WHAT E-COMMERCE MEANS FOR LOGISTICS OF SMALL AND MEDIUM-SIZED ENTERPRISES
Online commerce is booming, and it isn’t new. More and more consumers are enjoying anytime/anywhere availability and doing their shopping online. Their expectations are huge.
Consumers want to source a seemingly endless selection of products via highly professional online stores with straightforward order options. Availability and delivery by the requested date with shortest delivery times or deliveries to pick-up points must include free returns or a convenient return in a brick and mortar store. To survive in this market and prevail in the face of big players like Amazon, these services are also increasingly mandatory for medium-sized companies and startups.
However, what does the introduction of this dynamic distribution channel mean? It’s all about meeting customer expectations. Translated into terms of logistics and internal material flows of a company, this means 100 % delivery capability and loyalty, zero-error picking, the shortest lead times, and transparency in the warehouse and across the supply chain, all at a minimum cost.
In the following interview, Markus Schellinger talks about things small and medium-sized enterprises must closely consider when entering the e-commerce market.
What sets an e-commerce warehouse structure apart from a traditional warehouse?
Traditionally, several branches or regional distribution centers are supplied from a central warehouse where everything is scheduled. In e-commerce, every single customer is supplied individually. The result is much smaller order sizes and the need to predict which items will be ordered, which isn’t always easy. This is reflected in the range of available items, and the growing variety of items must be clearly structured and transparently managed to ensure permanent availability. Catalog and seasonal changes increase the stock of items from one season to the next. In addition, item sales can vary greatly, and the result can be an accumulation of slow-moving products. However, due to the unpredictability of ordering behavior these can suddenly turn into very popular goods with fast turnover. This high level of dynamism, small order sizes and a large inventory portfolio means that the focus must be on efficient piece picking when it comes to assembling individual e-commerce orders. This in turn means a fundamental change in picking methods for e-commerce logistics. Because of these circumstances, traditional person-to-goods order picking results in longer runs and fewer picks per picking position and finally in slow, errorprone
and costly processes.
So, how does this work in practice for SMEs?
When you enter the e-commerce business, good and careful preparation is everything. Therefore, it is advisable to work together in three steps:
1. Analyzing Basic data
With this basis, it is important to differentiate and illuminate the order data, especially in the direction of e-commerce. The growth of the company, the number of orders, possible changes of the order profiles as well as peaks and promotions should not be underestimated. A forecast for selling individual products is difficult and will always remain an unpredictable variable.
2. Putting together the right warehouse concept
We have to consider that SMEs initially test e-commerce as an additional sales market and that they do not switch over entirely all at once. This also means the customer does not necessarily need a new logistics center. Instead, modification to the existing design is optimal for parallel order processing. We select the right concept with regard to costs per unit picked as well as the order throughput time and take into account individual requirements for ergonomics and maintenance accessibility of the customer. For the final optimization of the system, we rely on a large team of in-house simulation experts in order to recognize potential bottlenecks and select optimized strategies. The success factor is the maximization of output while minimizing the effort.
Contrary to expectations, the magic words are still “manual” or “semi-automated”. Manual processes and workforces are not only the best option to start with, but also in the long run in order to be able to respond flexibly. With online retail on the rise and increasing sales, the degree of automation is also continuing to develop. But, partially and fully automated processes primarily cover the base load and are intended to replace unpleasant manual and repetitive tasks. Order peaks
require a special degree of flexibility, so they usually require some manual processes. In the future, it is of course still possible to readjust and re-automate step-bystep. Manual productivity can increase, for example, by adopting automated guided vehicles, intelligent order picking, or robotics.
3. Selecting the appropriate software solution
SSI SCHAEFER works with customers to develop a tailormade IT set-up that is adaptable to the warehouse and picking concept. This includes inventory control, the definition and tracking of key performance indicators for efficient control as well as planning, simulation, and optimization of warehousing and picking for maximum and traceable transparency.
How do medium-sized companies benefit from a partnership with SSI SCHAEFER?
Each customer is unique, and we address each situation individually. Here, we exploit the synergies of our in-depth intralogistics experience and our broad expertise in e-commerce. Together with the customer, we develop solutions, compare different approaches and make profound decisions. We strive to find the right solution for individual customers. Therefore, we advise our customers from a
product-neutral perspective and solve their challenges individually. From manual to semi-automatic to fully automated, we use a large portfolio with a vertical integration of approximately 85 %. We also take care of IT in-house with our logistics software WAMAS®. Plus, as certified SAP partner, we provide the commissioning and offer 24/7 customer service using innovative technologies. The scalability of the system is always guaranteed and nothing stands in the way of future growth or adjustments. As a one-stop supplier of intralogistics with certified project management expertise, general contractor expertise and the ability to take on construction work, we reduce interfaces for our clients and minimize the risk of planning errors. The overall vision combined with great attention to detail makes the critical difference with us. Furthermore, if we do not have the solution, we fall back on a strong network of partners and our ability to use “best in class” products.