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Online Retail Warehousing – Are You Ready For Christmas (2017!)?

christmastreeAs we are now well into the vital final quarter of 2016, retailers’ warehouses are operating at full tilt to fulfil web orders and, for those companies that still have them, to keep the stores topped up.

We can be sure that when the dust has settled, some companies will have struggled to maintain service levels on web orders. So, once the January sales are over, what areas in logistics should retailers look to review in order to make 2017 a bit easier, or at least no more difficult than 2016?

Reviewing warehouse layout, processes, systems and organisation is worthwhile in most businesses every 3 – 5 years, depending on the pace of change. However, for online retailers this cycle may be shorter as growth rates of 20 – 40% are common, meaning this year’s warehouse operation may simply not stand up to next years’ volumes.

Ask yourself what your storage and throughput needs will be for next year? Will growth be mainly from a similar SKU range, or will the range grow as well as number of orders? Do the new SKUs look like the old ones, or are larger or more difficult to handle / package lines entering the range? What obsolete / excess stock remains after the busy period? Is there a clear plan to sell this off or dispose of it before the pressure mounts once again?

Understanding whether your warehouse has sufficient space requires some serious thought and, ideally this should be approached in a structured way and supported by data analysis. Something many young businesses in particular do not address soon enough is the need to have accurate dimensional data for products. This information can be hugely useful in optimising 3D space utilisation within the warehouse, revealing hidden growth capacity. It also gives more options around efficient process design e.g. when knowing order cube can help when combining orders for picking, and even allow box selection in advance of picking.

Does your Warehouse Management System (WMS) offer the functionality you need to implement efficient processes? There is a recent trend towards bolt-on WMS modules to accounting and ERP systems but, while not ruling these out as a stepping stone, for online retailers needing more sophisticated functionality it’s usually more appropriate to look for a dedicated WMS system. Integration these days back to ERP is easier than in the past, and a new breed of low / no capital cost SAAS WMS systems have changed the market, making the step to WMS much simpler.

All the processes in the warehouse can have an impact on efficiency, capacity and hence customer service.

Getting goods-in and put-away right will ensure that when you go to pick goods they are where you expect to find them. Bulk storage should be differentiated from picking locations within the system. Locations should be clearly delineated with a single SKU stored in each. SKUs and locations should be clearly identified (e.g. barcodes).

Replenishment of pick-faces is a tricky conundrum that requires analysis and, sometimes, an element of trial and error to get right. This is a vital area for good WMS functionality.

Order Picking can almost always be improved – pick more orders at once, with less paper and optimise order combination and pick-walk routing to reduce travel time. Separate single-line orders from multi-line orders.

The packing process for single-line orders in particular should be super-efficient. Scan the item, the system should identify the highest priority order for despatch and print the label and despatch note accordingly. Put the goods in the bag or box with the paperwork, stick the label, close and push away to a takeaway conveyor. Very impressive productivity rates can be achieved.

Marshalling and Despatch can be designed efficiently with conveyor taking the finished orders away to be automatically or manually sorted by carrier service before being placed in the relevant cage or pallet. Carrier selection is important too, too many carriers will reduce a retailer’s leverage and create chaos in the marshalling area, while too few could risk putting all your eggs in one basket when difficulties start to arise. Software is available to give a rules based carrier selection once the pool of carriers in use has been defined.

Changes to layout, equipment, systems, processes, carrier services and management structures will take time. Getting a proper evidence based analysis, perhaps with the aid of a logistics consultant, with help to provide a road-map to success. But a key success factor is to start this journey as soon as possible – peak 2017 will be here before you know it!

Image: Creative Commons image source

This post was written and supplied on behalf of Go Supply Chain, experts in logistics and supply chain management.

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