While we are all too familiar with how the Amazons and Alibabas have changed the face of retail, less known is e-commerce’s impact on the distribution centre (DC). As retailers shift to a multi-channel marketplace it is changing the DC, from the location to order picking to the choice of technology.
For starters, DCs which were once located in the boondocks are now edging closer to the cities. The land cost is a lot higher but the close proximity to large population centres is a definite advantage for retailers, slashing hours off their delivery times, making it possible for them to provide online shoppers with the kind of service they have come to expect – delivery within 24 hours.
Order management and fulfillment within DCs is also taking on a whole new dimension. In the past, retailers could store all units of a particular item in a single picking location in pallet-size quantities. But as e-commerce is characterised by high volume of orders, low number of items per outbound case and fast order turn time present-day DCs will need to have multiple distinct storage locations for each item to facilitate picking in pallet, case or single item.
Companies with low volumes can probably manage with some tweaks in the order management and operation. But for large retailers, the spike in DC activity and complexity requires nothing short of an overhaul.
The systems installed before the rise of e-commerce simply does not have the features DCs now need. As today’s multi-channel environment require retailers to respond to orders of varied sizes and product mixes delivered to a multitude of locations, it demands the kind of precision and efficiency not expected in the past.
There is a range of technology options companies can consider, each with its merits and price points. Pick and put-to-light can increase efficiency of labour when managing multiple line item orders, miniload ASRS offers fast pick-up and delivery for moderate sized loads, while shuttle technology can be used to handle smaller loads. Other goods to man automation can be considered for organisation and movement of these order items.
Even high-bay DCs with stacker cranes, considered too expensive previously, can be part of companies’ options because of the pressing need to maximise the space occupied in the higher cost per square foot urban centres.
E-commerce has added one more element to the DC – returns management. Consumer surveys show that over 90% of online shoppers consider a company’s returns policy before purchasing, trumping even price as a consideration in making a purchase. Little wonder, as up to a quarter of the apparel purchases are returned because of the wrong size, the wrong fit or the fabric quality. With the growth of e-commerce, the number of returns has increased.
Returns management is a complicated process which takes up significant resources and storage space, and it is often managed next to companies’ core warehousing and distribution operations. Each return must be quality checked, destroyed or processed for new sales or returned to the supplier in accordance to the respective retailers’ return policies.
With all these added complexities, a software upgrade becomes necessary to efficiently manage the DC and provide real-time visibility.
To make an informed decision on how to best to go forward to develop a DC equipped to handle the challenging multi-channel marketplace, it is advisable to check out relevant industry specialists who can assist you.