As an online seller, you spend a lot of time attracting customers and convincing them to click the BUY button. But it’s all the things that happen after the click that have the biggest impact on the customer experience – and your bottom line.
We’re talking about pick and pack fulfillment: the processing and preparation of your products as they make their way to your customers. In this article, we’ll look at this vital function, share tips for how you can optimize it, and let you know how third-party logistics (3PL) providers can help.
Let’s start at the beginning. An order is placed and received by the warehouse. What happens next – the picking process – can go a long way in determining how efficient and cost-effective your fulfillment operations are. Consider these strategies.
In a fulfillment center, pickers can spend as much as 70% of their time traveling to and from the work. That’s a lot of travel time that you’re paying for. Intelligent warehouse slotting can help to boost picking efficiency and lower your labor costs.
Warehouse slotting is the process of organizing inventory to minimize space requirements and reduce travel time. Intelligent slotting involves:
You want around 80% of your orders to be picked in a forward pick area that minimizes travel time. A more efficient pick process that includes batch picking and smart slotting can reduce labor costs in a fulfillment center by 25%, depending on the product mix.
In addition to making the human activity more efficient within a fulfillment center, augmenting that activity with automation can further optimize your operations. Importantly, such automation doesn’t always need to break the bank. The following are a few examples of low-cost fulfillment automation that can pay real dividends for your pick and pack fulfillment productivity.
Automate the quality control check
At eCommerce fulfillment centers, you’ll often see a person at the end of a pack-out line doing a final check for order accuracy. But for a relatively small capital investment, you can scan bar-coded products as they are placed in a box or bag to ensure the order is 100% accurate, avoiding the need for manual QC.
Use Tape Machines
Tape machines cost between $2,500–$3,500, but in many cases these machines could replace a $35,000 associate. When you speed up the pack-out process, you need fewer people to handle the throughput.
Use box erectors
Box erectors that automatically create boxes vary widely in cost – from $20,000 to more than $100,000 depending on the number of box sizes and styles needed. For high-volume operations, the investment can make smart financial sense. For one cleaning products manufacturer, we calculated that switching from manual to automated box construction would increase output from 3 boxes per minute to 15 per minute, taking the labor cost from $0.10 to $0.03 per box – a 70% labor savings. This particular box erector carried a hefty $130,000 price tag, but the predicted ROI was less than 2 years because of the high volume of boxes.
If you’ve determined that you – or your 3PL – should have a higher level of automated eCommerce fulfillment, you can invest in more sophisticated technologies, including the following.
With pick-to-light technology, associates scan a bar code for an order on a picking container and are directed to pick items from certain bins. Lights above the relevant product bins illuminate and let the picker know what quantity to pick. The order is complete when all the lights go out.
Voice picking technology uses an automated voice via a headset to direct the associate to the appropriate inventory bin, allowing order fulfillment associates to keep their hands free. When they reach the storage container, the associate talks into the headset to verify they have the right bin. The system gives the associate the pick quantity, and the picker grabs the items and places them in a bin before moving to the next pick. Voice picking enables order fulfillment associates to handle high volumes of complex orders accurately.
Automated Guided Vehicles (AGVs) and Robots
Due to labor shortages and the pandemic, more and more warehouses are exploring AGVs for moving inventory around the facility. AGVs come in numerous forms, including automated carts that move bins and automated forklifts that move pallets. Co-bots have also gained popularity for their ability to work in tandem with order fulfillment associates by bringing inventory bins from warehouse shelves to a pick-and-pack station.
A fulfillment warehouse productivity standard is a reasonable expectation of the time it will take the average worker to perform a particular task correctly and efficiently. It’s usually created by carefully studying all of the steps required to execute that task over a long period of time and assigning a definitive time value to each one. You can set productivity standards for almost any activity. But some of the most common ones in a fulfillment warehouse include:
Once you establish a productivity standard, you’ll have the baseline you’ll need to drive optimal performance and maximize picking productivity.
With the orders picked, it’s now time to package them and get them out the door to a parcel carrier. Consider these strategies to optimize the packing function.
If you’re looking for more economical shipping options, don’t be afraid to think outside the box – literally. In many cases, significant savings can come from leaving the box behind.
If you sell a small, durable product and use polybag packaging instead of boxes, it can substantially reduce the total package weight and the corresponding shipping price, especially if you’re dealing with something lightweight. For example, let’s say you ship 60,000 orders per year via the USPS and the boxed shipments you’ve sent have weighed 12.1 ounces. By using a polybag instead of a box, you can get the shipping weight down to 11.2 ounces, which is a 7.4% reduction, and save anywhere from $66,600 to $74,400 per year depending on which zone you’re shipping to.
As many as 13 steps and 15 seconds to pack an order
Just open, fill and seal. Potential throughput increase of 3.5x
Adds to clutter and time to retrieve materials
Less storage space required, greater packer productivity
Filler and tape required
No filler, so related supplies and labor are eliminated
Add time, hassle, potential for error
None if print-on-bag technology is utilized
Void fill packaging (also called box filler or dunnage) fills empty space in shipped boxes to keep products from moving around inside the box during transit. Using void fill packaging allows eCommerce fulfillment operations to buy bulk amounts of various-sized boxes, reducing the overall cost of packing and shipping high volumes of goods sold online.
The ideal void fill will provide a balance between smaller items that require a full protective nest and medium or larger items that have some inherent durability but need some cushioning to keep them from shifting around. Below are the most frequently used void fill packaging products in eCommerce packaging.
Kraft paper is a simple brown paper that is recyclable, affordable, versatile (able to be stuffed into virtually any shape or size), and convenient (comes in large rolls for easy use, shipping and storage). The drawbacks to kraft paper are that packagers can easily overuse it; it takes significant amounts of paper to fill large voids; paper adds some weight to the parcel; and heavy products may compress paper in transit and reduce its effectiveness.
Air pillows have become a popular solution for void fill packaging. Major benefits include a lower weight, better safety for packagers (e.g., no paper cuts or dry skin), a higher level of product protection, and easy use and storage. The drawbacks to air pillows are that they’re difficult to recycle, have higher upfront equipment costs, and are more expensive than other void fill packaging options
Used as both void fill packaging and as wrap, bubble wrap is effective for fragile items, offers high protection, and is easily moldable. The drawbacks to bubble wrap are that it’s difficult to recycle and can be time consuming to use.
Though dimensional weight, or DIM weight, is hardly a new pricing model, it remains a hidden profit killer for pick and pack fulfillment operations that don’t properly manage it. Misunderstanding how parcel carriers determine shipping rates can inflate your shipping costs 5–15%, so it’s imperative to choose your most cost-effective packaging option.
Some eCommerce shippers will customize packaging solutions to shave every last cent out of DIM weight pricing, but that isn’t always necessary. Adhering to the following packaging tips can cut your annual parcel shipping costs 5–15%.1. Start right-sizing your shipping boxes
When your boxes are too big, you will pay more to ship that extra air. Using a healthy mix of standard box sizes will eliminate the need for unnecessary void fill materials, reducing actual weight, while also lowering DIM weight through the use of correctly sized packaging.2. Audit your freight bills
Parcel carriers employ automated scanners to determine box dimensions, and sometimes those scanners get it wrong. When you see language such as “we calculated charges based on a DIM weight of…,” verify that the automated DIM weight measurements were correct.3. Use a minimum amount of dunnage
Warehouse associates regularly overestimate the amount of dunnage required to protect an item in transit, which leads to oversizing of boxes and higher DIM weights and actual weights. Replacing bulkier void fill packaging with something lighter (e.g., air pillows) can reduce space requirements and the actual weight of your parcels.4. Consider the use of hybrid parcel services
The major private parcel carriers offer hybrid services in conjunction with USPS, where USPS handles last-mile delivery of the parcel. Leveraging this capability through services like FedEx SmartPost or UPS SurePost may soften the overall impact of DIM weight costs since USPS often uses a higher divisor that results in lower overall DIM weight rates.
Kitting is the process of taking two or more individual items and grouping them together into a single, well-organized unit for marketing, selling, and shipping purposes. Some examples include:
There are many times when a company’s kit building is an ultra-fast sprint to the finish, with massive numbers of people working to get the right mix of products picked, packed and presented “just so” within a tight timeframe. This approach is best when the pack out is relatively simple, order volumes are modest, and temporary labor can do the job.
However, there are many other times when kit building is more methodical, with a team that works steadily over a more extended period of time (e.g., 10 to 12 business days) to perform the same tasks. This approach works best when order volumes are high, labor is harder to come by, kits are more elaborate, there are different types of kits, and there is a preference to have full-time associates do the work.
Many 3PL kitting service menus feature this activity, particularly if the 3PLs in question are fulfillment specialists.
3PL providers that specialize in B2C fulfillment can execute the pick-and-pack strategies noted above and, in doing so, can help you leverage fulfillment as a real competitive advantage. Consider use of a 3PL to develop these strategies.
You want to be able to scale your pick and pack operations so that your logistics costs parallel your revenue stream and protect your cash flow. But predicting demand over time is challenging.
Many companies address this dilemma by entrusting pick and pack fulfillment operations to a 3PL provider. The best 3PLs are experts at managing fluctuating order volumes. They can help you scale up or down as needed – through seasonal spikes during the year and, longer term, through every stage of your company’s growth cycle.
Users of flexible warehousing with a 3PL gain the following benefits:
When you sell through a single channel, you generally have one set of product listings, one pool of inventory and one stream of sales data to manage. With each new sales channel you add, the process becomes more complicated. You have to take into account variations in demand and turnover rates, and the complexities of returns and shipping, among other factors. You also have to merge product SKUs and keep a sharp eye on available inventory across channels.
Despite the different demands of B2B and B2C fulfillment, it’s more efficient to combine these operations under one multi-channel order fulfillment strategy, managed by an experienced 3PL.
Partnership with the right 3PL will reduce costs by eliminating redundant facilities and staff and providing real-time inventory, order management, and shipping/tracking management information to proactively guide decisions.
When choosing a 3PL, look for a partner that combines experience in both retail and direct-to-consumer fulfillment.
The COVID-19 pandemic has taught many companies – the hard way – about the dangers of relying on a single fulfillment center. When illness struck a vitamin supplement company’s warehouse, it had to shut down for a period of time and no orders were fulfilled, frustrating customers. And it’s not just illnesses that can shut down a warehouse. Power outages, floods, earthquakes and other disasters also create risk if all your inventory is in one location.
This risk is mitigated by spreading your inventory out among multiple facilities. Beyond risk mitigation, a multi-location fulfillment strategy brings the following benefits.
If you’re unsure if you should expand your fulfillment network beyond one facility, check out Amware’s infographic which walks you through the thought process. Should you determine that you require a larger fulfillment network, many 3PLs have expansive fulfillment warehouse networks that you can tap into for your products and fulfillment ops.’
If in-house fulfillment operations or a sub-bar fulfillment partner are creating barriers to company growth, it may be time to outsource to a new 3PL. Finding the right partner will take work, but if you do your due diligence the right partner for you is definitely out there.
If pick and pack fulfillment is a core competency of your organization, we hope that this guide has given you useful food for thought. But if you prefer to focus your brand’s time and talent on building better products and driving online sales growth, consider partnering with a fulfillment 3PL like Amware to provide the know-how and infrastructure to handle everything after the click.
Amware Fulfillment specializes in high-volume pick and pack fulfillment and parcel management, handling close to 20 million B2C orders yearly. Connect with an Amware specialist to discuss how a 3PL can support your brand’s growth.