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For almost all retailers, the online sales channel has become a strategy for increased market share and revenue growth to supplement the more traditional brick and mortar store sales. In fact, for some retailers, online sales represent either a majority or the entirety of their revenues. To put this statement in quantifiable terms, according to the U.S. Census Bureau’s 2012 Annual Retail Trade Survey, more than $226B of business was transacted via the internet. This was a 14.7% increase from 2011 but represented only 5.1% of the entire retail sales revenues in the United States, so there is still a lot of room to grow this sales channel. In fact, by 2018, e-commerce is projected to reach between $414B and $491.5B in sales in the U.S. with the trend likely to continue linearly thereafter. As a result, e-commerce fulfillment has become a challenge for distribution centers whose processes were designed for store order fulfillment.

The challenges that distribution managers face when trying to adjust to e-commerce fulfillment is simply stated: it is completely different. Distribution centers have a discrete number of stores as their customers. For most distribution centers, stores are not replenished daily. Rather, they are replenished once, or perhaps a few times a week. The orders from stores have multiple line items, sometimes hundreds, if not thousands, and are usually wrapped on multiple pallets. They are shipped via dedicated, LTL carrier, or company trucks. Nothing about this model is the same as e-commerce fulfillment where there are an infinite number of potential customers who only order one or two things at a time, expect their order to be shipped through a parcel carrier of their choice so that they can decide the speed of delivery and can track it along its route.

Step 1 –Batch Picking vs Discrete Order Picking

The single most important determination when setting up a pick line or pick module for e-commerce fulfillment is to determine the pick method. The choice to discrete order pick or batch pick is determined primarily by the order profile. If, through extensive data analysis, it is understood that the Pareto Principle applies to the products that are ordered in which only a few SKUs are on a majority of the orders, then consider batch picking as the means to fulfill. However, if the distribution of SKUs ordered is very uniform, then discrete order picking would probably be most appropriate.

Batch Picking

Batch picking is typically accompanied by higher level automation compared to discrete order picking. Equipment such as Automated Storage and Retrieval Systems (AS/RS), Vertical Lift Modules (VLM), Carousels, and other Goods-to-Person technologies are effective means to pick multiples of the same SKU. Additionally, when picking multiples of the same SKU from one or more of these technologies, totes are commonly used to transport the batch to a deconsolidation area where the SKUs are separated to the appropriate order, oftentimes directed by lights with the use of a put-to-light system. If not transported to a deconsolidation area, the deconsolidation process can occur at the point of batch picking through the use of a put-to-light system with multiple totes and a take-away conveyor. In lieu of these very automated and expensive systems, using pick-to-light carts through storage locations such as shelving or carton flow rack can be used to both pick in batches as well as put to orders without the need for a dedicated deconsolidation station. As expected, though, the throughput and cube utilization of a pick-to-light cart and shelving system is not typically as high as an AS/RS, VLM, or carousel. Therefore, if the order profile shows a Pareto Principle distribution of SKUs ordered and the order volume is very high, then consider batch picking with a type of Goods-to-Person technology coupled with a put-to-light deconsolidation system. However, if the order volume is either low or unknown, then consider the much less expensive put-to-light carts until higher levels of automation are financially justifiable.

Discrete Order Picking

Discrete order picking is typically a more semi-automated method of fulfillment compared to most batch picking processes. As such, there is usually a higher labor component, which allows for flexibility when peak periods demand higher throughput from the system. A discrete order picking system can be either a single level pick line or a multi-level pick module, with the main determinants being the amount of SKUs to be included in the sales channel and the available cubic space to dedicate to the operation. In either setup, the technologies and process are the same, with the only challenge being the means to connect the multiple levels, which is typically accomplished with conveyors, including spiral conveyors for the elevation changes.

The high level steps in a discrete order pick process include initiation, picking, packing, and shipping. Within these steps are various options for increased efficiency and throughput. The main driver in evaluating possible options is determining if the process is paperless or not. Intuitively, if paperless, then more possibilities become available for increased efficiency. However, if the throughput is unknown, as would likely be the case in a new e-commerce fulfilment operation, then a paper-based process is the likely choice until the demand justifies the need for a paperless system.

Whether paperless or not, items are picked on the pick line to either a tote and then transferred to the appropriate shipper box at the packstation or the orders are picked directly to the appropriate shipper box, which requires the calculation of the order’s SKU dimensions and quantities in order to assign the appropriate shipper box. This calculation process is called “cartonization” and is available with most Warehouse Control System (WCS) software packages used in the control and communications of the fulfillment operations.

In a paper based discrete order picking process, order initiation is accomplished by simply printing out a stack of pick tickets with each ticket placed in a tote or box and then queued up on the gravity conveyor in front of the first pick zone. The pick line consists of a row of storage equipment, either shelving or flow rack, with a powered take-away conveyor down the middle of the row to convey the box or tote of completed orders to the packstations. Typically, gravity conveyor is placed either straddling the powered take-away conveyor or in front of the pick faces for order picking personnel to walk the tote or box along their respective picking zone while picking and placing SKUs into the tote or box. A pick line is divided into pick zones, typically with one picking associate working each pick zone. Depending on the throughput requirements, an entire pick line can be one or two zones for very low throughput fulfillment operations, or there can be numerous pick zones in a high throughput environment.

There are a couple of different strategies when routing the totes or boxes through the pick zones. One strategy, called “pick and pass”, has all of the totes or boxes in a continuous flow and routed in front of every pick zone for associates to read the pick ticket, whether a pick is required in the zone or not, and pick items from their zone, and then pass the tote or box to the next zone. Once the last pick for an order is completed, the box or tote is then pushed or placed onto the take-away conveyor. As imaginable, as volume increases in a pick and pass operation, the level of activity at the front of the pick line increases and then tapers off toward the end of the pick line as orders are completed. This bottleneck can cause a limitation in throughput as demand increases and thus, sacrifice customer service levels.

In fulfillment operations where the volume is high, a switch to paperless picking should be considered. In a paperless picking process, instead of printing and placing pick tickets inside the tote or box, either a bar coded label representing an order is printed and applied to the shipper box or a tote with a bar coded license plate is scanned and married to an order.

Once a bar code is used to marry the box or tote to an order, then a more efficient pick and pass strategy can be used, but instead of reading pick tickets, associates use a hand scanner to scan the bar code. Once scanned, either the hand scanner will direct the associate to pick items in their zone, or a pick-to-light system can be used. When using a pick-to-light system, lights in front of each pick face illuminate with the appropriate quantity to pick for the scanned box or tote. Upon picking the appropriate item and quantity, a pick confirmation button is pushed so that the software system keeps accurate track of the status of the order as it navigates the pick line. Once the last item for the order is picked, the pick-to-light system illuminates an “order complete” status and the box or tote is pushed or placed on the take-away conveyor.

An even more efficient direct order picking routing strategy compared to pick and pass is called “zone routing”. In a zone routing setup, a powered conveyor, usually with zero pressure accumulation, is run down the middle of the shelf storage or flow rack aisle. At the end of each pick zone is a 90-degree left/right transfer followed by conveyor that runs in the opposite direction as the middle-powered conveyor, which brings the totes or box along the pick zone. As a bar code labeled box or license plated tote is inducted into the system, it is scanned prior to each 90-degree left/right transfer. The scanner queries the WCS database to determine if there is a pick in either of the following left or right zones. If not, the tote or box continues to the next scanner and pair of pick zones. If there is a pick, then the appropriate left or right transfer is activate causing the tote or box to convey to the zone. Just like with the paperless pick and pass operation, either a hand scanner or a pick to light system can be used to direct the associate. Once the pick is complete, the associate pushes the tote or box onto the middle-powered accumulation conveyor to continue to be routed to the rest of the order’s appropriate pick zones.

Batch Picking with Discrete Order Picking

In situations where the order profile has characteristics such that there are a few SKUs that are common with most orders, but the rest of the line items in most orders are uniformly distributed, combining a batch picking with a discrete order picking process might be considered. In this circumstance, the batch picking and deconsolidation is completed first, at order initiation, and then the totes or boxes are routed to the pick line or pick module for fulfilling the remaining line item picks.

Packing and Shipping

Once the picks are complete, it is time to pack and ship. If totes are used in the picking operation, then the packstations are a little more laborious compared to the packstations where the associates picked to the shipper boxes. When totes are used, packstations are typically equipped with various box sizes for transferring and packing items, along with dunnage and sealing equipment, scales, and parcel label printers. All these operations are typically performed by the packstation associate and can take a little longer than those packstations for the pick to shipper boxes.

When the orders are picked directly to the shipper boxes, a few more opportunities for efficiencies are available. In fact, it is even possible to eliminate the need for packstations altogether with the only manual process needed to ship orders possibly being the manifesting of orders on a common parcel carrier. After shipper leaves the pick line or pick module, it can enter either a fully automatic, or semi-automatic, dunnage and sealing system. After completion of sealing, the shipper box can be conveyed to an inline scale in which the bar-coded label is scanned allowing the order and weight information to be sent to the WCS system. The WCS and parcel shipping software then calculates the shipping rate, generates the tracking number, and sends the appropriate parcel carrier compliant label information to the automated print and apply labeler located immediately downstream of the scale. The shipper is automatically labeled and conveyed to the manifesting station for preparation for shipment.

Oftentimes, e-commerce fulfillment requires the option to use parcel carriers of the customer’s choice. Therefore, when using the automated labeling, the WCS, shipping software, and inline print and apply labeler must be able to accommodate for the multiple parcel carriers. After the boxes are appropriately labeled, either manually at the packstations, or through an automated process, the conveyor system can be used to sort the boxes to the appropriate carrier down lines. Once sorted, the boxes can easily be manifested and readied for shipment.

In summary, as consumers continue to drive the economic engine of the economy, they will do so more and more through the internet. Therefore, adapting to this changing environment is critical for existing distributors whose processes were developed for supporting store replenishment. For those newer retailers that market primarily through the internet, establishing fulfillment processes that are efficient, flexible and allow for growth will prove to be most beneficial as their business evolves.