- June 25, 2015
By Chuck Fuerst and Carl Marin, HighJump
The warehouse should be one of the first places you turn to when improving efficiencies and productivity for your business. It‚Äôs the heart of your operations, and its ability to be nimble and efficient has a big impact on your customers‚Äô experience and your bottom line.
By Chuck Fuerst and Carl Marin, HighJump
The growth and changes that e-commerce is demanding of companies can be a double-edged sword: It’s thrilling to be operating and competing in such a fast-paced market, but it’s also dramatically challenging as companies of all sizes struggle to figure out which supply chain strategies, processes and technologies can help them succeed. There are always opportunities to upgrade this machine or buy that new solution, but what’s really worth your attention and investment?
The warehouse should be one of the first places you turn to when improving efficiencies and productivity for your business. It’s the heart of your operations, and its ability to be nimble and efficient has a big impact on your customers’ experience and your bottom line. It’s also where many e-commerce challenges originate - and where many can be solved.
Whether you are a start-up company or a large enterprise sophisticated in multi-channel commerce, the e-commerce market doesn’t discriminate: It is likely impacting your business in similar ways by challenging your efficiency and productivity.
One of the most common problems we see is the shrinking size of an order: Rather than ordering large quantities at a time, many manufacturers, distributors and retailers are dealing with one or two line orders – but a larger number of them. This increased volume with fewer items leads to the need for more labor and greater logistical complexity, and both of those quickly cut into your profit margins.
Warehouse automation is one of the fastest and most-effective ways to manage costs around e-commerce. In many cases, it’s getting more attention and investment than labor because of its flexibility and scalability. For instance, solutions like carousels and pick-to-light systems are just a few of the ways companies are improving productivity without adding to their labor count.
No matter your company size or market share, the goal of better warehouse automation is typically to increase productivity, efficiency and visibility. But the actual tools you consider and their implementation will depend on the size and objectives of your organization. Let’s take a look at some factors and best practices for both small to mid-sized businesses (SMBs) and large enterprises in an e-commerce marketplace.
SMBs: When we’re out talking with companies, we often hear the assumption that it’s only the big businesses that can afford automated warehouse systems. It’s assumed that SMBs should start with a manual system and ease their way into automation as order volumes increase.
That can work fine in some cases, but the nature of e-commerce makes that risky. It’s not unheard of for a company to double its order volume in less than a year, and if the orders come flooding in unexpectedly, it can cause a lot of upheaval in the supply chain. SMBs that invest in materials handling automation early on can do so in a way that allows them to scale their solution as order volume grows.
The first step is to examine which processes can be automated and the benefits of doing so. This may include selecting a warehouse management system (WMS) that can implement best practices for inventory management, order processing, replenishment, pick/pack and loading and shipping. Some companies may start with a WMS and then layer in automation incrementally.
Here are some examples of the benefits that automation can bring to an SMB:
- Dynamic slotting can better manage single or multi-line orders and reduce travel times in a warehouse.
- Implementing zone dividers rather than requiring workers walk through a warehouse will increase productivity and save on labor cost.
- As part of the wave planning process, a WMS can segregate items by proximity in the warehouse to optimize travel, labor and efficiency.
- Large enterprises: Many large enterprises dealing with e-commerce challenges have been around long enough to have already invested in warehouse automation for better efficiency and productivity. Due to their experience in the market, they may also have a better understanding and idea of their technology needs and exactly what results they want to accomplish.
In these cases, a WMS that provides a foundation of best practices along with the ability to adapt to any business need or demand will be critical. Large enterprises can experience rapid changes just as start-ups do. Though they may be able to handle the scale, the nuances and specific customer demands can be a challenge in a large logistical operation.
The right WMS can make a huge impact on the automation and productivity of a large enterprise’s operations:
- Allows you to stay nimble to the market and adjust more rapidly to meet its needs.
- Synchronizes all channels for order capture and fulfillment, and adds support for supplier drop shipment and in-store order fulfillment.
- Optimizes fulfillment strategies based on inventory position and complex customer-based rules while minimizing logistics costs.
Now that we have an understanding of these strategies in theory, let’s take a look at two examples of them in practice.
Online start-up scales up with automation
DrVita, the online dietary supplements retailer, wanted to maximize the efficiency of its 72,000 square foot manufacturing and distribution facility to remain competitive in the dog-eat-dog world of e-commerce. Despite being a start-up, it made the bold move to invest in materials handling automation technologies, with the strategy to scale the solution as order volume grew.
DrVita made horizontal carousels and robotic extractors the heart of its automated order fulfillment system. Cubing and weighing technology was also put in place to optimize storage in the picking carousels and reserve storage areas. An image of the item to be picked is displayed for verification purposes and the number of items to be picked is displayed prominently by the workstation’s pick-to-light system. DrVita’s WMS provides tools to cluster products for multiple order selection and provide the packer with efficient tools for selection regardless of the level of automation. The warehouse and fulfillment processes work together with the WMS to handle 1,000 orders per shift, yet can scale up to 10,000 orders per shift.
As DrVita has grown, it has scaled the current systems rather than disruptively reevaluated the current systems or installed new ones. As a result, its storage space is maximized and the need for picking and replenishment labor is minimized to help control costs. Other results include:
- Executes 600 lines per hour (4,800 lines per eight-hour shift) compared with a non-automated facility that can do typically 200 lines per hour.
- 99.9 percent picking accuracy
- More than 30 percent of customers receive their goods within a day.
- Space for up to 17,664 SKU inventory locations (the company currently stores 10,000 SKUs)
Market leader stays nimble with configurable WMS
Quality Bicycle Products (QBP), one of the largest wholesale distributors of bicycle parts and accessories in the U.S., improved productivity and adaptability with a WMS that brought a new level of automation to the facility. QPB was growing quickly, but relied on some manual and paper-based systems for its inventory management, including replenishment and picking.
After implementing a WMS that provided greater visibility into order processing and workflow best practices, QPB had real-time visibility into key inventory and order metrics. The flexibility of the WMS allowed QBP to configure the system to it specific needs, such as custom user interfaces, process changes and workflows for specialty items. As the company grew from a single site to a multi-site distribution network, it used the WMS to implement a waveless order processing system that enhanced its outbound processes and improved throughput on the conveyor systems.
As a result of the improved automation, QBP made leaps in efficiencies and productivity:
- Manages 21,000 boxes and 139,000 lines per week across its distribution network.
- Increased inventory accuracy 15 percent
- Decreased order cycle time 10 percent
- Reduced error rate 20 percent
- Achieved a 20 percent savings on returns and preprocessing due to increased accuracy
The importance of analytics
You can’t manage what you can’t measure. You should be tracking your metrics before and after any implementations or changes to ensure that you’re actually impacting the metrics you set out to improve.
The good news is that e-commerce doesn’t necessarily require a bunch of new KPIs; labor, throughputs and picking accuracy are still important. Establish your baseline metrics and then track the results as your strategies are implemented. Knowing your analytics will also help with capacity planning by identifying problem areas before you get slammed with dramatic volume increases.
E-commerce is the new gold rush of sorts: Everyone is racing to embrace it, but not everyone has the tools in place to actually succeed if they hit it big. By considering the strategies and solutions discussed here, you can make your supply chain a competitive advantage while keeping costs in check. The ability to scale up, respond quickly and stay nimble will help you stand out and increase your likelihood of success.Learn More
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