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8 Steps to Next-Day Delivery Fulfillment Efficiency

With e-commerce order fulfillment a requirement for many warehouses, next-day delivery processes must get done one way or another, but the real question increasingly isn’t will you need to handle next-day fulfillment, but how efficiently can you do it? By Roberto Michel

How fast, accurate and cost effective next-day fulfillment happens spans multiple best practices and systems.

Finding the right blend of these elements can help with cost reduction and competitiveness. 

“Facilities that aren’t good at doing next-day fulfillment usually end up with one of two things happening,” says Ian Hobkirk, president of consulting firm Commonwealth Supply Chain Advisors.

“They either have to throw more labor at the challenges, or they have to go with an earlier cut-off time than a competitor might have. Neither one of those situations is desirable.”

While warehouse management systems (WMS) and other technologies are essential to next-day fulfillment, consultants and solution providers point out that each operation needs to consider a blend of strategies.

“It’s really an orchestration across the right WMS solution, the right facility layout, proper storage media techniques and operational best practices, all synchronized together to support your fulfillment end game,” says John Sidell, principal with consulting firm New Course.

Strategic decisions such as where to locate warehouses as part of distribution center network design and distributed order management (DOM) solutions have a big impact on effective next-day fulfillment, as do downstream issues such as route scheduling.

Ian Hobkirk

“Traditional waving logic is not dynamic enough for e-commerce”Ian Hobkirk, president of  Commonwealth Supply

However, many factors at the warehouse level keep next-day delivery on track. 

1. Start with Assessment
Companies looking to improve fulfillment processes in DCs should analyze at least two or three months of order history before bringing in new forms of automation, advises Lauren Noyes, a logistics consultant with Bastian Solutions.

Examining how many lines are in orders, the cubic requirements for stock keeping units (SKUs) and order profiles, and applying some calculations to account for growth are typically part of such an assessment, says Noyes.

“The information derived from an order history assessment is going to help you adjust your current layout and eliminate some travel, help you optimize pick zones, and balance the amount of product in forward pick areas,” Noyes says.

“From there, you might want to go ahead and look at software and how better capabilities around cartonization, waving or intelligent batching can help you.”

Sidell agrees close examination of order profiles is a good starting point because operations managers need to know the time it takes to process common orders. “You want to work backward from those cycle times to be ready for your order pickup cut-off times [from carriers], so really understanding your order profiles is important,” says Sidell.

2. Dynamic Order/Wave Management
Perhaps the biggest challenge in next-day fulfillment, especially for warehouses designed for filling large retail or wholesale orders, is being nimble in the way orders are released to the floor and integrated into picking activity.

The trouble is that many WMS solutions were implemented to process orders in large batches or waves that have to be worked through from start to finish before being able to accommodate new orders. As Hobkirk explains, traditional waving logic “can be good for efficiency with larger retail or wholesale orders, but it’s not dynamic enough for e-commerce because you can’t drop-in new orders.”

A related issue is that some order management systems or enterprise systems are only set up to release orders to a WMS or a warehouse control system (WCS) in big batches, says Sidell, creating a “choke point” in being able to quickly process new orders. According to Sidell, you need a “dynamic integration” between order management and WMS or WCS, and then the warehouse system needs to be nimble enough to drop new orders into the material flow and work processes underway.

John Sidell

“It’s really an orchestration across the right WMS solution”John Sidell, principal with consulting firm New Course

Some WCS vendors have evolved their solutions into warehouse execution system (WES) solutions that support waveless or “continuous flow” processing of orders in which the WES takes in order data and creates a level flow of picking, replenishment, packing and other fulfillment activities.

While some WMS vendors say they can support a more dynamic approach to order release, WES vendors often focus their solutions on continuous flow environments. Where a WES tends to make the most sense, says Sidell, is for heavily automated DCs that do e-commerce fulfillment and rely on automated systems to process most outbound orders. 

3. Inventory Accuracy
Good old fashioned inventory accuracy provided by WMS and backed up by solid data collection is essential to effective next-day fulfillment.

While this may seem obvious, it’s easier said than done in large e-commerce warehouses that might have many thousands of SKUs, large forward pick areas to replenish, and seasonal or temporary workers to meet labor needs.

Some WMS vendors have added visual cues to screens to highlight where goods should be picked from or placed. WMS with graphical aids can help with accuracy, says Sidell, but it often comes down to proper training and rigorous bar code data collection steps to validate goods were put to the right location, or picked correctly.

New wearable technology that monitors precise movements by workers could help in the future, Sidell says, but he adds that, “proper training, as well as system checks and balances, are key to making sure accuracy is high.”

4. All About Labor
Where many older WMS solutions fall short is real-time labor management capabilities. Noyes says that WES solutions, in addition to supporting continuous flow, are often implemented because they have real-time insights into labor trends and the ability to dynamically reassign labor.

In Bastian’s solution offering, this is called a “work area manager” module that allows a supervisor to balance the workload and labor assignments to create a smooth flow of work. 

Lauren Noyes

“Being able to adjust and assign labor to different areas is very helpful to maintaining a consistent flow of work”Lauren Noyes, logistics consultant, Bastian Solutions

“Being able to adjust and assign labor to different areas, using real-time insights into labor and picking information is very helpful to maintaining a consistent flow of work,” says Noyes. 

5. Storage Best Practices
Choices made in storage media and set up of bins also have an impact on how quick and effective fulfillment takes place. In forward pick areas, notes Sidell, storage media such as flow racks or put walls that allow for replenishment to take place on one side of the storage while picking takes place on the other can help avoid congestion. 

Another best practice, says Sidell, is to right size bins for each picking. Locations that are too big can make it hard for pickers to quickly find an item within a spot, while locations that are too small are impractical because they are challenging to replenish efficiently and might also cause confusion in picking because there are so many like-sized small bins to deal with. 

Slotting software that optimizes where to place SKUs in pick areas helps make picking more productive by keeping fast movers in easy reach.

However, the software must get used more frequently than in the days of fewer SKUs and larger orders. Sidell adds that some fulfillment centers may perform slotting profiles on a daily basis for SKUs tied to e-commerce promotions, while across the board, slotting optimization on a quarterly basis has become a best practice. 

6. Pick Smarter 
Analysis of order profiles is seen as the best way to choose the right picking solutions. For example, says Sidell, if a DC has some high-volume SKUs that are consistently ordered, a put wall can be an effective solution because it efficiently “pushes” full cases to the put wall where they can be picked with less travel compared to each picking into a cart.

“Put walls can be a great solution, but you have to carefully consider your order profiles before jumping into a project,” says Sidell.

For e-commerce order profiles that exhibit high variability, fairly heavy volume, and involve many potential SKUs, a goods-to-person system can be an ideal solution, says Bastian’s Noyes. These systems are very “dense” in the way they store goods, using robotic sleds to travel along the top of the system to retrieve totes and bring the needed goods to a person consolidating the order. 

Bob Fischer

“You can gain efficiencies by combining steps and using bar code validation to improve accuracy”Bob Fischer,
CEO & President,  Advanced Distribution Solutions Inc.

But goods-to-person automation isn’t cheap, so the order profiles for the DC need to be able to justify the equipment based on throughput, accuracy and labor savings. “The automation only really works if you have a good idea of your order profiles,” says Noyes. “And, you also need software with the intelligence to pick the orders correctly and with the knowledge to cube the orders.” 

The picking methods that make sense also depend on where the facility is starting from, Noyes says. A DC with many manual processes probably can benefit from simpler solutions, like moving to RF-directed picking to carts or conveyor, using wave logic from a WMS. “To some extent, it depends on where you are starting from,” explains Noyes. 

Picking directly to a carton can also save touches and labor, consultants agree, although this typically requires “containerization” functionality in WMS or a shipping solution so the right size carton is used for each order.

7. Robust Replenishment
Efficient picking methods will quickly hit a snag if forward pick areas aren’t replenished accurately or often enough. Replenishment logic in WMS or WES that is “demand driven,” meaning it is tied to near real-time knowledge of pick rates and which items are being depleted, is essential to avoid shortages in forward pick areas, says Sidell.

“The ability to have dynamic or demand-driven replenishment is important,” he says. “If you don’t have the correct items in a pick face, you’re hung up.”

With robust WMS solutions, says Sidell, the replenishment logic typically is dynamic enough to keep forward pick areas stocked up properly, but users and their implementation services partners need to ensure the WMS replenishment logic is configured properly.

8. Examine Pack/Ship Areas
DCs that have separate pack out and ship out areas could gain efficiencies by combining steps and using bar code validation to improve accuracy, says Bob Fischer, CEO and president of Advanced Distribution Solutions Inc. (ADSI). “It just makes sense because you are combining two steps into one,” he says.

ADSI’s pack/ship solutions can provide the software functions needed for a combined pack/ship station, says Fischer, while workers outfitted with ring scanners can scan bar codes on items to validate that the correct items are placed into each package, while still being hands free.

Use of wearable scanners and bar code validation integrated with a shipping solution is faster and more accurate than visually inspecting or cross referencing paper lists or packing list data on screens, Fischer says.

With some products coming from a manufacturer in pre-packed, shippable boxes, such as lamps or ceiling fans, shipping software can support a “pick-to-label” process in which shipping software can generate appropriate shipping labels for the goods, allowing pickers to affix the labels on products as they are picked. These items can then bypass the full pack/ship step.

Shipping solutions can also provide cartonization functionality that ensures orders get put in the appropriate sized cartons, helping to avoid extra charges from carriers for large, lightweight shipments, says Fischer. Additionally, Fischer says, shipping solutions can provide address verification functionality that analyzes the ship-to address against address databases for accuracy.  

No Single Solution
While there are many potential solutions for greater productivity and accuracy in picking and shipping of rush orders, the changes that make the most sense will be driven by each DC’s order mix. “The type of picking you choose is a function of factors including how many orders you have, how many lines you have to pick, and the commonality in your orders,” explains Noyes. 

DCs may also have existing automation that can be adapted to e-commerce fulfillment. In some cases, says Hobkirk, a facility with a large sortation system originally installed to sort large retail orders can be used for e-commerce if some secondary sortation is used at the output chutes of the sorter.

The good news with next-day fulfillment is that there are many potential systems and best practices that can help. That’s also the bad news - there are so many possible methods to employ that it’s challenging to hit on the right blend of solutions. 

As Sidell sums up, “there isn’t one silver bullet, one single step, that will solve your next-day fulfillment challenges. It’s really an orchestration of multiple factors - operational best practices, the right facility layout, proper storage media, and having the right technology and data collection systems - that when combined together, get the job done effectively.” 

Optimizing Home Delivery: It Takes More Than Planning

For organizations with their own delivery fleets, using software that optimizes routes can reduce costs and make next-day delivery more effective. Planning the routes so vehicles take fewer left turns and make stops in the quickest sequence squeezes more delivery capacity from the fleet and can reduce mileage.

Will Salter

“Home delivery solutions, blend planning and execution functions to save costs and improve the customer experience”Will Salter, president and CEO of Paragon Software Systems

Additionally, some execution and order management capabilities complement route planning, says Will Salter, president and CEO of Paragon Software Systems, a provider of truck routing and scheduling software.

When it comes to home deliveries, software that quickly re-optimizes fleet schedules as it drops in new orders is key to being able to give a customer a precise, feasible delivery window, Salter says. 

“The way [our] system works is that routes are put together as orders are placed, and this has a knock-down effect on how good the deliveries are going to be the next day,” says Salter.

“The system will do some real routing in the background and report a delivery time back to customers in a live fashion. So what the customer gets back is a time window based on some real routing that goes on in the background.”

In effect, Paragon’s HDX solution links order fulfillment functions with route planning and scheduling.

This capability has attracted users such as Argos, a major U.K. retailer that is rolling out HDX for home delivery management, says Salter.

Other useful home delivery functions include skills resource management and execution functions such as proof of delivery and allowing customers to request delivery time changes.

With home delivery often involving consumer goods such as flat screen TVs, treadmills or refrigerators that require installation, the cycle time and skills needed for these tasks should be ingrained in the home delivery system, says Salter.

“You might on only have a certain number of white glove delivery specialists able to do some of these installations, so your system needs to account for these skill levels,” he explains. 

Paragon offers an Android app that delivery personnel can use to verify what was delivered, which on some deliveries can involve multiple items. The app can also use a phone’s camera to take images of product damage or item condition upon delivery.

Home delivery solutions, Salter concludes, blend planning and execution functions to save costs and improve the customer experience.

“The ability to hit those time windows and be accurate in everything you do are big factors in being able to retain customers,” he says.

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About the author
Roberto Michel, an editor at large for Modern Materials Handling (MMH), has covered manufacturing and supply chain management trends since 1986, mainly as a former staff editor and former contributor at Manufacturing Business Technology. He has been a contributor to MMH since 2004. He has worked on numerous show dailies, including at ProMat, the North American Material Handling Logistics show, and National Manufacturing Week. He can be reached at [email protected]

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