Achieving WORLD CLASS E-Commerce

Flexible materials handling equipment and systems is the name of the game for top E-Commerce companies

“The one thing that people don’t realize about E-Commerce is that it’s all about real-time demand,” says Chris Sang, Founder, Chairman, and CEO of iFulfillment, Inc.

A distribution veteran who cut his teeth in the specialty retail business, Sang for the past several years has worked exclusively in Internet-based distribution. His most recent venture, iFulfillment, is a third party logistics provider who counts among its customers Nordstrom.com and GoldenBooks.

	E-Commerce DCs may not look any different on the outside from a traditional DC, but management must implement special strategies and processes to handle such unique requirements as real-time demand, gift wrapping, and returns.

Given the fact that no two orders are alike and the number and type of stock keeping units (SKUs) in an E-Commerce environment are constantly changing, Sang says that there is little opportunity to take advantage of the strategies traditional DCs employ to achieve order handling efficiencies and economies of scale.

“Traditional DCs have a way of dealing with dimensional variability by consolidating orders into case or pallet quantities,” explains Sang. “In E-Commerce that’s not possible.”

Flexibility is key
So how do top DCs cope with lack of standardization? Sang says that companies need to ensure that they build sufficient flexibility into their handling equipment and processes to han-dle a broad cross section of SKUs and orders. “Otherwise, you’re going to wind up with a tremendous amount of work-arounds, which are going to kill you from a cost perspective,” says Sang.

As an example, Sang describes the pitfalls associated with standardizing on an equipment solution designed to exclusively handle a conveyorable product. “At some point down the road, the business is likely to shift and suddenly the DC is handling items that can’t ride on conveyors,” says Sang. “Those items will all have to be handled on an exception basis, which costs time and money.”

Bottom line, says John Yacka, a systems designer with the consulting company Gross & Associates, is that the E-Commerce environment really mandates different processes for different types of business. “It’s not uncommon to see several different types of order processing strategies within a single facility,” says Yacka.

As an illustration, Yacka points to the E-Commerce DC for handling books and entertainment items. The fastest-moving items to fulfill consumer orders are picked from multiple lanes of pick-to-light rack. Retail orders are batch-picked in a special put-to-light system, where items are picked into storage locations rather than from them. Slower-moving items, which account for a small percentage of the activity but consist of over 95% of the total SKU mix, are picked from economical storage shelving.

“By setting up DC operations in this way,” says Yacka, “Warehouse management is ensuring that each order is handled in the quickest, most economical manner.” Yacka adds that it’s a concept that top tradi-tional DCs pioneered, and that E-Commerce DCs have been quick to embrace.

For the most part, these flexible picking areas are comprised of proven, effective materials handling equipment and systems, including flow rack, storage shelving, pallet rack, take-away conveyor, and returnable totes and containers. A combination of industrial trucks, including counterbalanced lift trucks and pallet jacks, help to streamline the flow of orders (see layout).

“From an equipment perspective, you’re not going to see a whole lot that is different in a world-class E-Commerce facility versus a world-class traditional DC,” says Yacka.

“They are all applying basic, proven materials handling equipment and systems to their particular business environments.”

A WMS system is an effective tool for helping E-Commerce management optimize picking operations, by monitoring operations and reassigning work flow on the fly. It’s also helpful in monitoring the SKU mix and activity levels, reassigning storage locations to improve picking throughput and maximize use of the cube. And software can help manage the complexities of E-Commerce distribution (see layout).

Software also plays a critical role in helping E-Commerce facilities manage special servic-es such as gift wrapping and order expediting, as well as returns. “Management needs to be able to discern different product and order profiles, and make decisions on the fly on whether they will be handled differently,” says Sang. “For example, you may want the capability of kitting orders in advance that require gift wrapping.”

This kind of flexibility even extends to the dock area, as shown in the DC for health and beauty aids, where dock levelers can aid E-Commerce DCs that are often confronted by an array of delivery vehicles. Even at facilities where the traffic is standardized on a particular trailer type, installing a dock leveler at one door builds in the flexibility to accommodate the occasional non-standard vehicle.

In the end, being a top E-Commerce DC is a little bit like stealing second while keeping your feet just partway on first. “Unfortunately, companies are having to plan their DCs with out really knowing what their requirements will be in two to three years,” says Sang. “The important thing is to remain flexible, and learn to manage with shorter planning horizons.”

Facility Layouts