Optimizing Pick and Pack for More Efficient Fulfillment

November 17, 2020
Post by
Peter Casciato
Optimizing Pick and Pack for More Efficient Fulfillment

Two key factors keep customers happy when it comes to logistics: efficient distribution methods and simplified pricing. It doesn’t matter whether you’re an e-commerce company selling products online or a traditional business with shelves full of goods. Empty shelves in a big box store, or small retail store for that matter, result in the same fate as an e-commerce company’s failure to deliver.

It results in lost customers. When it comes to logistics, getting your products to customers efficiently and expeditiously is what matters most. And the techniques involved in pick and pack distribution provide the means to do just that.

How Does Pick and Pack Fulfillment Work?

One of the most formidable users of pick and pack fulfillment – also known as omnichannel distribution – is Amazon. That alone should make both traditional and e-commerce businesses prick up their ears, as there’s a reason the world’s top e-commerce retailer uses these methods.

Pick-and-pack is the process by which third-party logistics (3PL) providers pick products from their warehouses and pack these items properly before shipping the package on to the end customer.

Pick and pack systems allow companies to fulfill orders efficiently, correctly, and in a timely manner, due in part to the optimization this process enables. In fact, much of the labor involved with fulfilling orders involves employees walking around the warehouse to gather items, so effective methods of pick and pack can result in huge productivity boosts.

The pick and pack process becomes trickier the busier a warehouse becomes, which is why companies like Amazon increasingly look to artificial intelligence and machine learning to guide their teams through hectic workloads. But utilizing these methods needn’t be too costly. Widely available software designed  for pick and pack centers helps improve productivity by informing workers of the most efficient routes around the warehouse to fulfill each order.

Picking Using the Pick and Pack Process

While pick and pack operations are fairly simple on their surface, perfecting the practice requires patience and expertise. To begin, there are several unique methods warehouse workers can use when picking orders depending on the storage method, sales volume, or other factors.

  • Discrete order picking – used by businesses with low volumes or for higher weight and bulky products. Pickers grab items one at a time and then move on to the next order.
  • Batch picking – This involves a single picker taking items with the same SKU for multiple orders. This makes each trip across the warehouse floor more efficient.
  • Cluster picking – involving gathering items for multiple orders at the same time and clustering them. It’s a process that allows a picker to visit a location once, and is generally for small orders or quantities that are less than a case.
  • Zone picking – used for items with SKUs that are divided into certain areas, it involves each picker assigned to one zone per shift, though with orders from various zones. With pickers keeping to their respective zones, it reduces congestion and leads to quicker order fulfillment.
  • Wave picking – pickers queue and group combined pick lists, maximizing product overlap between orders for such things as product weight, shipping schedules, list capacity, and worker shifts.
  • Multi-batch picking – advantageous when multiple orders come through with the same SKU, it allows a picker to pick from the same location for multiple batches.
  • Zone-batch-wave picking – this combines zone picking with batch and wave picking, and is the most complex pick and pack strategy, with pickers picking up multiple SKUs simultaneously, with several scheduling windows for each shift.

After everything has been picked for an order, products go to a packing station where they’re checked, packaged, sealed, and labeled for shipping. They’re then sorted according to carrier and prepared for transport.

Best Practice Packing

The packing part of the pick and pack process, though simpler, requires best practices and should act as an additional layer that ensures customers are shipped the correct products. These simple things can reduce costs and errors in packing:

  • Put enough infill to protect products.
  • Use smallest possible box to reduce weight charges.
  • Design infill instructions for each SKU, informing the packer it should be prepared for shipment.
  • Re-scan products to ensure all items on the packing slip are the right ones for the box.
  • Calculate the correct size box for each order, using pick and pack software instead of having packers guess.

Once orders are packed, regional carriers like Hook Logistics partner with USPS, UPS, or FedEx to get packages out to clients. These can be end use customers ordering through e-commerce sites and retail stores of all sizes.

How Pick and Pack Supports the Last Mile

The same technology that allows logistics companies to efficiently package goods also allows partners in the logistic chain to deliver better customer experience. And it’s this final step for getting products to customers – the last mile delivery – that creates the most frustration for logistics providers and their clients.

Everything that happens during the pick and pack process supports product delivery, but it’s the last mile that tends to be the most expensive, especially when considering end use customers. Yet it’s this portion of the supply chain that pick and pack distribution is meant to address. There’s a reason it’s referred to as the supply chain. It’s only as strong as its weakest link. The tracking systems that allow efficiency in a warehouse also help with the last mile.

A 2020 survey of 1500 consumers by logistics consultancy Convey found that, of online shoppers:

  • 84% won’t order from a retailer after a subpar delivery
  • 98.1% said delivery impacts their loyalty to a brand
  • 41% want more self-service capabilities

Self-service technology that allows customers to track their packages stems from the technology used in pick and pack systems. As these become increasingly automated, customers will be able to tell where their package is, which will add to customer satisfaction, loyalty, and behavior.

According to an article in Inbound Logistics Magazine, customer experience is quickly becoming one of the most important elements in logistics, with consumers desiring the ability to track their orders. A 2019 survey of shippers and logistics service providers showed that 61% believe customer experience will become more important than price in the next five years.

Pick and Pack Techniques During the Pandemic

If the pandemic of 2020 taught traditional retailers anything, it was to operate more like online retail outlets, often referred to as “dark stores,” with shelves full of product but customers online. An August 2020 survey by Dunnhumby – a global customer data science company – found online grocery shopping and delivery represents over a third of U.S. shopping trips.

Despite the hype surrounding a few deaths of warehouse workers from COVID-19 at Amazon warehouses, the industry as a whole quickly adopted pick and pack methods to keep employees socially-distanced and safe. Going back to the list above, LOGIWA – a developer of warehouse software – advised the following pick and pack methods for different sizes of warehouses during a pandemic:

  • Very small warehouses with average shipments – any pick and pack method
  • Small warehouses with high volume – batch picking
  • Large warehouses with high volume – zone picking

Though these may affect efficiency and ultimately delivery times in smaller warehouses, or even stores that use pick and pack methods specifically to comply with social distancing, it does ensure employee safety.

Prior to the pandemic, predictions were of online grocery sales reaching 10-15% of the overall revenue. Now, the industry sees online grocery spending in the US to reach an average of 25% overall, as consumers conditioned to ordering more groceries online.

Though large retailers in the United States for the most part had plenty of in-store customers, the pandemic showed that big box store retailers can operate similarly to their online competitors, through use of pick and pack methods. They’ve also got the advantage of plenty of retail space.

This could make pick and pack methods of shipping even more important, with an increasing use of software and 3PL firms like Hook Logistics by grocery stores to help meet the demand of delivered groceries. Grocery stores found that they were horrible places to perform pick and pack operations. Besides getting in the way of in-person shoppers, with tens of thousands of SKUs spread over tens of thousands of square feet of retail space made it a nightmare for people picking orders.

Having worked with grocers such as Publix, Harris Teeter, and Kroger, Neil Stern – senior partner at retail strategy and consulting firm McMillanDoolittle – says this about the capacity among grocery stores:

“The [store-centric] model doesn't scale, and that's what we're learning from what's happening right now… What this really does is it exposes the vulnerability of online grocery in the United States. The vast majority of products are picked in-store, and that is the least efficient and least reliable way to get products to consumers. There’s no way we have the capacity in the system to handle that today."

According to Diana Medina – director of e-commerce solutions at Inmar Intelligence – many independent retailers without e-commerce platforms scrambled to adjust and re-configure stores to make them more efficient when utilizing pick and pack techniques. It’s for just this reason why many grocers may team with 3PLs like Hook Logistics, to increase efficiency.

Why Hook Logistics?

A common problem among e-commerce stores involves customers abandoning their shopping carts. Customers want to know the price they’re paying before they purchase an item, and if a customer gets an unpleasant surprise once they get to check out, they’re more likely to drop the order.

Making the price of shipping transparent – whether through pick and pack distribution or another method – reduces the chance of cart abandonment significantly. When customers know what they’re paying for a product, including the shipping, this alleviates the problem.

As a 3PL firm, Hook Logistics does just that. Charging flat, fair rates allows e-commerce sites to be more transparent on their pricing, which results in a much more efficient buying process and fewer abandoned carts.

In fact, it’s in their motto: “We designed our rates to be drop dead simple.”

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Post by
Peter Casciato
Peter Casciato is a writer based out of Brooklyn, New York. When he isn’t writing for the Sussman & Han or Hook Logistics Blog, he’s probably gaming, or looking at pictures of birds on Twitter.

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