Adapting Retail DCs To Support Omni-Channel Fulfillment
By Jeff Slevin, Chief Operating Office, Lucas Systems
Jeff Slevin joined Lucas Systems in 2003, originally as Director of Operations. Today he is responsible for worldwide operations and engineering, including product development. Jeff is a graduate of Carnegie Mellon University’s Graduate School of Business and the US Air Force Academy. He served for more than 6 years as an officer in the US Air Force in a number of telecommunications and computer systems/software divisions.
This is the second in a three-part series of articles describing how retailers can adapt their fulfillment and returns processes to address omni-channel needs using Mobile Work Execution software which complements existing information systems. This article focuses on DC-based processes while the third and final article will discuss in-store processes.
Introduction
Omni-channel commerce is forcing retailers to develop new distributed order management and inventory visibility systems and to transform their fulfillment and returns processes and systems to support new channels and strategies (click and collect; ship from store, etc). While greater attention has been paid to the challenges of distributed order management and inventory visibility, operations teams on the ground are struggling to efficiently fill different order types from multiple distribution points.
To meet the omni-channel fulfillment challenge, stores are improvising new pick, pack, ship, and returns processes, while distribution centers are creating work-arounds to support new channels and to overcome the inflexibility in their current automation and information systems. Many of these new fulfillment processes have been implemented piecemeal, outside of current systems. As a result, DC and store employees often have to rely on written instructions and printed lists. The paper-bound processes are inherently inefficient and inconsistent, which threatens customer loyalty and company profitability. To ensure omni-channel success, these hands-on fulfillment and returns processes need to be more consistent, productive, and accurate while remaining flexible for whatever comes next.
As described in a previous article, Mobile Work Execution software allows retailers to rapidly develop efficient hands-on processes for workers handling product, whether in a DC or in a store. The solutions include easy-to-use mobile applications for employees, work management dashboards for managers, along with work optimization and execution software that permits process changes without changing back-end information systems or radically rebuilding other infrastructure. In short, rather than replacing systems that are already in place, Mobile Work Execution fills the process gaps in existing systems to enable efficient, consistent hands-on work.
From Ecommerce to Multi-Channel in the DC
Over the past decade, retailers have struggled to efficiently support ecommerce sales from distribution centers that were built to support store replenishment. DCs were designed around the more predictable shipment schedules, order profiles, and seasonal peaks of store orders. Those same systems and processes were not well suited for the very different requirements for ecom orders and returns.
For example, many DCs employed WMS systems using RF or paper to direct manual picking processes that were relatively efficient, accurate and productive for store orders. Some installed voice-picking systems to optimize hands-on tasks, but many of those voice solutions merely voice-enabled the WMS-directed process. Those processes were not easily adapted to support the very different order profiles, sequencing, and picking requirements for ecommerce orders. As ecommerce emerged, most DC teams created work-arounds to their existing piece-picking processes to get ecommerce orders out the door without upsetting existing operations. Not surprisingly, those improvised approaches didn’t scale as the volumes of direct-to-consumer shipments have grown.
DCs with automated store replenishment processes faced even greater challenges, as the conveyors, sorters and warehouse control systems that direct automated processes are even harder to adapt and evolve. Any process change to support ecommerce would likely require changes to software systems (potentially both the WMS and WCS) as well as to physical infrastructure. Just as in less-automated DCs, the short-term fix to meet rising ecommerce volumes has been to create manual processes outside of current systems.
Many retailers are still struggling to efficiently support both ecommerce and store replenishment from the same DC, and some have carved out separate operations to support each channel. That is often a sub-optimal approach, and now the lines between the different fulfillment and delivery channels are blurring (similar to the blurring of lines between sales channels). In addition to shipping online orders direct to consumers, many retailers need to ship products from DCs for pick up in store – yet another new workflow. Once again, DC teams are driven to improvise manual work-arounds that are costly and fraught with error.
Similarly, most retailers need to manage rising volumes of ecommerce returns, along with new return ‘channels,’ such as direct customer returns of products purchased in store. As individual item returns increase, DCs need to develop more efficient processes for determining the appropriate disposition of goods, in addition to new workflows to get products available for re-sale (wherever possible). One approach is to pick returned product separate from new items to avoid the step of re-stocking returns in the main pick area. In either case, this presents up to three new workflows that aren’t adequately addressed in current manual or automated systems: returns processing, stocking, and picking.
A New Approach To Manage Omni-Channel Evolution
At root, the problem facing DCs is inflexible systems that prevent the rapid implementation and adaptation of new processes. Traditional DC automation systems are inherently inflexible, and WMS systems are first and foremost concerned with inventory management and planning, not the flexible execution of work on the warehouse floor. That’s where Mobile Work Execution comes in.
Mobile Work Execution solutions combine work planning, optimization and management software with mobile applications on smartphones and other small, light mobile devices that are ideal for in-store or DC use. They use order and inventory information from WMS and other back-end systems, but they insulate those systems from the detailed execution of work. In addition to improving the mechanics of hands-on tasks using voice-direction, speech recognition, barcode scanning, and device displays, the solutions provide tools for intelligent work planning and optimization for different order types. They also provide real-time insight and control for floor managers and supervisors, whether they are sitting at a desk or out on the floor using a tablet.
For example, Mobile Work Execution software can support efficient piece-picking for store and ecommerce orders from a single DC by applying different batching and workflow rules. A single, multi-line store order for less-than-case items may be picked efficiently in a single assignment or batch of two orders, while the Mobile Work Execution software can also batch 20 or more ecommerce orders together to optimize picking efficiency for those smaller orders. Those ecom orders picked in a single batch may then be processed in a sortation step using a put-wall process that is also directed by the Mobile Work Execution system.
In this example, the new ecommerce workflow and batching rules can be designed and implemented in a matter of weeks, without changing warehouse management systems. As volumes grow, order profiles evolve, and delivery methods change, the processes, workflows, and infrastructure can be adapted without costly, time-consuming, and risky back-end system changes. Likewise, DCs with automated case-picking systems can use Mobile Work Execution systems to create less-than-case picking processes. Rather than planning the process by spreadsheet and picking orders by paper, DC teams can implement system-directed processes that use mobile applications that are flexible, accurate and efficient.
Returns processing, stocking and picking can also be addressed using Mobile Work Execution systems, dramatically improving the speed, efficiency and accuracy of this product flow while reducing changes needed in WMS systems. First, the Mobile Work Execution system can guide users through the complex steps in evaluating and determining the appropriate disposition of returned items, an inherently labor-intensive process. Then, rather than restocking items appropriate for re-sale in their primary pick locations, the DC can stock those items in a separate returns-picking area. Finally, the DC can implement a new returns-picking process that may be dramatically different from the picking process used in other areas.
In this example, the returns-processing, returns-stocking, and returns-picking steps can be managed and orchestrated in the Mobile Work Execution system, creating system-directed processes that are easier, more efficient, and more accurate. This is a potentially major ‘win’ for retailers facing new return-logistics challenges in the DC.
The Future of Work Execution
Mobile Work Execution software addresses the immediate need for better, more efficient manual work processes that can adapt and change. In the long-term, more flexible forms of automation will help retailers better meet the complex fulfillment and returns requirements of omni-channel, and reduce human touch-points. But those emerging automated solutions will not altogether eliminate the need for manual processes performed by employees in DCs or stores. Mobile Work Execution will co-exist and complement automation as parts of an ever-evolving fulfillment system in which work execution is managed and optimized separate from inventory visibility, planning and optimization.