It may seem strange to write about how to prepare for the Christmas seasonal surge in the warehouse so early in the year. But the e-commerce surge can increase order volume by a factor of five or more for some retailers. To prepare for those kinds of volumes, you really do need to begin very early in the year.
One of the biggest challenges associated with retail and B2C is the seasonal surge in orders. The recent push by large online companies as well as retailers makes the problem worse. Mark Dickinson, the head of IT sales at SSI Schaefer, pointed out that when large-scale online retailers open a new fulfillment center it’s not uncommon for the facility to be built with over one million square feet or more. Distribution centers of this magnitude are opening up frequently and are employing three to four thousand workers in nonpeak season. However, that number swells to 25,000 at peak. This increase during holiday season soaks up the available warehouse labor within the local areas; “workers will move for 5 cents more per hour, knowing that each fulfillment center down the road is offering an unrestricted signing bonus as well.”
Both Mr. Dickinson and my colleague Clint Reiser view e-commerce as the primary driver of growth in warehouse automation solutions. In Clint’s Warehouse Automation & Control market study, he reports that retailers and B2C manufacturers are investing in “systems that can efficiently handle a high volume of small, multi-line-item orders. These systems include goods-to-person systems such as shuttles, pick-to-light, and put-to-light. Practitioners are also leveraging and expanding upon existing infrastructure such as the use of conveyance along with the use of put walls, and garment on hanger systems fitted to transport small and light items other than the traditional apparel.”
A Put Wall (Picture from Dematic North America)
It is worth noting that put walls are increasingly being used because this is a process that can handle holiday surge volumes at a relatively low cost. These zones are often added right before the end of year Holiday surge in orders, and then taken down after the season is over. Warehouse management systems that are inherently flexible make it easier to create these new zones and processes.
There is other important functionality a WMS should have to support e-commerce; good waveless functionality is needed. In a traditional WMS, efficiencies are created by dropping a large batch of orders to the floor at the same time. If the truck headed to store number one is arriving at dock door three in an hour, it makes sense to create efficiencies by picking all the orders headed to that store at the same time. This does not work with e-commerce. Mr. Dickinson explained that you need a business rules hierarchy that puts orders into a funnel and can drop a new order at the front of queue depending on priority (based on the delivery date or importance of the customer, for example).
Diego Pantoja-Navajas, the former CEO at the Cloud-based WMS solution LogFire, and now the head of WMS product development at Oracle (Oracle acquired LogFire in December) describes waveless functionality somewhat differently. In his view, e-commerce orders are generally dropped to the floor as they come in. But it is important that the WMS know where workers are located so that a worker in close priority to the product’s storage location can be dispatched to pick that order immediately as they are available in the system.
Mr. Pantoja-Navajas also points to the benefits of a chaotic put-away approach to distribute pickers evenly across picking aisles. In a traditional put-away approach, a particular product whose volumes are too high to support just one put-away location, stores the product in slots adjoining each other increasing the opportunity for aisle congestion. E-commerce requires a hot product to be stored in several slots spread across multiple aisles decreasing aisle congestion. E-commerce environments also typically maintain large assortments of items that are constantly changing, so fixing items to be put-away to specific areas in the warehouse will become expensive and inefficient, hence flexible put-away rules allow for the system to distribute the product across multiple aisles balancing aisle traffic and product category demand.
There are other features in a WMS, and other solutions, that support seasonal surges. I’ll save a discussion of those for a future article. But I’d like to close by reiterating the point I made in the introduction, it is not too early to begin preparing for the seasonal surge in e-commerce orders.