Super-fast Fulfillment
By Merrill DouglasShare on facebook
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When it comes to ASAP, quick-thinking shippers redefine what's possible.
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In a world where everyone wants everything yesterday, long lead times are a luxury most shippers can't afford. Amazon continues to set the standard for the "fast" in fast fulfillment, promising to deliver the goods in as little as one hour to customers who pay for the privilege (see sidebar, p. 44). Few companies push the odometer that hard, but many are deploying strategies to speed product to customers as soon as possible. Many of those strategies begin in the warehouse.
Here's a look at what some shippers are doing to turbocharge their fulfillment operations.
WARBURTONS: FRESH BAKED AND FAST MOVING
When your product emerges hot from the oven each day, speed to market is crucial. That's why Warburtons, the United Kingdom's largest bakery brand, uses route optimization and vehicle tracking technology to ensure its products arrive on customers' store shelves according to schedule.
"We have a fast-moving supply chain," says Jim Norton, distribution planning manager atWarburtons in Bolton, U.K. "To produce products that are fresh for customers the next day, we have to start manufacturing before orders are confirmed, which results in a dynamic route to market."
On-time delivery is a critical customer service metric for Warburtons. "We have to get product on the shelves before people want to buy it," Norton says.
Warburtons' distribution network encompasses 24 locations across England and Scotland; 11 of those are production facilities with distribution centers (DCs) attached. The other 13 are freestanding DCs. Warburtons' trucks move product among the facilities, and from the DCs to customers' retail stores.
Since 2005, Warburtons has used Paragon Software Systems' Multi-Depot optimization software to plan efficient delivery routes. (Paragon is based in Dorking, U.K., with a U.S. office in Frisco, Texas.) In 2011, Warburtons began installing GPS-based tracking and communications units from Navman Wireless, Glenview, Ill., on its 800 trucks. Paragon'sFleet Controller software connects the Navman units to the route optimization system, letting managers see how well drivers are following their routes and hitting their delivery targets.
The software resides on a server in Warburtons' headquarters. Managers there and in the DC use the technology to monitor the progress of deliveries in real time. When a problem occurs, this visibility allows for an immediate response.
"If we're suffering delays, we might choose to reroute a driver," Norton says. If a truck breaks down, a manager can dispatch other drivers in the area to pick up its product and make its deliveries. "In the past, we probably would have waited until the vehicles came back to the depot before sending them out again," he adds.
Data from the Navman units helps Warburtons design better delivery routes for the future. "We can easily transfer all the data we collect to our strategic Paragon system for off-line planning—what-ifs and other kinds of scenarios," Norton says.
Warburtons finished rolling out the Navman system to its entire fleet in 2014. Working in conjunction with Paragon's software, the onboard units have helped the company fulfill customers' orders faster and more efficiently. "We've improved on-time delivery over the past year by between five and 10 percent," Norton says.
MSC INDUSTRIAL SUPPLY: OUTSIDE THE BOX ON BOXES
MSC Industrial Supply puts such a premium on speed, it promises same-day shipping on all orders placed by 8 p.m. EST.
With that guarantee, fast operations are crucial for MSC, a distributor of products for metalworking and maintenance, repair, and operations (MRO), based in Melville, N.Y. Among its fast-fulfillment strategies is an automated packaging optimization solution, which MSC implemented in 2011 in one of its DCs near Harrisburg, Pa.
MSC sells nearly one million stockkeeping units (SKUs), which makes packaging a challenge. When packing an order, an associate used to choose from among approximately 27 different box sizes. Box size matters because carriers price package shipments by dimension as well as weight.
"We had a huge baker's cart with all the different box sizes," recalls Jeff Reagan, MSC's vice president of supply chain engineering and acquisition integration. Choosing the right box was a matter of trial and error. Once associates made a decision and packed the product, they performed several other steps—inserting marketing materials and a comment card, adding dunnage, sealing the box, and printing and attaching a packing slip.
Hoping to boost productivity, better protect its product in transit, and reduce dunnage, MSC worked with its supply chain consultant, Fortna, based in West Reading, Pa., and the French warehouse automation company Savoye. Together, they developed a custom-made, automated packaging system.
Today, a packer chooses from among just six styles of half-box—small, medium, or large, and either short or tall. With the product inside, the box moves on a conveyor to a sorting system, which sends small boxes in one direction, medium ones in a second, and large ones in a third.
From there, machines scan a barcode on each box to get details about the order, add collateral and one air pillow, cut the box to the precise height needed, and then add and adhere a carton top. "When the box comes out the other side, the system does a top application of the shipping label and a side or top application of the packing slip," Reagan says.
The system has boosted packaging productivity by 10 percent or more, Reagan says.
SUNSTAR: THROUGHPUT AUTOMATION SHINES
Cutting fulfillment time was an important goal when Sunstar, a manufacturer of oral care and dental supply products, worked with Numina Group to automate a new manufacturing and distribution facility in Schaumburg, Ill.
The DC went live in July 2015, says Dan Hanrahan, chief operating officer of Numina Group, in Woodridge, Ill.
Among other components, the automation solution that Numina Group designed and implemented for Sunstar includes: voice-directed picking; hands-free barcode scanning; an automated conveyor system; barcode-based order routing; and in-line systems for weighing packed cartons, checking their dimensions, and printing and applying labels. The system uses Numina's warehouse execution and control software (WCS), the Real-time Distribution System, to connect the materials handling equipment to warehouse management software within Sunstar's enterprise resource planning system.
That warehouse management module was good at keeping track of inventory. "But Sunstar didn't have sophisticated picking automation," Hanrahan says.
For example, after picking many individual items for an order, a worker used to carry a full tote to a packing station. There, a packer would determine the best-sized shipping carton to use, and then figure out how to fit a mix of cartons and single items into that box.
Today, the WCS releases waves of orders to a voice-directed picking system, which tells the picker what products to retrieve, from which locations. It also chooses the best-sized shipping carton, and instructs the operator on how to pick items directly to that box, as a conveyor routes the carton from pick zone to pick zone.
Next, a conveyor takes the carton through an in-line scanning and weighing system. That technology confirms that the order is correct, based on its weight. When the carton moves to the packing area, an operator inserts a packing slip, plus dunnage, if needed. Another in-line weighing and dimensioning system captures data needed to print a shipping manifest, and the carton is ready to go.
Automation in the new facility has cut the time it takes to process orders in half. "Sunstar is doing 100 percent additional throughput with equal labor," Hanrahan says.
FETCH ROBOTICS: OPTIMIZING HUMAN POWER
One of the more striking variations on warehouse automation is the robot. Amazon placed a big bet on robots in 2012 when it acquired manufacturer Kiva Systems, renaming the new business unit Amazon Robotics. Amazon uses Kiva robots to transport racks of merchandise to human pickers, speeding operations in the e-commerce giant's fulfillment centers.
Among other companies looking to deploy autonomous mobile machines for fast fulfillment is Fetch Robotics, based in San Jose, Calif. Fetch is working with several potential customers to test two models, named "Freight" and "Fetch."
The units are designed, in part, to cut the time pickers spend walking back and forth in a warehouse. "When workers are taking goods from one place in the warehouse to somewhere else, they're underutilized," says Melonee Wise, CEO of Fetch Robotics. Robots let human workers concentrate on more valuable tasks.
In one application, called Follow Pick, Freight follows human pickers equipped with an electronic or paper pick list. Freight carries a tote, which the pickers fill with product. "Once they're done with the pick, they can send that robot away, and a new robot will be automatically deployed to them," Wise says.
In the second solution, Fetch and Freight, a warehouse deploys a team of Fetch robots to pick items, each within a certain zone. Freight robots move among them, collecting filled totes. "The robot knows what it's supposed to be picking, and does it 24/7," Wise says.
Because a machine doesn't take lunch or bathroom breaks, it can do 90 minutes more work per shift than a human picker. And robot sidekicks make human workers more productive. "People using the robots are not getting as fatigued, because they're not walking six miles every day," Wise says.
Fetch and Freight use a different technology to navigate around a warehouse than do their counterparts at Amazon. The Amazon robots find their way by reading barcoded stickers placed in a grid across the floor. Fetch Robotics uses active sensing. "We sense the walls, the shelves, and the entire environment," Wise says. "Then we build a map to navigate through that environment." Fetch Robotics designed its robots to work with as little physical modification to the warehouse as possible, she adds.
Potential customers have been testing the robots in manufacturing and fulfillment operations. The tests haven't gone on long enough to provide solid data, but Wise predicts that Fetch and Freight will make operations significantly faster. "We hope to see a 30- to 40-percent bump in throughput," she says.
EXEL: VISIONARY PICKING
At third-party logistics services company (3PL) Exel, the desire for speed might point to a new generation of wearable warehouse technology.
In 2015, Exel's parent company, DHL, conducted a test of "vision picking" at a DC in the Netherlands, which DHL operates for Ricoh Company. DHL tested two kinds of "smart glass" devices, Google Glass and M100 Smart Glasses from Vuzix Corporation of Rochester, N.Y. Software from German company Ubimax turned the glasses into front-end devices for a WMS.
The technology boosted productivity in the DC by 25 percent during the pilot, according to DHL. Now, Exel plans to test the same devices in the United States in late 2015 or early 2016.
"We see this technology combining the best attributes of various picking types," says Adrian Kumar, vice president of solutions design at Exel in Westerville, Ohio. Handheld computers with radio frequency communications provide barcode scanning and real-time communications; voice-directed systems allow hands-free interaction; and light-based systems highlight the location from which the operator should make the next pick. A vision picking system potentially can do all three.
"Vision picking also has a short learning curve," Kumar says. "That's important, because we use a lot of seasonal associates."
Besides helping temporary workers learn their jobs more quickly, vision picking might give detailed instructions to associates who work on value-added services, such as kitting.
A series of kits might contain similar products, but some of them could—for example—contain just four items, while others have 10. "Can vision picking let associates see the step-by-step instructions to complete a kit with high quality and greater efficiency, and be able to more quickly change the type of kit they're doing?" asks Daryl Knight, Exel's vice president, customer development, technology, and aerospace logistics services. That's one question the tests will address.
Along with basic display and barcode scanning functions, a vision picking system could incorporate more advanced features, such as virtual pick-to-light, or a navigation system that guides workers efficiently among the aisles. "We are considering a spectrum of options," Kumar says.
During the tests, Exel will measure how vision picking affects overall picking performance and accuracy. A longer-term consideration is whether smart glass could provide an alternative to the use of capital-intensive materials handling automation in some facilities. "Maybe warehouses won't need a lot of conveyance, because the pickers can be extra productive," Kumar says. "When they get their assignments, they can pick 10 to 12 orders at a time."
DARK STORES COME TO LIGHT
Among e-commerce merchants, customer demand for fast fulfillment is driving a move toward urban warehouses. By storing product in densely populated locations, companies make next- or even same-day delivery simpler and less expensive.
For some omni-channel retailers, the urban DC strategy includes the use of "dark stores," which usually refers to a retail outlet that has shut down, and that a company—either the owner of the store or a different firm—converts to a DC.
Because e-commerce fulfillment largely involves piece picking, a company that turns its own store into a fulfillment center might be able to repurpose the existing retail shelves. If the building has a high ceiling, the retailer might install tall racking to make better use of the space. "But, particularly if fewer than a couple of years are left on the lease, the company will use as much of the existing infrastructure as possible," says Bob Silverman, executive vice president, supply chain and logistics solutions, at Chicago-based real estate company Jones Lang LaSalle (JLL).
More recently, some observers have applied the term "dark store" to a second scenario, in which a brick-and-mortar urban facility serves a dual purpose. By day, shoppers walk the aisles, choosing products to take home. At night, pickers walk those same aisles filling e-commerce orders.
A retailer might deploy this solution to take better advantage of an underperforming store that still has several years left on its lease. This strategy also solves a space problem for retailers that want to speed up e-commerce fulfillment by shipping product from stores to local customers. Shipping from the store during business hours can be difficult. "There's just not the space and layout to allow fulfillment of those e-commerce orders," Silverman says. "Back rooms are small, because retailers are trying to maximize selling space."
Because retail space costs four to five times more per square foot than warehouse space, the decision to convert a store to a DC is far from a no-brainer. The fact that companies are willing to spend the extra money demonstrates how crucial fast fulfillment has become. "The real estate cost is minimal in the total picture, compared with the opportunity cost of getting the business, and the transportation cost for shipping product from farther away," notes Silverman.
Whether the key lies in location, automation, smart spectacles, or smart routing, shippers will continue to refine their strategies for getting goods to customers faster than ever.
First Drones, Now Drivers
Next day is so passé. Since the end of 2014, Amazon has been pushing the boundaries of speedy fulfillment with its Prime Now service, offering free two-hour delivery or $7.99 one-hour delivery to members of its Amazon Prime service in select cities.
Now, Amazon is going even further in support of its efforts to blur the lines between fulfillment and Star Trek-style teleportation. The solution isn't a fleet of quadcopters, but a team of local residents with private vehicles and time on their hands who want to take the wheel for Amazon Flex, a program employing independent contractors to make Prime Now deliveries.
A driver who registers with the Uber-like service uses a mobile app to sign up to work for a specific number of hours, within a specific area, according to an Amazon demonstration video. When the driver accepts a gig, the app provides turn-by-turn directions to a delivery station, where the driver picks up the packages and scans them with the phone. The app then gives turn-by-turn directions to each delivery point.
Drivers will earn $18 to $25 per hour, Amazon says.
The company has launched Flex in Seattle, and will soon extend it to Manhattan, Baltimore, Miami, Dallas, Austin, Chicago, Indianapolis, Atlanta, and Portland, according to the Amazon Flex website.
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