As the adage goes, there are two sides to every coin and this sentiment holds true for fulfillment warehouses. They face a big challenge that stems from a huge opportunity—an explosive growth in e-commerce orders. Online sales were already forecasted pre-COVID to grow 12%+ annually in coming years. Now it’s expected to add nearly $100 billion more than previous estimates, every year through 2023. Increased demand caught e-commerce fulfillment warehouses on their heels.
An estimated 80% of fulfillment warehouses haven’t automated any processes and rely on a scarce and unreliable labor pool that’s been further limited by COVID-19. Not only do e-commerce businesses need to digitize and optimize, but brick-and-mortar retailers need to move all of their sales online.
Adding capacity to match demand isn’t simple. Higher demand has a trickle-down effect on warehouse operations, chief among them a need to restructure inventory to accommodate random access to a large number of SKUs. The nature of e-commerce and direct-to-consumer sales makes it difficult, if not impossible, to predict which products are going to be ordered on a daily basis. This added complexity of e-commerce fulfillment plus the avalanche of demand hitting warehouses at the same time make intelligence and digitization a critical first step in upgrading operations.
The two-sided coin comes into play here as well. The good news is that there are endless technology solutions that can make warehouses smarter and more efficient. The challenge is finding the ones that make your warehouse smarter and more efficient.
In the early days, warehouse automation meant massive, fixed systems that required millions of dollars in construction costs, as well as months to years of closures to complete implementation. Today, warehouse automation has come a long way. Systems are flexible, adaptable and more effective than ever before. There are traditional technologies that are adding new capabilities to their legacy systems, like WMSs that are pervasive. There are brand new technologies that deliver never-before-seen features, like autonomous mobile robots (AMRs).
From WMSs vs WESs (warehouse execution systems) to autonomous robots, picking the wrong solution for your business needs can be just as costly as old legacy systems. How do you decide which ones are the right choice for your needs and in what combination? The answer is to clearly define your needs.
This may sound obvious, but it’s easy to get carried away with product features and functionality. The innovation we’re seeing in warehouse process optimization is exciting. But not every feature is going to make a difference in your particular business.
This article will focus on three steps you can take to develop a clear set of needs that will serve as your North Star in the technology selection process.
Know Your Own Metrics
Is your goal to increase fulfillment speed? Is it to increase order accuracy? Is it both? Know what your future goal is, and then work your way back from there. If you want to get orders out to customers faster, you’ll need to calculate how long each step in the fulfillment process—receiving, picking, packout, etc.—currently takes.
This needs to be calculated accurately and holistically. For example, if you only look at average units picked per hour across your pickers, the numbers might be skewed by work stoppages or other disruptions that aren’t commonly encountered. You’ll need to conduct an actual time study to get a true measure.
The same goes for calculating pick rates. This can’t be done in a vacuum. You need to understand the speed of adjacent tasks. Your workers can be picking at very high rates. However, if your packout process can’t keep up, your orders aren’t going out the door any faster. It’s important to look at the flow of materials from entry to exit, find bottlenecks, and adjust resource allocation and utilization.
Establish Your Pace of Change
While Socrates may have said, “Know thyself,” it’s just as important to know your organization. Culture plays a big role in the successful adoption of new technologies. Some cultures want to change very quickly. Others want to do so at a more measured pace.
If you’re adding robots into your facilities, you may want to first integrate digitization and intelligence into your existing operations and labor force to help your teams get the hang of new processes before adding new equipment into the mix. For example, you can implement software solutions that leverage AI to find greater efficiencies in the way your people are currently assigned to tasks and how you interleave the tasks to minimize interdependencies. This can create significant improvements by re-allocating the resources you already have.
You can choose to take your team from 0 to 60 in a few seconds, or you can create a plan that lets them grow accustomed to the acceleration over a longer period of time. There are many technology offerings available now that let you take a phased approach to upgrading, adding incremental improvements with each step.
Find a Technology Solution that Aligns with Your Goals
Given the dynamic nature of e-commerce, one of the most important things you want from a technology vendor is flexibility. We’re living in a time of economic volatility that causes a lot of spikes in demand, and e-commerce has become an integral part of our lives. That means logistics has taken on greater importance and is now a key part of any business strategy.
As you include logistics in your strategic planning process, make sure your technology can accommodate different scenarios. Software should easily integrate with existing systems and even ones that haven’t been created yet. Similarly, equipment should operate and deliver its full capabilities in new facilities or in different zones of existing facilities. The days of bolting down a big automation system that stays in place for 30 years is no longer a viable option.
Today’s new systems have built-in mobility that allows you to implement them for today’s situation and needs, and then scale as business requirements change. For example, autonomous mobile robots (AMRs) can be designed into an existing fulfillment center and then be redeployed and split up into smaller fleets if you later decide to add more microfulfillment centers into your network. Being able to adapt the technology to your space and your people is going to keep you nimble and better able to adapt to changes in the market.
Technology can put you in a position to focus on the opportunity side of the two-sided coin. Choosing the right one is easier when you take the time to accurately measure your current operations, assess the pace of change you want to adopt, and prioritize flexibility in your technology selection. Warehouse optimization systems are key for warehouse managers to ensure the efficiency and productivity of their fulfillment processes, and it’s important to ensure that you find the right one that will fit both current and future needs.
Lior Elazary is co-founder and CEO of inVia Robotics, a provider of e-commerce warehouse automation solutions. He has more than 20 years of experience as an executive in Internet networking, robotics, software development and enterprise architecture businesses. He has a master’s degree in computer science from the University of Southern California (USC) with a specialty focus on artificial intelligence.
