\nErik Lopez, chief supply chain officer at Ulta Beauty<\/p>\n
Courtesy of Ulta Beauty<\/p>\n
\u00a0<\/p>\n<\/figcaption><\/figure>\n
Other retailers often build large facilities that may go underutilized throughout the year, but Ulta made a deliberate choice to keep a smaller footprint, Chief Supply Chain Officer Erik Lopez said in an interview with sister publication Supply Chain Dive.<\/p>\n
\u201cWe took a differentiated approach to say, you know what, we don’t want to just build a one-size-fits-all to the network because you know we have growth, but our growth is not just going to be vertical,\u201d Lopez said. \u201cWe have a staggered approach and we wanted to have an MFC [market fulfillment center] model.<\/p>\n
Once complete, the model will consist of four regional distribution centers, three market fulfillment centers and one \u201cfast\u201d fulfillment center.<\/p>\n
\u201cThe beauty of the MFC model is it’s faster to build, it gets closer, again keeps all of inventory under one roof and we can do it at an easier clip than doing these bigger buildings that involve a lot more capital,\u201d Lopez said.<\/p>\n
Regional distribution centers undergo retrofitting<\/h3>\n Ulta currently operates three regional distribution centers located in Dallas; Fresno, California; and Greenwood, Indiana. The company will also start construction of a fourth location in 2026 in Chambersburg, Pennsylvania, Lopez said.<\/p>\n
To better optimize its regional distribution footprint for an MFC model, the company plans to add new facilities to its network while retrofitting other locations with upgraded automation technology.<\/p>\n
The company completed a technology retrofit at its Greenwood facility last year, adding automated receiving systems and residual shuttles, among other upgrades. Next year, it plans to finish a retrofit of its Dallas distribution center by adding similar automation technology, as well as warehouse execution software, Lopez said. The company expects to eventually streamline to a single consistent operating model as it retrofits its other distribution centers.<\/p>\n
Lopez said the warehouse execution software will act like \u201cthe brains of [Ulta] facilities and controls the flow of goods through its facilities,\u201d Lopez said.<\/p>\n
The decision to retrofit facilities wasn\u2019t due to previously used automation technology being substandard, Lopez said. Instead, the company considered the needs of its employees to find ways to provide them with opportunities to upgrade their skills while making processes more efficient.<\/p>\n\n\n
<\/div>\n<\/div>
\nA map of Ulta\u2019s distribution centers.<\/p>\n
Image Source: Ulta Beauty<\/p>\n
\u00a0<\/p>\n<\/figcaption><\/figure>\n
What Ulta tried to do with the new automation is focus on reducing steps, reducing waste and being less labor intensive, according to Lopez.<\/p>\n
Ulta\u2019s ERP connection to market fulfillment centers<\/h3>\n In addition to its supply chain transformation, Ulta is also undergoing what it calls Project SOAR, which stands for Strength, Optimize, Accelerate and Renew. The project is a businesswide enterprise resource planning upgrade intended to accelerate and renew its core operations. While supply chain isn\u2019t the main focus of the project, the company is still seeing benefits on that side of the business as a result of the upgrade, Lopez said.<\/p>\n
More specifically, the upgrade has helped unlock the foundation of its market fulfillment centers called cross-docking capabilities.<\/p>\n
Cross docking allows for minimal or no storage in between loading and transporting an item. For example, products are inventoried and shipped from an inbound origin and directly loaded onto outbound transportation, Lopez said. This allows Ulta products to move from a regional facility to an MFC directly to stores.<\/p>\n
\u201cWithout the cross-dock functionality, we wouldn’t be able to open up the market fulfillment centers and we would be stuck with the one-size distribution center model,\u201d Lopez said.<\/p>\n
Compared with its regional distribution centers, which average 650,000 square feet in size, Ulta\u2019s\u00a0market fulfillment centers are smaller, measuring about 300,000 square feet on average, according to Lopez.<\/p>\n
The market fulfillment centers can serve up to 120 stores and 25,000 e-commerce orders per day, Lopez said.\u00a0They also have a limited assortment of products made up of what the company classifies as its highest moving inventory.<\/p>\n
\n
Ulta Beauty By the Numbers<\/p>\n
\n
\u00a0<\/p>\n
300,000<\/p>\n
The average square footage of a market fulfillment center<\/p>\n<\/div>\n
\n
\u00a0<\/p>\n
120<\/p>\n
The number of stores a market fulfillment center can serve<\/p>\n<\/div>\n
\n
\u00a0<\/p>\n
25,000<\/p>\n
The number of e-commerce orders a market fulfillment center can handle<\/p>\n<\/div>\n<\/div>\n
Each facility is equipped with automation technology, including Very Narrow Aisle Pallet Racking, or VNA, which allows for tighter aisles to help gain more capacity. Ulta also uses wire guided routes in these facilities, meaning associates don\u2019t need to train to drive equipment.<\/p>\n
\u201cThey can just hop in equipment and that wire guided system actually does all the work for them \u2026 It’s easier to train, easier to onboard and it helps our associates be more efficient,\u201d Lopez said.<\/p>\n\nUlta currently has two market fulfillment centers located in Greer, South Carolina, and Bolingbrook, Illinois. In 2026, the company will start construction on a similar facility based in the Pacific Northwest that is expected to open in 2027, Lopez said.<\/p>\n
A fast fulfillment center for speedy e-commerce<\/h3>\n The third element of Ulta\u2019s microfulfillment model is its \u201cfast\u201d fulfillment center in Jacksonville, Florida.<\/p>\n
The center, which only handles e-commerce orders, strengthens Ulta\u2019s ship-from-store method, Lopez said. Initiated in 2019 with a five-store testing phase, Ulta\u2019s ship-from-store program now encompasses more than 500 stores.<\/p>\n
In 2018, a fast fulfillment center was expected to be able to fill up to 30,000 orders per day during peak times, increasing Ulta\u2019s network capacity and progressing toward its goal of two-day e-commerce shipping by 2021, former CEO Mary Dillon said during a Q4 2018 earnings call. Today, the facility can serve up to 25,000 orders per day.<\/p>\n
Besides wanting things fast, Ulta\u2019s customers want options, Lopez said, particularly when it comes to delivery modes.<\/p>\n
The work is all part of the company\u2019s journey to omnichannel fulfillment, which allows it to provide variety to customers, whether that\u2019s to buy online and pick up in store or receive same-day delivery through DoorDash.<\/p>\n
Ulta is still in the midst of its supply chain transformation, but it is “constantly looking at ways to evolve and improve our supply chain operations to meet the needs of our guests,” Lopez said.<\/p>\n<\/p><\/div>\n
Listen to the article 7 min This audio is auto-generated. Please let us know if you have feedback. When Ulta Beauty began its current supply […]<\/p>\n","protected":false},"author":1,"featured_media":13645,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-13644","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/13644","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/comments?post=13644"}],"version-history":[{"count":0,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/posts\/13644\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media\/13645"}],"wp:attachment":[{"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/media?parent=13644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/categories?post=13644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dmsretail.com\/RetailNews\/wp-json\/wp\/v2\/tags?post=13644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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