There are a few key factors that need to be considered when analyzing the major components of an e-commerce operation. A few items that have the biggest impact, in my mind, on this type of business are:
- Data collection (SKU list with quantities)
- Material movement (cubic velocity)
- Direct & Indirect fulfillment labor (largest factor for potential savings)
Let’s drill down into each of these areas.
Data collection with regards to receiving goods, product put away and processing orders is the first part of the puzzle to help achieve cost savings. Document your current process and be sure to include any potential changes in your strategy along with any sales trends you’ve seen.
Velocity analysis of unique SKUs will paint a DNA picture of the business. This is critical information needed to determine what storage mediums, forward pick locations and which picking strategies will be most effective to achieve the highest throughput of the system.
Labor is the largest cost to a business of this type so maximizing the use of this resource is critical. The goal is, of course, to reduce labor costs and increase accuracy while smoothing the inevitable lumpiness in allocating labor, including temporary help, overtime, additional shifts, or a third party.
So how does a company collect this information in order to reach the ‘all elusive’ maximum efficiencies?
Details in the Data
Simply put, this is a hands on, roll up your sleeves, fully engaged process. Analyzing at least a year’s worth of receipts by time of day, orders and order lines, slotting, inventory and storage space will help determine what storage mediums, types of automation and amount of space and manpower are necessary to meet your needs. Your B2C internet customers are very different from your B2B customer so breaking this data down by sales channels and order types is important.
Start with a qualified material handling integrator (MHI) capable of the type of sophistication to help with data analysis. The MHI also should have a successful track record of managing these types of projects, demonstrating competency with a breadth of innovative solutions and interested in providing a rigorous comparison of more than one option to meet your needs.
Having procured substantial savings for many of our customers, Abel Womack looks forward to helping you improve your process, saving your company money, and becoming a trusted partner. Feel free to contact us for a no cost meeting to see how we can positively impact your operation’s efficiency, productivity, and customer satisfaction.