J.C. Penney Revamps Its Fulfillment Operation (672 words)
J.C. Penney has had a tangled fulfillment system for many years. The complexity of being a bricks and mortar and a catalog company created a fulfillment process enabling the company to provide exemplary product delivery, albeit through an elaborate system. But faced with multi-channel and multi-company sales expansion, even J.C. Penney recognized there had to be a better way.
J.C. Penney has six strategically placed fulfillment facilities across the United States that decrease shipping time to its stores and its customers. Every warehouse is 2 million square feet, which combined have more than 35,000 picking stations. Each one is configured to support the enormous product mix that J.C. Penney sells. In its years in the merchandising business, J.C. Penney has done some deep analysis that has allowed it to pigeonhole product fulfillment to the areas in which the merchandise sells best. For example, says Al Bell, director of fulfillment for J.C. Penney, women's dresses sell best in the Southeast, so dresses are fulfilled in J.C. Penney's Atlanta facility.
J.C. Penney relies heavily on its truck distribution network, which makes deliveries almost daily to every store in the country, and UPS to meet its 48- to 72-hour delivery standard. J.C. Penney has also operated an in-store pick-up model. This model allows catalog customers to collect their merchandise at the closest store, and store customers can order an out-of-stock item and then pick it up at the store. While the idea of shipping a catalog product to a store seems odd to many, it has been extremely successful for the company.
Enter the Internet
In 1994, J.C. Penney made a move to the Internet with an electronic version of its catalog where customers could view merchandise and then place orders through the 800 number. By 1998, the site was commerce enabled. And in 1999, J.C. Penney moved its other retail stores online, as well. The new sales channel has J.C. Penney selling products from its other companies: Eckerd, Flowers Direct, Levi's, Arizona Jean Co., Just 4 Me and soon a home furnishings company, Step Inside. However, the additional sales channel also added to J.C. Penney's fulfillment burden, forcing it to rethink its model and create JCP Logistics.