10 Ways to Achieve E-Commerce Distribution Success, Part 3 of 10 - Determine Overall Pick Strategy

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In this ten-part blog series I’m covering four basic, three intermediate and three advanced tactics that will help your firm achieve e-commerce distribution success. This blog, Part 3 will focus on the third Basic Tactic, Determine an Overall Pick Strategy.

 

Tactic #3: Determine Overall Pick Strategy

 

The decision of an overall pick strategy should not be taken lightly. Companies that are in their infancy with e-commerce will likely not have the piece-pick volumes to justify expensive material handling equipment. It is advisable, however, to perform some long range planning and have some sense of what strategy will need to be employed once volumes increase.

 

Vehicle-Based Systems 

Many companies may already be performing this type of picking. They may be using electric pallet-jacks for floor-level picking or “man-up” order-pickers for multi-level picking. Neither of these vehicles lends itself particularly well to picking low-cube items to discrete orders. Manual picking carts, while not likely to win any technological awards, are the lynchpin of many piece-pick distribution centers, even those with high volumes of business. A key to effective cart picking is using the right cart design. There are seemingly infinite configurations of shelves to suit every picking need. It may be wise to purchase a few different designs as “prototypes” to test out in the warehouse before making a larger purchase.

 Advantages:

 Inexpensive

•  Flexible
•  Easy to add additional labor at peak periods

Disadvantages:

•  Potential ergonomic issues
•  Passing batches between zones is harder than with conveyors
•  May be long travel distances to packing area

 

Conveyor-Based Systems

 

For large distribution centers with multiple pick zones, conveyor-based systems can be an effective means of fulfilling orders. When goods need to be conveyed a long distance to a shipping area, or when they must be routed to many different zones for picks by a variety of workers, conveyors can be a significant labor saver. Conveyor systems are not inexpensive however, and careful thought must go into their design. Systems should be designed with scalability in mind. Additional levels of a pick module might need to be added in the future, and the support structure should be designed to support this if needed. Generally speaking, conveyor-based systems evolve relatively well over time. Additional labor can usually be added fairly easily, and the system can be lengthened or additional levels can be added in the future.

 

Advantages:

•  Well suited for large distribution centers with multiple zones
•  Ties into automated packing systems well
•  Operators can focus on picking, not transporting
•  Can usually add labor in peak periods

Disadvantages:

•  High upfront cost
•  Less flexible than carts
•  Not all SKUs are conveyable

 

Goods-to-Picker System

 

There are a wide variety of goods to picker systems available, including vertical and horizontal carousels, vertical lift modules, automated storage & retrieval systems (AS/RS), and robotic picking systems. Each has their relative merits, depending on the type of goods being picked and the outbound velocity patterns. Goods-to-picker systems offer the fastest pick rates of all three picking strategies, but are also the least flexible if business needs change. A potential middle ground exists now with the advent of robotic picking systems. These systems involve armies of robots bringing shelving pods to pickers and then putting them away again after picking is done. (In the third segment of this blog we’ll discuss each type of goods-to-picker systems in more detail.)

 

Advantages

•  Ultra-high pick rates
•  Excellent space utilization

Disadvantages

•  High upfront cost
•  Very inflexible if needs change
•  System efficiency is highly dependent on the capabilities of the software controlling it.

 

Related Content: “Distribution Center Design Series, Part II – Developing a Throughput Design Tool and Determining a Pick Strategy.”

 In the next segment of this ten-part series we’ll look at the final Basic Tactic (#4), Determine Optimal Pick Methodology.

10 Ways to Achieve E-Commerce Distribution Success, Part 2 of 10 - Set Up Effective Replenishment

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In this ten-part blog series I’m covering four basic, three intermediate, and three advanced tactics that will help your firm achieve e-commerce distribution success. This blog, Part 2, will focus on the second of the four Basic Tactics: Set up Effective Replenishment.

 

Tactic #2: Set Up Effective Replenishment, a Basic Tactic

Eventually, the supply of goods in the forward pick area will be exhausted. Rather than having pickers be caught by surprise when this happens, effective rules must be set up for controlled replenishment.

 

Types of Replenishment

A. Visual Replenishment: This may be the only system possible with a primitive WMS system. At certain times, designated replenishment workers conduct a visual survey of each bin, and replenish the ones which are getting empty. This method can be haphazard, as additional work is required to visually survey each bin, and notations must be made as to replenishment levels. Furthermore, if demand for a SKU is exceptionally heavy, the bin may still be depleted before a replenishment can take place.

B. Min/Max Replenishment: This system involves using the WMS or inventory control system to trigger a replenishment when the bin is depleted below a pre-set minimum level. To be most effective, each SKU or SKU family should have a different pre-set minimum, based on demand and cube.

C. Demand-Based Replenishment: Both of the above systems are predicated on the assumption that demand will follow certain patterns. Both systems can fail to prevent a bin-level stock-out if demand is unusually heavy for certain SKUs. Demand-based replenishment proactively looks at SKU demand for a given day or shift, and preemptively triggers a replenishment for SKUs with extra-heavy demand.

D. Hot Replenishment: Even the best of systems will occasionally experience an unexpected shortage due to inventory inaccuracy and other imperfections. When this happens, it is helpful if pickers can trigger an automatic replenishment of the shorted SKU to correct the problem.

E. Top-Off Replenishment: At slow times during the day, bins can be proactively “topped off” to their maximum levels to get ahead of schedule. This can be done visually or with system-driven routines.

 

The Importance of Replenishment Synchronization

More advanced forms of replenishment require close synchronization of work between pickers and replenishment workers. For example, decisions must be made as to what event will actually trigger a minimum-quantity replenishment. Will the replenishment be ordered at the exact moment when the bin is depleted below minimum levels? Or will the replenishment occur at the moment when an order is waved for picking which is expected to eventually deplete the bin below minimum? If the replenishment occurs before the bin is actually depleted, the new product being brought in may not fit in the designated bin. If the replenishment occurs too late, then the bin may be out of product when a picker arrives. The same situation can occur if a demand-based replenishment occurs too early.

One way of rectifying this is to allow the same SKU to have multiple locations even within the forward pick area. At the same time, a certain percentage of bins are intentionally left empty when this area is slotted. If a replenishment is performed which will over-fill the primary bin, then the product is instead deposited in an empty bin, which becomes a secondary location for that SKU. The original primary location can then be picked to empty, and is added to the queue of available bins.

 

A Word of Caution…

Many WMS systems struggle mightily with the concept of multiple locations for the same SKU in a single zone, and cannot manage the replenishment logic. A simple method for dealing with bin overages is to simply have an informal area either overhead or on the floor adjacent to the bins to allow overflow product to be placed. The WMS “thinks” the product is all in the primary pick location, but pickers must be alert to check these overflow areas for product from time to time. Related content, Whitepaper: “Selecting the Right WMS.”

In the next segment of this ten-part series we’ll look at Basic Tactic #3, Determine an Overall Pick Strategy.

 

10 Ways to Achieve E-Commerce Distribution Success, Part 1 of 10 – Create a Forward Pick Area

Under increasing pressure to work faster, better, and smarter in today’s omni-channel and e-commerce business environment, companies need help getting their distribution operations up to speed with customer demands and expectations. To help, I’ve identified 10 key tactics that successful companies are employing in order to make a graceful transition to higher levels of e-commerce in the distribution center.

In this ten-part blog series, I’ll cover four basic, three intermediate and three advanced tactics that will help your firm achieve e-commerce distribution success.

 

Basic Tactics

1. Create a Forward Pick Area

2. Setup Effective Replenishment

3. Determine Overall Pick Strategy

4. Determine the Optimal Pick Methodology

 

Intermediate Tactics

5. Practice Real-Time Warehousing

6. Optimize Packing

7. Manage Parcel Shipments Effectively

 

Advanced Tactics

8. Pick to Shipping Container

9. Employ Goods-to-Picker Systems

10. Improve Wave Management

 

This blog, Part I will focus on the first of the four Basic Tactics, Create a Forward Pick Area.

 

Tactic #1: Create a Forward Pick Area, a Basic Tactic

A forward pick area is a zone in the warehouse that contains a small amount of a large number of SKUs. The goal of creating this area is to increase SKU-density per linear-foot, and allow multiple picks to be performed with a minimal amount of travel. The figure below illustrates the extent to which walking can be reduced by implementing this strategy.

 

 

 

 

 

 

 

 

 

Without a forward pick area, where unit picking is done from broken cases stored in pallet rack, a picker would need to travel 32 feet to be able to pick 8 SKUs. Because such a large amount of each SKU is stored in the pick zone (an entire pallet of each SKU), the picker must walk past large reserve supplies of product to pick a relatively small amount of goods.

In a forward pick area, a small supply (one month’s usage for instance) of each SKU is selected for the pick zone. Rather than being stored in pallet rack, these SKUs are stored in more suitable mediums such as carton flow rack or static shelving. In carton flow rack, for instance, approximately four (4) cartons of each SKU can be stored in a single lane of carton flow (assuming a twelve-inch square carton and 48” deep carton-flow). If the carton-flow is configured eight lanes wide by four lanes tall, then approximately 32 SKUs can be stored in eight lineal feet of aisle. This is a sixteen-fold increase in SKU density. Rather than walking thirty-two feet, the same 8 SKUs can be picked by walking eight feet.

 

Tips for Setting up A Forward Pick Area

• Don’t try to put every SKU here: Select the SKUs which are most frequently used for e-commerce. Very slow movers and very fast movers might not belong here.
• Use the right storage medium: Determine the optimal supply of goods to keep in this zone based on days of usage. Then determine how many cubic inches of space will be occupied by this target supply of each SKU. Once this factor is known, then appropriate storage mediums can be chosen. Items with low cubic velocity can be stored in static shelving. Medium cubic-density items can be stored in carton flow rack. Larger density items can be stored in decked pallet rack, full pallets, or even pallet-flow rack.
• Reconfigure your WMS: Your company’s Warehouse Management Software (WMS) system will need to be configured to allow for multiple zones in the warehouse, and to direct certain types of picking to certain zones. The same SKU will likely exist in the forward pick area in a small quantity, as well as in a reserve location where a larger supply is held. If full cases of product are required for an order, the WMS will likely need to direct the picker to the reserve location rather than depleting a significant amount of product from the forward pick area. Most modern WMS systems can accommodate this, but certain legacy systems may struggle with the concept of the same SKU residing in multiple bins. Work-arounds in the WMS may need to be created to allow this bin system. Related content, Whitepaper: “Selecting the Right WMS.”
• Re-profile frequently: As e-commerce ramps up, the target days-on-hand for the forward pick area may need to be adjusted, and certain SKUs may need to be shifted to other storage mediums based on changing velocity. Failure to re-profile will cause efficiency gains to be eroded.

In the next segment of this ten-part series we’ll look at Basic Tactic #2, Set Up Effective Replenishment.