The Ins and Outs of Same-Day Shipping.
By Dave Piasecki
Having worked for many years in same-day shipping operations, I'm well aware the challenges same-day shipping brings to those responsible for meeting this requirement. However, I've also gained an appreciation for certain advantages of same-day shipping that are often overlooked. That's right; I actually liked running same-day shipping operations—well, sort of.
Advantages and disadvantages of same-day shipping.
Disadvantages of same-day shipping.
Let me first start by acknowledging the drawbacks and challenges--and there certainly are challenges.
Capacity. The most obvious issue with same-day shipping is that it requires you to have enough capacity to meet whatever workload you may encounter on a day-to-day basis. In some businesses, this daily variability may be significant. Not only are you dealing with day-to-day variability, but also variability within the day. For example, you may find that most of your orders come in near the end of the day. So now you need enough capacity available to meet the busiest late-day period of the busiest day. In order processing, capacity includes people, systems, equipment, and even floor space. And all of these cost money.
Efficiency. The previously stated capacity issues can certainly have a negative impact on efficiency, but what I’m really trying to get at here is how same-day shipping can limit your options related to how you process orders. Whenever you examine order processing methods for large fulfillment operations, you will undoubtedly explore the idea of finding ways to group orders or picks to gain efficiencies. This may involve trying to group picks of the same item or picks in the same area to reduce travel times. Or grouping orders to facilitate trailer loading.
Well, in order to gain efficiencies by grouping orders or picks, you must accumulate enough orders or picks to open up these possibilities. This accumulation is known as your order queue. The smaller your order queue, the less potential you have for gaining efficiencies related to grouping orders/picks. In same-day shipping, you often don’t have enough time to accumulate large numbers of orders before starting to process them.
I do have to mention here that I find the potential for some of these types of efficiencies is often overstated. For example, when you actually analyze the data you often find that there just aren’t enough picks of the same item to justify going this route.
Advantages of same-day shipping.
The obvious advantage is related to customer service and marketing, but that’s not the point of this article. I’m actually going to focus on real advantages within the warehouse operation itself.
Productivity gains. When all orders have to ship every day, and everyone in the warehouse understands this and understands that they don’t go home until this is done, you will see some serious hustling going on to make this happen. As managers, we are always looking for ways to inspire productivity, and having some built-in inspiration like this is simply a manager’s dream.
Less to manage. Operations that don’t require same-day shipping need to manage their backlog. This generally means that someone is deciding which orders ship today and which do not. They then will evaluate those that didn’t ship and determine when they will ship. Depending on your shipping requirements, someone may be reviewing and making decisions related to a single order several times. In addition, you very quickly find that anything that doesn’t need to ship today (based on your policies) will probably not ship today even if you have enough capacity to ship it. This means that your backlog is not simply the result of capacity issues, but becomes the direct result of your policies. If your policy states that you have up to three days to ship an order, you will find that all your orders end up taking three days to ship. This probably was not your initial intent when you set the policy.
Summarizing the pros and cons.
I’m not trying to say that same-day shipping is the greatest thing since sliced
bread. The drawbacks are real, but I think people fail to appreciate how the
benefits can offset some of these drawbacks. Having to manage your capacity to
get all orders out every day is a challenge, but it means you don’t have to
manage a backlog. Same-day shipping can prevent you from implementing some more
efficient means of processing orders, but has the potential to boost
productivity by forcing people to hustle.
I don’t think every operation should be doing same-day shipping, but I do
believe there are many companies that can achieve same-day shipping with minimal
if any detrimental effect on the operation. And there’s no doubt your customers
will appreciate it.
Making it happen.
In order to effectively execute same-day shipping, you need to focus on both
efficiency and flexible capacity. Though I previously mentioned that same-day
shipping may limit some options related to efficiency, there are still many
things that can be done to make your order processing more efficient. And when
you have no margin for error in getting all orders shipped same day, you need to
be as efficient as possible. Flexible capacity means that you have the ability
to immediately ramp up to the meet the workload of your peak periods. Here are
some tips:
Picking access and availability. Your order pickers need to be able to pick items as quickly as possible. They can’t do this if they have to work around clutter in the aisles and clutter on the shelves, have to open bulk containers, or are sent to empty locations. Preparation of the picking area is critical in same-day shipping operations. That means an effective means of replenishing pick locations, and regular cleanup and preparation of the pick area.
Limit other activities in pick areas during peak picking times. This is similar to the above point. Though you need people stocking the shelves and performing other activities (cycle counting, cleanup, whatever), you don’t want them to be getting in the way of the order pickers. The best option is to schedule these activities before the picking begins.
Give ‘em the tools they need. You can’t be efficient if your workers are wasting time looking for equipment or having to make-do with a less effective piece of equipment. Depending on the nature of your products and orders, this may include lift trucks, pallet jacks, flatbed carts, picking carts, pallets, totes, ladders, tape guns, tape machines, stretch wrap equipment, strapping equipment, strapping cutters, box cutters, calculators, markers, label equipment, bar code equipment, work stations, etc. Don’t underestimate how much time can be wasted due to a lack of adequate equipment and supplies. Also make sure the quality and design of the equipment is appropriate to the task. Cheap equipment is fine for occasional use, but for heavy frequent use you need to invest in the good stuff.
Give ‘em the space they need. Lack of space is another productivity killer. Same-day shipping puts greater demands on space due to the volumes of orders that have to be processed in a short period of time (peak periods). So don’t skimp on staging and processing areas.
Give ‘em the system support they need. In some high-volume fulfillment operations, this very well may mean significant custom programming to support your fulfillment operation, but that’s not all I’m talking about here. In some cases, you at least need to provide the basics. For example, don’t send pickers to an empty location and then force them to find another location on their own. This is stuff computers do very well, so let the computer do it. And while I’m on this topic, for god’s sake don’t send pickers out to pick stuff that doesn’t exist. You’d be surprised how many companies set up their picking documents to not check availability. So someone orders something, you don’t have any and your computer knows you don’t have any, yet you waste your warehouse people’s time by giving them a picking document that tells them to go out and pick it.
Design flexible processes, systems, and layouts. To make same-day shipping work, you need the flexibility to meet varying workloads. You need to do this efficiently, but you also need to do it in a way the keeps your order-processing time short. This may mean having the flexibility to pick multiple small orders together in a single pass, pick medium sized orders one at a time, and split larger orders among multiple order pickers to cut down on cycle time. You may need similar flexibility in the way you pack and ship orders. You also need the flexibility to add and remove workers from your picking and shipping operation to meet changing workloads. It’s very important to think about flexibility when considering automation. While automation usually brings efficiency, often is at the price of flexibility.
Flexible staff used in moderation. What I’m talking about here is having people that can be moved to different tasks based on workload. So if you’re having a particularly busy shipping day or have a peak surge at the end of the day, you can take people from tasks that are not essential to getting today’s orders out the door, and move them to tasks that are essential to getting today’s orders out the door. I’m emphasizing, “used in moderation” here because moving too many people around like this too often can result in problems. For one, it’s hard to find people that can do multiple jobs well, and even those that can, will likely never be as good at multiple jobs as they could be at one job. Subsequently, when you move people around like this you may see lower levels of performance, quality, accuracy, and even safety. Another issue relates to morale problems you may see in those doing the “tasks that are not essential to getting today’s orders out the door”. These tasks still need to get done sometime, and if they (the people doing the tasks) keep getting behind every time people are pulled away from them to support the shipping process, and don’t get support to help them get caught up, well, I guess you can see how they may develop some morale issues. So while flexible staff is sometimes a necessity, it needs to be use wisely and managed properly.
Well-trained, highly skilled, highly motivated workforce. Yeah, do that. The training part is pretty easy, it just requires some effort. The highly skilled part comes down to hiring good workers and keeping them long enough for them to develop these skills. People often think of warehouse work as “unskilled” but I would strongly disagree. People that can quickly, accurately, properly, and safely operate lift trucks, pick orders, check orders, pack and ship orders, are absolutely skilled. And the best ones got that way over years (not weeks or months) of doing this type of work. You’re on your own on the “motivated” part though.
Exception handling/troubleshooters. What happens when an order picker goes to pick something and it isn’t there, or an order packer notices a picking error, mixed orders, or a damaged item? You need to have processes for handling this kind of stuff (known as exceptions). In many cases it makes sense to have people available that specialize in handling this kind of stuff; and a simple process to hand these exceptions off to these people and maintain the integrity of the order(s) involved without bringing your operation (or parts of it) to a standstill. The reason it often makes sense to have specialists/troubleshooters available, is that it often requires different skills and training to handle this stuff, and especially to handle this stuff in a fast, efficient, and accurate manner. You simply can’t afford to have orders piling up while an order picker or order packer takes 30 to 45 minutes trying to resolve something a specialist could resolve in 5.
Get later carrier pickup times. A later carrier pickup means you have more time to get today's orders processed, and/or, you can set a later order cutoff time for your customers for same-day shipping. Parcel carrier pickup times can be negotiated, though there are constraints. The primary constraints include the distance from your location to the transportation hub for the carrier, and the cutoff time to "make the sort". "The sort" is basically the process that gets your orders moving out to their destinations, and each hub has its own requirements for making this happen. The later the cutoff time for the sort at your carrier's hub, and the closer your location is to that hub, the greater opportunity for getting a later pickup time. I say "opportunity", because just because they can doesn't mean they will. They (the carrier) can't have all shipments coming in at the last possible moment because they simply don't have the capacity to process everything in that window, so late pickup times are not something they're going to be to anxious to give out. The amount of business you do with them makes a big difference, but even if you are a big customer of theirs you still need some pretty good negotiation skills to get a really late pickup.
Contingency plans. Same-day shipping means that you have to have contingency plans in place for whatever is reasonably likely to occur to your operation. Equipment breakdowns, power outages, computer problems, phone/data line problems, etc. As we have gotten more dependent on technology, the importance of contingency planning has increased dramatically. If you simply cannot process orders without your computer system, then you need to make sure you are never without your computer system. There are ways to achieve this. If you’re thinking about incorporating automation into your warehouse processing, then you need to have a plan for what to do if the equipment goes down. If you simply can’t operate if the equipment goes down, then you need to be sure you can quickly repair it in time to get the orders out, or you probably shouldn’t be using that equipment in the first place.
As I mentioned earlier, same-day shipping isn’t for everyone. But
I think there are many companies that overestimate both the benefits of queuing
orders and the difficulties of same-day shipping. Back in the early 90’s it
looked like most industries were heading the way of same-day shipping. And while
many did, some (retail in particular) now seem to be heading in the other
direction. Some big retailers (you know who I’m talking about) won’t even ship
your order out the following day unless you pay extra for it. As a consumer, I
personally think that’s ridiculous. And as an operations consultant, I also
think that’s ridiculous because I don’t believe there is a significant benefit
to doing this (other than trying to get you to pay them extra to ship your order
quicker). So don't automatically assume that same-day shipping (or next-day
shipping) will hurt your operation or make your life miserable.
Dave Piasecki, CPIM is owner/operator of Inventory Operations Consulting LLC, a consulting firm providing services related to inventory management, material handling, and warehouse operations to manufacturers and distributors in Southeast Wisconsin and Northeast Illinois, and author of the books Inventory Management Explained and Inventory Accuracy: People Processes, and Technology. He has over 20 years experience in warehousing and inventory management and can be reached through his website (http://www.inventoryops.com), where he maintains additional relevant information and links
Copyright © 2010 David J Piasecki