How to Boost Order Volumes, Efficiency and Productivity in Your DC
Today we’re seeing triple-digit growth in e-commerce, and the expansion is so fast that many operations are struggling to keep pace. What’s more, the genie is out of the bottle: many e-commerce trends being set now are here to stay. These rapid changes are creating some significant challenges for the industry, including:
- Exploding E-Commerce — Rising demand is straining fulfillment operations, and more SKUs are available than ever before. In addition, the pandemic has accelerated e-commerce by three to five years. Many operations can’t replenish stocks quickly enough, especially for high-demand items.
- Changing Buyer Behavior — Many distribution centers were originally designed to handle retail replenishment. But as e-commerce continues to grow, smaller direct-to-consumer orders are becoming a much larger proportion of the fulfillment workload. This strains operations by diminishing returns and decreasing efficiency. Omnichannel operations that serve both retail replenishment and direct-to-consumer orders are struggling to adapt established fulfillment processes and infrastructure to meet service level demands across both channels efficiently and profitably.
- Scarce Labor — Most distribution centers are still trying to meet growing demand with human labor, but there aren’t enough workers to meet increasing demands for speed and volume. Turnover in the industry is more than 33 percent, and a significant percentage of the workforce is older than 55. Even before the pandemic, there were only enough applicants to fill one in six available positions.
- Accuracy — Customers are also getting used to fast and free delivery. Even same-day delivery is quickly becoming a standard part of service level agreements. Moving more products faster increases the chance of human error, and customers may look elsewhere if orders are delayed. 72.7 percent of consumers say they are unlikely to do business with a site again after a poor delivery experience.
- Cost of Storage — Floor space is expensive, especially in dense urban areas where it’s needed most.
Goods-to-person order fulfillment (GTP) offers a solution to all of these challenges. These automation strategies apply the right mix of equipment, processes and workflow adjustment to handle high volumes of direct-to-consumer orders with greater speed and accuracy.
Traditional Picking Models Can’t Keep up with Modern E-commerce
In many fulfillment operations, a worker walks through aisles with a paper pick list and selects items needed for one or more orders at a time. It’s a lot like grocery shopping. This “operator-to-goods” model has some advantages: it’s the simplest fulfillment method in the industry, offering fast response time, short order cycle times and the ability to easily track picker accuracy.
However, travel time can cap labor productivity, with workers spending up to half their time walking between pick locations instead of actually picking. It’s not unusual for workers to walk five miles in a single shift. The operator-to-goods methodology can also deliver diminishing returns when pushing to meet high throughput demands. Adding more labor does not necessarily mean more orders fulfilled.
For example, scaling to meet 10,000 orders per hour would require additional workers roaming and congesting the same pick aisles, causing individual labor productivity and operational efficiency to drop. The limited vertical reach of pickers also restricts slotting options, requiring operations to build out rather than up. That leaves a wide horizontal footprint that doesn’t make the most of available space.
Another fulfillment methodology, known as pick-and-pass or zone picking, involves assigning employees a specific zone in a pick area, with the responsibility for picking SKUs in that zone. If a single order contains SKUs located in multiple zones, employees pick the necessary SKUs as the order passes through each zone until completion. This workflow uses more sophisticated technology like voice or lights to manage the picking process and conveyors to move product through zones.
Zone picking allows for greater efficiency and productivity. It also fulfills more orders in less time compared to operations with pickers walking around the warehouse. However, slotting restrictions limit effectiveness, as they require a large horizontal footprint and leave vertical space unused.
GTP: A Solution Built for E-commerce
The basic concept of a goods-to-person workflow is that you automate the movement of goods to a worker who picks and fulfills orders. While this idea isn’t new, the high volumes of small-size e-commerce orders make the business case for GTP stronger than ever before for many operations.
One of the game-changing benefits of GTP is the ability to use much more cubic volume than in operations that are limited by employee reach. Facilities that use these systems are able to store product 20-60 feet high, which gives you a 30 percent-50 percent smaller footprint than operator-to-goods workflows. That means your operation can build or lease a smaller facility, or significantly increase the capacity of an existing one.
Another key advantage of GTP solutions is that they help you make the most of scarce labor by improving individual productivity and minimizing pick errors. Bringing product to pickers eliminates the travel time that can account for as much as half of a picker’s time spent on the floor. High-utilization workstations are designed for employee comfort, offering consistent product flow into a picker’s ergonomic “golden zone” to enable more picks per hour. Furthermore, presenting pickers with a single SKU at a time combined with the use of fulfillment technologies such as voice and lights drives greater levels of accuracy.
Building a Successful GTP System
Reaping the full return on the promise of GTP fulfillment starts with the right system components. Here’s a quick overview of what’s available today:
Automated storage and retrieval systems (AS/RS) are storage systems designed to precisely handle picking and put-away without direct human interaction. In this way, AS/RS can improve throughput in operations of any size, from large omnichannel operations to micro-fulfillment centers. These systems come in a variety of shapes and sizes, from mini-load systems to carousels to unit-load systems. For e-commerce, however, we find that the strongest business case lies in shuttle-style systems which pick totes from racks and deliver them to workers at picking stations.
With enough space, shuttle-based GTP systems can scale as high as necessary. This enables operations to design for anticipated growth by communicating growth expectations to the system supplier and planning future expansions for enough capacity over a multi-year period. This insulates your operation from risking insufficient capacity in the future and spreads out the financial burden of the ultimate, complete system.
At a more immediate level, while GTP systems are typically designed for peak operating requirements, they also provide the ability to scale down operations during base periods. For example, an operation may require 10 GTP stations during peak months but only five among the remaining months. The fulfillment center can deactivate the other five GTP stations when not needed, reducing labor requirements, conserving energy, and saving system components from unnecessary wear and tear.
Autonomous Mobile Robots (AMRs)
Another technology that’s gaining significant ground is autonomous mobile robots (AMRs). These free-rolling bots use many of the same technologies being developed for self-driving cars. They use vision and mapping technologies to perceive and navigate warehouse environments with minimal changes to a facility’s infrastructure. They’re also smart enough to recognize and avoid everything from people to fork truck tines or any other obstruction in the DC.
Mobile robots can be inserted into an operation without major infrastructure, requiring only a short integration period to learn their surroundings.
Another way you can improve efficiency is to incorporate voice and light systems. These will direct a picker to an item and indicate the quantity to be picked. The strongest GTP systems leverage each of the options we’ve covered for maximum overall output. This offers a range of strategies for balancing the workload, minimizing congestion and throughput bottlenecks.
Warehouse Execution System (WES)
Honeywell Intelligrated also offers the Momentum™ software suite, which interfaces with equipment from Honeywell and many other vendors. This Warehouse Execution System (WES) is modular and can be scaled based on your unique requirements.
This extremely flexible solution allows you to pick and choose modules based on how you intend to design your warehouse. For example, you might select one or more modules for e-commerce picking, omnichannel operations, micro-fulfillment center (MFC)/grocery fulfillment or AMR integration.
Whatever automation strategy you choose, goods end up at an operator picking station like the one shown here. There, each order can be picked quickly and efficiently.
The two blue totes you see in this diagram are where totes show up at the operator station. Below these (shown in brown) are boxes or totes where the operator consolidates the order. Light systems in the station indicate which item to pick and where it needs to be placed. Totes can also be subdivided to contain smaller items.
The workstation can even give you a diagram of the item to be picked so that the operator can confirm they’re selecting the correct item. The system is also flexible enough to make changes based on the items to be picked.
Once the operator is finished with a tote, the touch of a button returns the current tote to the storage system and summons the next one needed.
The base system comes with four put-to locations, but can be expanded to include up to six more, three on each side. Scaling the system in this way allows additional orders to be consolidated.
Honeywell Intelligrated also offers a Decant/Replenishment station that enables your operation to replenish items as inventory runs low. Like the operator stations, these are very flexible stations that enable operators to pick from boxes or pallets into totes that will replenish the AS/RS system. Lights and diagrams provide the operator with clear instruction. If a box or item is damaged, the operator also has the option to reduce or change the number of items that are actually going into inventory. This ensures that you always have an accurate count of what’s actually in the system.
Enhancing Operations of Any Size
GTP strategies aren’t just for large distribution centers. They can be used in micro-fulfillment workflows and smaller DCs as well. As e-commerce continues to occupy a larger piece of the contemporary retail puzzle, fulfillment operations of every size must adapt to handle increasing volumes of smaller-size orders. GTP systems offer a solution to provide the throughput, scalability and accuracy required to efficiently handle complex order requirements.
Overcoming Key E-Commerce Challenges
GTP systems help to overcome many common e-commerce challenges: demands for increased volume, throughput and accuracy; large numbers of SKUs; changing buyer behavior; labor scarcity and the cost of warehouse space. The solution described here offers a flexible way to resolve all of these by automating the movement of items to the operator, enabling faster fulfillment.
It’s important to note that GTP won’t help solve all these problems by itself. The combination of GTP with automation strategy, the right mix of equipment, processes and workflow adjustments enables DCs to handle the high volumes of direct-to-consumer orders with the greatest speeds and accuracy.
To learn more about this topic, view our webinar, Leveraging Goods-to-Person (GTP) Automation Strategies.