Integrating Key Logistics Practices for Effective Digital Commerce Health

Written By Doreen Teng, PDLM

by Doreen Teng, PDLM

Integrating Key Logistics Practices for Effective Digital Commerce Health

Written By Doreen Teng, PDLM

by Doreen Teng, PDLM

by Doreen Teng, PDLM

Nowadays, as trends shift from Ecommerce to Digital Commerce, more Ecommerce companies are now integrating strategies such as Omni-channel, exploiting social media and other consumer-facing technologies for effective and integrated marketing for their businesses. This has in turn, significantly impacted E-tailers in terms of their logistics practices for their warehouses.

According to estimates by Temasek and Google, the Ecommerce market in Singapore alone is expected to be worth US$5.4 billion by 2025. Coupled also with the rise of a consumerist appetite amongst the middle class in countries such as China, India and Indonesia, Digital Commerce is only going to expand further in the future. E-tailers, therefore feel more compelled to direct their focus through effective Logistics.

The following highlights some ways of integrating logistics practices in the warehouse.

1. Implementing an Effective Picking strategy

Basically, there are seven picking methods that companies may implement.

• Discrete Order Picking

A simple picking method where one order picker picks one order, one line at a time. Orders are not scheduled and can be picked at any time on a particular day.

• Zone Picking

This is also known as the “pick and pass” method where order pickers are assigned a specific and physically defined zone in the pick area. The picker that is assigned to each zone is responsible for picking all of the SKUs located in the zone for each order.

• Batch Picking

It is when one picker picks a group or batch of orders at the same time with one SKU at a time. This is advantageous as travelling time is reduced or when there are multiple orders with the same SKU.

• Cluster Picking

It is a method of picking into multiple order containers at one time. The containers could be totes containing order batches or discrete order totes.

• Wave Picking

A method that is pretty similar to discrete picking in that one picker picks one order and one SKU at a time. Orders may be scheduled to be picked at specific times of the day to coordinate and maximize the picking and shipping operations.

• Zone-Batch Picking

It is a combination of methods where pickers are assigned a zone, just like traditional zone picking and comes with a scheduling window. However, pickers are also directed to batch pick within their zone.

• Zone-Wave Picking

This is a combination of methods in that pickers are assigned a zone. Each picker within their zone will pick all of the SKUs for all orders that are stocked in their zone, one order at a time with one scheduling window per shift.

• Zone-Batch-Wave Picking

Probably the most complex combination out of all picking methods. “Each picker is assigned a zone and picks all SKUs for orders stocked in the assigned zone.” Additionally, the picker picks more than one SKU at a time with multiple scheduling windows per shift.

2. Develop an All-purpose Facility that “Talks” to One Another

Emphasis should be placed on creating an all-purpose facility to handle small, medium and large orders that can do “it all” in an accurate manner. Firms would like to consider using IT-enabled systems and Distributed Order Management (DOM) solutions at both the distribution and the retail levels to ensure smooth and seamless processes to and from those all-purpose warehouses and Distribution Centres (DC). The ideal goal is to try to ship inventory from any point, stores included so that companies can accurately maintain inventory accuracy in a cohesive manner. It is suggested to do it all in one place (i.e., the warehouse) and not at the store and be able to do it all at once.

3. Design Facilities with Omni-channel in Mind

Omni-channel has nowadays provided customers with a seamless shopping experience. Be it shopping online from a desktop, mobile device, telephone or in a physical store, etc. It has transcended the modern-day supply chain and is impacting the way organizations design their warehouses and DCs. For example, having a DC that handles direct to consumer (D2C) Ecommerce can actually benefit from wholesale distribution in the short term under a single roof. In this way, it creates maximum value from its automation and available labour force.

Picture illustrating Omnichannel fulfilment and taken from: https://blog.magestore.com/omnichannel-fulfillment/

4. Level-load Orders Year-round to Offset Spikes and Lows

DC managers are concerned about how to even out the ebbs and flows of their companies’ Ecommerce fulfilment operations. They are hoping to find a better way to achieve balance throughout the year and have a more stable workforce, especially when they have several hundreds of temps coming in during peak seasons. Thus, by ensuring that orders are level-loaded throughout the year can help offset some of that temporary labour challenge.Therefore, DC managers should try to to ensure better planning and to avoid a slew of orders that are waiting to be processed during the peak season.

workers gearing up

Picture depicting the Amazon fulfilment workers gearing up for Black Friday & Christmas. Picture extracted from: http://fortune.com/2018/11/23/amazon-black-friday-2018-protest/

5. Turn to WMS for Help

Nowadays, Warehouse Management System (WMS) is not merely for tracking inventory levels and identifying stock locations. It is well-tasked to take on the key challenges associated with Ecommerce fulfilment. The retail fulfilment picture has changed with the trend of a much higher volume of smaller orders pushing companies to invest in more automation. In some cases, WMS vendors are building more automated processes in their systems such as Put-to-Light and Pick-to-Light technologies with the goal of enabling the “goods-to-person” process.

• Put-to-Light System

It is a half-automated sorting solution which consists of rack with display units similar to Pick-to-Light. Operators walk through rack aisles, placing items into totes in racks following the display instructions. It is perfect for goods that are available for immediate shipping on receipt without going through the storage process.

• Pick-to-Light System

An innovative picking system that visually guides pickers in what to pick and how many.It increases productivity, accuracy and cost-effectiveness by reducing the walk and seek times, eliminating paperwork and simplifying the picking process.

6. Understand the Seasonality of the Business

Not all Ecommerce sales are created equal and not all of them have a solid grasp on the seasonality of their businesses. Therefore, it is worthy to consider the Retail Wholesale Holiday Surge that comes at different time than the Direct Consumer Holiday Surge.

For example, in US, a DC handling wholesale orders may be busiest from September through November as it strives to get product out to the stores in advance of the shopping seasons. Meanwhile, the warehouse managing Direct-to-Consumer (D2C) orders may have its biggest labour needs only during December. If a business has both of these operations under one roof, the temp labour may be easily carried through both periods if the timing is right. Thus, when one understands the seasonality, it can save the hassle of re-hiring and re-training workers so as to better leverage the common labour pool.

7. Adopting a sound Returns Management Plan

According to research by JDA Software, a staggering 88 percent of consumers say ease of returns is an important factor in choosing where to shop.Consumers care far more about product returns than retailers seem to realize. Implementing effective returns processes pays off both in short-term customer satisfaction and in long-term improvements to understanding and servicing customers.

Some of the ways E-tailers may do to manage returns include:

• Clear up directions for E-shoppers
Simplify the work customers have to do in order to initiate returns. Preferably a 24/7 access to a customer service hotline or through an online Returns Management Portal.

• Route returns intelligently
Make sure companies know where returns go to when customers send them in as well as establishing a cost-effective way to determine what to restocked and destroyed. Consider partnering with fulfilment experts to manage these channels.

• Track and analyse returns
Instead of just processing returns, retailers should track who returned the product, what they returned, and WHY. Prompt customers to explain the reason for returns and navigate returns processors to inspect returned product and note their observations. Analytics may then be applied to data to improve product selection, marketing and quality control.

Conclusion

These are some of the implementable practices organizations can strive to achieve better logistics efficiencies. Nevertheless, there may be better ones. Organizations should further experiment wherever possible, between different practises to find the most efficient methods for themselves and to continue to evaluate them on a regular basis. Subsequently, along the way, new techniques and technologies do emerge which can help organizations in improving their warehouse operations further. Digital commerce is only going to grow further in the near future, especially with omni-channel orders. This meant that organizations need to be ready with the right product on-hand at the right time and ready to ship it with the customer’s click of the “checkout” button.


Video depicting wave, batch & cluster picking methods.


References

Abdul Rahim Bin Daud, DLSM. (2017). “8 Strategies for Successful eCommerce in a Supply Chain Fulfilment Centre”. Retrieved from SIPMM: https://sipmm.edu.sg/8-strategies-successful-ecommerce-supply-chain-fulfilment-centre, accessed 13/03/2019.

Christine Wheller. (2014). “The 8 Best Order Picking Methods (Including Batch Picking)”. Retrieved from: https://www.newcastlesys.com/blog/bid/348476/order-picking-methods-and-the-simplest-ways-to-minimize-walking-infographic, accessed 20/03/18

EDB Singapore. (2016). “How e-commerce companies are changing the logistics business”. https://www.edb.gov.sg/en/news-and-resources/insights/innovation/how-e-commerce-companies-are-changing-the-logistics-business.html, accessed 20/03/18

Jamal Bin Idi Ahmad, DLSM. (2018). “Essential Techniques for Integrating Warehousing with Transportation.” Retrieved from SIPMM: https://sipmm.edu.sg/essential-techniques-integrating-warehousing-transportation, accessed 20/03/18

Peter Sobotta. (2016). “Improve Management of Retail Returns for a Better Customer Experience”. Retrieved from: https://www.entrepreneur.com/article/254597, accessed 20/03/18

YunnieMarzuk. (2018). “E-COMMERCE TO SHIFT INTO ‘DIGITAL COMMERCE’: ACCENTURE”. Retrieved from: https://www.digitalnewsasia.com/digital-economy/e-commerce-shift-digital-commerce-accenture, accessed 14/03/2019.

About the Author Doreen Teng has substantive years of experiences in the IT and manufacturing industries, providing customer service and logistics support. She is a member of Singapore Institute of Purchasing and Materials Management (SIPMM). Doreen holds a Diploma in Economics from the University of London. She completed the Professional Diploma in Logistics Management (PDLM) course on March 2019 at SIPMM Institute.

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