Don’t let fixed order profiles be the boss of you

I have always believed that companies build distribution centers to ship on-time, error-free orders at the minimum cost.

Companies design their distribution centers to meet business requirements, such as target throughput capacity and order processing times. During the design process for new facilities, a lot of effort is placed on analyzing historical data to determine the order profile(s) that facilities should be designed and optimized around. For example, a 30%/70% mix of e-commerce and store replenishment orders, with an average e-commerce order size of 2.5 eaches. Customers also work with their equipment and systems vendors on what changes they expect in the future, and how to adjust the design order profiles accordingly (e.g., a company expects the share of e-commerce orders to grow 10% over the next 3 years). Vendors then design their systems to meet the throughput and processing targets using these best guesses for how order profiles will look in the future.

However, a lot can change between the design phase and when facilities start operating. For example, the share of e-commerce orders can grow faster than expected. A common reason new facilities fail to meet their capacity targets is that the actual orders that the facility needs to service do not match the order profiles used in the design phase. When this happens, vendors and companies start to argue about who is at fault and who is going to pay to make changes. Vendors have become skilled at writing contracts where the design order profiles are strictly defined, and protections for the vendor are included for not meeting target capacities when actual orders differ from the design order profiles. On the other side, companies get upset knowing that they spent millions of dollars on a project that is not hitting their targets, and as a result, they are having difficulty shipping their orders correctly and on time.

Even when good analytical tools are used to study historical data, and good forecasting techniques are used to predict future orders, without a crystal ball that shows the future, the probability of reality matching design order profiles perfectly is slim.

Historically, vendors have been hesitant to propose solutions with the flexibility to meet target capacities for different order profiles. They believe such solutions would be too expensive and the high price could disqualify them from projects.

With Fulfillment Engines, I want to break this pattern. Our solutions do not depend on fixed order profiles – or any other fixed assumptions such as SKU slotting, order batching, batch factors, or buffer sizes. We use real-time decision making to optimize manual labor to help customers process orders faster and more intelligently, based on order urgency and priority. Our highly efficient, flexible, and cost-effective fulfillment solutions adapt and optimizes your operations on the fly using the actual orders being processed and your available resources to realize better outcomes. And, because Fulfillment Engines optimizes your manual workforce, making changes does not require costly automation equipment upgrades or modifications.  

For example, if your company’s share of e-commerce orders grows faster than expected, the volume of smaller orders can be quickly exceed the design specifications of automation equipment, such as goods to persons systems or unit sorters. With Fulfillment Engines, rather than buying more steel or forcing you to process orders sub-optimally to stay within the limits of your automation equipment, now you can complement your automation capacity with your optimized manual workforce to process the additional volume of e-commerce orders efficiently and cost effectively.

Feel free to contact us if you would like to chat about these topics as well as to better understand how Fulfillment Engines solutions address these issues.