The Importance of Order Fulfilment
Order fulfilment is a high priority for most organisations due to the direct impact on customer satisfaction and the labour resources order picking necessitates. Incorrect or late orders create the potential for an unhappy customer who might decide to shop elsewhere or use another vendor next time (not to mention absorbing the costs of the return handling, shipment of the replacement and associated labour to handle the return). Additionally, order picking activities typically consume 50% – 70% of a facility’s operating expenses, it’s a huge cost – one that most operations are eager to reduce.
Couple these factors with razor-thin margins and rising customer expectations (as consumer trends from B2C delivery bleed into B2B) and order fulfilment operations quickly becomes a main focus for most warehouse and distribution centres. With customers demanding faster, more frequent orders in smaller quantities with custom labelling and electronic delivery tracking – many warehouses are turning to technology to help streamline and automate their order fulfilment process.
Improving Your Order Fulfilment Process
There are three major benefits to improving the processes in your order fulfilment operation: improved picking speeds. increased picking accuracy, and reduced labour costs.
Improved Picking Speeds (Pick Rate)
Picking speed measures the amount of time it takes to retrieve the product from its storage location and place it into the order container – this is the picking speed. Picking speed is usually measured with some sort of variation of how many (parts, lines, orders) are completed in a specific timeframe (hour, day) or by the number of people. The picking portion brings five different activities together —receive direction; travel location; locating the item at the pick location; item pick; and item wait/mark.
The biggest opportunity to increase picking speeds is to decrease travel time – which in a conventional, manual storage operation accounts for as much as 60%-65% of a worker’s time. The right picking strategy coupled with goods-to-person technologies (Vertical Carousel Modules, Vertical Lift Modules, Horizontal Carousel Modules, Multi-Shuttles and Vertical Buffer Modules) are designed to decrease walk time and increase picking speeds by delivering stored product to the operator.
Increased Picking Accuracy
Picking accuracy measures how often the correct part is picked from inventory. This can be calculated by dividing the errors by the overall picks. Some operations measure ‘put’ accuracy separately; or combine pick and put into one general accuracy metric. These accuracy metrics can be expressed by line, pick or order depending on what makes sense for your operations. Technologies that assist an operator in locating the correct part (pick to light, voice directed, weigh scales, bar code scanning) are designed to improve accuracy rates within a manual or automated order picking operation.
Reduced Labour Costs
Labour costs highlight the total cost of the personnel required to manage the order fulfilment operation – and it’s typically a significant number in the overall operating budget. Labour costs can then be divided by the number of orders filled within the same time period and to measure the average cost of labour per order or line. With rising labour costs and a shrinking labour pool, automated picking technologies can reduce the amount of labour needed for order fulfilment for reduced labour costs.
So, it’s easy to see why order fulfilment is crucial and in the end the secret to highly efficient order fulfilment is to organise, manage and synchronise your processes.
To learn more about how Kardex can help you click here or visit us at www.kardex.com