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8 Strategies for Successful eCommerce in a Supply Chain Fulfilment Centre

The growth in e-commerce has transformed warehouse and distribution centers to mega fulfillment centers. The global shift toward e-commerce is changing how the retail and logistics industries operate. This trend affects all aspects of the retail industry including the strategic location of fulfillment centers and total real estate footprint.

As e-commerce retailers seek to drive profitability, to differentiate their offerings and to improve time to market, logistics facilities are increasingly viewed as revenue drivers. As e-commerce logistics models develop, they will drive huge changes in physical distribution networks comparable in many respects to previous changes generated by the rise of global sourcing, or the earlier centralization of deliveries to retail stores via retailer-controlled distribution centers. This will give rise to a new class of logistics and distribution properties including mega e-fulfillment centers, parcel hubs, delivery centers, local urban logistics depots for rapid order fulfillment, and returns processing centers.

The operational requirements behind a successful fulfillment center are also different than for a distribution center, it is the business and operations strategy that drives the order fulfillment network. The capabilities needed for each company’s e-commerce strategy are customized and include developing flexible solutions for shorter time horizons, understanding the balance between automation and constraints, and properly sizing the packing operation. Peak shipping times are more intense in fulfillment centers, orders sizes are smaller, but volume is very high.

Strategy 1: Embrace “Chaotic” eCommerce Warehousing.

Chaotic storage and ecommerce warehousing is a means of storing products that was developed by Amazon. Chaotic storage does not follow any logical process. Instead, it focuses on using any available shelf space for incoming storage, and the location of the items are logged into the warehouse management system (WMS). While it seems illogical, it does reduce time spent in trying to find new, ideal places for products.

Strategy 2: Build Touch-Plan Strategies for Different Order Types.

Smaller orders should have fewer touch points. However, large orders of the same item should also have minimal touch points. These facts imply a touch-point strategy should be in places for different types of orders placed, including e-commerce orders.

For example, single-item orders should only have one touch point, but multi-item orders for a store should have at least two touch points. An indicator or alert label should be used to help pickers, packers and loaders identify these shipments easily.

Amazon eCommerce Fulfilment Center
The diagram above shows the Amazon eCommerce Fulfilment Center. (Extracted from Dagge, Herald Sun. 2017)

Strategy 3: Use Batch Pick to Carts.

Warehouses had grown accustomed to picking orders individually, but the demand created by e-commerce requires faster picking of many different orders. Consequently, warehouses must create a strategy for picking different types of orders faster, such as zone pick-and-pass or multi-order pick to tote. Ultimately, this helps get more accomplished sooner. Mobile technology, such as radio frequency scanners, can help to ensure all picks are accurate by verifying the items’ specifications against orders automatically.

Strategy 4: Proactively Pull Orders as They Come In.

E-Commerce warehouses are processing more orders than ever before. As a result, a single eCommerce warehouse may actually be responsible for processing groceries, fresh fruits and vegetables, beauty supplies, apparel and practically any other type of product. Shippers need to proactively pull orders as they come in, but the key to making this practice successful is prioritizing order picking to meet the demands of the consumers.

Prioritizing can be broken down by type
The diagram above shows how prioritizing can be broken down by type. (Extracted from iveybusinessjournal.com, 2017)

Strategy 5: Optimize Transportation Requirements During Picking.

Aside from the labor costs of having staff members physically pick products, the cost of transporting a shipment to the customer represents one of the highest costs in the supply chain. While many small orders may come in, the warehouse should proactively work to reduce the transportation costs by picking and packaging products for intermodal transportation, asserts Art Eldred and Tony Hollis of Supply Chain 24/7. As a result, shippers can reduce transit times and fuel costs, which promotes faster, on-time delivery.

ECommerce shows no signs of slowing, and those who refuse to enhance warehouse and shipping processes will lose their competitive advantages and fail. However, the future for eCommerce is filled with opportunity. If shippers and warehouses can leverage the power of insurmountable demand to improve the processes during order fulfillment and shipping, they can become the industry profiteers of tomorrow.

Strategy 6: Implement Adaptable Pack Zones or Stations.

Rigidity in warehousing is incompatible with e-commerce. All plans and strategies need to adapt to real-time data regarding demand fluctuations, forecasts and changes in how consumers are ordering. Rather than devoting additional resources to the construction of new warehouses for peak seasons, existing areas can be converted to pack zones or stations, allowing pickers to complete the order packing process faster, promoting faster delivery and fewer touch points.

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Hu, M., Kumar, R., & Chandra, S. (2014). “Best Practices in Strategic Multichannel Fulfilment”. Retrieved from https://iveybusinessjournal.com, accessed 31/08/2017.

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Abdul Rahim Bin Daud
Abdul Rahim Bin Daud
Abdul Rahim Bin Daud has substantive years of experience in the specialised field of logistics and operations management. He is a member of Singapore Institute of Purchasing and Materials Management (SIPMM). He has completed the Diploma in Logistics and Supply Management (DLSM) in September 2017 at SIPMM Institute.

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