Biggest Little Warehouse: Inside outdoor giant Patagonia’s massive Reno operations
By the numbers - Patagonia distribution center in Reno
342,000: square feet
*10,000: Orders processed/day
*60,000: Outbound units/day
*Numbers approximate during non-peak period
RENO, Nev. — A cacophony of sounds fills the air: the thrumming of conveyor belts, the beeps of busy forklifts, the soft crunch of shifting cardboard boxes.
With eyes closed, one could imagine you’re in the middle of Anywarehouse, USA.
This particular warehouse, however, happens to be a massive distribution center tucked in west Reno, squarely hugging the Truckee River. One that serves not only the U.S., but also the entire globe: The Patagonia Distribution Center.
It’s a Thursday morning and the center is humming — in more ways than one — like a well-oiled machine.
“We ship to the world from Reno,” Dave Abeloe, the center’s director, says with a smile as he walks the ground floor of the 342,000-square-foot facility.
A designer of outdoor clothing and gear, Patagonia has 32 stores in the U.S., including the Patagonia Outlet in downtown Reno, and 75 stores worldwide.
The company migrated its distribution operations from the beaches of Southern California to the mountains of Northern Nevada back in 1996.
“We’ve been here 22 years now. I find it interesting that people still don’t know that we’re here after all these years,” said Abeloe, adding that Patagonia doubled the size of its distribution center in 2006. “And we’re continuing to grow.”
In fact, just last year, in June 2017, Patagonia leased a receiving and cross-stock building a stone’s throw away in Verdi after surpassing the storage capacity of its Reno warehouse.
The 221,000-square-foot Verdi facility is where all of Patagonia’s in-bound products arrive. The items — from hats to jackets to backpacks — are held in storage in Verdi until they’re needed for shipment orders, Abeloe said.
“We have a couple of trucks that we constantly cycle inventory from there (Verdi) to here (Reno), as needed,” Abeloe said. “It’s probably not a traditional model for warehousing, but we did not want to abandon this building because it’s been a great location, a great facility. We just needed more storage.”
The Patagonia Distribution Center supports its U.S. stores as well as a wholesale network of dealers that carry the Patagonia brand, from large companies like REI and DICK’S Sporting Goods to mom-and-pop shops spread throughout the country.
The Reno facility also ships to international destinations — from South America to Australia and everywhere in-between — where Patagonia will support third-party logistics companies that are redistributing its products in various locations dotted around the globe.
All told, it’s a business model that’s cut from a different cloth, Abeloe said.
“What we’ve seen through the years is companies will set up a warehouse for direct-to-consumer and then a different warehouse maybe for a wholesale network,” Abeloe said. “But for us as a business, we grew up supporting shipments of one unit to a customer and also supporting our dealers who would carry our products.
“So operationally, with all of the systems in place, we’re designed to be flexible enough to support one-unit orders to 5,000-unit orders.”
FLEXIBILITY IS KEY
When orders are released from its various business divisions — direct-to-consumer, retail, wholesale — the center’s “pickers” pull the products from shelves, apply the order labels and send the units on a conveyor belt to the “induction platform.”
There, the units are individually placed on sorter trays circling above rows of chutes that funnel down to the packing stations. The items run under a scanner that tells the tray when to tip the product into the appropriate chute, Abeloe said.
Merchandise processors will then scan, pack and place the order on a takeaway conveyor that snakes to the shipping floor.
“The packing station is flexible enough to process any type of order — from single units to hundreds if not thousands of units,” Abeloe said. “But flexibility for us through the years is always key, so we can adapt and evolve and support any business divisions that we saw was continuing to grow, while supporting any business division that may have slowed down.”
Pausing, he smiles and shrugs, “Even though they’re all growing.”
TRUST THE SYSTEM
Patagonia’s warehouse management system monitors what is being pulled not only each day, but during each picking “wave,” which happen roughly every half hour, Abeloe said.
“The system can tell us that in three waves from now or by the end of the day, you will need more inventory to support additional orders,” he continued. “So the system is telling the truck drivers at the other (Verdi) building to pull certain quantity of cases of certain products and make sure they are delivered here.”
In other words, the system eliminates a waiting period for the warehouse crew.
“So the goal is to have pickers constantly picking inventory, but never having to wait for those new replenishments cases to arrive,” he said. “And we have that pretty well dialed in so that any stock-out scenario is essentially non-existent.
“It’s been fine-tuned through the years, and it works well for us.”
Abeloe said during the peak November-December period, Patagonia will receive an average of six to eight inbound containers per day from the Verdi facility. Each container holds approximately 20,000 items.
Meanwhile, the distribution center will ship out up to 90,000 units a day at peak. That number settles to 60,000 daily orders at non-peak.
In all, center will process up to 10,000 orders on a daily basis, with that number swelling to 30,000 orders a day during peak period.
Patagonia spokesperson Tessa Byars said Patagonia’s sales have quadrupled in the past 10 years.
To meet the growing demand, the Patagonia Distribution Center expanded its operating hours throughout the years, adding Sunday-Friday swing shifts to go along with its Monday-Friday dayshift.
Abeloe said the swing shift was implemented in order to process direct-to-consumer internet orders that are constantly flowing in over the weekend and over night.
“If we can get a jump on processing those orders, than it relieves the peak volumes that we used to see on Mondays,” he added. “Customer demands are always that they want it faster and cheaper — they ordered it today and want it delivered yesterday — so the goal for us is to provide the service that meet all of our customers’ expectations.”
The Patagonia Distribution Center in Reno employs roughly 450 to 475 people, Abeloe said, with that number growing to around 600 employees during the holiday season.
“Beginning in 2020, real estate enterprises must maintain contemporaneous documentation similar to the way a law firm might track time spent on client matters.”