Although some wholesale distributors obtain a small number of sales through their websites, a website that enables house accounts to do inquiries and place orders is not true e-commerce. And the traditional warehouse arrangement and processes may not be suitable for e-commerce, which will grow significantly (although not necessarily profitably). Those distributors who want to boost revenue by getting new types of customers and more sales, can learn if their warehouses are prepared, and if not, how to prepare them, by reading on.
What is e-commerce?
E-commerce is the 24/7 fully automated process of the public and house accounts performing item-availability and price inquiries, generating priced quotes, entering priced orders, generating invoices, paying by credit card (or on account), inquiring into quotes, orders, open invoices, and accounts receivable items. All printed documents must contain one or more bar code representations. Be prepared for extensive less-than-carton-sales to the public.
No people are needed for quoting and order entry. However, the purchasing department must be able to order larger quantities (and perhaps new items) without e-commerce. People are also needed to respond to phone calls and messages sent via the website. And people will almost certainly be needed to add information to the database about each item for sale.
The enterprise resource planning system (ERP) and e-commerce software must contain all needed functions, be fail-safe, and be able to handle dozens of simultaneous transactions. No employees need to be around. And there must be a backup power supply for the server(s) and redundant internet lines with automatic switching capability.
An e-commerce warehouse
As sales increase, it may be necessary to add shelving to store the larger volume of inventory and/or store more items on the same shelf. Products for public sales could be stored separately from products for house accounts, but this would require duplicate shelving and perhaps racks, with extra put away and picking time. For fast-moving products, push-back racks could be used, but that would require more duplicate racks and extra aisles. On the shelves, bar-coded product and (fixed) location labels must be affixed to crossbeams, and reading “guns” must be able to read labels on the highest crossbeam.
Receiving. As a pallet of received product is being verified, every carton and individual item must be scanned; no scanning one, counting, and keying in the quantity. If the bar code on a box or item is not suitable, a coded label must be immediately printed and affixed to the box or item. After verification, a system-generated ID (“license plate number”) would be printed and placed on a hat-looking holder, which would rest on the top box or shrink wrap. This way, all incoming items are tracked until put away. If the public is allowed to back-order (e.g., bottle of disinfectant), do not separate those back-ordered items from the others.
Put away. Successful e-commerce means that items to fill public orders cannot sit on pallets in aisles. Put away must occur immediately after receiving. The bar code of every carton and each item to be put away, and its location ID, must be scanned; no scanning one, counting, etc. The coded product label on the crossbeam should also be scanned to verify that product is stored in the correct location. At a put-away face, if a location or product label cannot be read or is wrong, the person doing the put away should contact the inventory control people.
Replenishment must be done well before picking starts. The ERP system should use data for on-hand inventory, allocated orders, and historical unit sales to determine when to direct a replenishment for an item.
Order entry. When selling to the public, the cut-off time might need to be much later than at present, which means that a second shift might be needed (if there isn’t one now). The public might not be allowed to order some items (e.g., Hazmat products), and a message explaining the reason should be displayed during order entry, is not a lost sale. If someone tries to order more than the quantity available, the system should save the quantity not available and whether the customer or prospect bought a partial quantity, or any item at all. This data should be transmitted to the purchasing department.
Picking. All sales orders must be picked as soon as they are entered with no waiting for a queue of orders to be picked. The bar code of every picked carton and each item, and the location ID, must be scanned; no scanning one, counting, etc. If the bar code on a carton or item is not suitable or missing, a coded label must be printed and affixed, and inventory control notified. If multiple picked items are placed in the same box or tote, do not seal it.
Checking and packing. The packing and checking area should be divided into two sections: One for public sales, which involve smaller and lighter items (e.g., carton of floor wax); the other for house account sales (e.g., cylinder of floor cleaner). Every carton and each item must be scanned versus the order number to verify correctness; again, no scanning one, counting, etc. No box should be sealed until every item is verified. Mistakes should be reported to inventory control.
Shipping. Because e-commerce usually involves numerous small-quantity orders, LTL (less than truckload) carriers (e.g., UPS) will be used for shipping. The ERP software, or an interface to a carrier system, must be able to print shipping labels, in some cases, a bill of lading.
Returns. The ERP system must enable customers to request a return material authorization (RMA) and generate an RMA document that the customer can print. A warehouse area for only public returns is required. As soon as a return is received, its RMA must be verified, the item inspected, and for resalable items, a credit issued to the credit card used for the purchase.
Preparing the warehouse for e-commerce
Organization. Store the most frequently picked items closest to the packing area, and even where items are stored by “family” or vendor line, store faster-moving families closer to the front of that area.
Receiving. If a unit of measure in purchase order (PO) data (on the screen of a scanner) is not the same as that on the corresponding packing list, the receiver should note that discrepancy on the packing list or record it via the scanner.
Put Away. If several items are stored on the same shelf, the scanning gun might have to display a three-parameter location for that shelf—aisle, bay, shelf, slot.
Replenishment. The time to replenish picking locations from bulk/overflow is before daily picking begins. Pulling down and picking at the same time leads to congestion that tends to cause errors.
Picking. To avoid the rushing that causes errors, items must be picked in a sequence that reduces walking time. But displaying all items on a scanning device may not minimize picking time. If there is a great variation in item size or weight, split the order into two or more displays—one for the smaller items and one for the larger/heavier items.
Packing and checking. To avoid repeating mistakes already made, an order checker should not be the same person who picked the order being checked.
Loading. To save time and reduce errors, the smaller, lighter items and packed cartons of an order should be placed on rolling shelves that are used only for moving outbound orders, not picking. Each rolling shelf can be pushed into or near the appropriate truck.
E-commerce is here to stay, and wholesale distributors must give serious thought to participating in the surge.
About the Author.
Dick Friedman is an objective and unbiased certified management consultant. For more than 20 years, he has helped jansan distributors, including some using bar code scanning, prevent warehouse mistakes that lose sales and customers. You may contact him via www.GenBusCon.com.