocks and closeout items overseas. "The liquidation channels are smaller in Europe," explains Holmes, "so having too much inventory in a nation where it was difficult to liquidate was a problem."
In the end, Orvis decided it would maintain its existing distribution network but reroute the flow of goods through it. Today, 80 percent of the European orders, including stock for retail stores and direct-to-consumer shipments, come from the Roanoke warehouse, with Andover handling the remaining 20 percent. Although that might sound complicated from a transportation perspective, Holmes insists that's not the case. "It is easier now to ship products as needed to the U.K. than to ship items in bulk and have to pull some back," he says.
Reallocating work formerly handled by Andover to Roanoke has taken a big bite out of Orvis's processing costs. That's partly because at three times Andover's size, Roanoke offers economies of scale. Roanoke also has the advantage of being an automated facility that boasts a new Manhattan Associates warehouse management system (WMS), which enables it to process orders more efficiently and cost-effectively than the manual Andover operation can. Finally, it enjoys lower labor costs as well as lower inbound freight costs from domestic suppliers.
Lower costs, higher sales
As for how it's all working out, the results to date are impressive. During the past year, Orvis's inventory levels have dropped 10 to 15 percent, which translates to around $10 million in savings. (Although the recession accounted for some of the inventory decline, its effects were largely offset by the opening of about 15 new stores—mostly in the United States—last year.)
In addition, Orvis cut its liquidation costs by 25 percent in 2008 and is on track to achieve bigger savings this year. Taken together, the savings in inventory, liquidation, and processing costs far outweigh the added expense of shipping merchandise overseas by air.
The benefits haven't been limited to cost savings. Customer service has improved as well. Now that the new WMS is in place, the Roanoke facility ships customer orders within 24 hours of receipt, and fill rates are well above 90 percent.
To top it off, Orvis appears to have achieved the multichannel mindset it sought. No longer does the company lose sales because of fractured communication between channels. Nowadays, it can marshal the full array of company resources when filling customer requests. And the payoff has come in more than goodwill. Orvis says the new cross-channel approach has translated into a 14-percent increase in retail sales alone.
Autonomous forklift maker Cyngn is deploying its DriveMod Tugger model at COATS Company, the largest full-line wheel service equipment manufacturer in North America, the companies said today.
By delivering the self-driving tuggers to COATS’ 150,000+ square foot manufacturing facility in La Vergne, Tennessee, Cyngn said it would enable COATS to enhance efficiency by automating the delivery of wheel service components from its production lines.
“Cyngn’s self-driving tugger was the perfect solution to support our strategy of advancing automation and incorporating scalable technology seamlessly into our operations,” Steve Bergmeyer, Continuous Improvement and Quality Manager at COATS, said in a release. “With its high load capacity, we can concentrate on increasing our ability to manage heavier components and bulk orders, driving greater efficiency, reducing costs, and accelerating delivery timelines.”
Terms of the deal were not disclosed, but it follows another deployment of DriveMod Tuggers with electric automaker Rivian earlier this year.
Manufacturing and logistics workers are raising a red flag over workplace quality issues according to industry research released this week.
A comparative study of more than 4,000 workers from the United States, the United Kingdom, and Australia found that manufacturing and logistics workers say they have seen colleagues reduce the quality of their work and not follow processes in the workplace over the past year, with rates exceeding the overall average by 11% and 8%, respectively.
The study—the Resilience Nation report—was commissioned by UK-based regulatory and compliance software company Ideagen, and it polled workers in industries such as energy, aviation, healthcare, and financial services. The results “explore the major threats and macroeconomic factors affecting people today, providing perspectives on resilience across global landscapes,” according to the authors.
According to the study, 41% of manufacturing and logistics workers said they’d witnessed their peers hiding mistakes, and 45% said they’ve observed coworkers cutting corners due to apathy—9% above the average. The results also showed that workers are seeing colleagues take safety risks: More than a third of respondents said they’ve seen people putting themselves in physical danger at work.
The authors said growing pressure inside and outside of the workplace are to blame for the lack of diligence and resiliency on the job. Internally, workers say they are under pressure to deliver more despite reduced capacity. Among the external pressures, respondents cited the rising cost of living as the biggest problem (39%), closely followed by inflation rates, supply chain challenges, and energy prices.
“People are being asked to deliver more at work when their resilience is being challenged by economic and political headwinds,” Ideagen’s CEO Ben Dorks said in a statement announcing the findings. “Ultimately, this is having a determinantal impact on business productivity, workplace health and safety, and the quality of work produced, as well as further reducing the resilience of the nation at large.”
Respondents said they believe technology will eventually alleviate some of the stress occurring in manufacturing and logistics, however.
“People are optimistic that emerging tech and AI will ultimately lighten the load, but they’re not yet feeling the benefits,” Dorks added. “It’s a gap that now, more than ever, business leaders must look to close and support their workforce to ensure their staff remain safe and compliance needs are met across the business.”
The “2024 Year in Review” report lists the various transportation delays, freight volume restrictions, and infrastructure repair costs of a long string of events. Those disruptions include labor strikes at Canadian ports and postal sites, the U.S. East and Gulf coast port strike; hurricanes Helene, Francine, and Milton; the Francis Scott key Bridge collapse in Baltimore Harbor; the CrowdStrike cyber attack; and Red Sea missile attacks on passing cargo ships.
“While 2024 was characterized by frequent and overlapping disruptions that exposed many supply chain vulnerabilities, it was also a year of resilience,” the Project44 report said. “From labor strikes and natural disasters to geopolitical tensions, each event served as a critical learning opportunity, underscoring the necessity for robust contingency planning, effective labor relations, and durable infrastructure. As supply chains continue to evolve, the lessons learned this past year highlight the increased importance of proactive measures and collaborative efforts. These strategies are essential to fostering stability and adaptability in a world where unpredictability is becoming the norm.”
In addition to tallying the supply chain impact of those events, the report also made four broad predictions for trends in 2025 that may affect logistics operations. In Project44’s analysis, they include:
More technology and automation will be introduced into supply chains, particularly ports. This will help make operations more efficient but also increase the risk of cybersecurity attacks and service interruptions due to glitches and bugs. This could also add tensions among the labor pool and unions, who do not want jobs to be replaced with automation.
The new administration in the United States introduces a lot of uncertainty, with talks of major tariffs for numerous countries as well as talks of US freight getting preferential treatment through the Panama Canal. If these things do come to fruition, expect to see shifts in global trade patterns and sourcing.
Natural disasters will continue to become more frequent and more severe, as exhibited by the wildfires in Los Angeles and the winter storms throughout the southern states in the U.S. As a result, expect companies to invest more heavily in sustainability to mitigate climate change.
The peace treaty announced on Wednesday between Isael and Hamas in the Middle East could support increased freight volumes returning to the Suez Canal as political crisis in the area are resolved.
The French transportation visibility provider Shippeo today said it has raised $30 million in financial backing, saying the money will support its accelerated expansion across North America and APAC, while driving enhancements to its “Real-Time Transportation Visibility Platform” product.
The funding round was led by Woven Capital, Toyota’s growth fund, with participation from existing investors: Battery Ventures, Partech, NGP Capital, Bpifrance Digital Venture, LFX Venture Partners, Shift4Good and Yamaha Motor Ventures. With this round, Shippeo’s total funding exceeds $140 million.
Shippeo says it offers real-time shipment tracking across all transport modes, helping companies create sustainable, resilient supply chains. Its platform enables users to reduce logistics-related carbon emissions by making informed trade-offs between modes and carriers based on carbon footprint data.
"Global supply chains are facing unprecedented complexity, and real-time transport visibility is essential for building resilience” Prashant Bothra, Principal at Woven Capital, who is joining the Shippeo board, said in a release. “Shippeo’s platform empowers businesses to proactively address disruptions by transforming fragmented operations into streamlined, data-driven processes across all transport modes, offering precise tracking and predictive ETAs at scale—capabilities that would be resource-intensive to develop in-house. We are excited to support Shippeo’s journey to accelerate digitization while enhancing cost efficiency, planning accuracy, and customer experience across the supply chain.”
Donald Trump has been clear that he plans to hit the ground running after his inauguration on January 20, launching ambitious plans that could have significant repercussions for global supply chains.
As Mark Baxa, CSCMP president and CEO, says in the executive forward to the white paper, the incoming Trump Administration and a majority Republican congress are “poised to reshape trade policies, regulatory frameworks, and the very fabric of how we approach global commerce.”
The paper is written by import/export expert Thomas Cook, managing director for Blue Tiger International, a U.S.-based supply chain management consulting company that focuses on international trade. Cook is the former CEO of American River International in New York and Apex Global Logistics Supply Chain Operation in Los Angeles and has written 19 books on global trade.
In the paper, Cook, of course, takes a close look at tariff implications and new trade deals, emphasizing that Trump will seek revisions that will favor U.S. businesses and encourage manufacturing to return to the U.S. The paper, however, also looks beyond global trade to addresses topics such as Trump’s tougher stance on immigration and the possibility of mass deportations, greater support of Israel in the Middle East, proposals for increased energy production and mining, and intent to end the war in the Ukraine.
In general, Cook believes that many of the administration’s new policies will be beneficial to the overall economy. He does warn, however, that some policies will be disruptive and add risk and cost to global supply chains.
In light of those risks and possible disruptions, Cook’s paper offers 14 recommendations. Some of which include:
Create a team responsible for studying the changes Trump will introduce when he takes office;
Attend trade shows and make connections with vendors, suppliers, and service providers who can help you navigate those changes;
Consider becoming C-TPAT (Customs-Trade Partnership Against Terrorism) certified to help mitigate potential import/export issues;
Adopt a risk management mindset and shift from focusing on lowest cost to best value for your spend;
Increase collaboration with internal and external partners;
Expect warehousing costs to rise in the short term as companies look to bring in foreign-made goods ahead of tariffs;
Expect greater scrutiny from U.S. Customs and Border Patrol of origin statements for imports in recognition of attempts by some Chinese manufacturers to evade U.S. import policies;
Reduce dependency on China for sourcing; and
Consider manufacturing and/or sourcing in the United States.
Cook advises readers to expect a loosening up of regulations and a reduction in government under Trump. He warns that while some world leaders will look to work with Trump, others will take more of a defiant stance. As a result, companies should expect to see retaliatory tariffs and duties on exports.
Cook concludes by offering advice to the incoming administration, including being sensitive to the effect retaliatory tariffs can have on American exports, working on federal debt reduction, and considering promoting free trade zones. He also proposes an ambitious water works program through the Army Corps of Engineers.