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Optimise to Survive

While Amazon, Zalando and the rest are gaining ever larger market shares, they are simultaneously investing massively in their logistics infrastructure. This means even companies with small storage needs must optimise logistics processes, argues Kardex Remstar.



08 February 2018

While Amazon, Zalando and the rest are gaining ever larger market shares, they are simultaneously investing massively in their logistics infrastructure. This means even companies with small storage needs must optimise logistics processes, argues Kardex Remstar.

Investment in logistics is partly happening to meet growing demand. However, large online retailers are also expanding, modernising and further automating their distribution centres in order to streamline processes and thus make savings. As a result, local businesses or smaller online retailers face pressure from two sides. A precise analysis and possible reorganisation of their storage strategy is unavoidable to remain competitive.

Obviously the design and layout of a large distribution centre is on a different scale to the planning of a warehouse for storing the goods of a medium-sized retailer or a start-up in the eCommerce sector. The same rules nonetheless apply, albeit to a lesser extent: In both cases there is a desire to optimise storage and retrieval processes within the available space at a reasonable cost, while ensuring a high level of precision.

Dynamic storage gives smaller retailers the option of storing a larger inventory using their existing capacity.

This starts even on a small scale – for example, when a storage space occupying ten square metres with a ceiling height of 2.5 metres has to be used more effectively in future. Here, items were previously removed manually from two shelves that provided storage volume of 12 cubic metres. However, only 70 percent of the room’s capacity was used due to the differently sized goods as well as ergonomic considerations. A dynamic storage system can store three to four times the quantity of goods thanks to its highly dense storage concept with tray heights precisely adapted to the dimensions of the items and a unit that makes use of the entire room height. This gives smaller retailers the option of storing a larger inventory using their existing capacity, which can be critical to the success of a company. That’s because it is the availability of goods that is increasingly becoming a key competitive factor in the retail sector.

Precision

Larger quantities of goods can be stored and retrieved more quickly and precisely with the aid of automated storage systems, significantly increasing process productivity. Other advantages include picking accuracy of up to 99%, returns are easily reincorporated into the inventory and better ergonomics. Another advantage over conventional solutions lies in the variability when storing fast movers and less frequently sold goods that are still important to the product range. With the ABC strategy, the items that are sold less often are stored somewhere in the back of the warehouse, whereas in an automated storage lift they are literally just inches away from the fast movers, minimising the otherwise longer travel and search times. This is of particular importance to small and medium-sized retailers because they are quickly stretched to their limit with the often wide range of products that they have to keep in stock and the resulting high proportion of shelf warmers.

In classic warehouse logistics, the inventory costs and transport costs must be constantly weighed up. While the running costs of storing goods in a central warehouse can generally be kept down, the transport costs tend to be higher than those for decentralised storage due to the greater distance to the customer. Accordingly, online retailers and chains also have to consider similar questions in relation to optimising their warehouses. Amazon is once again leading the way and is demonstrating how it wants to get closer to the customer with its Amazon Go stores. A sophisticated, decentralised storage strategy is an essential detail when it comes to the profitability of this approach.

Click & Collect

The Kardex solution can be adapted to multichannel retailers to help make it possible for customers to pick up goods purchased online in their stores. If these aren’t delivered from a central distribution warehouse, optimal use of must be made of the storage capacity in the local stores in future to compensate for the additional space needed for the goods purchased online that are being picked up in-store.

In addition, the option to try on a new item of clothing in-store makes exchanges and returns easier, which isn’t always that straightforward with online retailing. In terms of storage strategy, it means that more goods have to be kept in rooms with often limited space. As such, the Kardex solution can be a good way to increase storage density.

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