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Retail: Inside the multi-channel DC

Four approaches to multi-channel distribution show how the same tried and trusted technology can enable efficient store replenishment while keeping e-commerce customers happy.
By Josh Bond, Associate Editor
October 01, 2012

4. De-coupled processes
Art Eldred, client executive of system sales at Vargo Solutions, says the multi-channel challenge is not about simply fulfilling an order, but assembling that order. Order assembly used to happen at the store, says Eldred, and commonly bundled SKUs could be sent to that store independently. In pushing that function back to the DC, order selection processes that once proved very effective for store order fulfillment can quickly break down.

This order-fulfillment engine is designed for an end-user with about 5,000 SKUs. On any given day, only about 1,200 of those SKUs are active. Those active SKUs are brought forward to lanes of static bin shelving and carton flow racks. The bin shelving houses items moving at a rate of one box per day or less, whereas fast-moving product is housed in the flow racks.

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The flow racks are stocked from very narrow aisle deep storage by pickers using RF scanners to retrieve only enough product to satisfy active orders. The pickers then replenish the flow racks randomly, based on available slots. The same SKU might be deposited in two slots at opposite ends of the flow rack. Because of the order assembly approach, says Eldred, it makes no difference if commonly bundled SKUs are slotted far away from each other.

Pickers stationed in the aisles of racks and shelves use RF scanners and pull wheeled carts through an aisle, with each worker picking from only one or two aisles per run. Depending on the SKU cube, the picker might pick to as many as 100 orders or more on each run.

The picker deposits filled carts at the order assembly station, where they are staged in front of fixed pick-to-light bars. An order assembler then pulls items from the two donor racks and places them into either a tote or the shipping container to complete orders on a third rack.

The assembled orders are then wheeled to the pack-out stations where orders in totes are transferred to shipping containers and assorted documents and promotional materials are added. Orders could be manifested at the pack-out station, but Eldred says there are many benefits to decoupling processes. Aside from an additional layer of verification, discrete roles shorten training times for quick scaling during peak order volume.

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“If the pick area tried to serve all 5,000 SKUs, it would be five times the size and the walking distances would be five times longer,” says Eldred. “Individual process metrics, such as product retrieval from deep storage, might take longer than with a traditional approach,” says Eldred. “But when you look at the productivity end-to-end, you win. Lean approaches are often emphasized by department in a DC, but few take a lean approach for the entire facility.”

According to Eldred, this system is suited to nearly any kind of distribution, regardless of the percentage of volume dedicated to e-commerce or any other channel. By zeroing in on active orders, the cycle times are shortened to ensure speedy delivery to any customer.

Companies mentioned in this article
Bastian Solutions: bastiansolutions.com
Dematic: dematic.com
Intelligrated: intelligrated.com
Vargo: vargosolutions.com

About the Author

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Josh Bond
Associate Editor

Josh Bond is an associate editor to Modern. Josh was formerly Modern’s lift truck columnist and contributing editor, has a degree in Journalism from Keene State College and has studied business management at Franklin Pierce.


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