It’s difficult to pinpoint the most important department when it comes to everything that goes on in the warehouse but a case can be made for fulfillment. During the pandemic, when lockdown measures created staffing shortages just as demand for consumer goods skyrocketed, fulfillment was overwhelmed with orders, creating shipping delays that persisted for months.
Automated fulfillment is helping to improve operations and right size inventories. Here is a brief breakdown of what automated fulfillment is, what businesses are using it for and the benefits of the strategy that have taken the related technology to new heights of utilization and popularity.
What is automated fulfillment?
As its title suggests, automated fulfillment refers to the implementation of technologies that automate fulfillment. When a warehouse receives an order from a customer, a multitude of actions take place for the desired item to be selected, handled, packaged, placed and shipped to the buyer. Instead of each of these processes being done manually, automated fulfillment leverages technology to perform them all faster, more accurately and with greater efficiency. Some of these technologies may include — but aren’t limited to — robotics, conveyor belts, rollers, optimized sortation systems, pickers, mechanized arms and much more.
What companies are using automated fulfillment?
From Amazon to Walmart, e-commerce and big box retailers are among the most well-known users of automated fulfillment, each of them using the technology to varying degrees. Some organizations have dipped their toes in the automated fulfillment waters, testing some of the systems out first before investing in expansion.
A company that is in the midst of expanding its automated fulfillment network is Chewy, an e-commerce retailer specializing in pet supplies. After opening its first automated fulfillment center in Pennsylvania in late 2020 — the same year as the COVID-19 outbreak — Chewy’s chief executive officer announced the company will grow it further, as reported by Supply Chain Dive.
Speaking during a December earnings conference with investors, Chewy CEO Sumit Singh said the technology has proven particularly effective from a cost standpoint, noting outlay has diminished rather appreciably. In addition to its Archibald, Pennsylvania facility helping to reduce its expenses, Singh noted costs are also lower at Chewy’s Reno, Nevada facility, which opened earlier this year. Filled volumes from there were roughly 20% cheaper relative to the company’s non-automated network, Singh further explained.
“We’re still ramping volume into the third fulfillment center, so there is incremental volume leverage that we expect to gain, and we’re still continuing to scale our costs,” Singh said.
As to the more recent expansion, Singh noted plans are underway to build two more automated fulfillment centers, with the first one scheduled to open as early as next year.
Here a few additional advantages of using automated order fulfillment as a product-based business owner:
Improve customer satisfaction
Businesses are constantly trying to up the ante when it comes to getting goods to customers faster, as much of their satisfaction hinges on speed of delivery. Automated fulfillment helps to get items out the door more quickly by doing in seconds what manual processes take minutes to perform.
Seamlessly respond to market shifts in customer demand
Underestimating demand proved to be a major supply chain dilemma for businesses during the pandemic. But through demand forecasting, a complimentary tool of automated fulfillment systems, your business can get a better sense of what demand will be like at any given time, allowing you to diminish, increase or maintain your inventory needs accordingly.
These are just a few of the reasons why investing in automated fulfillment can be a wise supply chain management decision.