For e-commerce companies in particular, shipping represents both a significant expense and opportunity for competitive advantage. But shipping doesn't happen in a silo. Finding an optimal strategy requires taking a holistic view that reconciles shipping with fulfillment operations in the warehouse and considers the relationship between the two.
A zone-skipping strategy might be just what the doctor (or CFO, customer service team, chief supply chain officer, etc.) ordered. When successfully implemented, having e-commerce fulfillment operations take on sortation steps traditionally reserved for the parcel carrier can reduce transportation costs and improve transit time.
How can you translate this theoretical benefit to real results? Step one is to understand the fundamentals of zone skipping, outlined in part one of this blog series. When it's time for the rubber to hit the road, be sure to account for these critical steps to lay the foundation for success.
1. Identify opportunities for zone skipping
For starters, where is your fulfillment center in relation to parcel hubs? Operations shipping from coast-to-coast have plenty of zone-skipping opportunities, due to their shipments going through several local and regional hubs as they travel long distances. This is important because the more steps in the shipping process, the greater the opportunity for cost savings and faster delivery speed.
And secondly, how many orders are headed to the same region? A sufficient volume of shipments routed from the fulfillment center to a specific regional destination hub is what makes a zone-skipping plan cost-effective. Therefore, identifying the most common destination regions to leverage existing delivery volume is a critical step in building a zone-skipping strategy that fits operational needs.
2. Coordinate with parcel carriers
Although zone skipping takes some of the sortation and transportation burden off of parcel carriers, this does not mean that retailers and e-commerce operations totally assume the shipping process themselves. Coordinating with parcel carriers to integrate zone-skipping with their shipping operations makes the most of these efficiencies. This includes working out shipments destined to bypass local hubs and go straight to regional destination facilities, proper labeling and other practices to ensure a smooth implementation that delivers on efficiency promises.
The implementation of zone skipping should result in big operational savings from the carrier. It is important to negotiate and develop clear cost savings expectations prior to implementing a solution.
3. Build the right sortation system
Analyzing operational characteristics helps determine what demands will be placed on the sorter and define the best-fit sortation solution. The top considerations are:
- Throughput - The sortation solution must offer sufficient throughput capability to meet average and peak operational needs. A sweeper sorter is a simple, reliable option for lower throughput requirements in the 6,000-item-per-hour range, while other technologies like sliding shoe, cross-belt, tilt-tray, bomb bay or push-tray sorters can handle rates in excess of 20,000 items per hour.
- Layout flexibility - One of the key challenges of zone skipping is finding sufficient warehouse space to house the volume of diverts necessary to presort orders and keep them flowing to the right region. Destination pitch indicates how closely divert chutes can be located, with a lower pitch enabling a higher chute density. This metric is critical for operations with limited floor space, and also guides technology choice and configuration.
- Product handling capability - Sortation technologies can handle a wide range of package sizes and types, with these capabilities ultimately dictating what is considered "conveyable" and "non-conveyable." The greater the volume of non-conveyable items, the lower the payback on a zone-skipping sortation investment. Making this assessment upfront is critical, as is considering future demands since the variety of packaging types used by e-commerce operations can fluctuate due to a variety of external factors.
Hungry for more zone-skipping insights? Stay tuned for the final installment of the zone-skipping blog series to see how omnichannel fulfillment operations can use it to their advantage.