One glaring lesson which the explosion in online shopping has for e-fulfilment and multi-channel distribution centres is that success or failure will depend on the speed and flexibility of the various automated handling systems to meet a rapidly growing market. But for specific areas of retailing, like the fashion industry, there is another growing problem; the surge in returns. This is particularly onerous for the SME fashion retailers who must deal with returns as best they can by minimising costs, improving availability and reducing stock obsolescence. So if returns form a significant share of total ‘sales’ then equipment should be in place to return them into storage, after suitable inspection, whenever required, so that they are quickly available for resale.
Such is the diversity of businesses and the plethora of specially-developed MHE to meet their tailored needs that it is difficult to know whom to choose as mentor, though the task is easing in that the big automated equipment suppliers have over recent years expanded their product range, including software, often by purchasing competitor businesses. Even so, a systems integrator may still be the best ally to seek when considering, say, a fast sortation conveyor, and consultants can still be useful at the early stage in at least shortening the selection process.
Integrators can move outside their own company’s product range to integrate a complete materials handling system using a wide portfolio of products, and be more innovative without being faced with preconceived design ideas. Whichever partner route one goes down, however, projects can still go seriously wrong and one reason is that the data used for the design criteria is not always valid, so system buyers will need to look at the issue carefully. Moreover, if a sorter is a key part of a project buyers should be wary of supplier performance claims. There are three definitions of sorter capacity: 1) Design capacity (of individual components) 2) Ideal tests conditions capacity and 3) Operational capacity, which is influenced by many factors around the sorter’s periphery.
If storing a wide variety of SKUs Pareto’ law will be unavoidable, with some 80% of sales coming from 20% of SKUs but what many logistics managers may not realise is how problematic, slow-moving stock can be. This can mean that slow movers represent a small number of total picks but up to 40% of labour costs because they are placed in distant locations. Such are the implications of slow-moving stocks that Britain’s big food retailers are now having to reconsider their total SKU range.
A key logistics advantage enjoyed by the small but fast-growing food retailers like Aldi and Lidl is their much smaller product range, typically 1,600 SKUs against 40,000 for the big four retailers, many of which would be slow movers. Before the Danish discount food retailer, Netto, came to Britain it used only one distribution centre (DC) to serve all of its 120 EPOS-connected shops whose daily sales formed the equivalent of demand forecasting for the DC, which then, with the critical support of a fast sortation conveyor, replenished all shops before they opened for business the next morning. This meant that 90% of all the stocks at the DC passed through it every 24 hrs. Netto was ruthless at dumping slow movers to be replaced by hoped-for fast movers. Stock holding costs can dwarf all other warehouse costs combined. Sainsbury could see how critical this logistics advantage was and to an extent may be changing their business model by getting into bed with Netto. So the question is should you be similarly ruthless with your slow movers?
One big point to remember about fast sortation conveyors is that the longer they are in use the shorter their ROI, so why not consider using them to deal with both inbound and outbound processes? This is what BAX-shop.nl did with its Optimissorters, which cut walking and picking times so much that the sorter’s payback is under 18 months.