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Amazon Business Isn't Your Biggest Threat

Amazon isn't your greatest threat

by Dick Friedman

A mid-2017 survey of some 230 distributors, including at least 50 industrial supplies-type distributors, revealed that Amazon Business (AB) is still a threat, but not the greatest e-commerce threat. AB ranked fourth behind national chains (with a local presence), independent distributors and Grainger. Yet more than 50 percent of respondents indicated that their customers are buying from AB because it is easy to do and prices are competitive. And about one-third of the respondents indicated that they bought from AB to fill customers’ orders when the needed items were not offered or were sold out.

Looking forward, almost 50 percent of respondents indicated that AB sales could represent more than 10 percent of industry sales. These results confirm what this author has stated before, that Amazon Business per se is not the foe; the foe is the business model that AB is perfecting, and others are copying.

Illustrating the threat of the business model are Grainger’s two new e-commerce sites, Zoro.com, a site for selling lower-priced products to small businesses, and Gamut.com, an experimental web site to enable medium to large customers to solve specific problems via Gamut’s products.

Although not addressed in the survey, the threat of manufacturers selling direct to end-users continues to grow, as evidenced by some manufacturers telling the media that they have been approached by AB to become sellers. Channel Marketing Group created and conducted the survey, with help from this author; results of the survey are available for purchase at www.electrical trends.com in the research section.

To compete against e-commerce alternate channels of distribution, distributors need warehouses that are very productive, low cost and very accurate. Here are a few tips for achieving high warehouse productivity and high (i.e., 99.9%) accuracy.

Organization. Store items picked the most often closest to the packing area. Even where items are stored by “family” or vendor line, store faster-moving ones closer to the front of the section. Regardless of arrangement, if more than one item is stored on the same shelf, location codes should contain the identification of each usable location such as aisle, bay, level and slot. The exception is that heavy products should be stored on the lowest shelf or on the floor.

Receiving. If a unit of measure displayed on PO/put-away data on a scanner screen or on a printed put away list is not the same as what’s on the corresponding packing list, the receiver should note that discrepancy on the packing list or record it via the scanner.

Put Away. High productivity, not to mention accuracy, requires recording of storage locations as soon as possible. If there is no permanently assigned storage location for a newly received item because its location is determined after receiving, the person doing put-away must record the selected location on any document taken along during put away, such as a copy of PO, or a put away form, or via bar code by scanning the location-ID code. If paper is used, enter the new location ID into the ERP system ASAP.

Pull Down. The time to replenish picking locations from bulk/overflow is before daily picking begins, regardless of whether someone is using a printed pull-down list or displays data on a bar code scanner. Pulling down and picking at the same time leads to congestion that reduces productivity and tends to cause mistakes.

Picking. To minimize picking time, items must be picked in a sequence that minimizes walking time, which is minimized by storing items as described in “Organization” on page 20. But listing all items on one pick ticket or displaying all in groups on a scanning device may not minimize picking time. If there is a great variation in item size or weight, using one person to pick all the lines for an order may take more time than splitting the order into two or more tickets or RF-displays – one for the smaller items and one for the larger/heavier items.

Packing/QC. If possible, during packing, before an item is placed in a carton or wrapped or simply placed on a pallet, the checker should compare the code of the item to the data for the order, either visually or by scanning bar-coded labels. Verify the quantity being packed to the quantity on the order. To avoid repeating mistakes already made, an order checker should not be the same person who picked the order being checked.

Loading. To save time and reduce mistakes, the smaller and lighter items and packed cartons of an order should be placed on rolling shelves that are used only for staging outbound orders (not for picking), with only one order on any section of a rolling shelf unit. Each rolling shelf can be pushed into or near the appropriate truck.

Although the e-commerce competitors have spent millions of dollars on their warehouses, traditional distributors can maximize productivity and accuracy by using these recommendations.

Dick FriedmanFor more than 40 years, Dick Friedman has been helping fastener, tool, industrial and MRO distributors prevent inventory shortages and warehouse mistakes that lose sales and customers; and helping them select ERP, e-commerce and WMS systems, while avoiding the problems and pitfalls. Dick does not sell systems, software or warehouse technology. He is a certified management consultant and is objective and unbiased. Reach him at (847) 256-1410 for a free consultation, or visit www.GenBusCon.com for more information or to send email.

This article originally appeared in the Jan./Feb. 2018 issue of Industrial Supply magazine. Copyright 2018, Direct Business Media.

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