This article originally appeared in the November/December, 2017 issue of PARCEL.
As the boom in e-commerce continues to transform today’s business environment, how should warehouses be structured to meet these demands for quick turnaround? Previously, one warehouse was built to handle store fulfillment, and another was built to handle strictly e-commerce orders. Retail stores were fulfilled via bulk shipments from the closest DC, which could take anywhere from one to five days. E-commerce orders were filled from the e-commerce warehouse. Even if an online customer was located next to a retail-only DC, the order was shipped from the e-commerce warehouse, resulting in inefficiencies and greater costs.
Filling e-commerce orders is a much different proposition than replenishing brick and mortar stores. Consumers are placing more frequent orders of smaller sizes to be delivered to their home or to another location for pick up. Many traditional warehouse operations are not set up to efficiently accommodate a large range of orders with varying units. Instead, warehouses today need to be built to either process e-commerce orders or replenish store inventory, or be built to handle both.
E-Commerce and Multi-Channel Warehouses
Because of consumers’ Amazonian-mindset of instant gratification, the ability to quickly and accurately deliver an order to an online customer is an essential part of doing business in today’s fast-paced e-commerce world. Retailers that compete in this environment focus on their order picking processes to speed fulfillment and keep customers happy. Daily order volumes and order quantity can change frequently with seasonal and promotional peaks. Changing SKU velocity and SKU proliferation are challenges, too, especially if there is limited warehouse space. Regardless, the need for speed is essential to the success of the e-commerce warehouse operation.
Multi-channel warehouses supply a mix of products to retail stores while also filling e-commerce customer orders. Fulfilling both store inventory and e-commerce orders from the same stock has its complexities, mainly because stores order in bulk, while e-commerce orders are smaller. However, having the ability to view the entire pool of inventory in real-time allows orders to be filled, regardless of the channel, eliminating the need to stockpile products in bulk storage. Retailers can quickly and accurately check inventory availability, giving consumers access to more products. Store replenishment and direct order picking can coexist peacefully.
Stores can be used as fulfillment warehouses by shipping directly to consumers, often saving on transportation costs. Using stores for fulfillment also reduces the likelihood of out of stocks, increases sales, and eliminates the need to drastically mark down leftover merchandise at season’s end. To enable ship from store, retailers need to increase inventory visibility across all channels to ensure that each order is being fulfilled from the smartest location.
Picking Processes in the Warehouse
With smaller and more frequent orders, e-commerce picking processes are labor-intensive, whether picking from cases, pallets, or shelves. Typically, order pickers retrieve goods from the warehouse, which, depending on the size of the warehouse, can mean they travel several miles a day. Reducing steps in the pick path, slotting products in the right location, and limiting the number of touches an item receives will improve picking speeds in the warehouse.
Most warehouses use a variety of order picking solutions within their operation, including carton flow, static storage, and pallet flow. Choosing the best order picking solutions depends on any number of requirements such as cost, complexity, the number of customer orders, size and number of items, etc. Every business has its own unique requirements and a mixture of order picking solutions may be the best way to fulfill orders.
For “each” picking or “split case” picking, products sold in individual quantities instead of as a full case, items are picked from storage units, placed in the appropriate container, and then transported to the next stage of the picking process via a conveyor or mobile cart. Each picking operations are employed in distribution centers that are focused on delivering products directly to customers, whereas case picking operations are typically used to stock retail shelves. “Case picking” is when products are picked in full cases, placed on a pallet, cart, or conveyor, and then the picker travels the aisles selecting products, grouping, and sequencing orders for shipment.
Dynamic storage units with shelves that slant towards the pick face allow easy access to items that are to be picked. Flow racks that use shelves made of steel tubes or wheel beds allow containers to easily slide in and out of storage. Carton flow racks have a high order picking rate of up to 150 picks an hour, but combined with a pick-to-light system that uses lights to show workers which items to pick as well as how many, pick rates can increase three-fold.
Warehouses of Today and Tomorrow
Today’s fulfillment warehouses are designed for flexibility, and are able to ramp up quickly as demand grows. Each day, the warehouse must be ready to deliver a myriad of customer orders quickly and accurately, regardless of the channel. By increasing warehouse numbers and decreasing their size, retailers can build them closer to the customer to speed shipping and cut transport costs.
The ability to find an item online, research prices, select a vendor, pay for the item, and schedule delivery from a single device has changed the warehousing world. This trend will continue to grow as mobile devices are deployed in the warehouse for checking order status, equipment throughput, labor usage, and more.
Brian C. Neuwirth is Vice President, Sales and Marketing, UNEX Manufacturing. UNEX Manufacturing is the trusted industry leader in order picking solutions that maximize space usage, increase pick rates and improve ergonomics. Visit www.unex.com for more information