AMHSA: Automation for e-tail

There may be some doubt as to whether Napoleon actually referred to Britain as a ‘nation of shopkeepers’ but little doubt that, if he did, it was meant as a disparaging comment on the country’s fitness for war. Despite total retail sales of some £340 billion per annum in the UK today, Napoleon’s description rings less true every year, with the inexorable rise of online sales challenging the position of traditional High Street stores. According to the Office for National Statistics, the average weekly online spend in September 2012 was over £507 million – an increase of almost 10% per cent compared to September 2011 – and online sales accounted for almost 9% of all retail spending (excluding automotive fuel). The growth in e-tail is set to continue; for example, recent research suggests that online grocery sales will almost double from £5.6 billion currently to £11 billion by 2017.

Logistics challenges in e-tail
It is consumers, of course, who are driving this trend of e-commerce growth, but many retailers are keen to respond. E-tail is a very attractive proposition when comparing the costs of warehouse space with traditional retail space. Add in the savings through reduced inventory and the benefits of improved stock availability, and the argument for investing in e-tail or multichannel operations is compelling.

When it comes to logistics, e-tail throws up a number of challenges:

• The order profile for online sales is quite different, with a much greater requirement for single item picking compared with the more efficient batch picking needed to replenish shops. For multichannel retailers needing to pick orders for both channels, the challenge of optimising their picking systems is even greater;

• The logistics needs of e-commerce are much less predictable than those of traditional bricks-and-mortar retail, especially given the high growth rates that will continue to characterise this sector until it matures;

• With no immediate possibility to select alternative stock if the consumer is not satisfied with the delivery, customer service expectations are extremely high, so picking accuracy is critical;

• The high demand for next-day delivery and the offer of late order cut-off times frequently result in a short picking window; this requires a solution that can deal cost-effectively with peak throughput levels;

• The limitations of selecting goods via a computer screen or, worse, a mobile device mean that e-tail suffers from a high level of returns, a fact that is especially true for fashion goods.

The automated response
When it comes to e-tail, the challenge for the logistics industry is to deliver cost-effective, flexible and sustainable supply chain solutions that satisfy the increasing demands of the consumer. This is where automation comes into play. Automated systems, when carefully designed with the capacity for modular expansion to accommodate future growth, can meet peaks and troughs in a flexible way.

The latest generation of technology allows cost-effective picking of smaller unit loads – cases, totes or single items – and can facilitate the picking, sequencing and dispatch of orders in various load types within multichannel distribution centres. Advances in the speed and accuracy of robotic picking are making automation of the picking process for singles a reality. In addition, computer control of the picking process allows automated handling solutions to secure the economies of batch picking despite the requirement for single items; for example, a pick-by-light solution can enable the picking of several items from a tote and the allocation of them to several target totes, each representing a home delivery.

Returns are a major headache for e-tailers but many automated systems deal highly efficiently with returns. Unlike in a manual system where potential orders may be lost through the invisibility of returned goods, an automated system – with returns scanned on re-entry to the distribution centre – ensures that goods are immediately available for current orders. What is more, automation negates the need for returns to be reintegrated into the main stock, as the warehouse management system knows exactly where they are located.

Automated logistics processes – such as fully automatic A-frame picking machines, pick-by-voice techniques or pick-by-light technology – improve picking accuracy and thereby minimise the number of returns in the first place.

Automation facilitates highly efficient storage and picking in order to cope with the demands of next-day delivery despite short picking windows. For example, goods-to-person picking methods enable significantly higher pick rates per person/hour compared to personto- goods picking. What is more, many e-tailers are integrating valueadded services – such as gift wrapping – in their automated systems remarkably easily and effectively.

The future
The potential for automation in e-tail logistics is enormous. Undoubtedly, given the anticipated growth of the sector, a key area will be grocery e-commerce. Automated handling suppliers are already devising fascinating solutions to harness the power of automation within traditionally manual grocery distribution and this promises to be a key competitive arena between logistics automation providers over the coming years.