How can warehouse operators keep pace in an unpredictable market?

Warehouses and distribution centres nearly reached their limits in terms of space and system capacity due to the huge growth in e-commerce seen in the past few years. Automation is an easy answer to these challenges, but this is more straightforward if growth is linear and predictable. But what if your growth requirements are unpredictable?

“The main concern in the e-commerce market is that the ABC method struggles to cope with unpredictability. “
Stan Lamers
Segment Manager General Merchandise & Fashion

In the retail landscape, many operators have benefitted from the recent huge growth in e-commerce. But as a result, some warehouses and distribution centres (DCs) have nearly reached their limits in terms of available space and system capacity. However, growth seems to be slowing due to the economic uncertainty caused by high inflation rates, increasing energy prices and geopolitical instability. Despite this challenging set of circumstances, operators can expect to see growth continue but it will be even more unpredictable.

They are still confronted with growing pressure to tackle increasing operational costs, and are often not fully equipped to deal with the growing number of e-commerce orders. The range of SKUs (stock keeping units) is also increasing.

One of the most significant challenges is the scarcity of labour. While the easy answer is automation, this is more straightforward if growth is linear and predictable. How can retailers remain sustainable if their growth requirements are unpredictable?

Key considerations

Solutions and methodologies that allow e-commerce players to expand seamlessly while adapting to unpredictable market changes are vital. Ideally, storage and throughput should be scaled independently in order to keep any future system investments in line with specific requirements. Furthermore the solution should not be reliant on the ‘synergy’ potential of the order profile as this is also likely to change over time.

Goods-to-person (GtP) solutions are commonly used in dedicated e-commerce DCs, and the core component is typically a shuttle based AS/RS (automated storage and retrieval system). However, what difference does it make if this component is a traditional ‘full-captive’ shuttle system, a system with roaming shuttles, or a cube storage system?

There are central differences between traditional (‘full-captive’) shuttle systems and a shuttle-based AS/RS such as ADAPTO, that has built-in sorting and sequencing capabilities.

Scalable, flexible and available

To begin with, ADAPTO shuttles are able to drive freely over multiple aisles (in a so-called ‘roaming’ manoeuvre). As ADAPTO links to a single-order picking station, it forms part of a total solution, FASTPICK, that steers towards delivering in full sequence to a pick station.

Having a solution built around ‘lean’ infrastructure is also beneficial, and the strength of ADAPTO is that sequencing and sorting capabilities are in-built without having to install additional equipment at a later time.

ADAPTO can also be scaled in throughput or storage locations independently. In terms of availability, each lift serves only one pick station, rather than all lifts being connected to all pick stations. Each storage location is also reachable by multiple shuttles.

These examples highlight the two single points of failures inherent to traditional shuttle systems, which are eliminated when using ADAPTO.

Drawbacks of following the ‘ABC’ method

In traditional retail warehouse operations, stock can be divided into different categories based on demand. This is referred to as either the ‘Pareto’ or ‘ABC’ classification method, and encompasses fast- (A), medium- (B) and slow-moving (C) SKUs.

The main concern in the e-commerce market is that the ABC method struggles to cope with unpredictability. For example, the ‘slow mover’ of today can easily become the ‘fast mover’ of tomorrow, and vice-versa.

The biggest drawback of solutions that rely largely on the ABC method – such as ‘cube storage’ systems – is that they soon become ineffective if there are changing item profiles. The methodology is only supportive if a company is handling fixed profiles.

In addition, totes inside this dense storage concept are not directly accessible at the surface, and are therefore time-consuming to retrieve.

Room for manoeuvre

Another disadvantage is that shuttles only manoeuvre on a single plane and are not fully 3D like ADAPTO shuttles. This means cube storage only works when there are a minimal number of shuttles (throughput) compared to totes (storage volume).

There is also a question about scalability when it comes to matching future demand – particularly if warehouse space is at a premium. With FASTPICK, ‘fast movers’ do not need to be kept in a designated area, because the shuttles permit access to any product tote at any time.

For these reasons, it is better to invest in a solution that does not rely heavily on the ABC methodology. Indeed, the method is actually obsolete with automation that offers immediate access to all locations.

A platform for the future

It’s hard to predict what will happen in the future, but when market behaviour changes, it should be accommodated by an AS/RS solution such as FASTPICK. In an ever-changing world, the real value for a warehousing company is in securing a partner that can grow alongside it, and understands the complexities of solution design.

In an unpredictable world, setting a platform for the future is more important than ever, and retaining as much flexibility as possible results in scalability and peace of mind.

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