So, you’re a fashion fulfilment operator. You’ve embarked upon automating your operations over the last 5-10 years and you’ve seen the gains. Now what? How do you continue to make improvements and where should you be investing to keep realising the gains?
By BEUMER Group
BEUMER Group had the opportunity to chat with logistics consultant, Jacob Leth Nielsen of Logio Consulting A/S, to discover where fashion distribution centres can look to invest to optimise their operations further.
It may be useful to start by contemplating the difficulties inherent in improving sites already automated. Because, as Nielsen explains, while moving conventional, manual operations into automated environments was very achievable, it is not as straightforward as when rebuilding or improving automated warehouses now in operation.
No longer is it a physical endeavour of adding components but the changing, tweaking and modifying of an IT system – and that’s quite a different matter.
Nielsen explains it this way:
“Take the case of a fulfilment centre operator wanting to make changes to optimise its automated system by adding equipment and introducing new functionality. This is typically not a physical challenge but a software issue where flows used in daily production are not working as intended or an unexpected exception is occurring and stopping the flow. As with any advanced piece of technology, therefore, these complex systems require more skills to enable the warehouse operator to make the desired changes.”
So where does that leave a fashion fulfilment centre seeking to improve its operations?
Nielsen believes it means an increased level of professionalism needs to be applied. Changes are not something easily done alongside maintaining a fully operational warehouse, he says. Nor is it something that is wise to embark upon without the right know-how.
According to Nielsen, the fashion distribution centre will need to build up an internal team and if needed, enlist the support of an experienced independent consultant. With the team in place, it will need to identify relevant system integrators that have the potential to become long-term partners that can assist in the concept development.
Learn more about future-proofing your warehouse by teaming up with a long-term knowledge partner.
Nielsen continues:
“If the fulfilment centre approaches a system integrator, it needs to be clear and concrete on what it wants to achieve in terms of business opportunities. Importantly too, the fulfilment operator needs to regard its relationship to any suppliers already having delivered automation or WMS to the site as a working partnership. This is because any changes to improve its system will need to be gradual and conducted in a controlled manner. A good working partnership will enable adjustments to be made over time, while containing the risks that might impact on continuing operations.”
A system integrator can help distribution centres integrate the processes and flows on the IT side.
When screening the market, a fashion distribution centre should look for a system integrator that has a demonstrated ability to execute projects for comparable businesses, using the technology or the concepts that the warehouse has in mind.
So, how does a fashion fulfilment centre go about determining the right solutions to invest in?
Nielsen believes the answer lies in working open-mindedly with alternative concepts and comparing them, like for like. This means taking a range of potential future operational scenarios and evaluating each concept using sensitivity analyses and simulation tools to identify opportunities and limitations.
For example, a fashion fulfilment house could be asking itself what would happen if its e-commerce assortment grows by 15 percent annually while stock turns reduce. How would its current system cope and what adjustments does it need to make to meet that growth? How robust are the different future concepts to such change?
Nielsen suggests that the solutions that normally prevail are the ones that have the highest level of operational flexibility. He says:
“Even though these solutions might not present the absolute lowest OPEX level the fulfilment operator wants, they stay relevant over time. They will often not be bespoke solutions, completely tailored to the fulfilment centre’s operations. So, they will require operators who are used to working with specific design criteria to accept the highly dynamic environments they are now operating in.”
Which takes us to hidden costs. One aspect that fulfilment centre operators often overlook in their business cases is a budget for change.
As Nielsen explains, a fashion distribution centre investing in automation has to understand that change is constant and therefore a budget must be set aside for future change orders, system changes and modifications for even the best designed system.
Furthermore, when a fashion fulfilment operator is comparing different concepts, he or she also needs to be realistic about the costs involved to keep it running.
For example, says Nielsen, while in-house technicians may be capable of dealing with automated sorter errors, the addition of more technology, e.g. in the form of a large shuttle system with a related conveyor network, may require residential maintenance support from the supplier. This is a common situation – it just needs to be incorporated into a centre’s business case with realistic cost levels.
There is always a risk for a fashion fulfilment centre to delay the benefits of its investments through poor implementation.
According to Nielsen, however, more ordinarily, investments prove to be wasteful through poor system design. Projects run into trouble due to unclear specifications, the wrong competencies and not being serious enough about testing. Or, he says, because they have been designed according to a very specific set of preconditions by a team that did not fully understand the sensitivity of that specific automated system.
Fortunately, a fashion fulfilment centre is able to take measures to prevent wasting its investments. It can, Nielsen suggests, embrace the fact that it doesn’t know everything the future will bring and expose its concepts to a variety of scenarios, as mentioned above.
Working with different scenarios with various consequences will help a fashion fulfilment centre better understand what happens when conditions change and avoid wasting investments in equipment.
Finally, Nielsen believes there are some other areas where fashion distribution houses’ investments will pay off. These can be summarised as:
The pace of change and the volatility in many fashion fulfilment businesses makes it challenging for operators to know where best to put their investments to achieve greater optimisation. What’s more, making changes and adjustments to systems that are highly complex and in operation is not straightforward. By working in partnership with a system integrator, however, fulfilment centres will get the necessary know-how to make adjustments over time and in a controlled, risk-averse environment. And if they take the time to conduct sensitivity analyses for various future scenarios, they will be better able to determine the right solutions to invest in.
