Ecommerce Fulfillment: Definition, Process, How to Optimize
Understanding eCommerce fulfillment – what it is, how it works, and how to optimize or outsource the process for your online business.
Ecommerce Warehouse Layout: How to Design a Fulfillment Center
3 core principles for efficient eCommerce warehouse layout and how to maximize your storage space for improving your fulfillment process.
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What is an eCommerce warehouse layout and why do you need one?
An eCommerce warehouse layout is the physical design of your eCommerce fulfillment center. This is where you will house all of your inventory and pack and ship your orders. It’s important to have a well-thought-out layout to help you optimize space and efficiency. In this article, we’ll give you tips on how to design a fulfillment center that fits your eCommerce business needs.
Start With Our Warehouse Layout Guide
Have you read our guide about warehouse layout? If not, then jump over there first before following the steps below.
3 Main Considerations for Your eCommerce Warehouse
When designing an e-commerce warehouse layout, your main goal should be maximizing efficiency. This helps minimize wasted time and therefore reduces cost. To do this, there are 3 main components of your warehouse you should keep in mind:
Space Requirements
As a business that sells products online, you will need to dedicate a high priority to your storage space, and the ease with which employees can access that storage space. Since your primary process is pick pack & ship, your optimal warehouse layout design must prioritize this.
Determine Total Usable Space
Before you determine the amount of space you need, you need to know how much you have to work with. You need to think in terms of cubic volume here, not square footage. That’s because the height of your warehouse design affects your total space far more than the total length and width.
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Determine Storage Space Requirements
When deciding how much space is required for storing e-commerce products, you need to answer a few key questions:
- How many SKUs will inhabit the warehouse? The first thing you need to figure out is the total number of different types of items involved in your order fulfillment process.
- What types of products are being sold? You need to determine the size and packing for the products you are storing.
- What is the cycle rate for each SKU? After you have the basic product information, you need to know what the average cycle rate is for each product. This helps you understand how much of each SKU you will have on hand on average.
- How will you store the products? There are several ways to store products in a warehouse. These include storing by basic pallets, cartons, bins, or even by individual items. Depending on how you store them may require various racking configurations and increase or decrease the total capacity of your storage.
- How dense do you want your storage space? The width of the aisles plays a large role in the capacity of eCommerce warehouses. Many warehouses employ a high-density storage solution that enables several rows of racks with minimal aisle sizes. However, doing so can limit the type of material handling equipment that is compatible with your warehouse layout. They may also reduce the speed efficiency for picking items and moving through the warehouse.
Traffic Flow
The flow of traffic in a warehouse is critical for eCommerce businesses because it helps to ensure that the employees can move around quickly and efficiently, making order fulfillment as efficient as possible. Additionally, having a well-thought-out traffic flow plan can help reduce accidents and injuries due to congestion or overcrowding on the warehouse floor.
Designate Paths and Walkways
By creating designated paths and walkways, you will have a clear understanding of how people should move around the warehouse. In addition to this, it’s important to create multiple lanes if there is more than one direction of traffic.
Choose a Picking Method
There are four main types of picking methods. These are piece picking (also case picking), batch picking, zone picking, and wave picking. Each of these has its benefits unique to the other. As a business owner or warehouse management, you need to decide which one is right for you.
The type of picking method you choose depends almost completely upon three main factors:
- The type of items
- The total number of different items
- The number of orders in your business
As the total number of different SKUs grows, so does the need for finding them quickly. As the total number of orders grows, so does the need for greater efficiency in the pick and pack process.
Optimize Pick Paths
eCommerce fulfillment centers are under constant pressure to optimize pick paths and reduce the time it takes to pick an order. One of the first steps to optimize the pick paths for warehouse workers is to choose a picking method (as described above). This enables you to have a strict methodology centered around your specific needs, reducing congestion and downtime.
One way to do this is by studying the product demand and organizing products in a way that allows for quick and easy pick-up. Another way to optimize pick paths is by using technology such as warehouse management software (WMS) that creates intelligent picking routes based on real-time inventory data.
Integrate a Warehouse Management System (WMS)
Obtaining a warehouse management system (WMS) is vital for pretty much any kind of eCommerce business that engages in pick, pack and ship activities.
A WMS is a software system digitally tracks inventory, manages orders, and streamlines the movement of material within the warehouse. A WMS will even manage which pickers to send out and automate their pathways for peak efficiency. By integrating a WMS into your system, businesses can reduce operating costs, improve throughput times, and improve accuracy.
Product Location
The location of products in an online retail warehouse is incredibly important because it can have a significant impact on the speed and efficiency of fulfillment processes. Properly organizing an e-commerce warehouse layout allows e-commerce operations teams to find the right products quickly while minimizing the amount of time they spend walking around the facility looking for items.
Let Your Picking Method Dictate the Storage Locations
The e-commerce fulfillment process relies heavily on the picking strategy (method) to locate the product in the warehouse. The picking strategy can majorly impact how efficiently a fulfillment center is organized and managed.
For example, if an e-commerce business uses a zone order picking system, they may arrange their layout with similar product types in each zone. Each zone then is relegated to a single or group of pickers who only pick from that zone. It may even be just a single SKU for that zone. Regardless, this impacts where you place products in the warehouse.
Place Similar or Popular Items Near Each Other
When organizing an e-commerce warehouse layout, it is important to keep similar items grouped. Or, items that are often bought together. This makes it easier for pickers to quickly find the right items. Not only that but placing similar or popular items close together reduces walk time and possibly exhaustion for workers.
Pro Tip: Let Automation Be Your Friend
Although manual material placement and retrieval are by far the most common picking, many e-commerce businesses now use automation to gain efficiency. Automated storage and retrieval systems (ASRS) can help to quickly find and pick the items on a pick list.
Don’t Just “Set It and Forget It”
Once an eCommerce warehouse layout is established and properly organized, eCommerce teams should regularly review and optimize it. Things like seasonal changes in inventory or alterations to the fulfillment process can significantly impact how tasks are completed and should be taken into account when making changes.
By regularly reviewing all of the areas, you can ensure the best possible efficiency for every minute of time and square foot in your business.
Final Thoughts About eCommerce Warehouse Layout
Following the 3 core principles in this guide will help you gain efficiency in your online retail business. Perhaps the most important consideration, however, is to remain flexible and not be afraid to re-evaluate your layout as requirements change.
It is important to remember that a well-organized warehouse is not a “set it and forget it” situation. Warehouses must be regularly reviewed and optimized to account for changes in product demand, seasonal shifts, and technological advancements.
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