How Warehouse Automation Helps E-Commerce Grow?
Since the global boom of smartphones and smart devices, e-commerce and online shopping has been on a steady rise; and it’s slowly changing the way people purchase goods and the way they are distributed from Distribution Centres to customers. This poses a big challenge for warehouses as the movement of goods to and from warehouses become more rapid.
Because of real-time tracking, processing, and delivery of packages -- coupled with steadily rising delivery costs-- warehouse operations are expected to adopt advanced technologies to keep up with on-time delivery and keep customer satisfaction up while reducing costs on delivery. This is where automation steps in to help meet the demands of online retailers or “e-retailers”.
Growing e-commerce trend
Ecommerce and online retail is slowly taking over the consumer market, making a significant change in the retail market’s behaviour and the growth of brick-and-mortar stores. According to 10ecommercetrends.com:
“Today, eCommerce/digital influences up to 56% of in-store purchases, while eCommerce itself represents almost 10% of U.S. retail sales and that figure is growing by nearly 15% annually…As these figures suggest, stores can no longer survive without being present on their customers’ preferred channels; retailers need to fully integrate digital commerce in order to thrive.”
It’s likely that online retail will be the most preferred platform for purchasing goods in the coming years. And with current warehouses having little to no automation, it’s only a matter of time before they surrender to the growing number of day-to-day orders.
Rise of Online shopping and shipping
The fashion industry, for example, has experienced rapid growth in recent years. And with retailers giving low prices and special perks like returns with no charge to stay competitive in the tight market, keeping the internal processes free-flowing is an integral part of the changing purchase-distribution landscape.
As more and more retailers enter the online platform to sell their products, e-retailers try to remain competitive by giving free shipping to customers – and this is hurting the capital of both the shipper and retailer. According to Reuters:
“Shippers’ margins are falling or stagnating, despite steady price increases, because homes are roughly three times as expensive to deliver to as business addresses. And retailers cannot pass along the cost, because they must offer free shipping in order to compete.”
With the growing challenge of shouldering delivery costs and trying to remain competitive in the online market, it’s vital for online retailers to adopt some form of automation in their warehouses to improve storage and product movement for efficient order fulfilment and to reduce the occurrence of mis picks that further hurts costs.
Why is automation the answer? How can it help?
Faced with a growing number of online orders and package shipments daily – and order volume climbing 10 to 20 times during special days like Black Friday, Cyber Monday and Singles Day-- e-retailers cannot possibly complete their orders without any form of automation.
The application of automation in warehousing and distribution is able to help tackle the high logistics demands of e-commerce without high maintenance costs thanks to the optimum integration of such systems into the logistics processes. A range of technology options are available for e-retailers to consider and it is necessary to identify their requirements based on their own operational model since each option has their merits and price points. Things to consider include, the number of SKUs, orders, order lines, picks (per hour and per day), manpower, the enterprise resource planning (ERP) system and the forecasted growth they will achieve in the future. It is also essential to classify the distribution of the products to fast, medium and slow movers. This will help to decide the warehouse systems and picking technologies required to house the items.
A huge part of e-commerce success lies with speed and accuracy of items being picked which eventually affects fulfilment lead time - from the point when the order is first being placed to the time when the item is received by the consumer. Modular and scalable investments to speed up the movement of goods in the warehouse like the application of goods-to-man picking, supported by miniloads, carousels, shuttles or the implementation of automated guided vehicles (AGV), systems that help reduce the picker’s need to walk around the warehouse can raise the pick rate up to 1,000 picks per hour.
At the end of the day, the implementation of automation to the warehouses need not be an upfront one time investment at one go. A progressive adoption of automation to update the current warehouse system can be a viable option. With a well-planned integration of appropriate equipment, e-retailers can have a complete warehouse system suitable for their operation, addressing even complex picking challenges.