22 INDUSTRIAL DISTRIBUTION / November/December 2013 www.inddist.com
mental investment and operating costs. It’s a cross-functional,
cross-channel effort, and it has big impacts — both inside and
outside of the DC.
Companies should consider why they are doing same-day fulfillment in the first place. What’s the goal? Look at your service
commitment (“If you order today, it will be on a truck to you by
tomorrow”) versus the cost to deliver on that promise. Balancing fulfillment strategy against business requirements is crucial.
And increasing fulfillment speed without decreasing accuracy is a
In many cases, same-day fulfillment is the cost of remaining
competitive. Where the marketplace is demanding this level of
service as a standard and migrating from next day delivery as an
upgrade option to a key part of the order decision criteria, the key
is in understanding the true “cost to serve” by developing costs
models associated with different processing alternatives.
From an IT perspective, a system that provides holistic inventory
visibility across the entire supply chain (including merchandise that
is in-transit between the DC and stores/branches, as well as goods
being shipped from suppliers) is a critical first step.
To enable same-day fulfillment, a fundamental shift from batch
processing to event-driven processing of orders must occur. It’s a
transition from having between one and several days’ visibility
into incoming order volume, to having hours or minutes of visibility or no visibility at all. The resulting process changes can cause
you to do things in the DC that seem counterintuitive. For example, a change from picking via zone routing to a pick–
pass-con-solidate process might mean you increase the overall number of
touches to enable more parallel processing of orders, but the net
result generates greater throughput and allows for a later cut-off
time. It’s a delicate balancing act where the pivot point is your
order-cut off time.
The impacts go beyond receiving and replenishment. Companies
working to compress their fulfillment time need to examine the
impacts in several areas:
Systems: Companies cannot enact same-day fulfillment without robust demand planning and forecasting systems. Legacy systems – which are usually batch-oriented – will need an upgrade or
transformation to match demand with inventory in real time. You
need clear rules for allocating inventory to facilitate fast decision
making and exception handling (If you have two orders and one
item, how do you prioritize orders? How do you fulfill demand for
the other one?). Consider the value of integrating their commerce
platform with ERP and shipping systems to improve speed-of-ser-vice and eliminate errors.
Order entry and order management solutions are also top prior-
ities. Companies need to examine:
• How are orders coming in?
• How is inventory availability validated?
• How quickly can you get that order to the floor for process-
• How can you flag it as a priority order?
Systems that allow for dynamic picking assignment and real
time issuance of tasks may be needed to drive pick paths that support overall order fulfillment requirements.
Workforce management systems must provide a real time, visual
picture of fulfillment center staffing, as well as visibility to orders
in various warehouse zones. Calculations of warehouse capacity
versus work time remaining in the day are essential to managing
Culture/Labor: How will labor be impacted? A change in
process necessitates a change in labor standards and metrics for
personnel. And there are changes involved in planning labor in
a same-day fulfillment environment. Shifting the focus to speed
requires different ways of measuring productivity or labor, which
can have an impact on employee morale and performance. Examine your culture to determine how big of a change same-day
fulfillment represents for your company, and consider the need for
change management as part of the transformation.
Shipping: Same-day fulfillment should not be considered in
isolation, but in concert with transportation strategy — otherwise
you run the risk of sub-optimizing. For example, if the DC rushes
to ship same-day but the delivery carrier keeps it for a full day in
their hub, then the benefit to the customer has been lost. Carrier
pick-up times and delivery times must be aligned with DC processing times too. Can you still leverage your current delivery infrastructure if cut-off times and truck pull times are altered?
Equipment: Same-day fulfillment drives more single order processing. This is a critical path item for same-day fulfillment. If your
DC is not equipped to handle picking or packing efficiently, you
may need to invest in different approaches to flow and equipment
to accommodate the change. Process changes can also drive the
need for different types of storage and picking media.
Inventory: Determining the right inventory levels and con-
trols is crucial for executing same-day fulfillment. Considerations
• How much inventory to keep in stores/branches vs. the DC?
• Will you carry all of your SKUs in all of your DCs?
• Do you offer same-day fulfillment for all of your SKUs?
• What are the optimal safety stock levels?
• SKU breadth vs. depth.
Inventory accuracy and visibility are also key when moving from