Stitching Speed & Scale: How FIGS Built an Agile Supply Chain with DHL

- > Welcome to All Business. No Boundaries., a collection of supply chain stories by - > DHL Supply Chain, the North American leader in contract logistics. I'm your host, Will Heywood.

- > This is a place for in-depth discussions on the difference DHL makes on your supply - > chain challenges. Today's episode is 'Stitching Speed and Scale: How FIGS Built an Agile Supply - > Chain with DHL.' Let's dive in. In today's episode, we're going to talk about a new and - > fast-growing partnership.

We're joined by FIGS, which is a brand that's really redefined what - > modern medical equipment can be. FIGS has built a passionate community by combining performance, - > design and purpose. And as they continue to scale, their supply chain is evolving right - > alongside. We have two great guests.

Jon, welcome from FIGS. We're going to start with you. Paige, - > we'll come on to you in a second, but I'd like you to both introduce yourselves. Tell us who you are, - > what your role is at your respective companies and how long you've been there.

Thanks, Will. I'm - > Jonathan Tam. I'm the COO of FIGS and I've been here for 17 months. Okay, great.

Paige. Hi, I'm - > Paige VanFossen. I'm vice president of operations here at DHL and I've been here for five years and - > I support FIGS. Excellent.

I'm really glad to have both of you with us today on the podcast. You both - > have relatively short tenures in your current organizations, but I know you both have been in - > the industry for a long time. So maybe could you tell us about your longer career histories. Jon, - > starting with you.

So, prior to FIGS, I led operations at Revolve, another publicly traded - > e-commerce player. I was there for 12 years doing everything from distribution, fulfillment, - > shipping and dabbling in CX and things on the site and inventory. Okay, great. And how about you, - > Paige?

Where were you before DHL? Prior to being at DHL, I actually was on the other side of the - > table with a retailer, L. Brands, which most people would probably know as Victoria Secret - > and Bath & Body Works. I was there for 30 years and most of my time was spent I can't even say - > in e-commerce because when I started there was no e-commerce.

It was a catalog business. But, - > I've always been in direct to consumer. Excellent. And as the viewers can see - > we're all in separate places today.

Paige, where are you calling in from? I'm in Mount Vernon, - > Ohio. Okay. And Jon?

Pasadena, California. Okay. So, we are all over the place. I am in Columbus, - > Ohio, close to Mount Vernon.

Jon, FIGS is one of those if you know, you know, brands. There's - > a lot of passion for the people who do know. But for those who might not be aware of what FIGS is, - > can you tell us what the brand does, who you serve and what kinds of goods you make? - > Sure.

I'll start with the second part. We are there to support healthcare professionals. - > I think we got a lot of the spotlight in the middle of COVID where a lot more people were - > being treated and our brand was in more presence. Our goal is always to support healthcare - > professionals.

We were starting the brand well before Covid and we're best known for our scrub - > ware. We would say it's better fitting, better quality than a lot of the scrub ware that medical - > institutions now provide healthcare professionals because they supplement it. And by going with us, - > we've implemented some elements of fashion as well as performance and better fit throughout - > scrub ware. Okay, great.

That is helpful and we'll come back to some of those points and as we talk - > further here. So the company was not founded during Covid but relatively recently. What is - > the background history of the founding and kind of how the company has developed? So it was founded - > by two women Trina and Heather and in the middle of business school they found that there was a - > huge opportunity to improve the healthcare apparel industry and it was a huge industry better than - > bigger than anybody expected.

And they started producing products and technically selling it - > out of their trunks at hospitals and very quickly they got a lot of traction and they said hey this - > is something that you know a lot of healthcare professionals need to improve their workplace - > and it was at a time when digitally native brands could take off because you could plug in to a lot - > of platforms. You didn't have to build everything yourself. And that's when they really started to - > grow.

And my involvement as I met Trina in about 2016, I already started to see, wow, this is - > really getting a lot of traction. There's a lot of healthcare professionals and they were kind of - > that first player to market that had substantial volume and marketing behind them. And now if you - > go into a lot of medical institutions, you'll see that the majority of the healthcare professionals - > are wearing our product. So, we've now gained that momentum.

That's terrific. That's really good. So, - > Paige, how did DHL and FIGS come together? Well, I want to say it was back in 2022.

FIGS, - > as Jon mentioned, has had pretty explosive growth through, you know, its short lifetime. And they - > were in a multiclient facility that they were quickly outgrowing and they were looking for - > a partner that could support them on their journey of this explosive growth and you know - > they had put the feelers out to find a partner that could do that and that's how we met and - > you know ended up doing business together. Okay, great. And where do you guys do business - > physically?

Where are you located? We have the FIGS site in Phoenix, Arizona. Okay. So, Jon, - > I know you weren't involved with the DHL FIGS relationship at the get-go, but I know you've - > selected logistics partners in your career over time.

How do you think about partnerships? How do - > you select partners? How do you evaluate them once the relationship gets started? - > To me, it really comes down to fit and not only a fit financially and in the short-term future but - > also aligning the partnership to be successful in the future.

And I think one thing with DHL and why - > I feel like there is a really strong fit is that the ways that FIGS is planning to and intending to - > grow align well with how the DHL business also supports companies in growth. And one example - > I would use is embroidery. When we, you know, we've had a lot of customers that want their - > names and titles and logos on their scrub ware and it's something that's not very common in the, - > you know, digitally native space. And when we work with DHL, it's something that's, oh yeah, - > we've been able to support other brands or other companies doing this.

We have some experience. - > Obviously, there's nuances to how we do it. And DHL is very receptive and open to understanding - > what those are and saying, hey, we want to work with you. We want to figure this out because we - > think it'll be better for our infrastructure and our system and our capabilities.

Let's - > figure out how this can benefit FIGS and we've been able to do that. Excellent. So, Paige, - > you were there at the front end, correct? I was.

Okay. So, thinking about and I know - > you've worked with other customers and thinking about this notion of fit that Jon introduced, - > how do you from a 3PL or provider standpoint think about tailoring your fit to match up with - > the customer's requirements. So, there's a few pieces of fit that I think are really important. - > I think the first one is cultural fit.

I think you know one of the things we really look for - > when we are you know wanting to do business with a customer is that we are aligned on our values - > and on our cultures. Whether it's you know how we think about managing people or how we think - > about the environment or any of those aspects. You know are we you know are we aligned there? - > Because we're going to be working together very closely for you know our entire relationship and - > we want to make sure that we're speaking the same language regarding those things.

But also just - > when we think about the challenges of a business like FIGS, one of our sweet spots here at DHL is - > really providing custom solutions for, you know, customers that are, you know, large and have high - > velocity, you know, demand. And, you know, those things are not things that can be replicated, - > you know, across every customer. That these are going to be unique. And we have the skill sets and - > the teams that are able to, you know, ingest all of the data and all of the things that, you know, - > Jon's team provided us as background and then take that and turn those into a custom solution that - > will work specifically for FIGS and help them in their growth.

Great. So, before we dive into the - > solution, we've talked about fast, high growing, high velocity. Just maybe if we could mention Jon - > the scale of the business you started from selling out of trunks in 2016 to where is it today and you - > can use whichever metric you think is going to help us the most whether it's revenue or units - > sold how you know tell us about the FIGS business profile overall. So, 2026 we're projected for $750 - > million.

So big growth compounded over what we were doing out of trunks. And that equates to - > something like 16 to 17 million units shipped. So again, there's a lot of fulfillment needs to be - > able to process that type of capacity out of any distribution center. And then I think the other - > one that is really critical to our business is the profile of the orders.

We do have very very spiky - > periods where something like nurse's week were we're very strong or Black Friday, Cyber Monday. - > So, supporting it not only throughout the year but understanding when there are periods that are - > very very sharp, how do we you know how do we work together with DHL and make sure that our customers - > are getting their orders quickly. So, with the rapid growth - > of the business, sort of the complexity of the operation, the knowledge that you were going to have to adapt over time.

- > How did you think about the initial solution setup in the facility? What kinds of decisions were you - > making with respect to automation and different enabling technologies that could help with the - > peakiness as well as the expected business growth. Based on the total you know peak volume, we really - > knew that automation was going to be a must and it was just about what type of automation. So, - > we actually evaluated three or four different types of automation even manual.

So, we looked - > at manual like cart picking, we looked at Locus Robotics. We looked at the current solution - > which is a GreyOrange Zero Walk solution and then another similar type of system. And we weighed out - > you know the capital investment that would be required, the productivity and number of people - > that would be required to run the system. And then this obviously the overall output - > that the system could produce.

And based on all of those different variations, we landed on the - > GreyOrange Zero walk system as the one that would be flexible enough to accomplish what we needed. - > As you mentioned, it is a peaky business. It's got very large peak to average volumes, not only - > for the two or three sales that they have during the year, but they also have peaky months. And - > the GreyOrange system based on the amount of training required to be up to speed for our - > associates which is really only a couple of hours provided us the most labor flexibility which is - > what we need in a very peaky business.

Peak to average ratio what does that mean in your world? - > So, as I mentioned, when I was talking about the first year, like our average day was around maybe - > 30,000 units, but our peak day was over 150,000 units. And so, we would do the math of 150 to 30 - > and say, you know, that was roughly a 5:1 peak to average ratio. Okay, great.

Thank you. Jon as a - > COO there's a lot going on in the marketplace. You were with us at the Manifest conference talking - > about the multitude of vendors who were at that at that event. I'm assuming you get looks at - > different technology solutions every day.

How do you evaluate those things? How do you know where - > you've made the right investments? How do you know when it's time to make a change potentially? It - > seems to me like it would be a lot for somebody in your chair, but I wondered if you could tell us.

A - > lot of it does come down to when you're looking at different profiles of different businesses because - > those are what really make the businesses unique and when you can understand the different partners - > and technologies, they are usually designed for specific profiles. So, as Paige said, we do have - > this peak to average. I would also say we also have this dynamic where we are a uniform business. - > So, you would think it's very repeatable.

You know, there's a lot of regulations on what colors - > and how many sizes, but then we also have this element of fashion, which is we try to introduce a - > lot of new colors and new styles and that creates a profile that you know you have a lot of SKUs - > or more SKUs than you would think for a uniform business and you have people ordering different - > tops and bottoms and colors. So that's one reason the GreyOrange robot is also really successful - > for our application is because it addresses that profile where you're able to take a lot of SKUs - > and still get a lot of efficiency.

And I kind of take that approach when I think about partners - > throughout the operations where understand the profiles that they're very successful in. - > Understand the attributes and the businesses that are also using those technologies and partners - > that are very successful. And then just understand the companies and the people behind the companies - > and make sure that hey are they aligned kind of like what Paige said cultural fit. Are they - > understanding that hey they want to grow with us?

They understand what our missions are and they're - > aligned to do that. And generally, if they are it can be a really really healthy partnership where - > we have enough volume. We have enough you know we are cornerstone brand on a lot of platforms - > that we can help push them and understand how to explain to them what they need to build so they - > can be successful with other partners. But at the same time, we can extract the value of them - > being good fits and having good attributes for the different profiles of our business.

Great. - > Great. So, describe for the listeners what the GreyOrange robots and technology system look - > like physically and what do you know kind of how do they move and what do they do? The audience a - > good physical kind of representation is kind of a Roomba robot.

So, it has a motor, it has sensors, - > and it's basically a very flat round robot that can go under a shelf and lift that shelf above the - > ground and then be able to navigate among a field of now over a hundred robots and bring certain - > shelves to certain places in the warehouse. And by doing that, we can have our pickers essentially - > not move at all and spend their time really just extracting goods off of shelves as that's the - > biggest challenge in an e-commerce facility is that you have an order profile where people can - > order any items on the site in any permutation.

But to have somebody go and walk a warehouse - > to put those two items together in a box can be extremely laborious and and take a lot of time. - > So, by having the robots bringing the shelves and then adding a lot of layers of complexity - > and and science in terms of which shelves they should bring at which times to which locations, - > we're able to extract and use a limited number of pickers and and have them really productive as - > only grabbing goods out of boxes versus spending a lot of time walking to the different boxes and - > selecting the goods to grab.

So, I think that's like a very simplified way to describe the zero - > walk solution. And then we support those pickers also with other robots that are similar um in that - > they take the goods then from those pickers and sort them into different containers that represent - > orders. Paige, how do you train your staff to work with these technologies? So, you know we take them - > out onto the floor to a specific training station where a trainer will stand with them for you know - > a period of time and go through the process and what it takes to pick and literally what it takes - > to pick is very little.

A shelf will arrive at your station. A light will then shine onto - > the cubby in which you're supposed to pick from. you pick that item and you place it on the bot on - > the other side of you and push a button and that's it. And so, the training really is that simple.

Of - > course, there's other training that we do just to on board them into DHL, but the training on that - > process itself is relatively easy. Okay. And do the associates enjoy working with the systems? The - > associates really do enjoy it.

It does make their job a little easier. You know, I've been in direct - > to consumer and e-commerce for most of my life at this point, I think. And the number one job that - > associates hate the most is pushing a pick cart down a pick aisle. And this eliminates that.

It's, - > you know, it's tough. It's a lot of walking. It's cumbersome, especially if you're carrying - > an RF gun. And this takes all of that away.

And it really, you know, just allows them to, you know, - > less wear on their bodies and they're able to, you know, you simply do their job and feel successful. - > Okay. So, back to the peaky nature of the FIGS business and I heard mention of nurse's week. I - > know there are traditional peak seasons in in retail overall, but Jon, can you talk about, - > you know, kind of how FIGS goes to market with its customers and how you are introducing these types - > of promotions or sales throughout the year and what the you know, I think we saw we talked about - > the ratio, but what you expect out of those events in your business.

I think the best way to describe - > how we align is we really want to celebrate healthcare professionals. And what we try to do is align - > sales and promotions along with celebrations and events in a healthcare professional's career and - > life that they want to celebrate. So, the one we just did last week was match day. So that's the - > day in the year that healthcare professionals or aspiring healthcare professionals get matched with - > their residents and the program of their choice and it's something that you know there's a lab - > or white coat ceremony and all these fancy things and we want to celebrate that.

So, - > we have a promotion and we try to you know offer you know sales and things like that - > and the one coming up next the major one would be nurse's week. So it's a week that I think - > we have helped grow to provide a little bit more focus to the backbone of the healthcare system - > of all the nurses that work grueling hours, tough shifts and see some of the you know really really - > challenging parts of what we all see in life and we want to celebrate them. So, we have a week-long - > promotion aligned with nurse's week where not only are we going to offer promotions and sales, but we - > also want to celebrate them by offering launches of new colors, new products, things that can help - > them feel celebrated.

And throughout that week, we'll expect to get over 2 million units. And - > working with DHL Supply Chain, we send them, you know, a forecast which units we think are going - > to sell and in which volumes and when those sales are going to come in so we can properly align and - > focus on how do we make sure that we run a really smooth operation so that those orders and units - > get shipped out promptly. This may be a loaded question, but how accurate are your forecasts - > for these peak periods?

Great question. I would say more accurate than you would think. For most - > e-commerce businesses, especially when you have an element of fashion, it's very very hard to predict - > to with any level of accuracy who's going to buy what, right? We've done I would say a pretty - > good job of being accurate where we think it's very critical where the things that are going - > to move a lot and the things that need to move quickly like such as these launch colors, launch - > styles, things like that, then we will be off.

When there's the the fringe styles and sizes where - > we don't expect to sell a lot of them, that's where we will have a little bit more inaccuracy - > in our projections. But generally speaking, I would say we're pretty good. Paige, how - > do you see it and how do you think about taking a forecast and setting up your staff and operations - > in a way to absorb it. So you know, this is where the partnership comes in because this, you know, - > this is us and FIGS working together to really, as Jon said, on the surface it's pretty accurate, - > but the more you get down under the covers to the SKU level, that's where it gets a little bit more - > volatile or dynamic.

You know, part of what we have to do to prepare for these sales is load - > the GreyOrange field with product. We don't want to wait till the last minute. This is going to be - > a very high velocity event, and we don't want to be slowed down by replenishment. So, we do our - > best to get as much of what we think is going to be in the field into the field for us to pick in - > advance of these sales and sometimes that isn't completely accurate, but we are we always work - > together to you know get the best forecast align on really how much should go in there based on the - > velocity of the SKUs, etc.

So you know we really work closely together number one to make sure that - > we are aligned as aligned as we can and prepared as we can and then we have to you know be able - > to react to you know what has changed and that's I think again a testament to the solution that - > we implemented with GreyOrange because it is very flexible for us to be able to add labor. There's - > only so much we can add. There are only 30 pick stations. So that's as much as you can do in a day is what you - > can do in 30 pick stations.

So, it's also working with GreyOrange to understand what levers we can - > pull to get the most out of the system we can and depending on the profile that is you know coming - > at us those levers might be different. It is a very complex and dynamic operation that requires - > us to partner closely with our FIGS and our GreyOrange partners to make sure that we're able to - > support the volumes. Great. So, Jon, and we talked about it earlier and obviously with the growth, - > you've hit something with in the healthcare market.

I know these aren't just the standard - > blue scrubs that you typically see in a or I guess maybe used to typically see in a hospital. You've - > talked about different colors, different fits and all of that. How do you how do you guys take your - > customers feedback and put it into sort of your product development life cycle and then how does - > that factor into supply chain planning both on the source and make and the fulfillment side. - > The first piece is we definitely have a very very tight loop when it comes to customer experience.

- > Every time a customer reaches out there's an opportunity that they're giving you information - > that can help you grow or fix problems in your supply chain. And then the second piece is the - > way we've grown is mostly in the domestic US. Now we're taking a product that works very well in the - > US healthcare system and applying it with nuances to a lot of other countries and every country - > and every healthcare system has its own kind of profile whether it's specific colors or in certain - > parts of the world specific sizes that work better for healthcare professionals.

And we're - > starting to take that feedback and learn and use that to adapt and continue to grow in a lot of - > these countries. And while doing that, we need that to influence how we're building our supply - > chain so that whether it's out of the Arizona facility or as we look at other facilities, - > we're managing those products from every step from production to inbound manufacturing to getting all - > the raw materials to then distribution. So, when you talk about how does that inform our supply - > chain?

We're looking at where our customers are throughout the world and understanding how - > do we get them product from the raw material all the way through distribution in the most - > cost-effective and personally we need to keep it very fast. You know the modern day is now no - > longer waiting three, four, five days for stuff. Everybody wants things in one or two days. So, - > we have to factor that in as well.

Yeah. Well, speaking of that, you told me that FIGS - > is starting to set up some storefronts, correct? Yes, we are at five stores now. We opened three - > from the end of last year to the beginning of this year and there's planned for many more in this - > year.

Yeah. And you told me a good story about I think you went to the Chicago store opening which - > was I think you said the weather wasn't great, but tell us about the crowd that showed up for that. - > So, it was one the weather it was, you know, cold in Chicago in January. And then on top of that, - > you had a Chicago Bears playoff game, and a lot of the team was like, well, what's going to - > happen here?

Are we going to get a big turnout? And we had hundreds of healthcare professionals - > waiting outside in the cold. We provided some nice warm drinks and some screens to watch the game, - > but they were waiting outside in the cold just to get an early look at getting into the new FIGS - > store in Chicago. So, we have a very very loyal and dedicated community that we're, you know, - > making products and serving.

That's got to be fun to be part of all of that. Paige, are your - > operations supporting the store distribution as well? We are. So right now, we do pretty much - > all of the outbound processing for FIGS and that includes all of their stores.

Great. Great. So, - > store expansion, international expansion. What else is coming up for FIGS?

Jon, let's start with - > you. Stores international is already a lot. We are doing a lot more on the B2B business side. So, working - > with larger institutions and developing programs and platforms for them.

Along with DHL we're also - > doing a lot more in the customization space. I think that's an element of the fashion where as we - > localize you can imagine you know store specific city specific type product being able to customize - > that. And then I guess lastly is we're looking at the whole uniform. We're not sticking to only - > scrub wear.

There is product innovation happening all the time and we're finding ways that we can - > continue to celebrate healthcare professionals by providing them with the right equipment. Yeah. - > Excellent. So, Paige, how does that translate for you?

So, you know whatever four years ago - > when we started this journey, I don't know that FIGS completely knew you know what the journey - > was going to look like. And so, they were just starting to think about stores and so along the - > way as they have been listening to their customer responding to what he or she wants and you know - > developing a strategy to you know for growth. We have been alongside of them you know responding - > and reacting to you know what do we need to do in the operation to better support or to support - > their growth.

So, whether that means capacity for more retail or capacity you know helping them - > implement a new system to improve their embroidery processing you know we work with them to do that. - > So, we're really you know as Jon thinks about international you know we are you know listening - > to him and talking about you know where can we give him visibility to operations in those - > regions so he can go see them and think about you know where the right place to grow is. Yeah. Well - > growth is always great and exciting.

I know it's a top it's a first-rate operation out in Phoenix - > that you guys have partnered on. Look forward to hearing more about future growth with FIGS brand - > and seeing more of it in the market. Hopefully seeing it spread around the world. So, we'll - > look to check back in with you, Jon and Paige, sometime in the future.

But until then, I wish you - > both really good luck and enjoy Nurses Week. Yeah. Thank you. If you enjoyed today's episode, be sure - > to rate us and subscribe to us on Apple Podcasts, Spotify, or wherever you get your podcasts.

- > You can also listen to our entire library of episodes on our website, dhl.com/abnbpodcast. - > See you next time.