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EFFECTTHE E-COMMERCE

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MARKET RESEARCH REVEALS IMPACTS TO DISTRIBUTION AND FULFILLMENT OPERATIONSThe relentless march of e-commerce continues to put tremendous

strains on distribution and fulfillment operations. Honeywell

Intelligrated, in collaboration with Modern Materials Handling and the

Peerless Research Group (PRG), recently surveyed 171 U.S.-based

material handling executives to understand how their respective

companies are managing in lieu of e-commerce pressures. The

revealing results were published in a report entitled: The Impacts of e-Commerce, Fulfillment Challenges and Improvement Priorities.

It came as no surprise to learn that the majority of retailers are actively

seeking solutions to combat rapidly escalating fulfillment complexities

and new tools to manage mission-critical challenges, such as: labor

management, order processing and tracking, and warehouse and

distribution costs. Yet despite these issues, many have been slow to

adopt the technologies and automation needed to keep pace with

increasing service levels.

Let’s take a closer look at some of the key research findings.

EFFECT

6 ON THE MOVE 2019

THE EFFICIENT ORDER FULFILLMENT IMPERATIVE

Thirty-five percent of MHE executives reported that fulfilling more

orders, faster and at lower costs, was their primary operational challenge.

Other findings include: 28 percent stated that reducing errors in order

processing/improving order accuracy was their top concern; 25 percent

reported continually struggling to obtain enough labor to support

operations; and 24 percent cited the difficulty of keeping pace with

rising customer expectations was their greatest challenge.

OPERATIONAL EFFICIENCIES LIMITED BY LABOR AND FACILITY CONSTRAINTS

Insufficient workforce to handle e-commerce volumes and the lack

of available floor space were the top two constraints to operational

efficiencies, at 46 percent and 40 percent, respectively. Difficulties

adapting inventory workflow on the warehouse floor was cited by 38

percent of respondents.

AUTOMATION THE KEY TO SHORT- AND LONG-TERM GROWTH

Forty-four percent of DC managers stated that deploying more

automated systems in their facilities will be necessary to address

growth targets. Also, 37 percent seek to add more manpower to their

current labor force, and 33 percent reported that implementing

process improvement strategies and expanding the footprint of current

facilities are also in the works.

ADAPTING TO INVENTORY MANAGEMENT CHALLENGES

The survey group cited inventory management (39 percent)

bottlenecks as the most likely deterrents to achieving supply chain

adaptability. Processing and managing orders, manufacturing and

production challenges, and supplier collaboration were also reported

as barriers to becoming more adaptable.

ROOM FOR FULFILLMENT IMPROVEMENTS

When identifying functional areas ripe for improvements, managers

listed many phases of the fulfillment process, including: inventory

management (46 percent), order picking (35 percent), order waving/

releasing (28 percent) and packing (20 percent).

CONTROLLING FREIGHT AND LABOR COSTS

The majority of respondents expressed the

criticality of controlling freight/transportation

and labor costs (79 percent and 75 percent,

respectively). While fewer than one in 10

companies currently has automated labor

management processes, 34 percent plan

to introduce automation in the next few

years. Surprisingly, nearly one out of five

assert they have no plans to implement labor

management technology. Order management,

invoicing and shipping visibility are most

likely to be automated, although the majority

of respondents still only rely on partially

automated methods.

INVESTMENT AREAS

With an absence of end-to-end automation

across fulfillment operations, 58 percent

of companies surveyed expect to increase

investments in distribution software, such

as warehouse management systems (WMS),

warehouse control systems (WCS) and

warehouse execution systems (WES). Labor

management facility expansion, packaging

equipment and materials, and implementing

or upgrading automated materials handling

systems are also prime areas for upgrades.

THE EMERGENCE OF AUTOMATED SOLUTIONS

In light of these findings, it’s important to

also consider a few of the solutions we’re

recommending to help companies rise to meet

the e-commerce challenge.

AS/RS, ROBOTIC PICKING AND AUTOMATION

The 80/20 rule is changing. While the focus

has traditionally been on deploying picking

automation for the 20 percent of the most

commonly ordered SKUs, DC operators are

expanding their focus to now include the other

80 percent. In response, many fulfillment

operations have introduced automated

storage and retrieval system (AS/RS) shuttles

to help efficiently manage their entire SKU mix

and alleviate labor resourcing pressures.

Coordinating automation and resource availability is critical to meeting e-commerce customer expections.

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IN THE KNOW

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THE E-COMMERCE EFFECT

To improve productivity and reduce errors,

many DCs are integrating robotic picking

automation (via articulated arms) and goods-

to-operator (GTO) stations, especially to

offset labor-intensive and repetitive tasks.

In addition, many have deployed automated

truck unloaders as an efficient alternative to

the arduous manual tasks of truck loading

and unloading, which are often performed in

extreme temperatures.

LABOR MANAGEMENT SOFTWARE (LMS)

Peak demand cycles, in which fulfillment

volumes can grow up to three times their

normal rates during two to three weeks out of

a year, pose significant staffing challenges for

DC operators. LMS provides a suite of tools

that allows DC managers and supervisors to

mitigate these challenges, regardless of the

demand requirements.

LMS helps supervisors quickly visualize labor

status, identify bottlenecks, and understand

how people, operations and facilities are

performing. Historical data allows managers

to accurately forecast their staffing requirements in both peak and

off-season scenarios, thereby reducing their reliance on temporary

sources. By leveraging advanced analytics capabilities, LMS utilizes

algorithms to help identify employees who may be at risk of leaving —

giving management the opportunity to take proactive steps and try to

retain top-performing resources.

DYNAMIC WAREHOUSE EXECUTION SYSTEMS (WES)

Coordinating automation systems and resource availability is critical to

meeting e-commerce customer expectations. Although pick-to-lights,

voice picking and put walls are all tools many DCs have integrated to

improve order accuracy and productivity, a lack of real-time visibility into

all automation activities can still present throughput barriers. This where

a WES can help.

A WES can check workstation and labor capacity and intelligently route

work to available areas. By evenly distributing the workload, a WES limits

unnecessary congestion, bottlenecks and overworked resources. In

doing so, it alleviates labor fatigue that could potentially lead to errors

and lost productivity.

These are just a few examples of how Honeywell Intelligrated is helping

companies address the challenges of e-commerce. To learn more about

the research findings or our targeted solutions, please contact us.