Updating the Distribution Center to Meet Modern Shoppers’ Needs
E-commerce is popular. Really popular.
You’d have to be living under a rock not to notice the trend of online ordering over the past decade, but you may be surprised to know how popular it’s really become.
In the US, online-only retailers are outgrowing their bricks-and-mortar colleagues by more than 62%.
This coming of age has brought new heights of choice and convenience to the consumer but has wrought havoc and headache for distribution centers that have undergone a major change to keep up with them.
The Early Days of E-Commerce
When e-commerce burst onto the scene in the late 90s, it was easy for distribution centers to handle the novel one-off orders that made up a small percentage of sales. Managers or engineers simply roped off a small piece of real estate for broken-case picking, and the low volumes were pretty easy to accommodate.
Soon after, the “dot com bubble” burst, and for a few years, at least, things stayed relatively the same.
Fast forward to the mid-2000s, and the story was different. E-commerce sales soared into the billions, and engineers and managers faced a difficult problem. How does a distribution center set up for pallets and cases fulfill an order for a single pair of shoes without disrupting everything?
For many, the answer was entire facilities dedicated to piecing fulfillment, separate from store fulfillment. In time, this became costly as doubling costs of equipment, manpower, facility space, and inventory mounted.
That’s when smart companies started to ask the most difficult question of all. How do we do it all from one facility instead?
Enter the omnichannel distribution center.
There are many challenges of operating everything from one facility, from pallet to piece. A great omnichannel DC must solve a bunch of issues.
- How do pickers and pallets coexist in a way that doesn’t slow both down?
- How does my current transport coexist with parcel carriers?
- Do pick modules need to be fed from the same inventory as case fulfillment?
- How much space will we need?
These are just a few of the obstacles to overcome.
Storage Solutions has been around before, during, and after navigating these issues for many companies facing them. According to Eric McDonald, Storage Solutions’ VP of National Accounts, they can be overcome.
“For one client, ten years ago, everything they shipped was in pallet quantities. To keep up with their competition and to keep their customers happy, they slowly transitioned to case-pick items, and today they’re breaking down cases to ship individual pieces.” McDonald said, “They’re one of many who are seeing that new reality. Many of the top retailers have already made this transition, and many of the medium and smaller sized companies, ones that go direct to consumer, are looking at it.”
The numbers can be difficult to crunch for companies considering an omnichannel facility. Utilization can fluctuate wildly, better or worse, in the new facility. So what makes the transition work for the companies that have found success? McDonald says it’s the expertise of the people who plan it.
“This isn’t a bolt-on pick module,” McDonald said. “Clear heights may need to be taller, ingress and egress need to be different, and smart conveyor design with a great partner is a must. There are even smaller things that might surprise, like airflow, fire suppression, lighting, or even parking spots that come with adding a larger staff to a single facility.”
One more way for the modern omnichannel distribution centers to really hum is to get JIT right. Lower inventories have been a trend recently, but for the omnichannel facility, keeping inventory low can unlock ultimate utilization by opening up space for store fulfillment, store supply, and direct-to-consumer picking to coexist.
With great challenge comes great reward; however, facilities able to master this save big money by reducing overhead costs.