by Jorge Couto, Managing Director, Efacec Singapore
In this day and age where the use of internet is ubiquitous, most of us are substituting the act of shopping at brick and mortar shops with making purchases online. From clothing to electronic gadgets and even groceries, more and more retailers are choosing to make the internet their choice selling platform. Earlier, Goldman Sachs predicted that global mobile purchases would amount to US$626bn by 2018. Showing no signs of a slowdown, e-commerce is likely to grow even stronger in the near future.
Although e-commerce has become highly popular, not many consumers understand the intricacies behind their computer screens, much less what happens in the actual warehouse that stores a multitude of purchases. What happens after an order is placed on a virtual store is a series of highly efficient, carefully planned steps – collectively known as the order fulfilment process – that brings the physical goods to end customers.
Involving different stages of receiving, processing, and delivery, order fulfilment is a procedure that has broad applications, ranging from large business-to-business (B2B) orders to individual business-to-consumer (B2C) packages. As online shopping continues to give physical malls a run for their money, effective logistics and order fulfilment solutions will be even more essential to cater to this rising demand.
Behind the e-commerce platform
At the core of the order fulfilment concept lies a host of innovative and effective warehousing technologies. In every stage, specific logistics solutions are available to support the process and enable a seamless transition to the next step in the order fulfilment cycle.
Receiving & storing inventory
From the merchant’s point of view, the order fulfilment process kicks off with the receiving and storing of inventory. Before a business is ready to take on its first customer, retailers need to ensure adequate stock volumes. Here, received inventory is first counted, inspected, labelled, scanned, and then registered into a warehouse management software (WMS), before it is finally stored in a fulfilment warehouse. Technologies, such as radio frequency identification (RFID), barcoding, and automatic storage and retrieval (ASRS) solutions are then implemented to provide support at this stage.
Depending on the nature of the merchant’s business, the procedure can be performed daily or only when items are low in stock (e.g. fresh groceries that are highly perishable). For a clothing retailer, this procedure may take place every other week or between seasonal changes like spring/summer and autumn/winter.
Once a customer carts out his online purchase and successfully completes payment, another series of steps are put into motion. The merchant’s point of sales (POS) system automatically inputs the transaction into the enterprise resource planning (ERP) system, which in turn translates the sale into an order. The WMS then registers the order and transmits it to the fulfilment warehouse. There, orders are gathered via a combination of picking technologies (e.g. radio frequency, voicepicking, or pick-to-light) that will assist the merchant in its batch or unit picking operations. Most merchants choose to approach this process by first completing order picking segment, before sorting items into individual customer orders.
Some advanced WMSs can provide effective support in this area by guiding warehouse operators to the intended picking zones, or by selecting the most time-efficient picking route for each batch of orders. This provides tremendous value to the merchant as an inept picking process can take up much more time than it needs to, causing a bottleneck in the order fulfilment system. When picking is completed, orders are then consolidated through instructions forwarded by the WMS. Additionally, automated sorting technologies can be integrated to minimise human error and to improve overall efficiency. It is important that operations at this stage be exceptionally streamlined to enable critical time-savings, which ultimately leads to better levels of customer satisfaction.
After the orders are sorted, consolidated, and packed by automated robots or operators, integrated conveyor systems transfer them to a shipping station to prepare for delivery to the end customer. Typically, during this process, the WMS monitors the number of orders and assigns delivery trucks accordingly. Before the orders finally leave the warehouse, they undergo one last inspection to ensure that items are accurately packed. This step allows the merchant to check for order discrepancies, minimising return orders. Once the orders are cleared for delivery, the shipping station then changes the order status, which will be logged into the WMS simultaneously.
Using transportation assets owned by the merchant or an external provider, the transportation management system (TMS) then ensures that orders reach various destinations efficiently and reliably. Often, TMS processes extends across geographical boundaries and allows merchants to deliver goods internationally. Greater warehouse efficiency can also be achieved if merchants integrate their TMS and WMS into their ERP systems. This helps to eliminate data entry errors and provides users with a full suite of supply chain execution software solutions. Merchants also stand to gain better warehouse visibility, allowing them to make informed business decisions in the planning, controlling, and monitoring of entire logistic networks.
Improving the order fulfilment process
The automated warehousing solutions required in an order fulfilment process seem straightforward enough, but there is more than meets the eye. Across the different stages required to fulfil a customer’s order, a mixture of warehousing technologies is needed to support the process so as to enable a seamless transition.
More than just integrating hardware, the challenge lies in identifying and implementing the correct equipment to support order fulfilment. It is important that companies consider factors such as picking volume, picking support requirement, capital investment budget, and space allowance before committing to a picking solution.
For starters, merchants need to consider the size and physical attributes of their goods (e.g. bottles vs. clothing), in order to identify an appropriate conveyor solution that can provide adequate support. The nature and volume of orders that a merchant expects also helps determine the ideal order picking technology to invest in.
A merchant that serves B2B markets has different needs than one that serves B2C markets. The B2B customer typically places repeat orders that are larger and more complex, while B2C customers lean towards standalone and smaller buys that require more time and effort to repackage.
And for companies that experience high output, the order picking technology should include functional aspects that are different from companies with low order demand. Merchants should identify the type and level of picking support needed in order to select the right combination of order picking technologies to enhance the order fulfilment process. Investment budgeting is also important as it can reflect a suitable range of order picking technologies that will align capital output to strategic goals.
Last but not least, companies must also consider their warehouse space allowance. If space allowance is tight, a fully automated technology with large conveyor belts and trays may not be conducive, and may even potentially create a hazardous working environment.
Making e-commerce simple
As businesses gradually move out of domestic markets and into the international market via the internet, they begin to compete on a larger scale with new and more competitors. And because the order fulfilment process directly affects the customer experience and the brand’s image, merchants that wish to succeed must seek to better understand and streamline the various stages of the process.
In this regard, large-scale corporations involved in e-commerce often prefer to outsource their order fulfilment operations. This is especially true with merchants who do not have in-house experience, expertise, or the necessary technology to maximise order-processing efficiencies. Just as warehouses can be customised, order fulfilment solutions can also be tailored to individual e-commerce operations, providing a variety of options to enable businesses to fully optimise and leverage on their unique strengths.
For a highly efficient order fulfilment process, it is ultimately the mixture of warehousing technologies that makes all the difference. From the ASRS warehouse to order picking technology, conveyor systems, sorting technology, and the WMS, each component contributes to a smooth order fulfilment operation. With the help of logistics solutions professionals, companies that integrate effective automated solutions will likely find themselves ahead of their competition in the e-commerce game.
About the Author
Jorge Couto is the Managing Director of Efacec Singapore (Efacec Handling Solutions). He oversees the management of Efacec Singapore, the regional office for Efacec Handling Solutions, South East Asia. In addition, he spearheads the company’s business development activities in the region. Prior to joining Efacec, Couto previously worked in Philips Automation, where he was based in the Netherlands.