Scaling for growth and business fluctuations are expected to be a primary focus for retailers and brands this year, and this has a major impact on fulfillment operations. Since fulfillment technology plays a critical role in helping to handle more order volume quickly and cost-effectively, it is likely one of your top priorities for 2023.
Where to start? With all the buzz about new developments in robotics and automation, it’s tempting to make immediate strides in these areas. But before you order up a posse of robots, it is important to lay the proper groundwork.
Needs Assessment
Your order profile should drive your fulfillment technology solution. You will want to consider a variety of factors: sales channels, order profile and volumes, on-hand inventory, SLAs, physical product characteristics, special handling requirements, need for services like kitting and labeling, shipping requirements and capital requirements.
Then, think about future needs for your fulfillment operations that may require operational flexibility. The following list of questions is by no means exhaustive, but it should get you thinking about what might make your technology road map more effective and scalable.
- How much does order volume spike during promotions or peak selling periods?
- What do you anticipate in terms of growth from increased demand, product line expansion, etc.?
- Do you want to add new sales channels, i.e., pop-ups or physical stores, subscription services, third-party marketplaces or dropship partners?
- Will you need to add distribution centers or expand in new markets?
Even if you do not plan to make any of these changes in the short term, anticipating foundational needs like these in the design phase will help to ensure that your technology solution can accommodate them more quickly and easily when the time comes.
Systems Check
Once you have a solid understanding of your needs, take time to assess your systems.
Warehouse management system
First, ensure that your in-house or partner’s WMS can handle the fundamentals within the four walls of the fulfillment center, and that the system architecture ensures data integrity and security.
Then dig deeper. Does the WMS give you real-time visibility into fulfillment operations? Does it have the ability to track on-time performance? The more your order volume grows, the more value you will find in these features.
If you foresee a need to handle special requirements, such as kitting or generating packing slips, a WMS with flexible configuration can phase in modules for these capabilities as you need them.
Can your WMS support your parcel or transportation management system (TMS) and other systems? Does it integrate directly with your material handling systems? The fewer the integration points you have, the greater your operational reliability.
If you sell via multiple sales channels, are you able to handle orders for all of them from a single WMS instance? Can your WMS wave all order types and manage them operationally? These capabilities also come in handy if you have multiple brands or business units.
Order Management System
If you receive orders from multiple sales channels or operate multiple distribution centers, or plan to, you probably need an OMS. It can also be beneficial for those who simply want better control over their order management and allow for greater variation or customization.
You may invest in a system of your own or opt to operate from your fulfillment provider’s OMS. Either way, you need robust software that can accommodate multiple inventory sources and provide enterprise-wide visibility. To keep customers informed, you’ll want to know order status and product availability for both in-stock and available-to-promise items. If you use drop shipping, you may find it convenient to allow vendors access to the system so that you have one view of all your orders.
For orders from multiple sources – such as B2B and DTC – confirm that your system can support different inventory allocation and order release strategies and customize rules for processing. For example, if you’re short on inventory, do you want to prioritize ecommerce orders over retail? Do you always want to ship from the FC closest to the customer, or would you prefer to change the fulfillment depending on inventory availability?
It’s also important to know your options for editing or changing orders. How late can you change a shipping address or delivery method, or cancel an order? The more flexibility you can offer, the better the customer experience, and the greater the likelihood of repeat business.
If you have retail stores, you may want an OMS that can power buy online, pickup in store (BOPIS) or return in store (BORIS) and curbside pickup. This not only gives customers more options, but it saves on shipping costs. You may also want to consider an OMS with a store-picking module.
Integration
As you continue to grow, you will ultimately need a powerful Warehouse Execution System (WES) to tie your systems together and ensure that they communicate efficiently and appropriately. The WES integrates with an existing WMS to optimize order fulfillment and provides real-time visibility from click to consumer.
A WES also supports the addition of fulfillment automation, helping to manage and optimize order batching, release, picking and replenishment. Typically, it can work with a variety of systems, such as pick-to-light, put walls and mobile robots, from multiple vendors.
Entry-level costs have dropped, so it’s more affordable to have a WES in house, or partner with an integrator or 3PL with a system already in place.
Either way, you’ll need expert assistance. Effective integration requires a deep knowledge of the operation, systems and automation and robotics. Breakdowns in integration typically require manual intervention, which can result in costly errors and delays.
The Bottom Line
Thoughtful planning, robust systems and seamless integration will provide a strong foundation for scalable fulfillment operations. Remember, what you build on the front end will ultimately determine your operations’ ability to support growth and change down the road.
Note: This is the first of a two-part series
Brian Mattingly is vice president of operations for Saddle Creek Logistics Services