Distribution
Blog Post
The role of logistics in retail is always changing with new technologies and trends, though none have impacted the structure of warehousing and distribution more so than the emergence and rapid expansion of e-commerce. The demand for online marketplaces with fast delivery and accurate service has dramatically changed the business models of many traditional brick and mortar, which, in turn, has transformed order fulfillment requirements for logistics providers. As this trend continues to grow across the world, supply chains and distribution channels become increasingly complex in nature and more expensive to maintain with manual processes.

According to a survey by eMarketer, worldwide online sales amounted to $2.29 trillion in 2017 and are projected to reach $4.479 trillion by the end of 2021. In Europe alone, e-commerce grew by 14 percent last year, as shown in a 2017 report by the Ecommerce Foundation. In order to remain competitive and grow their customer base, retailers need not only an online presence, but also an efficient distribution process to support their sales. And, with big players like Amazon in the marketplace setting the standards for excellence in direct to consumer services, retailers and their distributors need to ensure their fulfillment processes are fast and precise to meet customer expectations, and cost-effective to save their business money.

Before the boom of e-commerce, distribution centers were accustomed to working with bulk orders and large order lines, and automation technology was focused on handling pallets of goods. Now with online sales, distributors are not only required to supply stock to retail locations, but also ship individual items for "buy online, pick up in store" options and direct to end customer deliveries. With omnichannel distribution of smaller order sizes containing a wide variety of SKUs, order line size has decreased and picking has become more and more complex and labor intensive. Manual processes and antiquated technologies are just not able to keep up with the fast-paced environment of e-commerce and meet the same-day shipping and next-day delivery demands of today's consumers.

Many businesses are struggling to find the best way to automate omnichannel distribution. Integrating flexible goods-to-person technology with manual processes may be the answer to increase productivity, eliminate errors and save on labor costs. Notably, an automated goods-to-person system can be up to six times more efficient than a manual one, allowing facilities to pick an even greater number of orders per shift. Instead of wasting time and energy walking the warehouse to pick individual SKUs for small orders, employees can have the items brought directly to them at a picking-station. An automated storage and retrieval system (AS/RS) and shuttle system can transport goods in totes, bins or trays to these stations in proper picking sequence, and then return them to storage after the required items are pulled. This technology can take human error out of the equation with its unrivaled precision, resulting in more accurate orders and happier customers.

Additionally, the traceability provided by an automated solution in conjunction with a warehouse control system (WCS) can lead to greater customer satisfaction. With access to historical and location data, businesses can provide the real-time tracking information and updates that end customers not only want but expect when purchasing online. A WCS can also maintain accurate inventory counts, ensuring the correct products are on hand for fast fulfillment when the customer makes a purchase.

Choosing an automated system that maximizes space is vital to keep up with e-commerce as well. E-commerce fulfillment often requires the storage of a wide range of SKUs to meet customer demands for variety. A modular AS/RS can eliminate the need for wide aisles to accommodate the movement of workers or forklifts and cumbersome racks of storage spread out for hand picking. With high-density automated storage, distribution centers can maximize the space to accommodate a vast range of SKUs and have all products available at a site for easier management.

With retailers increasingly focused on the importance of customer satisfaction, meeting the demands of e-commerce has become essential to customer loyalty and business growth. By integrating automated goods-to-person technology, great customer service can be achieved with later order cut-off times, faster fulfillment, real-time updates, and accurate products. The popularity of e-commerce is only going to continue its exponential growth, and your business will need the right distribution technology to support your place in the online marketplace.

Author Jarno Honkanen

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