E-commerce order fulfillment with a WMS

The growth rate in e-commerce in Africa & the Middle East has been modest so far but it is well-positioned to grow over the next years, especially with the changes in consumer buying habits after the pandemic. In the middle-east, however, the growth rates of e-commerce have been higher and a lot of customers are moving to e-commerce.

This, however, doesn’t mean that the growth rates of retail have been impacted in any way. A company should not be betting heavily only on e-commerce but instead should be looking at optimizing both retail and e-commerce strategies and fulfill them both optimally.

Retail is still lucrative in 2021 since a lot of people find factors like price, loyalty rewards, and face-to-face customer interactions as more value-adding to their shopping experience. Up to 84% of the shoppers indicated that they prefer having discounts and freebies and 59% said that they need the product information and updates before buying them.

This leads us to a fair inference that omnichannel presence is the most robust sales strategy even in 2021. But this requires multiples channels with different characteristics, being fulfilled from the same warehouse. A company must be able to orchestrate the orders for these different channels in a way that is suited for the specific need.

So how can be the e-commerce become a part of your omnichannel strategy? 

The difference between E-Commerce vs. Retail Fulfilment

E-commerce is a channel with different characteristics and needs than a retail channel. While fulfillment in e-commerce is about fulfilling actual customer orders, retail fulfillment is about fulfilling store orders. The understanding of the difference between these two channels and their specific needs is very important.

First of all, the order inflow in the case of e-commerce is continuous as the online stores are open 24/7 whereas in retail fulfillment there is usually a set cadence of order processing, like on a particular day in the week. The expectation of the speed of execution in e-commerce is much higher.

Next, the e-commerce orders are usually for smaller quantities and have a significantly higher percentage return flow for which the return processes also need to be planned while setting up the e-commerce fulfillment strategy. The reason for the higher returns in e-commerce is pretty obvious. Customers like to try the products before making the final purchase decision. Sometimes, they order multiple items and keep one while the rest are sent back to the warehouse. An effective WMS system should be capable to handle returns as effectively as the pick, pack, and dispatch process.

In contrast to e-commerce, the order quantities from the stores are usually large and aggregated over some time. Also, the returns are not a matter of concern here since the stores would only return in rare cases like an order mismatch, poor sales, or in case of damages. This reduces the focus and resources required for returns management in a retail fulfillment environment.

E-commerce warehousing characteristics

The warehouse setup required for an e-commerce supply chain can be very different from a regular setup. Here are some of the key fundamentals that are critical to the success of an e-commerce WMS warehouse setup:

• Item slotting – since the order quantities are much smaller in e-commerce, it requires smaller slots for keeping the inventory. This makes the pick and packing process faster.
• Cubing – the importance of cubing cannot be ignored in an e-commerce setup. Standardized carton sizes are critical for the success of e-commerce warehousing but this requires some pre-requisites like accurate dimensions of products
• Shipping – the shipping operations should be able to handle a large number of packages (oLPNs) and also effectively consolidate them.

Customer orders in e-commerce

Apart from what we discussed in the beginning, regarding the smaller order quantities that come in continuously 24/7, a major difference is that unlike in the retail fulfillment the customer orders in e-commerce can require some specific Customer Specific requirements (VAS), like a gift packing.

An Order Management System (OMS) should be integrated optimally with the WMS for effective end-to-end management.

E-commerce optimized picking strategies

When fulfilling e-commerce orders there are a few picking strategies that can be followed to ensure maximum optimisation:

• Pick-to-Tote: Picking and packing are separate processes in the Pick-to-Tote. This is also known as batch picking. For multi-line orders, the items should be consolidated in a putwall, and then all the items for a customer are consolidated and dispatched.
• Items can also be packed straight into the carton, combining pick-and-pack and then just directly dispatching to the customer. For this, pick-path optimization by a heuristic algorithm and task sequencing can be done, where we tell the system which path to follow. Cubing strategy is very critical for this strategy.
• Singles Bulk Pull: Multiple, single line, single-unit orders. This is an interesting strategy that works like a charm on some specific products where there is a huge demand for a single item. For example – FIFA's latest version. When it is launched a large order pool of the customers, like a 1000 customer order, just one line of the latest FIFA game. We can take one pallet with 1000 units and start packing in singles and add shipping labels.

Putwall

Putwall is one of the most effective methods to consolidate the items of an order. Pick-to-tote can be used to put the items in the putwall where all the items for one order are collected. A putwall can be used from both sides. There are three types of putwalls:

• Outbound Packing – we get different totes from different areas. The “Follow Me” principle is required for this putwall along with an effective cubing strategy.
• Transit Putwall – pick and pass, consolidate the items into a tote and then take them to the packing station.
• Exception Putwall – oLPNs with the shortages get directed to the exception putwall, chase items are directed to the oLPN exception putwall to finish the picking.

Pack station

At a packing station, the orders start getting ready to be shipped to their final destinations. The emphasis on an effective cubing strategy can’t be ignored here.

As a step-by-step process, when a tote reaches the packing station, its contents are scanned, the items are verified against the system, and then packed. Customer-specific requests (VAS) can be entertained at this stage, like gift packing. And then the shipping labels are applied and the package is ready to be sent.

Speedy and accurate processing of returns

Contrary to the belief, the customer returns process is similar to the dispatch process. It can be viewed as a process that is opposite to the fulfillment process.

Typically, the return station UI verifies the order by scanning and acknowledging the items. The same system can take inputs on the return conditions as well.

Conclusion

E-commerce can be a part of your omnichannel strategy but it has a different order profile than your store orders and hence require special customizations to your WMS. There is a lot more that can go into a superior WMS system, like material handling and other processes specific to your products and business.