Support Services: Have It Your Way1 May, 2009 By: Tony Sziklai Response
More and more, customers are demanding instant gratification — same-day shipments, order and package customization, last-minute order changes and continuity program customization. The Burger King mantra — "Have it your way" — still drives consumer behavior, as well as the back-end processes that a DR merchant must implement to meet customer needs and desires.
From an operations perspective, we strive to meet these customer needs while at the same time maintaining good cost control and P&L performance. Balancing fast response and overall labor costs ultimately leads to a discussion of fulfillment center automation. How much automation do I need? What should I automate, and when?
From our experience, there are a number of core principles to keep in mind when choosing the right outsourcing partner to implement your fulfillment center automation:
Flexibility. Assume from the start that the nature of the customer relationship will change over time. Proactively managing your relationship will increase lifetime customer value. Choose a fulfillment vendor that will work with you to develop a method that allows changes to be made to offers, quantity shipped, shipping intervals and terms. Implement a forecasting program, inventory and order management strategy, and release programs to help these changes flow smoothly.
Design and customization. Customer needs and demands drive the design and operation side of the fulfillment center. Your vendor's processes and systems should be rapidly scalable, expandable and flexible to manage unexpected shifts in customer orders.
Order release. Work with your fulfillment partner to develop an order profile for your products and campaigns. Knowing the volume of single-item orders versus multiple-item orders can greatly simplify your operating process and allow for quicker assessments of daily and hourly labor requirements. Group orders and queue them by type and item mix so that they can be processed more efficiently, in greater volumes and at a lower cost-per-order.
Lean operating principles. Consider how you might reduce process steps, touches and the space required to fulfill your orders. Industry studies often show that fulfillment center labor can waste as much as 75 percent of its time in a poorly designed and managed fulfillment center.
Sensible automation. Locating goods (velocity slotting) in the right location and quantity based on its activity will minimize excess handling and is a key fulfillment center design principle. Software automation may be used to manage and queue electronic orders and to release them to picking zones. Bar code scanning of received items and their warehouse location can increase picking accuracy to more than 99 percent. Using computer-directed voice picking and pick-to-light zones for higher activity items can often double or triple order picking productivity and reduce labor costs substantially. A comprehensive order picking automation strategy can increase customer order accuracy to 99.99 percent!
Visibility. At the hub of an efficient fulfillment operation is, first, possessing visibility into six core areas of the enterprise: forecasting; order management and release process; inventory management; zones and labor management; manifesting; and logistics (inbound, outbound and reverse logistics). Having the tools to manage and re-target resources on a real time basis comes second. The third item at that hub is the ability to proactively communicate changes to the customer.
Put to good use, these principles will allow you and your outsourcing partner to promote the kind of streamlined workflow, visibility and customer satisfaction that are vital to any fulfillment center automation plan. You should also be able to reduce costs and gain additional operational efficiencies.
Tony Sziklai is president of Moulton Logistics Management in Van Nuys, Calif. He can be reached at (818) 997-1800, or via E-mail at