The e-Commerce warehouse’s management and Lean Manufacturing

Although e-Commerce in Italy developed later than in other countries, today it is one of the fastest growing sectors. There are 38 million online consumers, and by 2023 it is estimated that they could become 41 million. The turnover amounts to 32 billion euros, according to data from the B2c eCommerce Observatory, with an increase of 15% compared to 2018.

Many people have decided to start shopping online, with the Covid 19 emergency, due to the closure of many shops, the restrictions on entering shops and the fear of contagion.

Sales grew exponentially, from 81% to + 162%. From a survey carried out by Netcomm, 77% of companies selling online said they had acquired new customers.

Online sales require both the creation and management of a web platform and the creation and management of a logistics platform. According to Istat data, three out of four companies sell online, so it is necessary to know what are the characteristics that a warehouse must have in order to meet customer needs.

e-Commerce Management
e-Commerce Management

Reliable

First of all it must be reliable, i.e. real and virtual world must be aligned, every activity carried out in the warehouse must be transferred to the online platform and recorded. Warehouse and web platform must be perfectly integrated. Specifically, the customer must understand if there is availability of products in the warehouse and for this reason the accounting stock must be aligned with the physical stock. Many companies still have difficulties in managing the warehouse, in particular there are unregistered picksrejectsdisorderlack of checks on the arrival of the goods. A warehouse designed for online sales must eliminate all possible causes of disservice.

Warehouse e-commerce
Warehouse e-Commerce

Scalable

Secondly, scalable, because the organization of people and the means used must be designed to allow easy readjustment as soon as there is a change in the volumes to be managed in the warehouse. A website allows anyone to make a purchase, because the internet has the ability to reach more parts of the world and the potential customers can grow sharply. Here we need to ask ourselves: What is the production capacity? How many orders can the warehouse process per day? It becomes essential to know the maximum capacity of the resources used, and this knowledge represents the know-how to be able to increase warehouse performance.

Fast

Fast, as orders must be processed as quickly as possible. Preparing the order as soon as possible will increasingly become a strategic asset for business organizations. Technology and automation will be fundamental from this point of view. Having short lead times and in the future companies will start to personalize the deliveries on time slots chosen by the final consumer.

Accurate

Fourth assumption, a warehouse must be accurate. Errors are poorly tolerated by network users. The eCommerce requires logistic excellence, that is the respect of the “right seven” defined in 2000 by Encyclopedia of Production and Manufacturing Management (ed. Springer): the right product, the right quantity, in the right place, in the right time, in the right conditions, at the right customer and at the right price. Failure to comply with any of these criteria results in inaccuracy. Accuracy corresponds to designing simple and accurate activities. Finally, for companies that have to interface with international customers, it is necessary to have an in-depth knowledge of the rules and regulations related to the export of goods.

Warehouse Fast and Scalable
Fast and Scalable

Transparent

Transparent, that is the possibility for everyone to be able to view the warehouse, even virtually, at any time. Transparent is synonymous with clean and tidy, where operators are protected, through working conditions that protect the person. Transparency gives it an excellent corporate reputation and strengthens its brand in the market.

Traceable

Sixth requirement, traceable. The customer must always have a real-time view of his order. It must be possible to reconstruct the activities and resources involved in the process from order to delivery and also in post-delivery. Traceability is not only a protection for the consumer, but also an opportunity for companies to view the entire process and identify any bottlenecks to make improvements to the activities. Also in this case, technology facilitates organizations, providing companies with increasingly advanced tools, for example one of these is the blockchain.

Reversible

Finally, reversible, the organization must be able to respond to the high rate of returns that is present in eCommerce sector, managing the material returned by customers quickly and at low cost. It is necessary to quickly understand if the returned merchandise can be resold or handled differently. It is essential that there are few constraints for customers who have made a purchase and wish to return it, precisely in order not to have excessive limits that can disappoint consumers’ expectations. Failure to return your product is a major cause of negative feedback.

Why Lean Manufacturing for an e-Commerce warehouse?

According to Eurostat, Italy was in fourth-last place in the ranking of European countries in 2019 as a percentage of internet users who shop online, ahead of Cyprus, Romania and Bulgaria. Progressive growth and the entry of new companies in the eCommerce sector are expected in the coming years. It will therefore be important to reorganize the warehouses, in order to meet the seven requirements described above to be competitive on the market.

The “Lean Manufacturing” philosophy and moving towards to lean production, which aims to generate the highest quality for the customer, while minimizing waste, can help manufacturing companies.

Lean production leads to reduced delivery times and an increase in punctuality, and therefore to have a precise and fast warehouse. Costs decrease, efficiency and productivity increase. But not only that, the flexibility of variations in the product mix increases. Lean Manufacturing also reduces intermediate and final stocks, increasing the scalability of the production site.

Five fundamental principles need to be applied:

  • Define value from the customer’s point of view by asking: What does the consumer buy?
  • Identify the flow of value, defining the activities that lead to the realization of the product
  • Create the flow of value, developing a company not by function, but by process, involving all the people involved to arrive at the final output
  • Set up the activities according to the pull and not push logic, that is to start an activity only if the downstream process requires it
  • Pursue perfection according to the logic of continuous improvement

To enter in a new market, in eCommerce, what better opportunity to implement the Lean philosophy within your warehouse?

Gravity Fed conveyors implementation
Gravity Fed Conveyors implementation

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