- May 06, 2013
Remaking Distribution Space for E-commerce
By Dees Stribling, Contributing Editor
The following scenario is not far-fetched and is not far in the future. And it has the potential to transform at least some—and maybe many—warehouse and distribution facilities to meet new consumer expectations.
In the not-too-distant future—say, one Christmas Eve later in the 2010s—a man decides he needs one more gift for his children before the morning. Perhaps some electronic plaything that is not even on the market now but was all the rage that year. Maybe the stores are already closed for the day, maybe not. That does not concern him.
He makes a quick online search, finds the item and orders it. Within two hours, a delivery person rings his doorbell, bearing the item. The man might have paid more for the gift than in a store, but he received it without any trouble, in time for Christmas morning. In fact, by this time, he might not think much of it, since immediate delivery of some (or many) retail items in some places (even in most places) might be the norm, just as next-day delivery is now.
The technology that makes this retail transaction imaginable is in part communications—ordering on the merchant’s Web site—but it is also part transportation, with the technology necessary for near-instant e-commerce to be found in warehouse and distribution centers.
Much of the new technology involved in the rapid delivery of goods through e-commerce will be the purview of tenants, but the warehouse and distribution facilities they rent will have to have more complex internal layouts and technical capabilities. In fact, it is entirely possible that e-commerce and wholesale distribution are beginning to evolve into two different animals, each requiring different warehouse configurations and supporting technologies.
“In some cases, distribution centers are going to be larger and more complex,” said Kristian Bjorson, Jones Lang LaSalle Inc. international director & head of retail/e-commerce distribution. “That’s because omni-channel distribution will need to serve customers in all different ways. It won’t be the entire spectrum of distribution properties, but it’s going to be an increasingly important part of the market. Buildings that can adapt to the needs of e-commerce are going to be more competitive.”
E-commerce distribution technology is a complex, worldwide specialty, facilitating a complicated interaction between retailer and customer. E-commerce means a large volume of small orders, and those orders tend to come in unpredictable patterns. Accuracy is a prime consideration, because customers who order goods online tend to have little tolerance for mistakes or sluggish delivery, and that is only likely to intensify as rapid e-commerce delivery becomes a more normal part of everyday consumer experience.
Important e-commerce-supporting technologies include systems that automatically sort products for multiple-item orders and mini-load systems for storing small quantities of the same products in boxes, as well as box-folding and box-closing machines. The nature of e-commerce fulfillment means, however, that not everything can be as automated as retailer-oriented distribution facilities, which typically receive many entire pallets of goods for wholesale customers.
Automated sorting is an advancing technology. Recently, Next Group PLC, a British garment purveyor, installed 23 Pickbuffers and associated conveyor connections. Pickbuffers, a product of Durkopp UK, enable automatic storage and single-item picking for both e-commerce and store orders. Covering more than 320,000 square feet, the whole concept is designed to take stock from an adjacent high-bay warehouse for feeding into an automated sortation process. Garments are selected here for shipping to Next’s 520 U.K. stores, international stores and the company’s growing volume of Internet sales.
“The system is used for all of Next’s hanging garment picking, and due to the growth of Next’s e-commerce business, we were asked to extend the system we originally installed in 2006,” said Annette Sommer, general manager of Durkopp UK. “We’ve also installed a special fast-track lane to accommodate late orders and meet Next’s delivery promise of ‘order by 9 p.m. and have it delivered next day.’ ”
Mini-load systems are also coming online in various parts of the world—and not only for consumer goods. In Germany, for instance, viastore systems GmbH completed a new automatic mini-load system for CLASS Selbstfahrenden Erntemaschinen (CSE) that is used for distributing small numbers of industrial parts. That is not quite the same as e-retailing, but the principle is similar, since it involves processing orders of widely varying sizes in short periods of time for exacting customers.
“The new turnover machine has two shelf aisles, 55 meters long, up to eight meters high and each equipped with an automatic storage and retrieval machine,” noted Dietmar Düsing, who is responsible for supply chain management at CSE. The new system enables the storage capacity to be roughly doubled and the turnover speed to be considerably increased. The total storage capacity is now 12,544 storage shelves, providing space for some 32,000 containers of varying sizes.
The two viaspeed XL automatic storage and retrieval machines pass through the shelf aisles as many as 140 times an hour, setting down containers with newly delivered items and picking up other items needed for production. The facility is rated for 5,000 container movements per day. The machines then move at speeds as fast as 15 feet per second, with load units that together weigh as much as 140 pounds.
To accommodate e-commerce uses, distribution centers, whether new or renovated, require some different infrastructure characteristics than distribution facilities that serve retail stores. According to a recent study by Jones Lang LaSalle, an e-commerce distribution center is going to be different from an ordinary distribution center in the following ways:
Mezzanine areas. E-commerce companies need larger mezzanine areas, and that requires higher clearance: from 36 to 40 feet. New buildings of this size can usually accommodate two or even three levels of mezzanine for picking, packaging, gift wrapping, returns and other back-office tasks.
Life system and HVAC requirements. Because not everything can be automated as thoroughly as with standard distribution, e-commerce requires a comparatively large warehouse workforce, and that means upgrades to certain systems, like better lighting and ESFR fire protection. Formerly driven by inventory, now heating and cooling systems must be geared to employees.
More parking. More employees for labor-intensive picking and packing to fill online orders also means more employee parking.
Consumer-driven location selection. Demand plays a larger role in site selection when goods must arrive for quick turnaround. There must be an available and affordable labor force to staff e-commerce distribution centers, as well as access to rail, highways and air transportation.
“Who’s going to make that investment?” Bjorson said, referring to the extra costs involved in an e-commerce-oriented facility. “That’s something the real estate industry hasn’t worked out yet. Currently, build-to-suits are on a case-by-case basis, and spec developers are studying whether they need to build their facilities with e-commerce tenants in mind.”