E-commerce: Is Your Warehouse Really Ready?
by Dick Friedman
Although some wholesale distributors obtain a small number of sales through their websites, a website that enables house accounts to do inquiries and place orders is not true e-commerce. And the traditional warehouse arrangement and processes may not be suitable for e-commerce, which will grow significantly (although not necessarily profitably). Those distributors that want to boost revenue by getting new types of customers and more sales can learn if their warehouses are prepared, and if not, how to prepare them by reading on.
E-Commerce is . . . the 24x7 fully automated process of the “public” and house accounts performing item-availability and price inquiries; generating priced quotes; entering priced orders; generating invoices; paying by credit card (or on account); inquiring into quotes, orders, open invoices and A/R items. All printed documents must contain one or more bar code representations. Be prepared for extensive less-than-carton-sales to the public.
No people are needed for quoting and order entry, however, the purchasing department must be able to order larger quantities (and perhaps new items) than without e-commerce. People are also needed to respond to phone calls and messages sent via the website. People will almost certainly be needed to add information to the database about each item for sale.
The ERP and e-commerce software must contain all needed functions, be fail-safe and able to handle dozens of simultaneous transactions; no employees need be around. There must be a backup power supply for the server(s); and redundant internet lines with automatic switching capability.
An E-commerce Warehouse
Organization. As sales increase, it may be necessary to add shelving to store the larger volume of inventory or store more items on the same shelf. Products for public sales could be stored separately from products for house accounts, but this would require duplicate shelving and perhaps racks, and extra put away and picking time. For fast-moving products, push-back racks could be used, but that would require more duplicate racks and extra aisles. On the shelves, bar coded product and (fixed) location labels must be affixed to cross beams, and reading “guns” must be able to read labels on the highest cross beam.
Receiving. As a pallet of received product is being verified, every carton and individual item must be scanned; no scanning one, counting and keying in the quantity. If the bar code on a box or item is not suitable, a coded label must be immediately printed and affixed to the box or item. After verification, a system generated ID (“license plate number”) would be printed and placed on a hat-looking holder which would rest on the top box or shrink wrap; this way all incoming items are tracked until put away. If the public is allowed to back order, do not separate those backordered items from the others.
Put Away. Successful e-commerce means that items to fill public orders cannot sit on pallets in aisles; put away must occur immediately after receiving. The bar code of every carton and each item to be put away, and its location ID must be scanned; no scanning one, counting, etc. The coded product label on the cross beam should also be scanned to verify that product is stored in the right location. At a put away face, if a location or product label cannot be read, or is wrong, the person doing the put away should contact the inventory control people.
Replenishment must be done well before picking starts. The ERP system should use data for on-hand inventory, allocated orders and historical unit sales to determine when to direct replenishment for an item.
Order Entry. When selling to the public, the cut-off time might need to be much later than at present, which means that a second shift might be needed (if there isn’t one now). The public might not be allowed to order some items (such as a 240-VAC band saw), and a message explaining the reason should be displayed during order entry; is not a lost sale. If someone tries to order more than the quantity available, the system should save the quantity not available and whether the customer or prospect bought a partial quantity, or any item at all. This data should be transmitted to the purchasing department.
Picking. All sales orders must be picked as soon as they are entered; no waiting for a queue of orders to be picked. The bar code of every picked carton and each item, and the location ID, must be scanned; no scanning one, counting, etc. If the bar code on a carton or item is not suitable or missing, a coded label must be printed and affixed, and inventory control notified. If multiple picked items are placed in the same box or tote, do not seal it.
Checking and Packing. The packing and checking area should be divided into two sections: one for public sales, which involve smaller and lighter items (such as grinding wheels); the other for house account sales (arc welding machine). Every carton and each item must be scanned vs. the order number to verify correctness; again, no scanning one, counting, etc. No box should be sealed until every item is verified. Mistakes should be reported to inventory control.
Shipping. Because e-commerce usually involves numerous small-quantity orders, LTL carriers (like UPS) will be used for shipping. The ERP software, or an interface to a carrier system, must be able to print shipping labels; in some cases, a Bill of Lading.
Returns. The ERP system must enable customers to request an RMA, and generate an RMA document that the customer can print. A warehouse area for only public returns is required. As soon as a return is received its RMA must be verified, the item inspected, and for re-salable items a credit issued to the credit card used for the purchase.
Preparing the warehouse for e-commerce
Organization. Store the most frequently-picked items closest to the packing area, and even where items are stored by “family” or vendor line, store faster-moving families closer to the front of that area.
Receiving. If a unit of measure in PO data (on the scanner screen) is not the same as on the corresponding packing list, the receiver should note that discrepancy on the packing list or record it via the scanner.
Put Away. If several items are stored on the same shelf, the scanning gun might have to display a three-parameter location for that shelf – aisle, bay, shelf, slot.
Replenishment. The time to replenish picking locations from bulk/overflow is before daily picking begins. Pulling down and picking at the same time leads to congestion that tends to cause mistakes.
Picking. To avoid the rushing that causes mistakes, items must be picked in a sequence that minimizes walking time. But displaying all items on a scanning device may not minimize picking time. If there is a great variation in item size or weight, split the order into two or more displays – one for the smaller items, and one for the larger/heavier items.
Packing and Checking. 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, smaller, lighter items and packed cartons of an order should be placed on rolling shelves used only to move outbound orders, not picking. Each rolling shelf can be pushed into or near the appropriate truck.
E-commerce is here to stay. Distributors must give serious thought to participating in the surge.
Dick Friedman is a Certified Management Consultant who does not sell any technology nor necessarily endorse using any. For 40 years he has objectively helped industrial distributors determine if a particular technology should or should not be obtained. For worthwhile technologies, Dick helps obtain them, including negotiating contracts that protect the distributors. He also helps distributors prevent warehouse mistakes that lose sales and customers; even distributors using bar codes. For a FREE consultation contact him via www.GenGusCon.com.
This article originally appeared in the Sept./Oct. 2021 issue of Industrial Supply magazine. Copyright 2021, Direct Business Media.
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