E-Commerce Fulfillment: DC Strategies for Riding the Surge

Tags: Distribution, E-commerce, Fulfillment

A surge in online purchasing created by the pandemic resulted in Gap Inc. hiring 1,400 new employees for the 2020 holiday season at its Fishkill, New York, distribution center.

The pandemic turned traditional assumptions about demand for a whole range of products on their heads. In these volatile times, how did smart fulfillment operations keep up?

A disaster in countless ways, COVID-19 has nevertheless been a boon for e-commerce. Consumers spent 44% more money online with U.S. retailers in 2020 than they did in 2019, according to Digital Commerce 360.

The e-commerce spike had several causes. Early in the pandemic, many stores deemed "non-essential" shut their doors, pushing consumers online. But even when stores were open, fear of infection prompted many shoppers to order from home, choosing delivery or curbside pickup.

And while shutdowns suppressed the need for some products—evening wear, luggage, party supplies—it boosted demand for others, such as leisure wear and work-from-home electronics.

Unprecedented demand patterns forced e-commerce merchants to adjust fast. Here's how fulfillment operations in five vertical categories met the challenge.

Biomedical Products: Urgent Need

Companies that sell biomedical devices and supplies saw demand soar during the pandemic. Among those companies is a major supplier that uses warehouse technology from Los Angeles-based Rufus Labs in its e-commerce and wholesale fulfillment.

"They sell all sorts of equipment online, from ventilators to syringes to personal protective equipment (PPE)," says Gabe Grifoni, co-founder and CEO of Rufus Labs.

The company also sells COVID-19 tests. As orders poured in, the vendor had to fill them while observing social distancing protocols. It couldn't simply crowd in more associates.

Rufus Labs' technology provided several advantages that helped the supplier keep up with surging orders. For one, having switched from handheld scanners to Rufus' wearable technology before the pandemic, the company had already increased its picking pace. "Switching to wearables provides a 30% boost in pick speed just by not having to pick up devices and put them down," Grifoni says.

To prevent infection, the company bought more wearables, so pickers had their own devices rather than sharing with workers on other shifts.

Rufus Labs also increased efficiency with a function that lets associates use their wearables to record activities other than picking, such as breaking down boxes or cleaning. Workers no longer need to spend 15 minutes at the end of a shift reporting those activities to a supervisor in person.

"The pandemic accelerated the need for rethinking that process, because everything had to change—who was in the warehouse at what time, or who can go into whose office," Grifoni says.

The pandemic also prompted Rufus Labs to add a new safety feature. "We built proximity alerts into our platform to let workers know when they're within six feet of each other," Grifoni says.

Post-pandemic, warehouse operators could find that feature useful in other ways—for example, for averting collisions between people and robots.

Beauty Products: Look Good, Feel Good

As COVID-19 sent office workers home, canceled night life, and hid faces behind masks, you might have expected demand for beauty products to wither.

But that wasn't the case for one online merchant that sells cosmetics by subscription and through e-commerce sales.

From mid-March through late July 2020, this company saw online subscription sales grow by 60% month over month, says Nicole Lee, director of fulfillment at Saddle Creek Logistics Services in Lakeland, Florida, which manages that company's fulfillment from two U.S. locations. Regular e-commerce orders increased too.

The subscription business probably spiked because consumers enjoy getting regular shipments of personalized beauty products. "It makes people feel good and gives them something to look forward to," says Lee. "When there's a crisis, that's important."

As the beauty company's fulfillment partner, Saddle Creek's facilities had to get more orders out the door while observing safety protocols and contending with a tight warehouse labor market.

"Fortunately, we had built in capacity that allowed us to scale more quickly," Lee says. "It also helped that we were early adopters of safety measures and focused on creating a culture where associates felt safe and supported coming to work. We were flexible with shift requirements and spread some of the work over a longer time frame."

A close partnership with the cosmetics client also helped. "Even before the pandemic, we were on the same page with forecasting, understanding their customers' behaviors and where the business was going," Lee says. "That alignment helped us to make quick decisions and be responsive when sales volume exploded."

Swedish beauty retailer Kicks has been using a color-coded automated picking system from Swiss company Kardex Remstar to increase picking capacity for both its retail stores and its large e-commerce business. Kardex Remstar's U.S. operation, based in Westbrook, Maine, recently brought the system, including the Megamat RS vertical carousel module, to the United States.

The system lets several pickers work in the same aisle at once, each pushing a cart that is coded with a different color. "As they move through the aisle, the vertical carousel indicates where they have red picks, green picks and blue picks," says Douglas Card, director of systems and integrator sales at Kardex Remstar. Each associate picks items that appear on racks displaying their color.

"When the operation is not that busy, it can run that same system with a single operator and a single cart," Card says. "As it gets busy, it can introduce a second, third, or fourth cart, all color-directed." That lets the fulfillment center match workforce to orders as volume fluctuates over time.

Apparel: Automation, Microfulfillment & Forecasts

With stores closed and dress-up occasions on hold, nimble apparel retailers made two big changes in response to COVID: They refocused their product lines on more casual styles, and they put more resources into e-commerce.

"Those that had already been prepared with a strong e-commerce channel were able to manage some of the disruption a little better," says Kim Baudry, global market development director for apparel at supply chain automation company Dematic.

Some of Dematic's apparel industry customers have started to operate omnichannel fulfillment centers, rather than run store fulfillment and e-commerce from separate facilities.

"They're using the same inventory to service their stores and their e-commerce customers, which cuts down inventory carrying costs," Baudry says.

But those two kinds of fulfillment need different automated material handling systems. "Software is important to balance inventory and orders across the different subsystems we use in the building," she says.

Also, some apparel companies have opened smaller facilities—micro-fulfillment centers—in urban areas, speeding fulfillment by getting product closer to customers, Baudry says.

To help meet the challenge of increased e-commerce demand, Gap Inc. recently opened a highly automated, 850,000-square-foot facility in Longview, Texas, that will initially fill orders for its Old Navy brand. The facility incorporates technology such as a robotic sorting system and automated baggers that the company previously tested at other facilities.

Thinx, a New York-based brand that sells fabric undergarments for menstrual and bladder leak protection, has seen a big jump in demand in the past year, especially online. The general shift to e-commerce is one reason for this growth, says Nathan Fox, the company's senior vice president, finance and operations.

Social distancing also might have given the product a boost. "Our product is something we think customers are more willing to try from the safety of their couch in a work-from-home environment," Fox says.

As e-commerce demand accelerated steeply, Thinx brought in more inventory and worked with its service partner, Ruby Has Fulfillment, to build more capacity.

"As best we can, we've tried to give Ruby Has accurate forecasts, so they can plan their staffing and space," Fox says.

Because it works closely with customers such as Thinx to anticipate projected sales, Ruby Has can allocate resources to match growing demand, says Esther Kestenbaum Prozan, president at Ruby Has, which is based in Bay Shore, New York.

To generate forecasts during a time when historical data doesn't really apply, Thinx closely watches how its marketing campaigns, special promotions, and new product introductions translate into sales.

Besides responding to customers' projected needs, Ruby Has serves as a consultant. "We can bring to bear not only what you'd think of as fulfillment solutions, but also suggestions about various technology integrations and other solutions they might need," says Kestenbaum Prozan.

Thinx, for one, has implemented technology to integrate its own data systems with Ruby Has. "We were doing that before the pandemic," Fox says. "But that is one of the areas that has enabled us to continue our operations, to take on that order volume with scalable technology."

Food & Beverage: Click and Eat

In the food and beverage market, COVID has boosted several kinds of e-commerce. Consumers go online to order basket loads of groceries from retail chains for curbside pickup or home delivery. They go to retail websites to order an item or two that a parcel carrier brings to the door.

Or sometimes they order from a manufacturer's own e-commerce site. PepsiCo, for example, sells snack foods and beverages at PantryShop.com, and its Frito Lay and Quaker brands operate Snacks.com.

PepsiCo announced in November 2020 that it was piloting a microfulfillment site for c-commerce in Joliet, Illinois, equipped with automation from Dematic.

Food and beverage manufacturers had already geared up to support retailers in responding to the surge in demand, but they were less prepared to see hordes of consumers order from them directly, says Tom Steininger, global market development director for food and beverage and consumer packaged goods at Dematic.

Manufacturers are used to shipping pallets and caseloads. "To start to go to eaches was a real disruptor," Steininger says. "They hadn't planned for that. They saw it coming, but I don't think they saw it increasing."

Microfulfillment, backed by technologies such as automated mobile robots (AMRs), gives both food and beverage companies and grocery retailers the flexibility to handle orders of various sizes and configurations and get products to customers fast.

In the case of "click and collect," when customers order groceries online for curbside delivery, the microfulfillment center might be at the back of the store, or it might be in a standalone location.

In one scenario, an automated shelf system sorts products and brings it to an operator, who picks orders and puts them in totes for customers. An e-commerce app tells the customer to drive up to a specific door.

"The customer goes there, the door opens, and their merchandise is waiting, brought there from the picker by one of the robots," Steininger says.

Electronics: Black Friday & beyond

Between people who needed gear for working and studying from home, and people who wanted better entertainment options, COVID-19 created a healthy market for consumer electronics. Shipments of home computers and tablets increased by 11% in 2020, and revenues from game consoles rose by 18%, according to a Strategy Analytics report.

One major electronics firm, which uses technology from inVia Robotics in its e-commerce fulfillment, saw order volume more than triple in May and June of 2020, says Lior Elazary, CEO of inVia in Westlake Village, California. So officials knew that the peak holiday season would prove especially tough.

"Black Friday 2020 was even more difficult for many customers because there was a limited available labor force," Elazary says. "And everybody wanted to buy products during that time."

inVia provides robots that can, for example, deliver products to human operators who assemble orders, greatly reducing the need for humans to walk around the warehouse. InVia also provides software that orchestrates work performed by both humans and robots.

The electronics firm in question mainly sells personal computers and related accessories. Its fulfillment challenge is especially complex because it sells custom-configured products, letting buyers choose the components they want. When an order comes in, someone must quickly retrieve parts to assemble the product.

"It's difficult to predict ahead of time what somebody would want," Elazary says.

Three weeks before Black Friday, this company came to inVia for help. To gain a quick benefit, the company first deployed inVia's software to manage the activities of human workers. That doubled efficiency, mainly by creating more efficient travel routes.

The company started to add inVia's robots in spring 2021. It will take a while for those new systems to prove themselves, but other customers have seen productivity rise by a factor of 10, Elazary says.

As coronavirus vaccine programs continue to roll out, people everywhere are wondering how the return to normal will look. Given the public's accelerated embrace of e-commerce, for companies that sell online, "normal" is likely to become a "new normal," with novel processes and tools to help fulfillment operations meet demand.






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