This is a terrific short video by Tech Insider on how Amazon Prime Now run their warehouses. Amazon have 41% of the online retail market in the USA so they probably know a thing or two about warehousing and distribution. The Amazon Prime Now service is in 27 cities in the U.S. and will deliver to you in an hour for $7.99 or in two hours for free! Watch the video and then I'll unpack their warehousing secrets and tell you how you can get the same results in your warehouse.
The Long Tail
How to store the Long Tail
So how do you store tens of thousands of items in a warehouse? Well my third Principle of High Performance Warehousing is that you need to match your storage systems with your inventory and order profile. So in Amazon's case their inventory profile is generally small packaged goods in ambient storage (with some cold and frozen storage) but the long tail means a small stock holding of any one item due to demand spread out over many items.
The solution is exactly what you see here. Steel shelving divided into bins of different sizes. Image 2 shows an aisle with 7 levels of 4 bins/bay and image 3 shows an aisle with 9 levels of 6 bins per bay. They may also have aisles with 2 bins per bay and 1 bin per bay for bulkier items for items that sell in higher volume but these are not shown in this video. Amazon are mixing items in bins due to necessity, but because they are scanning items during picking, the risk of mispicks is low.
It is possible they may also have a put-away algorithm that prevents mixing similar items in the same bin. which helps the operator quickly identify the correct item to pick. The bins are quite densely packed but not over-stuffed, you don't want to see lots of air around the products in your warehouse or you will be wasting space (and increasing travel distance). Also note the shelving is high, the top shelf looks to be around 1.8-2.0 m which will require a step to pick from for many operators. Generally you would want to control your put-away algorithms to put slower moving items up high and down low so that most picking is between knee and shoulder height.
The location labelling shown in image 1 reveals they are using a 3 element bin numbering system with 123 representing the rack, Letters (A-I) representing the shelf level and 3 digits for the bin number. The labels are colour coded by level and there is an arrow to pointing to the bin and a small 2D barcode for the operator to scan to confirm they are at the correct bin location. A logical location numbering system an easy to read and scan location label is an essential part of modern warehouse design.
Image 4 and 5 illustrate the difference between random storage and storage in family groups. It is unfortunate that family group storage is all to common in warehouses. It is the logical way to store things when you do not have location control in your inventory system. Finding Coke in the drinks aisle is easier that finding Coke somewhere in the warehouse. Tracking inventory by location allows you to quickly find anything anywhere in your warehouse. It overcomes the main problem with family group storage, which is where do you put the Coke when the drinks aisle is full? However random storage is not the the only storage strategy you need. Coke is a fast moving product and you want it up the front and in one place all the time. This is called a pick location and requires regular replenishment. I cover these concepts in Principle 7 on storage and replenishment strategies. Also I doubt that this slide really represents how Amazon are putting away their products. You would usually try and put the same item in a bin where it is already stored, or find a bin big enough to store the whole amount you have to put-away, otherwise you will end up adding more work into your put-away task by forcing the operator to visit several bins to complete the put-away. Random storage is useful, but even the long tail has slower and faster moving items and you would want to use your put-away algorithm to drive your faster moving items into the shelving closest to your despatch area to minimise picking travel.
How to pick the Long Tail
There are three basic order picking strategies -
So how do I do this in my warehouse?
How far you can travel along the path of warehousing sophistication shown in this video will be dependent on your systems and infrastructure. Setting up your shelving with more finely divided bins is easy enough to do by investing in dividers or cardboard bin boxes for your shelving. However, you will not be able to move to more efficient storage and picking strategies without system support.
For a basic paper based set up you will need:
For a more sophisticated set up you will need to invest in a Warehouse Management System. This will give you real time control with all warehouse tasks being directed by the system. This is what Amazon are using in the video and Logistics Help can help you get there with the Upimium Warehouse Management Suite, which will give you all of the advanced capability described above.
WMS used to be a really expensive solution reserved for large corporate enterprises, but with advances in technology and software design this technology is now available and affordable for small and medium businesses. Warehouse Management Systems do require expert implementation and Logistics Help are experts in working with small and medium businesses to implement high performance logistics strategies and technology.
Contact us now to find out how we can help you create your own high performance warehouse.
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