Distribution centers (DCs) are experiencing unprecedented growth in stock-keeping units (SKUs) and more inventory turns as a result of demand for e-commerce and multi-channel fulfillment.
The impact is predictable. But DCs with traditionally designed material handling equipment (MHE) and warehouse software struggle to keep up.
It’s no wonder. The average number of SKUs increased by 18 percent in 2015. This year, 38 percent of companies plan to handle even more SKUs.
While DCs typically are designed to handle below-peak throughput, the rise of e-commerce, more frequent promotions and competitive service level agreements are creating more peak periods than ever.
That increase in demand pushes orders from online customers quickly through warehouses - so fast, in fact, that the average number of annual inventory turns topped nine last year.
Today’s challenge has now become how to manage fast-moving inventory with enough precision to meet the expectations for prompt shipment of multiple small orders.
All of these elements have to occur alongside traditional wholesale orders for full cases and pallets.
Cost efficiency still matters, but it’s become a dual challenge for warehouse design: Businesses must capture e-commerce opportunities - and fulfill them at the lowest cost.