As global e-commerce continues to scale by leaps and bounds, small mom-and-pop upstarts strive to carve a niche out for themselves, taking on the giants in this intensely competitive landscape. While web design, hosting, and marketing are now well within reach, one area where the big guys still have an upper hand is in logistics and supply chains.
A lot goes on behind the scenes right after the user clicks ‘Add To Cart’ and checks out from an online store. From the sourcing of the product to effective storage, packaging, labeling, and shipping, supply-chain management is not for the faint-hearted. This article covers the monumental body of material handling knowledge, which is increasingly crucial for aspiring ecommerce entrepreneurs.
Understanding Material Handling
Material handling is critical to an eCommerce business’s overall supply chain management process.
It encompasses a wide range of activities aimed at efficiently and safely moving, storing, controlling, and protecting goods from their origin to their final destination. Let’s delve into the various aspects of material handling in eCommerce, exploring each activity in as much detail as possible.
Receiving inventory involves accepting and inspecting incoming goods from suppliers or manufacturers. This step is crucial to ensure the accuracy and quality of the received items. Key considerations include,
- Verification & Documentation: To ensure accuracy, compare the received items with the corresponding purchase orders and packing slips. Document any discrepancies or damages for potential claims or returns.
- Quality Control: Inspect the received goods for defects, damages, or discrepancies. This step helps prevent inventory issues and maintain customer satisfaction.
- Put-Away Process: Organize and store the received items in designated locations within the warehouse or storage facility for efficient retrieval during order fulfillment.
Order fulfillment encompasses the processes involved in picking, packing, and shipping customer orders. It plays a crucial role in ensuring timely and accurate delivery to customers. Key considerations are as follows,
- Order Processing: Efficiently processes incoming orders, verifying customer details, stock availability, and shipping requirements.
- Pick Strategies: Employ different picking strategies based on the nature of the products and order volume. Common strategies include:
- Single Order Picking: Each order is picked individually.
- Batch Picking: Multiple orders with similar items are picked simultaneously.
- Zone Picking: The warehouse is divided into zones, and each picker is assigned specific areas to fulfill orders.
- Packing: Safely and securely package the items, considering their fragility, size, and weight. Choose appropriate packaging materials to protect the goods during transit.
- Shipping: Select suitable shipping methods and carriers based on customer preferences, delivery speed, and cost considerations. Generate shipping labels and ensure proper documentation.
Inventory management involves tracking and controlling stock levels, location, and movement within the eCommerce business. Effective inventory management prevents stockouts, reduces excess inventory, and optimizes order fulfillment. Key considerations include:
- Real-Time Inventory Tracking: Utilize inventory management software to maintain accurate and up-to-date information on stock levels, locations, and product attributes.
- Demand Forecasting: Analyze historical sales data and market trends to forecast future demand accurately. This helps in optimizing inventory levels and replenishment cycles.
- Stock Replenishment: Establish reorder points and quantities based on demand patterns to ensure timely replenishment without excessive stock holding.
- Cycle Counting: Regularly perform cycle counts to reconcile physical inventory with recorded quantities, identifying and resolving discrepancies promptly.
- ABC Analysis: Classify products (A, B, and C) based on their sales volume and value. This enables prioritization and efficient management of high-value or fast-selling items.
Packaging protects products during transit while reflecting the brand’s image. Effective packaging practices help minimize damage, reduce shipping costs, and enhance the customer experience. Key considerations are as follows:
- Box Sizes: Select appropriate box sizes based on the dimensions and weight of the products. Using too large boxes can increase shipping costs and risk product damage.
- Cushioning Materials: Utilize suitable cushioning materials such as bubble wrap, packing peanuts, or air pillows to protect against impacts and shocks.
- Branding & Inserts: Consider including branded packaging materials, personalized notes, or marketing inserts to enhance the customer unboxing experience and promote brand loyalty.
- Sustainable Packaging: Adopt eco-friendly packaging solutions, such as recyclable or biodegradable materials, to minimize the environmental impact.
Shipping is a crucial aspect of material handling for eCommerce businesses, as it determines the final stage of the product’s journey from the warehouse to the customer’s doorstep. This includes:
- Carrier Selection: Evaluate different shipping carriers based on factors such as cost, reliability, speed, and coverage. Negotiate competitive rates and establish relationships with reliable carriers.
- Shipping Software Integration: Integrate shipping software or utilize integrated eCommerce platforms to streamline shipping processes, automate label printing, track shipments, and provide customers with real-time updates.
- International Shipping: Familiarize yourself with international shipping regulations, customs documentation, and duties to ensure smooth cross-border deliveries.
- Returns & Reverse Logistics: Develop an efficient process for handling returns, including clear return policies, prepaid return labels, and streamlined restocking procedures. Properly managing returns is crucial for customer satisfaction and inventory control.
Optimizing warehouse space is crucial for eCommerce startups, allowing them to store and manage inventory efficiently.
Here are some strategies for space optimization:
- Vertical Storage Options: Utilizing vertical space is essential to maximize storage capacity. This can be achieved through tall shelving units, mezzanine floors, or multi-level racks. You can maximize your warehouse’s cubic capacity by stacking items vertically.
- Efficient Racking Systems: Choose racking systems tailored to your inventory characteristics and operational requirements. Options such as selective pallet racking, drive-in racking, or push-back racking can optimize storage density and provide better accessibility to products based on their turnover rate. There are plenty of affordable material handling solutions for small businesses short on capital. Many opt for high-quality used equipment and racks from reputable companies like East Coast Storage Equipment.
- Automated Storage & Retrieval Systems (AS/RS): AS/RS technologies, including automated conveyors, vertical lifts, or robotic systems, can greatly enhance space utilization and retrieval speed. These systems automate the movement of goods within the warehouse, minimizing the need for manual labor and reducing storage footprint.
- Slotting Optimization: Analyze your products’ demand patterns and order frequency to assign storage locations strategically. Group frequently picked items closer to the packing area to minimize travel time and improve order fulfillment speed. Implementing slotting optimization techniques can significantly improve picking efficiency and reduce operational costs.
An ecommerce business, even a small one, can be quite lucrative for owners, and this holds true despite the intensifying competition because in the end, you can sell anything and everything under the Sun to a marketplace that pretty much encompasses the entire world.
Despite the monumental growth in this segment over the past decade, we can be fairly certain that the golden age of ecommerce is still ahead of us. With millions across developing countries just starting to emerge from poverty, coinciding with rising internet penetration, there is no reason to doubt this.
For small businesses that go above and beyond to deliver value to their customers, this business holds a trove of potential riches just waiting to be harnessed. It, however, involves an extensive learning curve, much of it pertaining to supply chains, material handling, and shipping, among other things.