Rise of online fulfillment.

‍

Online volumes from a supply chain perspective are now reaching critical tipping points for Australian retailers – where key investment decisions are required – in order to support sustainable and efficient competition into the future.

‍

Australia Post -eCommerce Industry eCommerce Industry Report 2023

‍

Some example questions emerging for Australian retailers include: 

Centralised or Decentralised?

To what degree should we centralise our online fulfilment physical network?

Together or Dedicated?

To what degree should we bring together our store and online fulfilment operations?

Manual or Automated?

To what degree should we automated our online fulfilment – given volumes, product profile, etc.?

Push or Pull?

What is the optimal inventory operating model for online fulfilment?

Technology Options?

It is only once an organisation has a relative feel for the above that specific technology options should be considered.

‍

What are the strategic online fulfilment options?

A key strategic decision for retailers is choosing the right online fulfilment channel, be it traditional stores, dark stores, dedicated online centres, or shared distribution centres.

How can online fulfilment channel achieve faster and cheaper online fulfilment whilst avoiding the “white elephant” when making strategic investment decisions ?

Finding the optimal channel will come from balancing factors such as range, responsiveness, product complexity, market maturity, set-up costs, and operating costs. By carefully assessing these elements, retailers can establish an efficient fulfilment system tailored to their needs, boosting customer satisfaction and driving long-term success.

It is never one consideration in isolation – the challenge is to overlay the considerations and identify the optimal point when balancing trade-offs.

‍

Fulfilment Options

‍

Store Fulfilment

Manual

Semi-automated

Automated

‍

Dedicated Online HUBs

Dark Stores

Semi-automated

Automated

‍

Co-located

Manual

Semi-automated

Automated

‍

The visual below highlights the fulfilment options across two dimensions. On the Y-axis, level of centralisation and on the X-axis, level of automation.

‍

‍

‍

What are the key supply chain considerations?

How can retailers shortlist online fulfilment options for consideration?

It can be daunting knowing where to start. At trace. we recognise it can be difficult to understand the strengths and respective trade-offs of common approaches to online fulfilment. This is why we offer a simple questionnaire to support our clients translate what they know of their existing business strategy, and targeted customer offer, into a shortlist of potential Online Fulfilment Models.

This hypothesis driven analysis simplifies the path forward by ruling out options that are not complementary to your strategic considerations.

‍

Deeper analysis is often required, however this table can highlight the relative trade-offs to help shortlist scenarios for modelling.

‍

‍

‍

Is your business transitioning from store fulfilment to dedicated or co-located fulfilment?

‍

‍

‍

How to find the right online fulfilment option.

‍

Below is an example 3 phase approach for this type of project.

‍

1. Analyse & Design 2. Scenario Modelling   3. Business Case & Implementation

‍

‍

‍

Our approach to helping our clients identify, select, design and implement the optimal online fulfilment option is hypothesis driven, structured and fact-based. We utilise a range of in-house developed tools for this analysis.

The objective is to design a network and online fulfilment capability that is able to deliver on the target customer promise at the optimal operating costs – whilst also providing a level of resilience to changing operating conditions – for example, as customer demands, product profiles, volumes, etc. continue to change and evolve.

‍

Selecting Online Fulfilment Technology

Highly interrelated to the strategic direction is the selection of the technology to support the fulfilment solution. Below are some example options to consider – each with varying trade-offs that require balanced assessment.

‍

Core Picking Technology

‍

Traditional

Person to Goods (PTG)

‍

Popular & Emerging

Goods to Person (GTP)

Goods to Robot (GTR)

‍

“…GTP and GTR can be 6 to 16 times more productive than traditional PTG…”

‍

Picking Support Technology

‍

Traditional

RF

Voice-Picking

Light Directed

Display

Augmented Reality

Picking Methods: Cluster Picking, Batch Picking, Zone Picking

‍

Popular & Emerging

Autostore

Mobile Autonomous Robots

Multi-shuttle ASRS

Perfect Pick

Carousels (legacy)

Vertical Lift Modules (legacy)

Mini Load ASRS (legacy)

‍

Order Consolidation and Unit Sortation

‍

Traditional

Put Walls (Batch to Order)

‍

Popular & Emerging

Sure Sorter (Automated Put Walls)

Unit Sorters (Tilt Trays, Cross Belt, Bombay)

Pocket Sorter (Overhead Sorter)

‍

Don’t let inventory be an after-thought.

‍

Inventory management can be complex…

Extensive SKU Ranges

Multitude of Stocking Locations

Multiple Channels

Service Level Targets

Working Capital Targets

Customer Expectations

Large Vendor Lists

Varying Product Profiles

Demand Patterns & Variability

Product Lifecycles

Promotional Activity

Lead Time Variability

Storage Capacity Constraints

Returns & Excess Stock Mgt

‍

‍

‍

Below we have listed a few drivers for the ‘big’ inventory questions – this assumes a co-located facility with a level of automation

‍

Contact us today, trace. your supply chain consulting partner.

Crafting a Future-Proof Supply Chain Organisational Design

In today's dynamic business environment, the supply chain extends beyond a mere backend operation; it emerges as a pivotal competitive edge. However, sculpting a supply chain that marries efficiency with resilience demands a considered approach to organisational design. This task is not only about structuring the supply chain to satisfy present demands but also about forecasting and prepping for future hurdles and opportunities. Our exploration delves into the core facets of supply chain organisational design, such as operating model design, workforce strategy, the debate between insourcing and outsourcing, capability gap assessment, the crafting of job roles, and the enactment of the RACI framework. Furthermore, we underscore how the organisational context—be it a quest for growth necessitating scalability or a crunch for cost leading to a drive for efficiency and resilience—can significantly mould these design principles.

‍

Operating Model Design: Warehouse, Transport, and Operations

An efficacious supply chain organisation is rooted in its operating model, which encompasses warehouse logistics, transportation, and overarching operations management. The blueprinting of this model necessitates an intimate grasp of the company's strategic pursuits. For instance, a business eyeing growth may lean towards scalability and adaptability in its warehouse operations, potentially opting for expansive facilities decked with cutting-edge automation tech. In contrast, a firm grappling with cost pressures might zero in on optimising existing assets, deploying lean inventory stratagems, and securing more cost-effective transportation agreements to pare down overhead.

Warehouse Operations

The linchpin of proficient warehouse operations lies in strategic layout planning, adept inventory management, and the seamless integration of technology. The deployment of automation, through robotics and AI-managed systems, can significantly uplift productivity and precision. Nonetheless, these tech investments must resonate with the company's long-term strategic vision and capacity planning.

Transportation and Logistics

The transportation strategy is equally paramount, entailing mode selection, route optimisation, and forging solid carrier alliances. Leveraging advanced analytics can illuminate the most economical transport modes and routes, yet this demands a workforce skilled in data interpretation and strategic decision-making.

Operations Management

Operations management acts as the glue binding everything together, with a spotlight on process efficiency, quality assurance, and the ethos of continuous improvement. The objective is to ensure the supply chain operates as a unified, nimble entity, ready to pivot in response to market flux.

Workforce Strategy & Composition

The cornerstone of any potent supply chain is its workforce, underpinned by a well-conceived blend of skills and roles tailored to operational objectives. This includes navigating the intricate balance between insourcing and outsourcing and the nuanced mix of full-time, part-time, casual, and contingent labour.

Insource vs. Outsource

The insource versus outsource conundrum is layered, shaped by cost considerations, the desire for control, expertise, and scalability. Insourcing can foster greater alignment with the company ethos and quality benchmarks but necessitates substantial investment in recruitment, training, and infrastructure. Outsourcing, meanwhile, offers adaptability and access to specialised skill sets, albeit with potential trade-offs in quality oversight and communication fluidity.

Labour Mix

Crucial to the workforce strategy is striking the right chord in the mix of full-time, part-time, casual, and contingent workers. This balance is pivotal for managing labour costs effectively while ensuring the workforce remains responsive and adaptable to changing demands. Full-time employees provide stability and in-depth knowledge of operations, while part-time and casual workers offer flexibility to scale labour in response to fluctuating workloads. Contingent labour, including freelancers and contractors, allows companies to tap into specialised skills on an as-needed basis, offering a blend of expertise without the commitment of full-time hires. This nuanced approach to workforce composition is integral to a resilient and efficient supply chain, ensuring the right skills are available at the right time and in the right proportion.

Team Capability Gap Assessment and Training Needs Assessment

Identifying and bridging capability gaps within the team is vital for perpetual advancement. This entails evaluating the existing workforce's skills and knowledge against the competencies required to realise strategic ambitions. Subsequently, a training needs assessment can spotlight specific development areas, fortifying the organisation's capacity to embrace new technologies, methodologies, and market shifts.

Job Roles and Description Design

The articulation of clear, comprehensive job roles and descriptions is pivotal for organisational lucidity and employee morale. This clarity is instrumental in a supply chain milieu, where cross-functional synergy is crucial for operational fluency.

RACI Framework Implementation

The RACI framework (Responsible, Accountable, Consulted, Informed) serves as an invaluable tool for demarcating roles and responsibilities within supply chain processes. Its implementation can streamline decision-making, mitigate overlaps and responsibility voids, and enhance inter-team and departmental communication.

The Influence of Organisational Context

The aforementioned design tenets are not universally applicable; they necessitate customisation to the unique backdrop of the organisation. Whether the goal is scaling for growth or honing efficiency, the strategic approach to supply chain organisational design must be in harmonious alignment with the company’s overarching objectives and situational demands.

Designing a robust supply chain organisation is a complex yet crucial endeavour. It mandates a strategic orientation towards operating model design, workforce strategy, and the nuanced balance between insourcing and outsourcing. Additionally, recognising the significance of team capability, precise role definition, and the RACI framework is essential for operational triumph. Nonetheless, the quintessence of supply chain organisational design lies in its congruence with the strategic imperatives and contextual nuances of the company. Through a comprehensive and strategic approach to supply chain organisational design, businesses can forge a supply chain that not only confronts today's challenges head-on but is also well-equipped for the opportunities and trials of tomorrow.

‍

How Optimized Warehouse Design and Technology Elevate Business Efficiency and Service

In today’s fast-paced market, the efficiency of warehouse operations directly impacts a business's ability to serve its customers effectively, manage operating costs, and maintain competitive advantage. The optimization of warehouse space, layouts, and workflows plays a crucial role in enhancing the efficiency of receive, pick, pack, process, and dispatch operations. Moreover, the integration of new technologies—from automation in warehouse operations to advanced order and warehouse management systems—is revolutionizing how businesses manage inventory, fulfill orders, and respond to customer demands. This article delves into how effectively designed warehouse spaces and the adoption of new technologies can significantly boost labor efficiency and overall service performance. Additionally, we will explore how trace consultants can assist organizations in modeling their warehouse capacity requirements, determining the optimal network configuration, and designing efficient workflows.

‍

The Impact of Warehouse Design on Efficiency

Space Optimization

Efficient warehouse space utilization ensures that businesses can store the maximum number of items while maintaining easy access for picking and packing. High-density storage solutions, such as dynamic racking systems, can significantly increase storage capacity and reduce the need for extensive physical infrastructure. Effective space planning also involves considering the type of inventory and its turnover rate to allocate space strategically, minimizing wasted movement and improving labor efficiency.

Strategic Layout Planning

The layout of a warehouse directly affects the speed and accuracy of order fulfillment processes. A layout designed with an understanding of the flow of goods—from receiving to shipping—can drastically reduce travel time and handling. Key considerations include placing high-demand items closer to the packing area and employing zone picking strategies to minimize congestion. The goal is to create a seamless flow that reduces bottlenecks and optimizes the use of available resources.

Workflow Optimization

Optimizing workflows involves streamlining operations to reduce manual handling, errors, and delays. This can be achieved by implementing standardized procedures for receiving, storing, picking, and shipping goods. Continuous process improvement methodologies, such as Lean and Six Sigma, can be instrumental in identifying inefficiencies and implementing corrective actions to enhance productivity and reduce waste.

Leveraging Technology for Enhanced Efficiency

Warehouse Automation

Automation technology is a game-changer for warehouse operations. Automated storage and retrieval systems (AS/RS), autonomous mobile robots (AMRs), and conveyor belt systems can drastically reduce the need for manual labor, increase picking accuracy, and accelerate order processing times. Automation also enhances safety by reducing the likelihood of accidents and injuries associated with manual handling.

Advanced Management Systems

Investing in state-of-the-art order and warehouse management systems (OMS and WMS) enables businesses to gain real-time visibility into inventory levels, order status, and performance metrics. These systems facilitate efficient order processing, optimize inventory management, and improve demand forecasting accuracy. Integration with customer relationship management (CRM) and enterprise resource planning (ERP) systems can further streamline operations and enhance responsiveness to customer needs.

The Role of Trace Consultants

Trace consultants play a pivotal role in helping organizations navigate the complexities of warehouse optimization and technology integration. They offer expert guidance in:

Modeling Warehouse Capacity Requirements

By analyzing current and projected inventory levels, order volumes, and fulfillment requirements, trace consultants can identify optimal warehouse capacity needs. This ensures that businesses invest in the right amount of space and resources to meet their operational goals without unnecessary expenditure.

Designing Optimal Network Configuration

Determining the most efficient layout and flow within a warehouse is critical for maximizing labor productivity and minimizing operational costs. Trace consultants leverage their expertise to design configurations that streamline processes, reduce handling times, and improve order accuracy.

Workflow Design and Implementation

Implementing efficient workflows requires a deep understanding of operational processes and the potential impact of new technologies. Trace consultants can guide businesses through the selection and implementation of automation solutions and management systems that complement their specific needs, enhancing efficiency and scalability.

The optimization of warehouse space, layout, and workflows, coupled with the strategic integration of new technologies, can significantly enhance labor efficiency, service performance, responsiveness, and operating costs for businesses. Trace consultants offer invaluable expertise in modeling warehouse capacity, designing optimal network configurations, and streamlining workflows. By embracing these strategies and technologies, organizations can achieve a competitive edge in today’s dynamic market landscape.

The journey toward warehouse optimization is an ongoing process of evaluation, implementation, and refinement. Businesses that commit to continuous improvement and adaptability will not only survive but thrive, setting new standards for operational excellence and customer satisfaction in their respective industries.

‍