Rapidly-increasing customer expectations are creating a challenging fulfillment landscape. E-commerce order volumes are three times higher than the retail industry as a whole. Consumers want greater product variety, creating larger and more volatile inventories, and they expect fast - and free - delivery. Mass urbanization adds additional challenges by shrinking available space and making prime locations more expensive.
These demands are compounded by a shrinking labor pool, placing upward pressure on wages. U.S. warehouses currently face 600,000 unfilled jobs and a 25% turnover rate. The cost of finding and training a replacement can easily reach 25% of a lost worker's salary - not to mention lost productivity, stress on other associates while a position is being filled, training time and reduced efficiency during onboarding. In an environment like this you need to make the best use of the valuable labor you have, and keep them sufficiently engaged so they aren't tempted to jump ship.
Automation and fulfillment technologies can help you achieve both of these goals by shifting your picking workflow from the traditional operator-to-goods (OTG) model to goods-to-operator (GTO) fulfillment.
The operator-to-goods workflow can be compared to shopping in a supermarket. Workers currently spend up to half their time walking between pick locations before picking. Adding more workers offers only diminishing returns as overcrowding and aisle congestion creates higher cycle times. The benefits of low capital investment are quickly lost to high operating costs, which are increasingly unsustainable in today's competitive market.
Costly walk time is completely eliminated in the goods-to-operator fulfillment model, which uses automation to retrieve inventory and deliver it to employees. Think of the carousels that bring clothing directly to the worker at the front of a dry cleaner and you have the basic idea behind GTO.
The GTO workflow tackles the continual problem of souring labor by enabling significantly higher pick rates, which reduces overall labor requirements. GTO facilities maintain high efficiency as order volumes rise - when demand spikes require boosting the system's capacity at a moment's notice. Workers also reap the benefits of improved ergonomics, higher safety, increased focus and greater long-term productivity.
While GTO systems require more capital investment, their operational benefits and lower operating costs drive real long-term savings. More orders are fulfilled with greater accuracy in less time, using fewer employees.
Automated storage and retrieval system (AS/RS) shuttles are the key to the GTO model. They enable:
- Greater storage density
- More storage capacity
- Layout flexibility
- Easier scalability
- Quicker access to inventory to feed downstream processes
Shuttles deliver these benefits by retrieving inventory in cartons, totes, cases or other storage media from narrow aisles. End-of-aisle lifts enable shuttles to travel between rows, and multiple shuttles can operate in the same row to increase throughput capability. Compared to other AS/RS solutions, shuttles offer the most efficient way to satisfy the growing demands of e-commerce distribution.
While AS/RS is a big investment, the current industry environment and the ROI benefits like these justify adoption more quickly:
1. Ease of finding, training and retaining labor
2. Reduced operating costs
3. Deferred need to invest in new facilities
4. Increased throughput
View the full webinar to learn additional details on how GTO systems driven by AS/RS shuttles can help you increase throughput by 500% or more, and overcome fulfillment labor challenges.
To meet consumer demand for more convenient delivery options, many retailers have adopted the buy online and pick-up-in-store (BOPIS, or "click-and-collect") order fulfillment model. Depending on your service level agreement (SLA), customers expect orders to be ready for pickup usually within 1-3 hours. Unfortunately, many retailers make this promise without first having the in-store workflows in place to keep it. And, by turning a potential customer convenience into a frustration, their first missed SLA might be their last.
Another common "click-and-collect" mistake retailers make is setting the SLA time too long and driving the customer to abandon the cart and possibly purchase from a competitor.
So, if you're thinking about offering click-and-collect to your customers, it's important to be prepared for the associated order fulfillment challenges. What follows are five keys to ensuring a successful consumer experience, and five ways our Store Solutions can help.
1. Plan the perfect pick route - Picking products in a retail store can be a lot like trying to find your way through a labyrinth: it's important to choose the most efficient pick path for every order, every time. What you need is a system that batches orders to create optimal routes for picking orders in a steady flow. Store Solutions plans the most optimized pick route and directs store associates along that path; i.e., no more doubling back for missed items.
2. Determine order fulfillment cycle time - If you don't know how long it's going to take to fulfill an order, there's really no way to consistently meet SLAs. Even before a worker begins the pick process, Store Solutions accurately determines an order's cycle time. This adds predictability and certainty to the SLA expectation by estimating how long it will take to complete each order.
3. Drive productivity and accuracy - Workers who have well-defined pick paths will not only know how long it should take to pick a specific order, but will also complete the task at hand with fewer errors. By providing optimized pick planning, performance expectations and item picking validation, Store Solutions helps drive worker productivity and accuracy on every order.
4. Allocate in-store resources - So, now that you're meeting BOPIS SLAs, are your everyday, in-store customers still receiving the service levels they've come to expect? Store Solutions provides the labor management tools to plan accordingly and effectively allocate resources to cover all your customer service bases. Labor planning is optimized to not disrupt other store activities and customer needs while filling orders.
5. Gather transactional data - Now that you've effectively solved the click-and-collect order fulfillment problem, there's an opportunity to take efficiencies to the next level. Store Solutions allows you to continuously fine-tune picking processes and worker performance by gathering valuable transactional data, such as: travel time and distance; planned pick time vs. actual pick time; path deviation, incorrect product locations and dwell times at product locations.
By following these steps, Store Solutions can help you predictably and efficiently meet click-and-collect SLAs - and even shorten them for an additional competitive advantage. To learn how you can deploy Store Solutions in your retail outlet, please visit the Store Solutions section of our website.
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.
For years, brick-and-mortar retailers have carved out their niche by providing excellent in-store customer service. But for those now entering the e-commerce fulfillment arena - and providing customers with the option to buy online and pick up in stores (BOPIS) - the challenge of preserving their hard-earned reputation just got bigger.
To say that online customers are demanding is an understatement. One order error is often all it takes for online shoppers to permanently take their business elsewhere. Retailers risk not only losing their online customers, but also eroding the loyalty of their existing clientele.
There's no question that e-tail giants have raised the bar for e-commerce fulfillment. Today's consumers expect nothing less than 100 percent order and inventory accuracy. According to a 2015 study by IDC, multichannel shoppers are 30 percent more profitable over the lifetime of the customer than traditional shoppers, making the potential impact of getting orders wrong even greater. Here are a few online customer characteristics to keep in mind when considering their importance to your business:
- They are less loyal than traditional customers
- They expect fast delivery time, and will jump to a competitor if the predicted delivery time is too long
- They are very price-conscious and can perform price comparisons quickly at no cost
- They expect a flawless customer experience at every touch point, or they will choose another retailer
Atoning for order mistakes can also cut into retailer profitability. Let's examine an order pickup scenario that is more common than it should be. An online customer shopping for a tool set confirms that the item he's looking for is available at a local home improvement store and will be ready in 2 hours. Once at the store, the shopper discovers that the order was 'shorted' the tool set, as there is a disconnect between what the online system thinks is on the shelf and what is actually on the shelf. To make up for the inventory mix-up, the store manager grants the shopper a discount on a larger tool set - making it even cheaper than the original item and reducing or eliminating the profit on the item.
Let's add up the full costs of this botched transaction: the time the store associate searched for the item; the discounted price of the more premium tool set; and the loss of confidence by a customer who has many other retailer options.
So how can retailers fix this problem? By combining a voice-based task engine with labor management software, retailers can gain visibility to inventories on hand and add efficiency to all in-store fulfillment processes. By checking the SKUs for each item picked or put away as item movement occurs, there is greater synchronization between the online inventory and the physical inventory, in real time.
Honeywell Intelligrated's Store Solutions is designed to do just that. With Store Solutions, retailers can validate the activity of each SKU with every transaction - whether that's stocking, picking or returns - resulting in a view of actual items in inventory that can drive order accuracy levels to as high as 99 percent. The benefits of meeting online customer expectations are gaining their all-important loyalty and securing their repeat business. And with the efficient management of labor, retailers can add predictability to all in-store order fulfillment processes.
To learn how Honeywell Intelligrated combines voice and LMS to help retailers drive order fulfillment accuracies, please visit the Store Solutions section of our website.
Whether your DC relies on operator-to-goods batch-picking, zone-picking processes or an automated storage and retrieval system (ASRS), put walls drive order fulfillment efficiency by providing convenient demand consolidation points. But exactly where and how put walls should be integrated can vary widely, depending on the needs of your operation.
Typically, the upstream picking or sortation method used in a facility will determine the most efficient way to utilize a put wall. Here are four of the most common scenarios, organized by the level of throughput they provide.
This scenario minimizes picking execution by allowing pickers to aggregate demand in batches. For example, 10 units might be picked, then distributed to 10 different put wall cubbies. Case picking, where cases of one SKU are picked and distributed to multiple orders, is enabled in the same way.
In facilities with designated product zones, this scenario allows batch or "eaches" picking to take place in each zone. Pickers send totes from their zones to the put wall, where items are then distributed and consolidated by the operator. While still a relatively simple process, picking efficiencies are maximized by breaking order line items into individual zone-picking tasks.
3. Mechanized picking
In this highly efficient scenario, picking is handled by automated storage and retrieval systems, shuttle, carousel or mini-load automation technologies, minimizing the amount of operator movement required. For example, if 25 percent of a retailer's SKUs come from an AS/RS system, these items are automatically batch-picked as needed and delivered to the put wall.
Put walls can also be integrated into the sortation automation process, allowing sorted goods to be conveyed to the designated put wall station.
4. Cross-dock (receiving to order fulfillment)
To expedite delivery of high-demand products, put walls can be deployed in the cross-dock receiving process. In this scenario, items are taken out of cases and distributed directly to the put wall. Orders are conveyed to a pack-out station once demand is filled at the put wall.
Most of today's put walls are designed with fixed, uniform cubby sizes. The next generation of put wall technology will enable customizable configurations to address the challenges of SKU proliferation and changing product and order profiles.
By combining the ability to customize put wall cubby sizes (hardware) with user-friendly programming (software), integrated put wall and light solutions give operators the ability to modify cubby sizes to accommodate varying product and order profiles in the same put wall.
Intelligrated is leading the development of these customizable put wall solutions. With user-friendly software that automatically configures the light-directed confirmations of the cubby sizes, our modular put walls allow DC managers to expand their operations without having to do major material rework to their facilities.
To learn more about how Intelligrated's enabling put wall technologies can enhance your DC's efficiency, click here.