Distribution is going through a dramatic change due to ecommerce order fulfillment. This is affecting manufacturers, distributors and retailers. Manufacturers that used to ship pallet quantities are now becoming single item parcel shippers because their big-box retail customers are asking them to serve as online order fulfillment extensions of their warehouses and stores. Distributors that used to sell to retailers are opening up their own ecommerce stores, either on Amazon/EBay/Alibaba, or setting up their own web sites. Retailers that used to focus on their brick-and-mortar stores are extending their ability to sell via the internet. In every case, abilities are stretched, often to the breaking point, causing disappointed customers or unprofitable growth. (We worked with one manufacturer/distributor that tripled their shipments due to an increase in ecommerce orders but had zero-unit growth overall.)
The efulfillment warehouse must be efficient at picking multiple orders with very few items per order.
Online order fulfillment usually happens via parcel shipping (UPS, FedEx) and can include as few as one item on the order. For a manufacturer or distributor that is used to shipping pallet loads, this business can be very unprofitable. For a retailer operating a brick-and-mortar store, they eventually have to grow beyond shipping out of their store’s backroom to a warehouse.
Distributors and manufacturers will often have to create three warehouses in one, an efulfillment warehouse, the mixed-item pallet quantity warehouse and the full pallet warehouse.
The efulfillment warehouse must be efficient at picking multiple orders with very few items per order. This is best achieved through wave or batch picking, where the order-selector will pick multiple orders in a single trip through the warehouse. Usually this requires a system to determine how to batch orders (how many orders to include in the single batch given to one order-selector). In addition, the technology must allow them to see item locations for the batch so they can efficiently pick all items in a single trip.
The best warehouse layout for ecommerce order fulfillment is a narrow aisle design using a drive-by-wire order picker that can travel through narrow aisles and allow for easy picking of items higher up in the racking. These order-pickers move vertically with the order-selector (connected via a safety harness) and are prevented from hitting racking by the lateral control. An advantage of this design is SKU placement by velocity becomes less important. With multiple orders the order-selector will usually drive through most aisles during their pick-trip. One important design consideration is the order-selector will need to have an easy way to separate items into multiple orders so items do not get mixed up at the pack-and-ship station.
At the end of the pick-trip the order selector will drop off orders (with items separated by order) at the “head” of the pack-and-ship line and pick up their next batch of pick-tickets (paper or electronic on their hand-helds). At the head of the line an organizer/quality inspector will review each order and items to ensure the order-selector didn’t put the wrong item with an order. (Even with barcode technology, when picking multiple orders at the same time, it is possible to get items and orders mixed up.) After the quality-check, the inspector will put the items in an order down the pack-and-ship line, where an operator will put the items in a box and create the shipping paperwork, usually via UPS or FedEx’s system. Completed orders are staged for pick-up by the parcel shipper.