“Here come the bots!”
Wow! This was the title of the presentation I was about to see. I had just joined the company. I had just spent the last few years in retail. I’ve done a lot of research on how to improve efficiency and productivity in online/ecommerce fulfillment distribution centers. And I had endured the agonizing processes and resource challenges of fulfilling ecommerce orders during the holiday season, which is by far the busiest time of year in retail.
So I was very curious to see what strategy the company wanted to pursue with this presentation. I knew from experience that having operators manually push carts up and down the aisles of huge warehouses was inefficient and wasteful in almost every way. I had been working on plans to improve this and I certainly had my own point of view.
At my core, I knew the paradigm had to be one Transport the material to your employees, not to move your employees to the material. But what I saw next fell far short of what I had hoped to see.
The inefficient environment
We had a very large online distribution center with thousands of items stocked on shelves and shelves. To fulfill an online customer order, an employee had to wheel a cart through aisles across the entire warehouse to find all the SKUs that made up a particular customer order.
While the cart size would allow the employee to pick the skus for multiple orders at once, the basic design was that the operator pushes that cart TO THE material, and then when he has filled all the orders on the cart, pushes it the entire cart to a processing station at one end of the warehouse.
In e-commerce, most surveys show that online shoppers want their orders shipped quickly (although they’re not necessarily willing to pay for it). At the same time, your business has the goal of driving sales growth (e-commerce is perhaps the fastest growing business channel in the world) and reducing costs and costs per order, as well as maximizing profits.
In a warehouse fulfillment model where workers push carts TO materials, NONE of these goals are achieved: it takes longer to fill an order, it’s harder to scale operations to meet demand, it’s wasteful, and it’s very , very expensive.
So I was surprised to see that the presentation, titled “Here Come the Bots!” Robots or automation were not involved at all. The company had done exactly what I had experienced…they had employees pushing carts up and down the aisles to manually collect items to fill customer orders.
The presentation and strategy I saw involved nothing more than putting a few humble bells and whistles on the carts to facilitate some incremental process efficiencies while maintaining the same approach of getting employees to the material.
To quantify the extent of the problem, we gave some employees Fitbit devices at the start of their shift so we could track their step counts throughout the day. On a Fitbit device, the default goal is 10,000 steps per day, or about 5 miles. After a little testing, we found that our employees walked more than 20,000 steps in a single 8-hour shift! That’s over 10 miles!
And when you reduce lunch and break time, that means our employees have had to run over 10 miles in a 7-hour period. The Fitbit goal of 10,000 steps was for a full 24-hour day. Whilst our staff may have been getting fit, this reinforced our view that moving staff to material was a highly inefficient way of running an operation.
Impact of Black Friday/Cyber Monday
The problem only gets compounded when you consider the various implications. During the holiday season, including Black Friday/Cyber Monday, businesses can easily see 100%, 200%, and 300% or more volume increases compared to the rest of the year.
In a highly resource-dependent operation, this means that you have to hire many new employees for a short period of time. They need to be trained. They must be preserved. And they need to be productive (in the context of running a process that, at its core, is designed for waste).
In addition, every other company tries to hire many employees at the same time for the holiday season. So if you find, retain, and motivate dramatically more employees, you may need to offer employment incentives, pay higher hourly rates, and pay more overtime and bonuses.
It’s all going to be incredibly expensive. And the customer is not willing to pay for it!
In addition, you must have the necessary capacities to meet all these requirements. During this busy time of year, your volumes can invariably far exceed the already lofty growth forecasts you had planned to support. When the most important factor in adding capacity is your ability to attract, train, and retain significantly more employees in a very short period of time, your ability to add capacity can be strained.
During Black Friday/Cyber Monday, your ecommerce fulfillment process and organization will be stressed and strained to the max. Customers want their orders to be fulfilled just as quickly, if not faster, at this time of year. So a fundamental business process that requires moving your people to material is perhaps the least efficient model you could have.
Waste and waste avoidance!
In lean language, this movement is considered waste. It does not add value to the product nor would it be seen as something the customer is willing to pay for. The goal then is to eliminate the waste!
There are many approaches to enable this paradigm: Move the material to your employees, not the other way around. There are multi-million dollar solutions that require significant automation with ship sorters and material handling systems such as Kiva or Swisslog or other automated storage and retrieval systems.
There are advanced robotic solutions where robots automatically pick and retrieve products from storage bins. Pick-to-light systems can be very effective. Zone picking is a process technique for narrowing down the physical area a worker must cover, and voice picking can be more efficient.
If there is a conveyor belt running in your warehouse, this can limit the freedom of movement of your employees. And ABC goods location (see our Post E-Commerce Fulfillment First Principles (Part 1) – optimize warehouse locations) can make great strides in reducing unnecessary movement in your ecommerce fulfillment setup.
It’s not my intention to list all the different warehouse fulfillment solutions here. There are those that are more or less expensive. In my experience, we have used this paradigm shift very effectively and created an Lleading edgealthough inexpensive, solution to this problem (pCheck out a future post!).
The bottom line is that all of these solutions and many others put you on track to support greater growth and faster delivery at lower cost, fewer capacity constraints, greater ability to scale your operations, and less waste, and less stress!
Although Holiday 2016 is behind us, it’s time to start planning for Holiday 2017 NOW! If you recognize this fundamental problem in your warehousing operation and need to support future growth and increased customer demands, seamlessly expand capacity, lower costs, and reduce waste and resource constraints, this simple paradigm shift in your operations can serve you well.
With this new paradigm, you can begin your business process optimization journey. And again, it doesn’t have to be expensive.
So start now! In any warehouse fulfillment process, work to eliminate the waste created when workers move to material and instead Bring the material to your employees!