The pandemic accelerated the adoption of e-commerce. Faced with the Coronavirus disease (COVID-19), consumers embraced online shopping and its flexibility, even during the historic transition to remote working and learning for millions of families.
The impact on materials handling in the retail industry and the larger supply chain was swift and unprecedented, with data from the logistics industry in particular revealing the dramatic growth of e-commerce.
It should also come as no surprise that retailers’ fulfillment operations and distribution centers were significantly impacted. Retailers in every sector – from general merchandise to fashion – saw dramatic growth in their online sales, and in many cases, at their brick-and-mortar operations as well.
The increase in e-commerce had another transformative impact. Consumers’ preferences quickly evolved from second-day to next-day delivery. Now, many expect same-day delivery options, whether it’s for items delivered to their homes or those shipped to a nearby store for pickup. They also require retailers to utilize an equally robust network of distribution centers and warehouses that are not only nimbler and more flexible, but can also fulfill orders faster than ever before.
So, what do retailers need to know and do to ensure that their fulfillment operations stand up to same-day delivery demands? And, how can they use these new capabilities to their advantage? Just as importantly, what factors should they consider? For answers, one must start first with automation.
● The decision to automate fulfillment operations is no longer optional. Same-day deliveries necessitate fulfillment operations that operate at a velocity that is not possible without automation. At its core, the automation of distribution centers and warehouses is all about decreasing retailers’ dependency on labor to fulfill the orders they receive and to do so with much faster lead times.
That does not mean; however, that automation in itself is a silver bullet that can be applied in a cookie-cutter fashion. Each business and their customers are different. Retailers must consider their own unique micro-fulfillment and hyper-local fulfillment needs. For this reason, a highly flexible approach to automation and the many technologies involved, including shuttles, robots and software, is absolutely crucial. There is simply no one-size-fits-all approach that works for every retailer. Customization is crucial.
● Increase storage density and scalability. Warehouses and distribution centers must be stocked to address immediate demand not only for the 20% of stock-keeping units (SKUs) that comprise 80% of most retail businesses, but also the greater SKU counts required to be competitive in markets where consumers demand more choices.
In most businesses this necessitates the higher storage densities that automated shuttle systems offer while utilizing more vertical space in the same facility. Dark stores (brick-and-mortar facilities converted into distribution centers or that devote a portion of their footprint to e-commerce fulfillment) should also be considered to address scalability requirements. Notably, these can be used to help promote the retailers’ ability to quickly address customers’ needs. To showcase their innovative solutions, some retailers design their stores so that customers can view the robotics and fulfillment operations behind their ultra-fast delivery options during their brick-and-mortar shopping experience.
● Consider a phased approach with software, systems and processes that can be rapidly and effectively scaled. The demand for same-day deliveries is an indicator of the dramatic volatility that continues to shape the retail industry and e-commerce. Retailers should look to automation that can be deployed in a phased approach that can be applied to markets and facilities of all sizes. Put in other words, retailers should be able to replicate their automation assets quickly and easily throughout their fulfillment, warehouse and distribution networks while empowering e-commerce and brick-and-mortar operations to rapidly address consumers’ demands.
● Use automation to address not only the labor shortage, but also the many challenges people encounter in warehouse environments. Automation should not be viewed simply as a way to decrease retailers’ dependency on labor, but also as a way to help distribution center employees remain healthier and happier while addressing the employee turnover that many fulfillment operations struggle with. For example, robots can be used to pick up the heaviest items while decreasing the number of chronic workplace injuries that are commonplace and preventable in warehouse careers.
This improves ergonomics in the warehouse and with operator turnover. The department-friendly modern fulfillment automation enables delivery of all SKUs to the aisles or sections of the store where needed and dramatically decreases the time and labor required to stock shelves. This not only reduces the overall dependency on labor, but also prevents in-store replenishment from interfering with customers, therefore enhancing the customer experience.
● Look at the fulfillment of same-day delivery as an opportunity to enhance customer relationships and strengthen loyalty. The software at the heart of automation can easily transform fulfillment and same-day delivery options into a competitive advantage that recognizes and rewards desired shopping behaviors and the most valuable customers. For example, SKUs can be prioritized so that the orders of the most loyal, long-term patrons are prioritized. Alternatively, these same customers can be given even faster deliveries options as an added value and show of appreciation.
● Consider the service requirements of automation. Retailers looking to automate their fulfillment operations should also pay careful attention to the service life of the machines, systems and software they invest in. Service and maintenance should be a core consideration, not an afterthought. Like all software and machinery, today’s fulfillment automation solutions require upkeep.
The demand for same-day deliveries is here to stay and requires retailers to be more disciplined, focused and innovative in their approach to materials handling and distribution. Fortunately, today’s advances in automation empower retailers to be better equipped and more able to respond instantly with the right product, at the right time, at the right place than ever before.