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 - MMH Editorial

1. The put wall
Mike Khodl, senior vice president of Solution Development at Dematic, says multi-channel capabilities are going to become a very normal way of designing a distribution center going forward. He adds that the central challenge of moving from batch operation to thousands of small orders can be done without elaborate technology deployments. An illustration of one such low-tech approach to multi-channel fulfillment is the put wall, a simple series of cubby holes that enable a worker to pick from a single stock keeping unit (SKU) to many orders for any channel.

In this facility scenario, pallets are received as usual and put in either automated or conventional storage. From receiving, a case can be crossdocked direct to shipping or sent to a conventional full-case pick module. Another case might be unpacked into a tote and put into an automated buffer system. A tote can then be routed into the high-volume, multi-line order station or a single-line order station to process against. The tote might be routed to both, depending on order demand.

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At the put wall, a worker picks from conveyor-fed single-SKU totes and puts to multiple orders. If there is product left in the tote it is sent back into a forward inventory storage location. The next time there are more orders against that SKU, the partial tote comes out first before drawing from full cases. “You’re drawing off the same pallet for large retail stores, small storefronts, e-commerce and store pickup channels,” says Khodl. “With this system, I have zero duplicity in my inventory system.”

Once the customer’s order has been picked, it can be routed to the packaging station or to a value-added services station. The order is then labeled, filled with dunnage, sealed and routed to either a UPS/FedEx truck directly, or it receives a simple store-out label and is put on a trailer bound for a retail store. With this system configuration, it would be relatively easy to add store delivery for items ordered through e-commerce. Store delivery is a slightly different channel than strictly retail or strictly D2C, but it can easily be achieved with this type of system, says Khodl.

Whether the fulfillment engine is an automated storage and retrieval system (AS/RS) or standard conveyor, Khodl says the multi-channel facility will need complex software to drive the flow of product. “It’s all about how I manage the routing, the inventory levels, order demand and order velocity,” he says. “The view of order demand and order velocity by SKU is critical to controlling your upstream flows.”

The software needs a holistic view, but an optimal system also asks managers to adopt a larger perspective. “Often the shipping supervisor doesn’t necessarily care what’s going on at the putaway, storage and replenishment engine,” says Khodl. “But now he does, because it can shut him down.”

2. An integrated picking approach
Aaron Jones, vice president of Bastian Solutions, also emphasized the importance of flexible software in tackling multi-channel applications. In addition to complex routing protocols, Bastian’s approach to designing a facility for wholesale and e-commerce fulfillment includes traditional equipment used in a non-traditional configuration.

Instead of a common linear distribution design, with its limitations in routing, throughput and picking complexity, this multi-channel facility enables consolidation of eaches from many different segments of the facility. A pick-to-light system is used to select high-value and sensitive items from carton flow racking, from which the order might move directly to packaging and shipping along a few hundred feet of conveyor. Or, it might be routed to a full-case picking area where pick-to-voice is used to select product from pallet flow racking. All picking areas in the facility support both retail store fulfillment and D2C orders.

“It was a challenge to ensure direct-to-consumer products and orders do not get buried behind miles of accumulation conveyor,” says Jones. “A shipping window missed by five minutes can translate into an entire missed day for the e-commerce customer.”

From the full-case pick area, the order might pick up a few additional items from a forward storage area where slower-moving SKUs are stored in bin shelving. Once an order has been assembled from any of the three picking areas, it’s “distribution as usual,” according to Jones, as the order is either sent directly to the dock sorter or to a split-case area for consolidation.

Orders are picked to their shipping containers, which are right-sized by automatic lidding machines to fit their contents and reduce packaging and shipping costs. Before being automatically labeled, cartons will pass through automatic document insertion modules capable of packing invoices, packing lists, promotional items and more at a rate of 20 cartons per minute per line.

“A multi-channel facility needs packaging flexibility,” says Jones. “You will also see more bypass and workaround capabilities.”

The multi-channel shipping dock also requires greater flexibility than a traditional distribution facility. “If properly planned, a facility can operate for a large portion of its volume with just a handful of dock doors,” says Jones. “The door-per-store approach is not necessarily ideal, between the resulting accumulation conveyor and trucks remaining immobile. With multi-channel, there tends to be more intermittent shipping milestones and deadlines, as well as more truck turnover by utilizing different carrier sizes.”



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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