You don’t need a giant distribution center rivaling Amazon or Wal-Mart to benefit from automation. These days, small and medium retailers are competing with the big boys by investing in scalable technologies.
For small- to medium-sized retailers, the choice to automate a fulfillment center isn’t always an easy one, especially when many people consider it a tactic of larger players such as Wal-Mart or Amazon. However, the use of material handing automation in the SMB world is becoming a reality, especially in the e-commerce realm.
Take for example BHFO, the leading seller of clothing, shoes and accessories on eBay. The company recently consolidated three facilities into a 250,000 square foot building and invested in an automated order fulfillment system featuring Perfect Pick, a goods-to-person storage and retrieval system developed by OPEX Corporation.
Related story: Watch the BHFO case study on the company’s new order fulfillment system.
“Moving into this new facility, our goal was to increase our throughput to 6-7,000 items a day,” explained Matt Wade, Chief Operations Officer at BHFO. “To be able to meet the demand of those orders, we knew we were going to need an automated fulfillment system such as the Perfect Pick.”
Perfect Pick and similar systems such as AutoStore and Uni-SHUTTLE HP are becoming popular choices for growing online retailers. These systems provide an array of benefits including increased throughput and productivity, reduced labor costs and error rates, and improved space utilization within a facility. However, for SMBs, the biggest benefit of systems such as Perfect Pick, is their scalability.
If there is limited capital to purchase automation, the foundation of the system can be purchased now and expanded incrementally as needed. In addition, for fast-growing e-tailers, future order volumes are difficult to predict. Scalable goods-to-person systems allow more automation to be added as order volumes are met.
BHFO installed four aisles of Perfect Pick with 5 iBots per aisle. This provided a capacity to fulfill up to 12,000 single-item auctions per day, but with the condensed footprint of the Perfect Pick system, the company has room to add aisles as order volumes increase.
In a recent article on MultichannelMerchant.com, Clay Olivier, CEO of Volusion, Inc., predicted at least a 9% growth in online sales for SMB retailers this holiday season. He goes on to say that these retailers will need to find “new and innovative ways to keep up with the largest names in the market”. If Clay Olivier’s prediction is correct, BHFO will likely be using that additional capacity sooner rather than later.
The innovations Olivier refers to in the article can range from mobile website optimization to the efficient planning of sales and promotions; however, an efficient order fulfillment system should not be overlooked as it will be key if retailers want to keep up with not only holiday demand but also consumer requests for same-day shipping.
So how do you know if it’s time for an automated fulfillment system? Unfortunately, that’s not a black and white answer, but here are some top questions to ask when deciding if automation is right for you.
1. Are you running out of space?
If you’re out of floor space in your current facility, automating your storage and retrieval process can dramatically improve storage capacity and provide room for growth. An AutoStore system, for example, is capable of reducing space usage by 40-60%. As you do your research, compare the cost of an automated system versus an investment in a new facility or building expansion.
2. Are your labor costs and turn over high?
If you have a high turn-over rate, rely on temporary workers during the holidays, or consistently hire more employees to keep up with demand, then a goods-to-person system can greatly reduce the need for additional labor. Petzl, a retailer of climbing equipment, also invested in a Perfect Pick system and even with a projected 10% yearly growth rate, the company has stated it will not need to hire an additional full-time employee in its Utah-based DC for another 4 years due to the picking capacity and scalability of its new system.
3. Is your company projecting future growth?
We know that e-commerce is a booming business right now, but regardless of industry, if your company is growing, then automation could be an excellent solution. Take a close look at your operational costs versus a capital expenditure to automate. Systems such as Perfect Pick often provide a payback period in 2-4 years, so the investment can often be justified when looking at future projections of growth and costs.
4. Are picking errors high?
With manual operations, picking errors can hover between 90-95%. That might sound good, but advanced automation systems are typically above a 99% accuracy rate. When it comes to customer service, the additional focus on order quality can go a long way in earning a repeat customer.
If you’re looking for additional info on order fulfillment automation, take a look at our picking webinar series. Part one covers basic technologies such as voice and light-directed picking, while part two delves into some of the advanced solutions discussed in this article.