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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

November 11, 2015



Logistics News: E-Commerce Expands DC Order Fulfillment Scope

Establishing Best Practice Operations


Holste Says:

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Implementing an effective continuous order processing operation is not optional - it is essential in establishing and maintaining a customer centric capability.
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Previous Columns by Cliff Holste

Sorting It Out : Searching For Cost Effective Solutions to Piece Picking Challenges

Sorting It Out : DC Automation - Adoption Problematic For Some Businesses

Sorting It Out : Work Rate Verses System Productivity

Sorting It Out : The Business Case for Project Planning in Materials Handling Automation

Sorting It Out : Consultant Verses Industry Expert -- Understanding The Difference

More


Traditional B2B & B2C order fulfillment picking, sorting, and shipping systems are designed to process medium to large replenishment store orders, along with a limited amount of smaller direct to consumer type orders, that are shipped within 24 to 48 hours. However, the individual internet consumer typically orders across one or two lines, in small quantities, and expects same-day shipping. With potentially thousands of internet customers, the daily frequency of these orders can be huge, especially when promotions are in play, choking a traditional order processing system.

The three main order fulfillment functions impacted by internet orders include; Order Picking, Packaging, and Returns. Depending on marketing strategy, some Value Added Services (VAS) like monogramming, gift wrapping and other personalization services may be included, further complicating order processing systems. Unfortunately, there are relatively few options for efficiently integrating internet order capability into an existing operation. Possibilities include:


 •

Re-arrange and/or expand your existing facility to include a separate e-commerce processing area

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Build a new more automated facility with integrated e-commerce capability

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Utilize a 3rd Party e-commerce order fulfillment center

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Have your suppliers ship direct to your internet customers from your website under your banner


In general, establishing best practice operations for e-commerce involves:


Modifications to order entry software and material handling systems as required for the adoption of a Continuous Order Processing (COP) system

Operating an automated high-capacity, high speed, highly accurate item picking operation

Maintaining 100% pick face inventory accuracy


Automate value added services such as case labeling with Auto Print & Apply technology


Utilizing advance picking technologies such as RF, Pick-to-Light, and Voice Directed

Achieving a same-day order shipping cycle time

Efficiently processing a large volume of USPS, FedEx, and/or UPS shipping packages

Supporting increased system transactions

Provide a quick and easy returns process


The last bullet point cannot be over stated. Successful internet services providers know that managing and accurately processing customer returns is a high priority. A shippers returns processing capability is a significant factor in whether or not an internet consumer continues to buy from you or surfs the web for a better option.

With e-commerce 30% or more, of on-line purchases will be returned. To support this volume, many shippers outsource the management of returns to a third party operator. This option however should first be compared to processing returns in-house. The following are some of the key components of an efficient returns operation:




Customer-Crediting Process: Crediting the customer’s account after a return is made is critical to maintaining a strong customer relationship. Failure to quickly process returns is the largest risk to shippers, according to a leading survey conducted on internet consumers. Achieving a crediting period of 48 to 72 hours from the point of mailing the return to crediting the customer’s account is an achievable goal. Advanced systems must be put in place to support this short cycle time. Streamlining the crediting process and making it easy to use will separate the on-line successes from the failures.

   

Quality and Control: Efficiently handling the products returned is essential for controlling costs and product quality. The goal is to maximize the value of the goods that are returned. Properly identifying the quality of goods returned, repairing damaged items, and repackaging destroyed packages are all examples of controlling the quality of returned goods. Establishing a network of aftermarket dealers and recycling services are also critical components of maximizing the value of returned goods.

   

Applying Technology: The material handling and storage equipment utilized in the returns area should support the anticipated peak volumes. The use of conveyors, sorters, racks and modular workstations should be considered in the design of the returns area. In addition, advanced systems must support the transaction volumes and quick crediting requirements.


Final Thoughts

When developing e-commerce plans it is important to remember that selling products in cyberspace still comes down to the physical movement of product through the DC to the final customers. Implementing an effective continuous order processing operation is not optional – it is essential in establishing and maintaining a customer centric capability.

 

 

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