July 27 2006 09:26 AM

It is half time and we are down by two touchdowns. Its time for a new plan if we are to win this game. Shipping individual products to consumers has become a major challenge for existing supply chains. Customers demand fast product delivery, excellent customer service, real-time inventory tracking and customized offerings. Many current warehouse processes are not scalable and are unable to fulfill numerous small orders flawlessly to create processes where there are no back orders, no cancelled lines, no picking errors, no data entry errors, no billing errors and arrival times in line with customer expectations.


Failure to make the necessary changes in technology, processes and people can result in widely publicized disasters. For example, this past year e-commerce failures caused great pain to many companies. After poor execution during Christmas, many companies, as well as customers, still remember the inabilities of e-commerce companies. Failing to improve, the e-commerce world once again stumbled during Valentines Day, with many companies getting failing grades. Therefore, best practice companies, as a matter of survival and customer retention, are developing new game plans. To successfully meet these challenges, companies are integrating technology, processes and people.


Integrating Technology

Flawless execution necessary for high customer satisfaction and retention requires technology. As a means of survival, best-in-class companies are quickly implementing technological solutions, such as warehouse management systems to reduce back orders by achieving up to 99%+ inventory accuracy. The warehouse management systems can also provide 100% shipping accuracy. These systems allow for flawless execution of order fulfillment.


Best-in-class companies are also implementing technologies to improve picking accuracy and productivity, as well as reduce costs. Two technologies best-in-class companies are employing include pick-to-light systems and voice-directed picking. Both systems increase productivity by eliminating messy, unprofessional pick sheets and labels, as well as reducing time correcting errors and training.


Pick-to-light is hands-free, and picking is performed without paper, which can increase productivity up to 60% over paper picking.


Voice-directed systems communicate to the worker exactly what to do, asking short questions and expecting short answers. Voice systems also provide hands-free picking; the workers eyes and hands are free so they can move about their duties with maximum efficiency. This system also allows workers to notify host computers of situations, as they develop on the job. For example, in the case of picking a short item, workers can get instructions of an alternate pick location through their headphones, saving them the time of returning to a computer. In addition, voice systems can notify a supervisor of a situation, so they dont have to wait until the end of a run, or the end of a shift, to find out about problems, such as inventory shortages, and fix them. Voice systems have increased productivity up to 15% and reduced & errors to 1/10 th of 1%. Vocollect is one company offering this technology.


Technology integration is not necessarily a matter of cost justification but survival due to a dwindling of resources to pick, pack and ship orders. Over the next few years, companies will install labor-saving systems based on necessity rather than cost justification.


Integrating Processes

Process success requires flexibility and speed, which can be achieved in numerous ways. For example, hybrid storage systems combined with hybrid picking systems, monitored by reporting and analysis systems to measure and enhance success can create flexibility and increased speed.


Hybrid Picking Systems

Best-in-class operations use a variety of picking systems to pick orders. In designing effective picking systems, the secret is in the sort. Since walking can account for up to 70% of picking time, sorting and batching orders can result in dramatic time savings since productivity increases as location visits decrease in frequency. Suggestions for improving productivity include:


Sort single-item orders (orders with one item); batch by item number. These orders can be accumulated for the day to minimize visits to the pick location. Additional savings can be achieved by picking some of these items from the reserve location. For example, 48 customers order the same toy, Bounce Around Tigger. Bounce Around Tigger comes in cartons that contain six units each, so eight cartons need to be picked. Rather than pick the items from the forward pick location, use the reserve location, which would save the replenishment of eight cartons.


Sort ship-alone items. Items in their own shippable containers, such as a car seat, should also be sorted in a separate batch. Typically, these items are big and bulky and can be picked using a lift truck, such as an order picker. Picking these items with the other items in an order can slow pickers and packers. In most cases, there are items that should be converted to ship-alone items. A good example of this is an item that is received in a large carton say 48 inches by 36 inches by 40 inches that contains two items. Each item can be placed in a box and a ship-alone is created. Most operations have a few items that fall into this classification. Converting these items to ship-alones improves the picking and packing functions.


Sort multi-line orders. Orders of more than one item can be batched into groups. The size of the batch will depend on the cube of the product and the container used. For example, jewelry can be batched in batches, of say 48, while toys can be batched in batches of 12, when the same size cart is used. When creating the batches, orders should be accumulated to cover the least amount of walking. For example, group all orders that can be filled from one aisle. Once batched, the orders can be picked and sorted into pigeon holes during the pick process or can be picked into a picking cart and sorted after all the items have been picked. To sort the items after all have been picked, place a label on each item to facilitate accurate sorting.


Pick from reserve. Move very slow-moving items (those that move a few items in a month) from the forward-picking area to the reserve area only. This will free space in the forward-picking area for new items, something every warehouse needs. These items can be batched picked first from the reserve area and then sent to other areas for completion.


Order completion zones. In some operations, a small population of the stock keeping units may completely fill a group of orders. For example, in an operation that has 7,000 items, 700 items can fill 35% of the orders. These items can be placed together in one area or zone, allowing 35% of the orders to be picked completely in this zone. This increases overall productivity.


Hybrid Storage Systems

Best-in-class companies use a forward-picking area (a condensed area of stock from which to select orders) and a reserve area, back-up stock for the forward-picking locations. Typical material handling storage units employed in this area include pallet rack, shelving and flow racks. Some organizations use carousels to further condense the picking area.


Caution should be used in setting up the forward-picking area. Do not make the forward-picking area so small that replenishers struggle to keep product in the pick faces. This will cause many orders to be shorted. Therefore, keep a minimum of one weeks stock in the pick face.


Reporting and Measurement

Reports are necessary to not only design but also provide feedback on the operations performance. Reports such as the number of times an item is restocked in a week, provide process information to determine if the item is in the correctly sized forward picking location. Reports such as lines per hour picked for pickers and orders per hour packed for packers, provide valuable feedback for workers to attain their goals.


Creating a Team

For the technologies and processes to work successfully, workers must be carefully selected using detailed job descriptions and skills assessments. Once hired, job expectations, both qualitative and quantitative, for each function they are to perform should be shared. In order to meet their goals, workers need to be properly trained using consistent, detailed training programs and provided frequent feedback on their performances using reporting and measurement systems.


Becoming Best-in-Class

In sports, success comes to those who develop and deploy winning strategies. E-commerce fulfillment is no exception. The mantra must be flawlessly executed. Anything less provides a reason for your customer to shop elsewhere and, with the Web, your competition is just a click away.


Wayne Teres is director of Logistics for toysmart.com. He can be reached at teresw@aol.com.