Executive Briefings

New Techniques in Order Processing for Multi-Channel Retailing

There were good reasons for handling orders in batch mode in the early days of automated warehouse systems, says Jean Belanger, chief executive officer of Reddwerks. But the popularity of e-commerce has made that approach unfeasible for modern-day retailers.

When designing systems for large-scale order-processing, companies today must account for the changes wrought by the advent of internet selling. Buyers today want the assurance of product on hand, coupled with immediate delivery. Retailers must be ready to fulfill a given order at the touch of a button. As a result, they no longer enjoy the luxury of time, as it existed when sales were preceded by deliveries to the store and physical visits by customers. "The retailer captures time by putting inventory on the shelf," Belanger says. "The customer captures time by being a buyer at its convenience. The customer benefits from time more in an internet environment."

The new merchandising model imposes a "tremendous stress" on any retailer attempting to meet the requirements of electronic commerce. Traditional buying and selling cycles, whereby retailers would load up their stores and distribution centers in late summer or early fall for the Christmas shopping season, don't necessarily apply. The peak in demand has shifted closer to the end of the season. "Convenience to the consumer," says Belanger, "has caused inconvenience to the seller."

With those changes in mind, retailers must rethink how they design and use their distribution centers. Some rely on the same facility for internet and brick-and-mortar sales, but that approach creates the challenge of handling very large and very small orders in one distribution environment. Others build separate facilities, which can boost overhead and complicate both planning and execution in DCs.

The right picking technology will depend on the nature of a retailer's SKUs; the volume, size and scope of the distribution operation, and seasonal demand patterns. In any warehouse, the overarching goal is to minimize travel, without compromising the ability to respond instantaneously to demand. The software, too, must be able to react in real time, not in the batch mode that characterizes many legacy systems that were tied to big mainframes. A modern-day operation must be able to handle each item according to its assigned priority, even in a high-volume, multi-channel environment, Belanger says.

To view video in its entirety, click here

There were good reasons for handling orders in batch mode in the early days of automated warehouse systems, says Jean Belanger, chief executive officer of Reddwerks. But the popularity of e-commerce has made that approach unfeasible for modern-day retailers.

When designing systems for large-scale order-processing, companies today must account for the changes wrought by the advent of internet selling. Buyers today want the assurance of product on hand, coupled with immediate delivery. Retailers must be ready to fulfill a given order at the touch of a button. As a result, they no longer enjoy the luxury of time, as it existed when sales were preceded by deliveries to the store and physical visits by customers. "The retailer captures time by putting inventory on the shelf," Belanger says. "The customer captures time by being a buyer at its convenience. The customer benefits from time more in an internet environment."

The new merchandising model imposes a "tremendous stress" on any retailer attempting to meet the requirements of electronic commerce. Traditional buying and selling cycles, whereby retailers would load up their stores and distribution centers in late summer or early fall for the Christmas shopping season, don't necessarily apply. The peak in demand has shifted closer to the end of the season. "Convenience to the consumer," says Belanger, "has caused inconvenience to the seller."

With those changes in mind, retailers must rethink how they design and use their distribution centers. Some rely on the same facility for internet and brick-and-mortar sales, but that approach creates the challenge of handling very large and very small orders in one distribution environment. Others build separate facilities, which can boost overhead and complicate both planning and execution in DCs.

The right picking technology will depend on the nature of a retailer's SKUs; the volume, size and scope of the distribution operation, and seasonal demand patterns. In any warehouse, the overarching goal is to minimize travel, without compromising the ability to respond instantaneously to demand. The software, too, must be able to react in real time, not in the batch mode that characterizes many legacy systems that were tied to big mainframes. A modern-day operation must be able to handle each item according to its assigned priority, even in a high-volume, multi-channel environment, Belanger says.

To view video in its entirety, click here