Maximising throughput in an eCommerce venture is absolutely critical to long-term profitability, here we’ll talk you through an example to show this in real figures and explain where and how ultra-fast packaging plays it’s part in getting you there.
As eCommerce has developed we’ve all noticed that it has predominantly led to smaller and more frequent orders. Particularly in the situation where a previously wholesale dominated sales field has migrated to eCommerce and increased it’s end-user customer base. This scenario has presented a crisis for operations managers who were used to running a high order value / lower volume distribution setup, and are now faced with an ever increasing volume of lower value orders that need to be delivered fast.
The eCommerce Order Processing Dilemma
An eCommerce operation in a wholesale dominated company is often shoehorned into a small corner and assigned a small team of pickers and packers. As volume picks up on the eCommerce site this small team and small corner becomes ever more cramped and inadequate. The peaks and troughs common to eCommerce sales are hampered by inflexibility and unscalability.
However, increasing space is rarely an option as the wholesale operation needs as much space as possible to maintain efficient service to a long-standing customer base. This leaves just a few alternatives:
- Relocation of the eCommerce operation: Although an attractive long term solution it takes with it many extra expenses that need to be carefully considered:
- The initial cost of warehouse purchase or ongoing cost of lease/rent.
- Cost of additional storage racking and installation/safety inspection etc.
- The expense and complexities of moving replenishment stock from the wholesale site to the eCommerce site and maintaining a stock buffer.
- Integrating the eCommerce & Wholesale Operation: Integrating the two operations into one single operation helps to relieve the space pressure but becomes impractical in terms of order picking and packing. Consider the following points:
- You will need a flexible picking operation integrating both forklift and manual picking for small and large orders.
- Health & Safety issues will increase as forklift and manual picking are combined.
- Smaller eCommerce orders need manual packing so space will still need to be given to the packing operation.
- The eCommerce packing operation will need to be scalable to cope with peaks such as the run up to Christmas.
Analysing the True Cost of your Packing Operation
In almost any eCommerce operation the bottleneck is the actual packing of the order. Whereas a large order can take many minutes to pick yet the wrapping of the pallet is automated with a wrapping machine, in eCommerce it is often the packing of the order which is the most time consuming task. This leads to a much larger packing operation.
As a result there is one area that has a significant impact on smaller eCommerce order processing. The packing speed. It is now that the full packing cost needs to be seriously considered because there are many hidden costs that may not be immediately apparent. Take a few moments to consider the following points:
- When in a peak season do you scale your packing operation as order volume rises? If you do, what is the true extra cost of increasing this? Consider disruption, manager input time, extra man-hours, as well as the fixed costs of extra packing benches & machinery. If you don’t scale your packing operation think about the following points. Are you letting customers down through late delivery times or reduced packing quality at peak season? At low season are you wasting warehouse space and limiting return on investment with inactive packing stations?
- Have you considered the true return on investment? Many warehouses are over 9 meters high, some over 20 meters. However most packing operations are only 2-3 meters high. As the eCommerce packing operation extends so the amount of inactive and wasted space increases. Yes this can be remedied by a mezzanine but consider the capital investment and disruption costs of installing a mezzanine.
- What is the true cost of employment? As the packing operation increases so does the number of employees needed to run the packing stations. However the true cost of employment is a lot more than just wages. There are many extra costs such as initial recruitment costs, new employee uniform, manager oversight, sick & holiday pay, as well as indirect costs such as increased health and safety considerations, larger canteen and rest space facilities, more parking & travel considerations.
The Need for eCommerce Packaging Speed
With all the above points in mind it brings us to the question, is there a way of increasing throughput without having to scale up the packing operation?
The answer? Yes.
By using ultra-fast packaging specially designed for an eCommerce packing operation it is not difficult to double your packing bench throughput. Depending on your current packaging design it is possible to increase throughput by 4 times. That means that you can get 4 times the amount of profit through your current packing operation. Here are a few options to consider:
- SpeedBuild™ Dispatch Carton with Peel & Seal Closure Vs Standard 0201 Carton: Making up & taping a standard 0201 carton ready for filling takes between 15-25 seconds. A SpeedBuild™ design takes just 2 seconds. Packing both cartons takes the same amount of time. Sealing a standard carton takes between 13-23 seconds. A Peel & Seal Closure takes just 5 seconds.
- SpeedBuild™ Postal Carton with Peel & Seal Closure Vs Standard 0427 Diecut Carton: Making up a standard 0427 diecut ready for filling takes between 20-40 seconds. A SpeedBuild™ design takes just 4 seconds. Packing both cartons takes the same amount of time. Sealing a standard 0427 diecut takes between 13-23 seconds. A Peel & Seal Closure takes just 5 seconds.
As you can see from the examples above there are significant time savings that can be made by using ultra-fast packaging specially designed for eCommerce packing operations.