Solving the DC Conundrum: Best Practices for Online Fulfillment

October 27, 2009


By Bruce Welty, CEO, Quiet Logistics

With the ever-increasing bright future of e-commerce taking more and more market share, brick and mortar retailers are faced with an urgency to immediately adapt their operations to online fulfillment in order to compete and survive. Retail store executives are in a quandary on how to best achieve physical online fulfillment (each picking) without disrupting their currently established store order fulfillment (case picking) operations while not appreciably increasing costs.

Instead of the traditional retail distribution center to store fulfillment, online retailers, to be competitive, now must deliver directly to the consumer with greater speed and accuracy at lower handling and shipping costs. Order accuracy has always been an important aspect because if you don't have the right product on the shelf at the right time then the retailer would lose the sale. In the new e-commerce online world, the stakes are much higher. If you don't have the product or mis-pick or mis-ship an order, the retailer now loses the customer. Order fulfillment is directly responsible for that customer experience.

As any distribution center manager will attest, each/unit picking fulfillment is the most physically demanding of all D.C. center operations requiring added handling, packaging and transportation flexibility considerably beyond that of case picking fulfillment. Historically, each picking has been managed by increased labor activity and/or with additional material handling automation escalating costs and complexity.

Up to now, bolted down/fixed steel material handling automation provided only limited success but did not supply the flexibility needed to react to the demands of e-commerce (faster and more accurate each picking at a lower cost). D.C. automation has been mostly based on serial conveyor lines which have been in operation in warehouses for over 100 years and are typically integrated with other automation technologies. Because these components are completely interdependent, if one piece breaks, it usually triggers system failure and work stoppages. These systems are expensive to support and many were replaced (with increased labor activity) in the 1990's (when labor was more available) because of its inflexibility and high maintenance cost.

With D.C. labor availability rapidly diminishing (and costs increasing) and material handling automation not providing the flexibility for the swiftly growing online market place, a new generation of solutions has emerged focused on resolving these issues. New mobile robot material handling technologies combined with new outsourcing business models are enabling unprecedented higher levels of each picking services and product care at lower costs.

Recently, thanks to newly developed artificial intelligence software together with faster (and cheaper) chip processing power, mobile robotic development is on the upswing, creating new and much more flexible material handling solutions. Field proven mobile robots bring the product and work to the picker, significantly increasing productivity and accuracy while eliminating the need for physical labor to solve the each picking problem. These new technologies can reduce labor costs by more than 50 percent while increasing speed and order accuracy. Robot systems take one tenth of the time (over traditional automation) to implement, enabling faster installation and almost immediate up time.

Innovative new outsourcing 3PL companies are emerging that have created a packaged solution combining this new robotic material handling technology with a fully integrated warehouse management system, other appropriate automation technologies and parcel shipping systems. The goals for these new 3PLs are to utilize the latest field proven technologies that will reduce costs, increase each picking speed and order accuracy while providing the highest product care and service levels in the industry. Typically these 3PLs keep their pricing simple and direct - one basic charge for each line shipped.

By outsourcing to this new class of 3PL, brick and mortar retailers do not have to incur the capital expense of purchasing this new robotic equipment along with the project risk of integrating it with warehouse systems and other technology. Newly emerging online e-tailers can now grow as their business takes them and not be limited by their physical distribution capabilities. With the implementation speed of this new automation together with the packaged approach of the 3PLs, increased volume throughput capabilities can be put into operation within a matter of weeks (not the traditional months).

This new era of technology and 3PL are changing the way things have always been done, just in time for this challenging new world of ecommerce.

Bruce Welty is the CEO of Quiet Logistics, Inc., a Third Party Logistics company leveraging automated robotic technology for fulfillment.

About Quiet Logistics
Quiet Logistics, Inc. is the industry's first Third Party Logistics company to deliver a complete outsourced fulfillment solution that leverages the game-changing material handling robotics of Kiva Systems. Quiet Logistics' "One Touch" fulfillment service is an alignment of best-in-class operations experience and a fully integrated technology platform with a simplified business model to improve distribution throughput, accuracy, scalability and flexibility at costs that are 30-50% lower than the competition. For more information on Quiet Logistics and its services, please visit www.quietlogistics.com.