Target and Toys R Us posted overall sales declines during the holidays.
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But iHerb's Kentucky warehouse, which fulfills a higher concentration of the e-retailer's domestic shipments, uses an automated Perfect Pick "goods-to-person" system manufactured by Opex Corp. The Perfect Pick system uses robotics technology and software to bring totes of products to warehouse picking stations, where employees read order instructions on computer screens to pick the right products from each tote. This system is designed to quickly fulfill orders that get shipped to individual customers, as opposed to groups of orders prepared with the pick-to-light system and shipped in batches, VanWormer says.
He says it takes the Hebron facility about three hours to ship a customer order after it's received online. In the L.A. facility, though it has a much larger workforce, the average time is about six hours.
Data from iHerb's warehouse picking systems are integrated in iHerb's warehouse management system, which the e-retailer built in-house. With a staff of some 75 software developers, iHerb opted to build its own management system and customize it with features not usually available in commercial systems, VanWormer says. For example, iHerb's system monitors sales volumes to automatically modify how much of each SKU to replenish from suppliers. The system also adjusts the warehouse location of SKUs based on sales volume.
For iHerb's Kentucky facility, it contracts with Bastian Solutions, a technology reseller and systems integrator that sold iHerb its Opex Perfect Pick system and integrated it with the retailer's in-house warehouse management system, to keep inventory levels accurately updated. The retailer also uses Bastian's Exacta software for tracking inventory levels in real time, VanWormer says.
That central data management is crucial, he adds, because effective systems enable retailers to have up-to-date information on the products they have available to fulfill orders. With these systems providing current data to e-commerce sites, customer service centers and store point-of-sale systems, retailers can immediately let shoppers know what's available or which items must be placed on back-order.
VanWormer won't say what the various systems cost iHerb, but a spokeswoman for Bastian Solutions says a pick-to-light system is typically priced from $100 to $120 per lighting device, with volume discounts for about 1,000 or more. Commonwealth's Hobkirk says e-retailers with pick-to-light systems often use 10,000 or more lights.
Prices of radio frequency and voice-activated systems are usually based on software licenses, with additional costs for devices. Radio frequency software licenses start at about $1,500 per worker station as a one-time fee, while voice systems run $3,000 or more, plus the cost of scanning devices.
Such investments, VanWormer says, pay off in getting orders out the door faster and without running up labor costs. "Highly automated material handling systems require a sophisticated warehouse management system and significant capital expense," he says. "However, this investment is recovered through significant labor savings and heightened customer service levels." He declines to offer more specifics.
As e-retailers compete in a world ruled by high customer expectations amid pressures to minimize operating costs, such warehouse management performance can help them fulfill those expectations.
Picking the right picking system
Radio frequency systems are considered more accurate than other systems because they scan and record product details as employees handle products, instantly updating warehouse and inventory management systems. But they can also be more cumbersome because workers must often wield scanning guns while also moving boxes. Wrist- and finger-mounted scanners can provide more flexibility.
Pick-to-light systems are best suited for picking products from a limited number of SKUs in a particular area of a warehouse, and fulfilling large numbers of batched orders, says Ian Hobkirk, managing director of Commonwealth Supply Chain Advisors. Although considered easy systems for employees to learn, the lights are expensive to install and replace.
Voice-directed systems, which direct workers through headsets to which SKUs to pick, provide workers with hands-free picking suitable over wide areas of a warehouse. Although considered more difficult to learn than radio frequency or pick-to-light systems because they give workers a quick series of directions, it is relatively easy and cheap to replace headsets versus thousands of lights in a pick-to-light system.
Robotics systems are often called "goods-to-person" systems because they can bring totes or bins of products to workers, who follow instructions and cues from computer screens and lights to move items from a bin to a shipping box. These systems are known for expediting fulfillment of individual orders.
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