With the rapid growth in e-commerce, online retailers that are already fulfilling a significant volume of orders annually may reach a tipping point where they must eliminate manual aspects of the packing and fulfillment process and transition to higher speed, automated packaging operations.
Although the tipping point for any online retailer varies, companies processing several hundred thousand orders a year often find themselves in this position. Symptoms of the growing pains include orders that sit in bins for days before leaving the warehouse, high manual labor costs, and even high packing material costs.
In addition, staffing up to meet peak holiday season demands can be even more of a challenge – particularly when 50-80% of annual sales are made between Black Friday and Christmas. During this time, most e-retailers run extra shifts and hire large quantities of people that must be trained for the 30-60 days they will work. But even this approach can lead to slow order fulfillment – a detriment when competing with online retailing giants that promise one day – and even same day – delivery.
Whatever the reason, when this tipping point is reached, e-commerce retailers are forced to evaluate options for more automated equipment and additional packaging and fulfillment lanes.
Fortunately, there is packaging equipment that provides the functionality and options to cost effectively scale up from manual to semi-automated to full automation as growth continues. In many cases, this is the same type of equipment used in the largest fulfillment centers by major online retailers.
A Real-Life Example
One example of how retailers are using automation and new equipment to meet e-commerce challenges involves a fast-growing online retailer of discounted personal care products. Unfortunately, for the online retailer, with fast growth came growing pains. Often the partially-automated fulfillment process left many bins of picked items waiting to be processed, particularly during the holiday season.
The online retailer had been employing a conventional packaging system that included manual labor. This involved having a checker manually place product in a box, adhere a shipping label and put it on a conveyor. Another team would add void fill to protect the product and the box would be sealed with tape.
With the conventional packaging system, the online retailer was paying people to make boxes, fill them, tape them up, and put on labels. Management felt driven to invest in new automated packaging lanes. The conventional packaging lane would still be utilized for larger items and gift sets that are sold in higher volumes during the holidays.
For its solution, the online retailer turned to a compact, automated parcel packaging machine. The equipment can be used to package up to 20 orders per minute and can reduce labor up to 50% or more with typical ROI in 10-24 months.
In conjunction with the automated packaging system, the online retailer also uses a product which protectively holds the contents of the shipment in place on an economical corrugate base pad using shrink or stretch film, without the use of void fill. With this design, the “tabs” on the base pad interlock into the die cut slots of an economical shipping carton to securely hold the base pad in place. Contents may be totally random in size and shape, and may be any combination of products. There is no need to manually put items in a box, because the box gets formed around the pad, and there is no need for void fill because the items are shrink wrapped to the pad.
The online retailer chose to implement the automated packaging systems using two carton sizes. During most of the year, leading up to the holidays, the majority of sales are single items or several smaller items in a single package, so the company decided to utilize a small packaging size as well as a larger one. Each line can be changed to adjust packaging size in as little as 10 minutes.
The picking system recognizes which lane should be used, large or small, based on the item(s) in the order, and takes into account whether the item might be sensitive to the heat in the shrink wrap process.
At each automated lane, up to eight checkers can scan and place items for the order on the corrugated pad. The pad is then conveyed through the shrink wrap heat tunnel and the box is formed around it using the automated packaging equipment. The shipping label is printed & applied automatically, adhered to the top of the box, and the order and shipping label are verified as matching.
With the packaging automation supplementing traditional packaging lines, the online retailer’s product is getting fulfilled and shipped much faster. Other retailers may benefit from emulating this approach.
John St. John is President of Systems Technology, Inc., a manufacturer of automated packaging systems which has equipment installed at fast-growing online retailers. The equipment can be used to package up to 20 orders per minute and can reduce labor up to 50% or more with typical ROI in 10-24 months. For more info: call 1.909.799.9950 ext.222 or visit www.systems-technology-inc.com.
