The Mega-Million Dollar Idea
Sometimes all it takes is a simple idea to spur a mega-million dollar business, and Kevin Plank, a University of Maryland football player, came up with a genius plan. Plank, who was tired of having to change out of the sweat-soaked T-shirts he wore under his football jersey, came up with a concept for a form-fitting t-shirt that could regulate body temperature.
Shortly thereafter, Plank and former University of Maryland lacrosse player, Kip Fulks launched KP Sports from Plank's grandmother's basement in the outskirts of Washington, DC and began creating moisture-wicking T-shirts. By 1996, Under Armour had generated $17,000 in revenue purely by word-of-mouth. A year later, Plank had $100,000 in orders to fill and moved his business out of his grandmother's basement and into a factory in Ohio.
Massive Brand Exposure Wins Big Business
The Under Armour brand gained massive exposure when in 1999 the Oliver Stone movie "Any Given Sunday," depicted actor Jamie Foxx wearing an Under Armour jockstrap. Beyond exposure in the blockbuster hit, a photo of Oakland Raiders quarterback Jeff George wearing an Under Armour mock turtleneck hit the front page of USA Today.
Between its innovative product line and massive media exposure, it's no surprise that Under Armour is today a world renowned brand that sells its popular performance apparel via the Internet, catalogs and 17,000 sporting goods stores worldwide. The retailer operates a booming wholesale business and outlet stores throughout the country. It debuted its first specialty retail store in late 2007 at the Westfield Annapolis Mall in Annapolis, Maryland. Under Armour stores are designed to look like the underbelly of a sports stadium with a tunnel entrance and a ramp leading up to the store.
The brand supplies a wide range of sportswear and casual apparel including running footwear, sports cleats, slides and training shoes. To keep its products hot and cutting-edge, Under Armour recently introduced the Recharge suit, which is built with strategic compression that is designed to stabilize muscle tissue, while controlling post-workout swelling.
With European headquarters located in Amsterdam and offices in Hong Kong, Toronto and China, Under Armour will continue to concentrate on global expansion. The company announced that international revenues were up a healthy 51 percent in its latest quarter.
Another huge measure of success is that the brand is the official supplier to the NFL, MLB, NHL and major collegiate and high school teams throughout the country. With positive reviews from players, word-of-mouth continues to drive the demand and appeal for Under Armour products and the business is skyrocketing despite tough times.
Tech Adds Fuel to Brand's Fire
In 2006, as Under Armour's business boomed, Jim Calo, chief supply chain officer, and his team recognized that its warehouse management system was no longer able to scale to its business needs.
"We had a distribution system that we were constantly modifying," says Calo. "We realized that we could no longer keep making these modifications and it was time to start looking for a state-of-the-art warehouse management system."
Calo wasn't the only one feeling constrained by its previous warehouse management system. "Our company needed a system that could keep up with our explosive growth and we had outgrown our previous system," says Eric Olsson, director of distribution systems. "We needed a system that was more automated and could scale to our different business needs across independent stores and our direct-to-consumer outlet stores."
Under Armour ultimately selected a sophisticated Warehouse Management System (WMS) from Manhattan Associates and went live with the system in April 2008 from its Baltimore-based distribution center. The company also added advanced slotting optimization technology, however it did so prior to rolling out Manhattan's WMS. The system was implemented at its footwear business first, which is smaller than its apparel business.
"We were able to get footwear up without missing a beat," says Calo. "When we selected this system, the apparel process was mostly manual. By the time the system was ready to incorporate the apparel segment, much of the process had become automated."
To achieve even further efficiencies, Under Armour's pick-to-light area was recently converted from a "pick and pass" to a "zone picking" system, which boosted efficiency by eliminating the need for an operator to touch every order. Olsson notes that a pick-to-light system is the company's picking method of choice for fast-moving SKUs, followed by Radio Frequency (RF) picking for medium-velocity items.
"We were able to hit record volumes quickly in our picking area," says Calo. "The most we ever processed with our old system was 140,000 units a day and by the summer of last year we were processing more than 225,000 units a day. This was a great success."
In addition to speeding up its picking process, the new system has led to better inventory control.
Under Armour also rolled out Manhattan's Extended Enterprise Management system (EEM), which provides instant visibility for third-party logistics providers (3PLs) to manage order fulfillment, shipments and inventory. EEM provides Under Armour with end-to-end visibility of orders, shipments and inventory from sourcing to cargo delivery, so it is able to watch the entire shipping process and can track and monitor supply chain events as they happen. The retailer also can now respond immediately based on alerts to critical exception events.
"We can now see when the manufacturer has shipped the product and when it has moved to our consolidator, which then recognizes it has the product," says Calo. "We can now see the product move across oceans and have pretty good visibility into when the product is coming."
Under Armour has also gained efficiencies involving its label printing processes. "We have become much more efficient since our manufacturers are now able to print UCC128 labels right from their factories instead of having to rely on a supplier for labels," says Calo.
"The system is as on-demand as you need it. Before implementing the system, the product may have been ready, but it was held up if we didn't have the label. We can now reprint a label if it smudges or if it contains errors right from our system. Additionally, price tickets, which used to be ordered in bulk quantities, can now be printed as needed."
Building a Future for Success
In the future, Under Armour will continue to upgrade its WM and EEM solutions. Under Armour also recently purchased Labor Management from Manhattan Associates that will be implemented later next year.
"With Manhattan's EEM, we continue to make improvements to the system," says Calo. "Our next step will be to input milestones for the manufacturer so we know when fabrics have been ordered, received and cut. We can then estimate the time it will take for the product to be delivered. We believe we can cut down on lead times and better service our customers."
Calo adds, "Last year, Under Armour reported record sales and we are pretty confident that we would have not been able to service our business if we had not implemented the Manhattan Warehouse Management system."
With continuous worldwide exposure, state-of-the-art technology and innovative product lines, Under Armour's empowering success story is far from a journey based on happenstance.