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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News

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.

September 28, 2016

Logistics News : Multi-Channel Order Fulfillment Challenges


Does a "One-Size-Fits-All" Solution Apply to Multi-Channel Operations?

 

The challenge logistics companies face when adopting new marketing channels, especially those that require quick response capabilities is supporting vastly different customer order profiles and shipping schedules within the same order fulfillment facility.

The typical batch-order picking and sorting model for example, works most efficiently and productively when the average customer order includes medium to large quantities of mixed SKUs. Here the shipping schedule allows sufficient time for the Warehouse Management System (WMS) to accumulate and construct several large batches of orders prior to releasing them to the picking system. SKU quantities are summarized across the orders in the batch. Then, individual pickers pick a portion of each order containing those SKUs. Picked product is transported via a network of conveyors to an automated sorting and order consolidation system.


Holste Says...

It is much better to deploy, test, and prove new order processing methods on a standalone basis well in advance of the marketing campaigns launch date.

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There are of course, dozens of “rules” involved governing how batches are constructed. But, having a sufficient amount of customer orders in advance is the key to constructing efficient and productive batch sizes.

The e-commerce model is very different. To start with the frequency of customer orders tends to be very high while the individual orders are characteristically small with just a few items that are to be shipped the same day. As individual orders are received in the DC they are immediately processed by the WMS and released to picking. Because these orders are typically for less than four line items, they are more suited to discrete order picking methods.

One multi-channel solution is to setup two separate order picking systems, batch (as described above) and discrete, both driven by the same WMS. In the discrete order picking model, incoming e-commerce orders are allowed to accumulate in the WMS for a short period of time (say 10 to 15 minutes) prior to being released to an individual picker as a small cluster – (6) orders or less. Then, based on SKU characteristics, automated picking machines such as an A-frame, and Goods-to-Person equipment such as horizontal carousel, vertical lift module (VLM), mini-load AS/RS, can be deployed in conjunction with a pick-and-pass system configuration that feeds completed orders directly to checking, packing, and shipping.

The above describes how both types of order fulfillment operations can share the same facility, business management and IT support systems while their physical orders are processed within distinctly different systems.

Another approach is to segregate e-commerce operations into separate DCs. This approach allows for the deployment of smaller DCs that are strategically located to reduce shipping cost and time. Due to the abundance of spec buildings currently available on the market, this may be an attractive option. The following lists a few desirable e-commerce building characteristics to look for:

  • More building depth with the first interior row of columns set back 60 to 70 feet will greatly improve fork truck traffic on the dock. Column spacing greater than the normal 40 x 40 grid is most desirable. Clear height may not be as critical, as inventory is primarily held in pick locations that are accessed manually. This makes existing buildings with low to moderate ceiling heights viable alternatives.

  • The building should be equipped with a roof truss supported Early Suppression Fast Response (ESFR) fire sprinkler system. This type of system allows maximum equipment layout flexibility because storage and picking systems can be configured and re-configured independent of the ESFR system.

  • Sufficient floor or mezzanine space to accommodate manual access to pick locations and to accommodate horizontal carousels, pick-&-pass systems, or mobile robots.

  • Look for high flow-through capability – receiving docks on wall opposite from shipping docks. This arrangement facilitates the high inventory turnover rate and short product life cycle associated with e-commerce marketing. Reserve inventory needs be stored close to active pick locations.

  • Adequate facility power to handle peak shipping days with back-up generators to provide uninterrupted operations during power outages.

  • Temperature control: not just for product sensitivity, but to keep workers comfortable and increase productivity. Air conditioning is becoming a requirement, not an option.

Final Thoughts

The point is that when considering new marketing channels, first understand how it will impact on the current operation. Mixing order fulfillment processes within the same system operation is a risky business. The result could be to dilute the output of the entire operation, leading to a result that may not satisfy overall company business objectives. It is much better to deploy, test, and prove new order processing methods on a standalone basis well in advance of the marketing campaigns launch date.

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