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About the Author

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

Logistics News

By Cliff Holste

June 3, 2015



Logistics News: Outsmarting Today’s Order Fulfillment Woes

As the Percentage of Small E-Commerce Orders Increase so does Order Processing Cost


Holste Says:

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Managing today's full service quick response DC requires at least some basic understanding of assembly line sequence and balancing techniques in addition to the traditional warehousing and order fulfillment processes.
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While the primary purpose of the distribution center continues to be warehousing and order fulfillment, today’s DCs are becoming a hybrid of customized value added services, creative packaging, order assembly processes, and targeted marketing promotions. The warehousing function hasn’t really changed all that much overtime except that stock turns somewhat faster now than it did a decade or so ago and product life cycle times are shorter. Industry analysts’ contribute much of this to the impact that web-based marketing strategies have on DC operations and the accelerated speed at which a product becomes obsolete or just falls out of fashion. The point is that inventory management has always been an important benchmark for DCs and that’s not going to change.


What is relative new in today’s order fulfillment environment is the amount of customized order assembly and kitting operations that have migrated into the DC. Fortunately, much of this work, like price ticketing and kitting, can be done off-line and in advance of the actual order fulfillment process. This is referred to as parallel processing. However, customer specific services like monogramming, gift-wrapping, and serial-number capture (as shown in the adjacent picture) must be done in sync with the order fulfillment process and is referred to as serial processing.

Regardless of whether its parallel or serial, these order processing variations challenge DC managers to plan processes that are efficient for each, and can be scaled up or down or turned on and off as activity shifts.

Normally, system planners use historical data to establish capacity requirements for each separate process and then design the processes and system flows accordingly. Common sense will dictate that demand will peak ahead of certain holiday periods. But, planning each process for its most extreme peak results in excess capacity most of the time, and can be very difficult to cost justify. On the other hand, you should avoid using annual averages as that would be like the fisherman who drowned while fly fishing in a stream having an average depth of only 6 inches.

The following are a few planning ideas that can help you outsmart the specific challenges associated with e-commerce fulfillment:


First, be cautious of highly automated processes whose efficiency depends on running at full speed. They may not be so efficient when volumes are low, and still have the high capital investment to amortize.


Choose the simplest process that works well for the majority of the orders then absorb the inefficiency for the others.


Create a mini-DC or independent line of flow (like a “slapper” line) for orders that have common characteristics. These might include a small sub-set of the product line, single lines or single units, the same shipping package and/or compliance labeling requirements, or the same carrier mode. This may feature a workstation for picking and packing as a single-step process. Or, a separate conveyor line specifically designed to handle small lightweight cartons.

If there is a fixed path conveyor system make sure that the flow permits products and materials to access all processing areas, and that it includes sufficient buffering and re-circulation capacity.

Design workstations that have the capability to perform a variety of tasks and locate them so that they are easily accessed from different points in the primary line of flow. These might be configured to support several activities. And cross-train employees so that as the mix of requirements changes, they can be quickly re-assigned to a different workstation.


Depending on the size and scope of the operation, manual delivery methods may not reliably support throughput requirements leading to product shortages and processing delays. In addition, providing a sufficient number of workers to deliver parts to all of the various workstations in a timely manner during peak production periods may not be manageable.

Companies in this predicament need a more flexible, cost-effective delivery system capable of supporting a multi-shift operation. Many companies are now looking to Goods-to-Person (GTP) technologies such Carousels, Mini-load AS/RS, Multi-Shuttle, Pick Wall, and autonomous robot tuggers that are capable of delivering product from a centralized distribution depot to multiple workstations may be the solution.



As an example - this GT3 tugger (www.seegrid.com) employs patented industrial mobile robotics technology to move independently throughout the facility. First, it builds a 3D map of the environment utilizing onboard cameras. Then, independent reasoning ability enables the tugger to navigate a predetermined path throughout the facility to complete multiple delivery tasks.

Because of its versatility, the tugger can traverse multiple routes for the first shift, and subsequently be changed to follow a completely different route for the second shift. This flexibility to change the routes easily and frequently is a huge benefit providing real value for the DC.


Final Thoughts

Managing today’s full service quick response DC requires at least some basic understanding of assembly line sequence and balancing techniques in addition to the traditional warehousing and order fulfillment processes. While all these additional tasks may increase operational complexity, you don’t have to be victimized by it. Careful data analysis and clever process planning, along with the adoption of appropriate technologies, can put you back in control.

 

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