So many consumers are expected to purchase their holiday gifts online this year that Black Friday and Cyber Monday are predicted to be the most lucrative online shopping days ever.
According to Adobe, 2017 online holiday sales are expected to reach $107.4 billion and Cyber Monday is expected to become the single largest online shopping day in history, generating $6.6 billion in sales.
This continual rise in holiday-related ecommerce packaging can be a nightmare for fulfillment warehouses where it often feels like things are going to burst at the seams this time of the year. There’s too much product moving in and out in too short a period of time.
To avoid peak season nightmares and deliver precious gifts on time, retailers need to remove wasteful activities by standardizing operations, regrouping ecommerce packing areas, and automating what can be automated.
During November and December ecommerce orders can increase from 3,000 to 10,000+ a day, which forces fulfillment warehouses to hire additional labor to handle the increased volume. Amazon, for example, is seeking 120,000 seasonal workers this year in more than 30 states.
Finding and keeping seasonal workers can be difficult. A substantial number of temporary employees don’t show up after their first day. Companies are finding they have to incentivize workers to stay a full week or boost hourly wages.
Warehouses are often grouped together within industrial parks or located within a few miles of each other so workers will jump to another warehouse or distribution center for 25 cents more an hour. Adding to the issue are third-party logistics companies such as UPS and XPO that have gotten better at recruiting seasonal workers and are draining the resource pool.
Ecommerce Packing is the Bottleneck
Workers in fulfillment centers are generally picking, packing, and shipping the ecommerce orders. The time drain occurs most often during the packing process, which is where the bulk of manual activity takes place. Packing requires workers to:
Choose a correct box size
Form the box
Put the item inside the box
Place cushioning and void-fill materials around the item
Put the invoice in the box
Close the box
Tape the box
Key data into the computer for the shipping label
Print the shipping label
Adhere the shipping label to the box
Push out the box
If an order requires gift wrapping or personalization, which is more frequent during the holidays, those extra steps are added to an already long process and can slow down the entire operation.
Most companies need to rethink gift wrapping within the fulfillment structure. During peak times, they can’t afford to have workers waste time folding corners and taping paper like one would do at home. Even something as simple as having two corners of the paper pre-folded can help move things along.
One of the best solutions is to use printed mailers or specially designed inflatables that allow the protective packaging to serve as the gift wrapping. Companies that accommodate gift wrapping best use a decorated envelope, bag, or box and just drop in the item.
All of these packing and wrapping steps are what ecommerce has wrought. Before ecommerce existed, distribution centers didn’t have to deal with this type of packing. It’s was all about breaking down pallets of cases from distributors or vendors and putting those cases on a different pallet to be sent to a store. Now, it's all about creating and packing individual orders and that takes more time.
As many companies still struggle to get a handle on ecommerce fulfillment, packing is often the last thing they think about. Companies put a lot of effort into managing inventory efficiently, conducting inventory controls, and running inventory quality checks but when it comes to packing, it’s always an afterthought. Any improvement in packing will reduce the cost per package shipped and increase throughput.
Compounding the packing problem is that during peak season, many fulfillment operations take the best packers off the line to train new employees. This practice sets off a domino effect of decreased productivity during the busiest time of the year.
3 Tips for Ecommerce Fulfillment Success
1. Standardization is Key
As more retailers offer two-day and next-day shipping, order lead times have to shrink. The order can’t just sit there on a pallet waiting to be packed. As soon as an order is picked, it needs get on a conveyor and out the door as soon as possible. This requires streamlining so the whole pick, pack, and ship operation moves to the same same beat.
Stratifying the ecommerce packaging environment is a good first step. This means splitting up similar order types or categories into dedicated areas i.e. fragile items are packed in one area, bulky items are packed in another area, and so on. This type of separation makes it easier to standardize each packing activity and typically leads to an increase in packing productivity by 30%. The learning curve for labor is faster when the job is repetitive.
To make it through peak season, when on-time shipment becomes critical, solutions need to be in place so that the fulfillment process is standard, visual, and teachable. You have to be able to walk into a packing station and within a few minutes be productive without pulling other workers off the line to assist.
The process can be made visual, for example, with something as simple as production boards that illustrate hour by hour how many boxes a person is expected to pack. Or, there could be a cue such as a yellow light that appears when productivity drops, alerting the need for assistance. Visual signs help new and temporary workers understand what’s expected of them.
2. Work Faster and Smarter
Once a fulfillment operation has been streamlined, standardized and stratified, it's time to consider automated packing systems for full efficiency. Automation removes repetitive manual tasks, which removes costs.
New technologies in fulfillment automation have brought us to an era where machines not only work faster, they work smarter. What the smarter technology has shown us is that we need to rethink the box: boxes are big and clunky and slow.
We now have automated solutions with the ability to:
Create right-size boxes
Reduce shipping costs
Maximize labor efficiency
These new technologies are providing high-speed fulfillment velocity and making the package as small as it can be while still ensuring that the item arrives as intended. It is not uncommon to see a 1% increase in throughput generating $1 million of gross margin. When you increase throughput you increase capacity and optimize returns on assets.
Automation can free labor to do value-add and complex tasks that require decision making, thinking, and reasoning. Currently, for example, it's people who are best at planning how things are placed in a box, not machines. But machines such as conveyors are best at moving items around a warehouse, not people who end up wasting too much walking miles across the warehouse floor.
3. Look Within
We should also use input from labor to standardize processes and to test potential scenarios. During non-peak times, productivity often drops when there’s low volume because employees will extend their workload across the day stretching out what should be done in six hours to eight hours.
Those two hours could be used to come up with a better way of gift wrapping or an exploration of standardization methods. Companies could use those two hours to replicate workers’ best practices. Some of the answers are right there inside the warehouse. Labor may know the best answers to production issues, which could eliminate the inevitable nightmares that come with peak-season fulfillment. Someone just needs to ask them.