March 27, 2003, 12:00 AM

Overstock turns to the web to improve warehouse efficiency and productivity

Overstock is using a web-based automated system to streamline operation of its 354,000-square-foot warehouse, where it stores 16,000 products and ships between 10,000 and 50,000 orders each week.

 

There`s nothing like getting rid of a paper-based system in favor of an electronic one to improve the efficiency of processing orders through a warehouse. That`s what Overstock.com Inc. has done with an Internet-based warehouse management system. "The system improves our warehouse efficiency by prioritizing customer orders, and we gain wonderful insight into our staff productivity and order lifecycle within the warehouse," COO Jim Hyde tells InternetRetailer.com.

Overstock uses the Warehouse Advantage system from HighJump Software to streamline the operation of its 354,000-square-foot warehouse, where it stores about 16,000 products that it sells as excess inventory liquidated by other companies. It ships between 10,000 and 50,000 orders each week.

The HighJump system, which replaced a proprietary paper-based system in fall 2001, identifies orders that need to be processed ahead of others and transfers the order information over a radio frequency interface to the handheld devices of warehouse pickers. The pickers, using handhelds with built-in scanners, gather and scan the products for each order, then transfer the products to the packing department. Packers then check order information provided by the Warehouse Advantage system on their own computer screens to verify each order`s contents. Other Overstock workers check the system to confirm each order`s destination and weight.

Hyde says that, in addition to improving efficiency, the Warehouse Advantage system provides granular detail that enables Overstock to track the movement of each product as well as the productivity of each warehouse worker. "We know where every warehouse item is at any given time, and we have constructed an incentive system for the warehouse crew based on the performance data we have collected using the HighJump system," he says.

"In terms of event management, probably the most useful feature is inventory control," Hyde says. "If an order picker finds that our inventory records don`t match the items on a warehouse shelf, we use HighJump to confirm the item count and track the inventory." He adds that Overstock uses the Warehouse Advantage system to verify inventory levels every quarter as well as at year-end.

While improving the efficiency of operating its warehouse, the company says, Overstock has contributed to a steadily improving financial situation, resulting in a net loss for the fiscal year ended Dec. 31, 2002, of $4 million on $91.8 million in revenue, compared to a net loss of $13.6 million on $40 million of revenue a year earlier.

 

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