Distribution
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Automation levels the playing field in goods-to-person distribution

E-commerce continues to boom around the world, forcing manufacturers to find new ways to keep up in their distribution channels. With projections of B2C worldwide e-commerce sales reaching nearly $1.8 trillion in 2015 , only those organizations that meet the demand accurately and on time will survive. The United States leads the global e-commerce market with an estimated $347 billion to be spent this year, while Canada is expected to see a 13.5 percent growth in online sales. Combined, the North American market, which currently ranks second only to the Asia-Pacific, is expected to command close to $540 billion in e-commerce sales in 2015¹.

This unprecedented growth has largely been attributed to the increase in mobile device usage for shopping, which empowers consumers to make purchases at any time, from anywhere – at home, at work or on the go. By 2018 there will be over 10 billion mobile-connected devices, exceeding the world’s estimated population at that time (7.6 billion)² . The convenience of online and mobile shopping has driven consumers to leverage virtual and physical stores to find and purchase products. This opens up opportunities for retailers to further increase sales by promoting both web-based and in-person shopping through location-based notifications, in-app advertisements or email campaigns.

Furthermore, retailers are creating omni-channel strategies that seamlessly integrate online and brick-and-mortar entities throughout the supply chain. This enables brick-and-mortar behemoths like Walmart to enhance offerings with online-only products and direct-to-store delivery, or traditional grocers to offer an internet shopping experience such as Peapod or Grocery Gateway by Longo’s. Alternately, Internet-based giants Google and Amazon are now offering same-day deliveries through Google Express and Amazon Fresh (and a rumored New York City brick-and-mortar store for the latter).

Some companies are reevaluating their entire business strategies based on the opportunities available through a goods-to-person business model and moving toward drop-shipping or selling products exclusively through a third party, like Amazon.

To fully accommodate this e-commerce growth, retailers are looking at the industrial landscape to determine how, when and where to build integrated, big-box centers for both distribution and order fulfillment. However, these centers are much larger than traditional distribution centers and require not only more manpower, but also increased levels of automation and technology to ensure efficiency and productivity.

The path a product follows through the supply chain has changed, compelling users to change the way they use industrial real estate—leveraging increased levels of automation and locating in areas that allow for faster delivery³ .

Combining traditional distribution and goods-to-person order fulfillment into a single location can streamline operations, but it also presents an entirely new set of challenges for order picking. The transition from picking large quantities of product to load onto a truck for delivery to a retail store to picking individual items can result in time-consuming and inefficient manual picking for individual goods-to-person orders. Utilizing automated storage and picking systems can alleviate this disconnect.

Automated systems are programmed to identify and execute the most effective path to picking an order, eliminating the need for individuals to walk long aisles across the warehouse for various items. An automated system for the goods-to-person market should be able to accommodate a large number of SKUs, whether handled in plastic crates, containers, trays, totes or bins. High efficiency and accuracy of the system are key to ensuring effective productivity levels and unmatched customer satisfaction.

An additional benefit of automated systems is the acquisition of data throughout the picking and packing process. Using historical data such as the number of orders fulfilled or the amount of a specific SKU packed will help management make data-based decisions to improve productivity and predict volume spikes. Looking at orders in real time also helps to optimize efficiency by shuffling the orders to find the most efficient picking routes.

As e-commerce continues to explode with new, more convenient ways for consumers to shop, automation will remain a vital component to any manufacturer’s distribution success. To remain competitive, many businesses will have to consider new options, looking to alternative sales channels or drop shipping, brand extensions and new product lines, to streamline operations and increase their bottom lines.

But with so many potential variables, it’s difficult to implement an automation system that will accommodate an unknown future business strategy. That’s why it’s imperative to find a system that is flexible enough to scale with these business decisions, as well as seasonal spikes that increase the volume of orders, such as the month from Black Friday through the end of the calendar year. Embracing advancements in this technology will inevitably improve the efficiency, accuracy and productivity of any distribution and order fulfillment center.

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eMarketer, Global B2C Ecommerce Sales to Hit $1.5 Trillion This Year Driven by Growth in Emerging Marketshttp://www.emarketer.com/Article/Global-B2C-Ecommerce-Sales-Hit-3615-Trillion-This-Year-Driven-by-Growth-Emerging-Markets/1010575

Cisco, Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2013–2018http://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/white_paper_c11-520862.html

CBRE, E-Commerce and the Changing U.S. Industrial Landscapehttp://www.cbre.us/research/2014-US-Reports/Pages/Ecommerce-and-the-Changing-US-Industrial-Landscape.aspx

TEXT: DEREK RICKARD, SALES MANAGER, DISTRIBUTION SYSTEMS PHOTO: CIMCORP ILLUSTRATION: SHUTTERSTOCK

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