Distribution
Blog Post
You would be hard-pressed to find a person in the world today who has not ordered something online.

While once a supplemental channel to brick-and-mortar stores, e-commerce has exploded into a force of its own - with no signs of slowing down. According to Statista, worldwide e-commerce sales, worth approximately $1.3 trillion in 2014, will nearly triple to $4.5 trillion by 2021. With e-commerce taking greater precedence over the retail world and our everyday lives, it is driving significant changes in consumer demands, and with them, the demands of order fulfillment placed on warehouses and distribution centers.

With e-commerce taking greater precedence over the retail world and our everyday lives, it is driving significant changes in consumer demands, and with them, the demands of order fulfillment placed on warehouses and distribution centers.

Higher volumes of smaller orders

For the most part, people aren't ordering entire cases of goods online. So, whereas facilities were once more concerned with preparing and shipping pallets filled with products to store shelves, now they have to efficiently and accurately pick single items for higher volume, small orders that go directly to consumers. For facilities used to the former, this can cause big headaches in coordinating staff in picking and managing inventory.

Shorter lead times

When consumers order something online, they want exactly what they ordered and they want it fast. In a survey conducted McKinsey & Company of customers in North America, Europe and Asia, nearly 25 percent said they are willing to pay significant premiums for same-day or instant delivery. This number is likely to increase, given that younger consumers are more inclined (just over 30 percent) to choose same-day and instant delivery over regular delivery. With high consumer demand for speed, the pressure is on for warehouses and distribution centers to adequately meet their satisfaction. The need for speed is even greater for shipping food & beverage products to consumers, such as through services similar to AmazonFresh, to guarantee freshness and maximize shelf life. It can be extremely difficult for facilities that still employ largely manual processes to keep up.

More product and SKU variation

Consumers want things their way. Manufacturers are delivering on this by offering more products with more options and variations than before. For instance, in food & beverage, there may be more sizes and flavors available, on top of gluten-free or organic options. As a result, warehouses that once housed a few hundred SKUs are now dealing with a couple thousand. And not every product will move out the door at the same speed due to varying consumer demand, which makes managing stock levels and replenishment all the more challenging.

To best meet the modern demands of order fulfillment, warehouses and distribution centers should look towards modern technologies. This includes robotics hardware and intelligent software for optimizing the flow of goods and managing inventory in the facility. For instance, while order picking systems can help accelerate the movement of full crates of goods for delivery to stores, a goods-to-person picking solution is ideal for tackling those smaller, single item, orders going to customers. Products automatically come straight to staff for picking, speeding up the process significantly which shortens the lead time. What's more, these systems are flexible enough to handle any volume of SKUs. Combine robotics with a high-level system like a Warehouse Control System (WCS) that provides warehouse managers control over the order picking and material flow as well as data on products, order lines, volumes, and dispatches, and you will be well equipped to meet the order fulfillment demands of today and well into the future.

Author Kai Tuomisaari

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