Today's e-commerce retailers face a perfect storm of market challenges. While order fulfillment complexities are on the rise, the pool of qualified labor continues to shrink. According to a recent report by the National Retail Federation, the growth of e-commerce order volumes is expected to triple those of wider industry growth rates. This emerging e-commerce reality is forcing DC operators to look for new ways to deal with rising SKU counts of varying velocities and the subsequent inventory, storage and picking difficulties.
In our next On The Move webinar, we will discuss how many retailers are deploying automated storage and retrieval system (AS/RS) shuttles to address the mounting pressures of e-commerce order fulfillment. This informative webinar will take place on Thursday, Nov. 16 at 2 p.m. EST / 11 a.m. PST.
In addition to looking deeper into the forces behind this trend, we'll also explain how the rules of thumb for deploying shuttle automation is evolving - from its historic use of addressing inventory storage challenges to a more pragmatic solution to offset labor shortages.
To better understand how e-commerce growth is driving the need for greater efficiencies, we will compare traditional operator-to-goods (OTG) workflows to goods-to-operator (GTO) automation. While OTG represents a lower capital investment, it is often characterized by labor-intensive, inefficient and inaccurate processes. In fact, workers can spend up to half their time walking between pick locations rather than actually picking. For SKUs that are ordered less frequently in an e-commerce scenario, OTG might require an associate to walk five minutes to a remote area of the DC to retrieve them.
In contrast, a GTO shuttle system would greatly reduce labor requirements and potentially eliminate much of this walk time. And although a shuttle system calls for a higher capital investment, it delivers significant gains in pick rates, order volumes and accuracies.
Attendees of this webinar will learn:
- Impacts of labor challenges on e-commerce order fulfillment processes
- Overview and benefits of the GTO shuttle fulfillment model
- How AS/RS improves fulfillment efficiency, accuracy and throughput
- The various factors driving the AS/RS ROI equation
So, if you would like to learn how AS/RS shuttle automation can help address your labor shortages and improve order fulfillment productivity, please register for our next On The Move webinar and join us Thursday, Nov. 16 at 2 p.m. EST / 11 a.m. PST.
The months of November and December are more critical to your retail distribution center (DC) than any other time of the year. As consumers make a run on retail stores and websites in search of the perfect holiday gift, a lack of preparation can spell certain disaster for your operation.
Order fulfillment has become more complex than ever before. Consumer orders are more frequent, consist of many diverse SKUs and offer several options for delivery or in-store pickup, forcing effective, efficient omnichannel operations. To ensure your holiday peak season goes off without a hitch, consider adding automated storage and retrieval systems (AS/RS) to streamline inventory management and accessibility for dramatically increased efficiency.
Shuttle systems offer a fully-automated storage solution to store and retrieve inventory, controlled by software interfaces tailored to exact specifications. Here are five ways AS/RS can make your holiday peak a merry one.
1. Fast access to inventory - During hectic holiday peaks with everything on the line, being able to access product quickly to make same- or next-day delivery commitments is vital. Shuttle solutions provide faster access to inventory compared to manual processes with foot and forklift traffic, enabling more efficient inventory flow and ultimately allowing reduced inventory levels. With inventory carrying costs ranging as high as 40 to 45 percent of overall value per year, AS/RS not only can reduce operational costs but also free additional operational space for other processes during peaks.
2. Better predictability - Manual inventory retrieval processes are not only less efficient, but also expose operations to vulnerabilities of inconsistency. Lapses in product flow can strike during employee turnovers, shift changes, refueling or battery replacements. Shuttle systems offer a more reliable solution for the inventory storage and retrieval process, arming management with more predictability and reliability with which to plan and execute operations integral to a successful peak season.
3. Greater labor productivity - Because order fulfillment during holiday peaks is a race against the clock, optimizing labor is a critical component of success. With lowered inventory levels, fulfillment centers can reduce the staff needed to manage inbound transportation of product into storage. And unlike traditional operator-to-goods picking, AS/RS shuttle systems in fully-automated solutions bring product to pickers - eliminating walk time and enabling employees to spend more time filling orders.
4. Greater storage density - AS/RS systems optimize existing warehouse space by enabling operations to build up - maximizing the use of vertical space - rather than out. Shuttle systems do not need to allow room for pedestrians or vehicles, nor are they limited by the reach of an employee or forklift. Instead, fulfillment warehouses can use taller, narrower storage aisles to access inventory thanks to the shuttles. Saving space comes in especially handy during peaks, as it leaves room for operations to bring in extra labor and house specialized seasonal SKUs or more inventory to maximize throughput and selection.
5. Loss prevention - The 2016 National Retail Security Survey revealed that inventory shrinkage averaged $45.2 billion in total losses. What's more, a University of Florida study found that employee theft from retailers - including warehouse theft - amounted to 45 percent of that inventory shrinkage. With such a significant portion of this theft occurring internally, one option is to reduce the number of manual touchpoints in fulfillment processes. Inventory stored in an AS/RS shuttle solution is inaccessible to employees until its release for order picking operations. The technology tracks exactly what merchandise leaves the AS/RS and how much of it is required, allowing operations to keep a closer eye on its inventory.
The impact of e-commerce and the evolving labor pool continues to affect distribution and fulfillment operations, and holiday peak season magnifies the effect of these forces. When navigating your operation's busiest time of the year, an automated storage and retrieval system is a critical piece of fulfillment technology to maximize throughput and uptime.
To learn about how Honeywell Intelligrated's AS/RS shuttle technologies can enhance your DC's efficiency, click here.
The transformative effect of e-commerce on order fulfillment operations is well known. Rising consumer expectations for convenience and shipping speed have left many operations struggling to keep up. The increased number of direct-to-consumer fulfillment paths threatens to inflate shipping costs and the number of delayed shipments, spurring dissatisfied customers to take their business elsewhere.
But these are not the only forces driving change. Rapid urbanization fueled by flight from suburban areas and small towns to larger urban centers shows no sign of slowing down - especially among millennials with technology preferences that favor e-commerce. Already crowded cities are getting bigger and denser by the month.
This mass migration to urban areas means e-commerce supply chain operations must follow suit, and increased competition for limited space by residential and commercial interests drives up land costs. This, coupled with SKU proliferation and expanding inventory requirements, all conspire to give operations no choice but to optimize the limited space they do have.
Flexibility is key
Urbanization pressures order fulfillment operations to embrace flexibility. That is, the flexibility to optimize existing layouts and handle a wide array of package shapes and sizes, all coming together in a well-oiled e-commerce order fulfillment system to keep orders flowing to the right places at the right time.
A motor driven roller (MDR) conveyor right angle transfer enables such a material handling solution, offering the best payback in facilities with a high concentration of merge and divert operations working in a limited footprint. Using a compact, efficient design, these transfers facilitate a 90-degree change in direction for cases and totes, as well as some polybags.
Polybag handling can present added complexity to systems because of their inherent physical characteristics. Detecting the leading and trailing edge of the bag can be difficult due to inconsistent shapes, and bag corners add additional catch points that can lead to throughput-killing jams. Understanding what your system can handle, in terms of packaging types and the items within, is critical to success. An experienced partner or internal engineering resource can provide the expertise to ensure that equipment can reliably handle polybag-packed e-commerce orders.
Keep up with growth without sacrificing efficiency
As products and packaging types used for home deliveries continue to evolve, vital fulfillment infrastructure like sortation and conveyor systems must adapt. The right MDR transfers can adjust roller and band spacing to accommodate wide varieties of packaging types and sizes. For polybags, this can help minimize catchpoints and risk of jams without the need for margin-crushing modifications.
And as demand grows, best-fit fulfillment workflows change. Goods-to-operator fulfillment maximizes labor productivity and makes the most efficient use of available space to serve growing order volumes. In this workflow, MDR transfer works in tandem with an AS/RS shuttle system to keep inventory flowing smoothly and efficiently.
When not in use, the transfer's run-on-demand technology minimizes wasted energy, resulting in longer equipment life and a fraction of total energy use. For operations already strained by higher land costs, these reductions offer welcome cost savings to minimize overhead and protect margins.
Designed to avoid downtime
With such tight delivery schedules, demanding service level agreements and competition only a click away, unplanned downtime is lethal. But in the event an outage does occur, a swift resolution can mean the difference between repeat business and losing customers. MDR transfers are maintenance-friendly by design and use fewer unique replacement parts, which means operations spend less time on maintenance and less money on replacement parts. Simpler designs with fewer parts also reduce risk of an outage and hasten a resolution in the event that an outage does occur.
For more information on how MDR transfers, conveyors and other sortation solutions can work as part of your e-commerce order fulfillment strategy, contact a Honeywell Intelligrated representative or read the Conquer high-volume e-commerce with goods-to-operator order fulfillment white paper.
As e-commerce titans like Amazon continue to re-shape the retail landscape, traditional brick-and-mortar retailers turn to omnichannel strategies to find a competitive advantage and increase operational efficiency. This includes running e-commerce fulfillment and retail replenishment from the same facility and leveraging stores for near-immediate fulfillment. As this line between physical retail and digital commerce continues to blur, delivering a convenient, consistent and compelling customer experience across all channels becomes paramount.
This final segment of our three-part blog series on zone skipping looks at its impact on omnichannel retail. For a refresher, check out part one on the basics of zone skipping and part two for tips to ensure a proper implementation.
It's an omnichannel world
Competition in modern retail means meeting consumer preferences to research, buy and receive merchandise in the manner of their choosing, whether in store or via direct delivery. These choices have serious consequences for logistics operations, challenging retailers to make the most efficient use of existing inventory and delivery capacity.
From brick-and-mortar to shared quarters
Consolidating supply chain operations to run retail replenishment and e-commerce fulfillment from the same facility is a proven solution to root out redundancy and reduce supply chain costs. And while this approach does present challenges to make the most of warehouse space, increase throughput volume and handle greater complexity, it also provides opportunities to find extra value from retail delivery routes.
Enter zone skipping
Retailers already have trucks running regular deliveries to replenish inventory at brick-and-mortar retail locations. They also have e-commerce orders destined for the same regions. Zone skipping in these omnichannel operations involves sorting e-commerce orders according to region and loading them into gaylords, accompanying existing retail deliveries headed for the same area. This allows retailers to take advantage of latent delivery capacity and avoid redundant shipping costs.
Retail replenishment trucks can deliver pre-sorted e-commerce orders to regional carrier facilities located near the final destination. This reduces the sorting and shipping done by parcel carriers and improves delivery time by getting items as close to the final delivery location as quickly as possible.
Zone skipping can save up to 75 percent per parcel by reducing reliance on parcel carriers for both sortation and transportation. These savings are more crucial than ever, as operations face dimensional weight pricing (DIM) and other pricing pressures from parcel carriers. Assuming a conservative savings estimate of $0.20 per item in shipping costs, multiplied by 200,000 to 500,000 orders per week, operations can generate $40,000 to $100,000 in weekly savings from zone skipping.
In addition to improving profitability, these reduced shipping costs are passed on to consumers, providing a real competitive advantage and potential sales boost. According to the 2016 UPS Pulse of the Online Shopper study, of the more than 90 percent of buyers who reported abandoning shopping carts, at least half cited unexpectedly high shipping costs as the reason for doing so.
This concludes our blog series on zone skipping. For further information on the advantages of zone skipping and how it can benefit your operation, read the Honeywell Intelligrated white paper, Zone skipping strategies to reduce e-commerce shipping costs or contact us.
Challenging market dynamics like limited labor availability and the increasing demands of e-commerce order fulfillment (e-fulfillment) are placing extraordinary pressures on distribution centers, warehouses and fulfillment operations. As businesses invest millions of dollars annually to design, build and operate these facilities, they must also become skilled at quickly identifying when these challenges are impacting customer service levels or chipping away at profit margins.
In our next On The Move webinar - which will take place on Thursday, Oct. 19 at 2 p.m. EDT / 11 a.m. PDT - Luther Webb, Intelligrated's director of operations & solutions consulting, and Mark Steinkamp, Intelligrated's director of solutions development, will explain how companies can identify operational inefficiencies and address them before they impact the bottom line.
Compared to traditional distribution centers (DCs), e-fulfillment centers not only have significantly more orders to fill, but also require more labor - and up to four times the parking spaces as traditional DCs. With so much at stake, and so many resources to manage, maintaining operational efficiency becomes even more critical.
Luther and Mark will begin their webinar by covering the unique challenges these e-fulfillment centers face, including:
- Reducing order cycle times while increasing throughput and accuracy
- Dealing with SKU proliferation and the rise of each-picking scenarios
- Managing inventory availability vs. inventory costs
- Attracting, training and retaining a skilled workforce
To show attendees how to evaluate the effectiveness of their operation, Luther and Mark will discuss the importance of data and trend analysis around key data points, such as: product flow (and bottlenecks); available space; customer complaints and returns; interviews; organizational goals; and facility design capabilities.
Luther and Mark will consolidate all this information into a 10-step approach designed to help operations identify opportunities for improvement today and in the future.
So, if you're ready to learn how to audit operational performance, improve training functions and streamline order fulfillment processes, please join Luther Webb and Mark Steinkamp for the next On The Move webinar on Thursday, Oct. 19 at 2 p.m. EDT / 11 a.m. PDT.