“Here Come The Bots!”
Wow! This was the headline caption on the presentation I was about to see. I had just joined the company. I had just spent the last few years in Retail. I had done a lot of research on how to improve efficiencies and productivity in Online/E-Commerce Fulfillment Distribution Centres. And I had lived through the agonizing process and resource challenges of fulfilling E-Commerce orders during the Holiday season, which is far and away the busiest time of the year in Retail.
So I was very intrigued to see the strategy the company was about to embark on with this presentation. From experience I knew that having operators manually pushing carts up and down the aisles of vast warehouses was inefficient and wasteful in most every way. I had been working on plans to improve this and I certainly had my own point of view.
At it’s core I knew that the paradigm had to be one of moving the material TO your employees, not moving your employees to the material. But what I saw next fell far short of what I hoped to see.
The Inefficient Environment
We had a very large Online Distribution Centre with thousands of skus stored on shelves and racking. To fill an online customer order an employee had to push a cart up and down the aisles, across the entire warehouse, in order to find each of the skus that made up a particular customer order.
While the cart size would allow the employee to pick the skus for multiple orders at a time, the fundamental design was that the operator would push that cart TO the material, and when they had filled all of the orders on the cart they would then push the entire cart to a processing workstation at one end of the warehouse.
In E-Commerce most surveys show that Online customers want their orders delivered fast (although they are not necessarily willing to pay for this). At the same time your company has the objective of driving revenue growth (E-Commerce is perhaps the fastest growing business channel worldwide) and lowering cost and cost per order plus maximizing profit.
In an E-Commerce Fulfillment model which involves having employees pushing carts TO the material NONE of these objectives are met: it takes longer to fill an order, it is more difficult to scale operations to meet demand, it is wasteful, and it is very, very expensive.
So I was surprised to see that the presentation titled “Here Come the Bots!” didn’t really involve robots or automation at all. The company had been doing the exact same thing I had experienced … they were having employees pushing carts up and down aisles manually gathering items to fill customer orders.
The presentation, and strategy, I was seeing involved nothing more than putting some modest bells and whistles on the carts to facilitate some incremental process efficiencies while perpetuating the same approach of moving employees to the material.
To quantify the magnitude of the problem, we had given some employees Fitbit devices at the beginning of their shifts, so that we could track the number of steps they took during the day. On a Fitbit device the default target is 10,000 steps a day, or about 5 miles. After a small test period we found that our employees were walking as much as 20,000+ steps in a single 8 hour shift! That’s over 10 miles!
And when you reduce the time taken for lunch and breaks that meant we had employees walking over 10 miles in a 7 hour period. The 10,000 step Fitbit target was for an entire 24 hour day. While our employees may have been getting fit, it corroborated our view that moving the employees to the material was a highly inefficient way to run an operation.
Black Friday/Cyber Monday Impacts
The problem only becomes amplified when you consider the various ramifications. During the Holiday season, including Black Friday/Cyber Monday, companies can easily see 100%, 200%, and 300% or higher increases in volumes from what they see during the rest of the year.
In a highly resource dependent operation that means you have to hire a lot of new employees for a short period of time. They need to be trained. They need to be retained. And they need to be productive (in the context of performing a process which is designed with waste at its core).
Further, every other company is looking to hire a lot of employees at the same time for the Holiday season so finding, keeping and motivating a dramatically higher number of employees means you may have to offer employment incentives, pay higher hourly rates, pay more for overtime and pay retention bonuses.
This all becomes incredibly expensive. And the customer isn’t willing to pay for any of it!
Additionally you need to have the capacity in place to meet all of this demand. Invariably during this hectic time of year your volumes may far exceed the already lofty growth projections that you had been planning to support. When the number one factor in expanding capacity is your ability to attract, train and retain substantially more employees in a very short period of time, your ability to add capacity can be severely strained.
During Black Friday/Cyber Monday your E-Commerce Fulfillment process and organization will be stretched and stressed to the hilt. Customers want their orders filled just as fast, if not faster, at this time of year. So having a fundamental business process requiring the movement of your employees to the material is perhaps the least efficient model you could have.
Waste and Waste Elimination!
In the Lean vernacular this motion is considered waste. It does not add value to the product nor would it be considered something the customer is willing to pay for. The goal then is to eliminate the waste!
There any many approaches to enabling this paradigm: Move the Material to your Employees, not the other way around. There are multi-million dollar solutions that involve significant automation using Ship Sorters and material movement systems such as Kiva or Swisslog for instance, or any automated storage and retrieval system.
There are advanced robotic solutions that entail having robots automatically pick and fetch products from storage bins. Pick-To-Light systems can be very effective. Zone picking is a process technique for narrowing the physical area that an employee has to cover, and Voice activated picking can be more efficient.
Certainly having conveyor running in your warehouse can limit the amount of movement of your employees. And ABC goods location (see our Post E-Commerce Fulfillment First Principles (Part 1) – Optimize Warehouse Storage Locations) can make huge strides in reducing unnecessary movement in your E-Commerce Fulfillment facility.
My intent here is not to enumerate all of the different E-Commerce Fulfillment solutions. There are those that are more or less expensive. In my experience we employed this paradigm shift to great effect and created a Leading Edge, while cost effective, solution to this problem (See a Future Post!).
The key point is that any and all of these solutions, and many others, will set you on the path to be able to support greater growth and faster delivery with lower costs, fewer capacity constraints, a greater ability to scale your operation, less waste, and less stress!
Even though Holiday 2016 is behind us NOW is the time to start planning for Holiday 2017! If you recognize this fundamental problem in your E-Commerce Fulfillment operation, and you need to support future growth and higher customer demands, seamlessly expand capacity, lower costs, and reduce waste and resource constraints, this simple shift in your operating paradigm may serve you well.
With this new paradigm you can begin your journey of Business Process Optimization. And again, it does not have to be an expensive proposition.
So start now! In every process work to eliminate the waste from having employees move to the material and instead Move The Material To Your Employees!
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