When was the last time you redesigned the pick-pack-ship process of your eCommerce business?
While global online sales are rising constantly, the availability of storage space is shrinking. This has caused warehouse rents to shoot through the roof. Hence, you need to use your storage facility optimally in terms of space utilisation and turning around shipments quickly.
Moreover, 65% of the warehouse costs are associated with labour and 50% of the working hours of storage personnel is spent walking back and forth to pick the orders. This can slow down your shipping process and increase your operational costs.
If you consider the above data, you would find significant room for process improvement in your pick and pack warehouse.
That said, let’s discuss the nuts and bolts of picking & packing and the ways you can optimise your warehouse operations to pick and pack your customers’ orders quickly.
Overview of the Order Fulfillment Process
As an eCommerce business, right from procuring the products to delivering them to your customers, everything falls under the order fulfilment process. You can handle the entire process in-house or you can outsource it to external logistics providers for better efficiency.
An eCommerce order fulfilment process comprises five main stages. They are:
- Receiving inventory: It’s the first stage when you receive the ordered stock from your suppliers, unload them, sign the receiving documents, and get it into the storage facility.
- Warehousing and storage: If you’re managing your inventory in-house, you would store and organise your products category-wise into your own warehouse. In case you have partnered with an end-to-end fulfilment service provider, they’ll stock your inventory in their distributed fulfilment centres for faster deliveries.
- Order processing: At this stage, customers order products on your website and you start processing the orders. It starts with the picking and packing process which we’ll discuss in-depth throughout this guide.
- Shipping: Once the products are packaged, the next step is shipping them to your customers. Most eCommerce businesses outsource the shipping and delivery process to logistics companies.
- Handling returns: Order fulfilment doesn’t end as soon as the customers have their orders in their hands. You also need to proactively plan for reverse logistics in case your consumers want to return or exchange the products.
Now that we have briefly discussed the order fulfilment process, let’s get into the nitty-gritty of picking and packing.
What is Pick and Pack?
Here’s the step-by-step explanation of the pick-pack-ship process.
Receiving the Orders
As soon as customers place orders on your eCommerce site or other digital sales channel, they’re escalated to your warehouse automatically, provided your warehouse management system (WMS) is integrated with your website.
Then WMS generates the picking slip (or picking list). It can be a physical printed document or digital order.
Picking the Orders
Next, the warehouse staff collects the picking slip and starts picking products from the warehouse racks.
Though simple, it’s an important step of the pick-pack-ship process because a small error ends up in delivering the wrong products to customers. That’s the reason you need effective inventory management and a pick & pack system that suits your business type and sales volume.
Packing the Orders
Then the picked items are passed on to the packing station. Here, your packaging team:
- Verifies the products as per picking and packing slip
- Packs the orders securely with an optimal package size to minimize their volumetric weight
- Seals and pastes shipping label on the package
- Makes it ready for shipping
Shipping the Orders
Once packaging is done, the warehouse workers move the shipments near the loading dock for the carrier to pick up. In case, you are working with multiple carriers, then you need to sort orders according to the assigned carriers.
Additionally, you may also want to consider allocating dedicated loading space to carrier vehicles if you’re shipping in high volumes.
Pick and Pack Methods
Although the pick-pack-ship process sounds pretty simple, you need a systematic approach to picking and packing if you wish to operate at scale effectively and consistently.
Even if you’re operating a low volume business from your home or garage, these methods can help you reduce shipping errors and costs. Whereas, for medium and large organisations efficient pick and pack systems are non-negotiable.
Let’s take a look at some of the popular pick and pack methods that most eCommerce businesses deploy depending on their business volume and products.
Piece picking is the simplest method you use if you’re running a small business with a few daily orders to process.
This method requires you to work on one order at a time. So you collect the picking slip for a single order, check your storage shelves, and pick the relevant products. Once you have collected all the items for that picking slip, you take them to the packing station and the packaging staff will pack the orders.
Let’s say your business has grown over the months and now you’re receiving order volume good enough to divide into batches.
In this case, you can use the batch picking method.
It involves sorting the picking list according to the items that are stored in the same or nearby areas of the warehouse. This allows your pickers to optimise their picking route and also saves time since they don’t have to go back and forth between shelves and packing stations for single orders.
For example, many orders include a common product or SKU, so it’s easy to pick all those items in one batch at a time.
You can also work this method in your low volume business. Instead of picking and packing single orders multiple times during the day, you can pick all items at one decided time of the day and also pack them at once.
Zone picking method works well for businesses with a very high volume of daily orders since they have large warehouses. In addition, third-party logistics providers also use this technique in their fulfilment centres.
In this method, pickers stay within their assigned zones in the warehouse and pick the items located in their zone. For other products in the picking slip, they pass the order to the picker in the relevant zone and so on.
Once all the products are collected from different zones, the worker sends them to the packing station.
For this method to work, you need a sound WMS and excellent coordination within your picking staff.
When you combine the best practices of batch picking and zone picking, it’s called wave picking.
Here’s how it works.
The pickers collect the products in batches within their allocated zones. After that, it’ll be passed on to the worker in the next zone who will also repeat the same process. It continues till the last batch of items is picked. Then the picking team will move all the collected orders to the packing zone.
The wave picking batches are decided according to:
- Order shipping time.
- Similar products or SKUs ordered around the same time
- The warehouse picking zones, etc.
In the cluster picking method, your warehouse pickers can work on multiple orders at the same time. Also, they can pick various items from different orders instead of focusing on similar SKUs.
First, you need to load the order picking cart with multiple containers and then travel through the warehouse zones for the cluster you’re working on. Then order-wise collect the items and put them in the designated containers.
Challenges to the Pick and Pack Process
Sometimes your pick-pack-ship process may get affected due to various factors that can cause errors and delays. However, when you are aware of the challenges in the process, you can plan for it and save your additional operating costs arising from such adversities.
That said, here are some of the obstacles that you should consider.
Inaccurate Inventory Management
Stock-level discrepancies is a common inventory management problem for many eCommerce companies.
For instance, you received an order of 500 units of a specific product on your site. Your system shows that there are enough numbers of products available but the actual quantity on shelves is only 300 units.
Hence, the picker will have to escalate the matter to the warehouse supervisor. This would affect his current as well as next picking tasks.
Higher Turnaround Times
The time involved in product picking, organising, and packaging is referred to as turn-around time (TAT).
Your TAT can extend due to factors like:
- Misplacement of products
- Unsystematic warehousing practices
- Ineffective picking and packing systems
- System errors, etc.
The higher the TAT, the fewer the number of orders picked, packed, and shipped. Ultimately, it delays the entire order fulfilment process of your business.
Unavailability of Product Information
Sometimes unavailability of important information hampers the pick and pack process.
For example, packaging gets affected when the packing team doesn’t have crucial information such as:
- The fragility of the product
- Weight and dimensions of the product
- Product groups like dangerous goods or high-value products
If you’re not using wireless and mobile technologies like barcode & RFID scanners, it’s quite possible that the picker may collect the wrong product. Then it’s passed on to the packing section.
Now, if the packing staff verifies the product with order information, the damage stays limited within the warehouse only. The picker will have to go back and get the right product.
However, if the packing team also fails to verify it, the wrong product lands in the customer’s hands. This makes you incur extra costs on reverse logistics.
Hence, it’s best that you use automated WMS and scanners to avoid such errors.
Lack of Tracking Mechanism
Again, the warehouses that lack technology & automation find it difficult to track who has picked up a particular product.
When you don’t have such accessibility, you are unable to measure your pickers’ efficiency. Moreover, you also can’t track the progress of order fulfilment. Further, it results in customers not getting timely updates on their orders.
Pick and Pack Warehouse Set Up
Your warehouse setup is one of the most critical factors that can make or break the efficiency of the pick-pack-ship process.
The way brick and mortar stores organise inventory where all similar products and brands are racked up together, may not always work well with complex eCommerce order fulfilment processes.
So let’s find out how to set up your warehouse to optimise your pick and pack processes.
Chaotic Inventory Management
Though the chaotic storage method wasn’t invented by Amazon, they have certainly made it popular by using it successfully over the two decades. Today, more than 50% of the warehouses use this process.
Chaotic inventory management refers to storing the incoming products randomly in the available shelving space instead of dedicated sections according to product categories.
In traditional warehousing, when goods arrive — say soccer shoes — at the facility, a worker finds the shelf where soccer shoes are kept and places the boxes there. Whereas, chaotic storage requires the employee to rack up these shoes wherever they see an empty shelf.
At first, this method sounds random and disorderly but it’s organised chaos. Here, each shelf space has a barcode and the incoming products are automatically assigned the available storage shelves by the software according to product size, weight, and fastest route.
Hence, this method enables:
- Optimum use of the warehouse space
- Faster racking and slotting of incoming products
- Quicker picking of outgoing inventory
However, keep in mind that chaotic inventory management needs the advanced WMS since manual tracking would result in absolute chaos — and live up to the name of this method.
Robotic Picking System
Technological advancements have also transformed how warehouses operate. Nowadays you also automate your pick and pack warehouse with semi-robotic and robotic picking systems.
Semi-robotic (or Mobile Shelf-based Order Pick — MSOP) system partially automates the picking where robots bring the shelves to the pickers. Once they pick the required items, robots place the shelves back.
On the other hand, in a fully-automated picking system, the robots travel across the warehouse aisles, scan & pick the ordered products and bring them to the packing stations. Thus, they collaborate with your warehouse staff and make their work easier while eliminating the picking errors.
Volume and Class-based Inventory Management
Volume-based inventory management focuses on storing the highest selling products closer to the packing stations so that pickers have to less travel back and forth in the warehouse. At the same time, items that have the least volume of sales are placed farthest from the packaging area.
On the other hand, if you use a class-based storage system, you would classify products that share one or more common traits. You can group them according to:
- Product size
- Packaging requirements, etc.
Ways to Pick and Pack Like a Pro
Having understood the basics and the methods of the pick-pack-ship process, now let’s go through a few quick tips that can help you turn around your picking and packing quickly and efficiently.
Here are the eight ways to pick and pack like a pro.
1. Conduct ABC Analysis
There are high chances that 80% of your revenue might be coming from 20% of your product line. That’s the Pareto principle (also known as the 80/20 rule).
ABC analysis is built on this principle and helps you optimise warehouse operations by sorting the inventory into three major categories. Here’s how you can identify and categorize them:
- Category A: This group represents 10-20% of the total inventory but its share in your bottom line would be around 70-80%. You would ideally keep your best selling products in this category. Consider storing these items nearest to the packing station so that you can save time in picking and so the overall turnaround time.
- Category B: This is the second important category. It consists of around 30% of the inventory count but contributes 15-20% to the value. You can place these items a little away from the warehouse packing stations they are sold less frequently.
- Category C: These are the least sold products that cover approx 50% of the inventory but their share in revenue would be only 5%. Sometimes they may cost you more to store than their actual value. You can place them farthest in your warehouse.
2. Consider Cross-docking
When you unload your inbound inventory and re-load them directly into the outbound shipment vehicles, it’s called cross-docking.
Since this method requires matching the timing of the inbound and outbound inventory movement, it’s more applicable to B2B eCommerce where you sell items in bulk. So if this applies to you, it can help turn around your goods quickly and also save your storage costs.
For large e-retailers, cross-docking makes more sense when they distribute the incoming inventory across their multiple fulfilment centres.
3. Implement Pick and Pack Software
A sophisticated warehouse picking software can help you optimise your picking and packing time. Moreover, they also streamline your pick-pack-ship processes while ensuring error-free shipping.
You can customise this system according to your picking and packing methods like batch picking, zone picking, wave picking, etc.
Thus, you can not only deliver faster to your customers but also delight them with accurate shipping.
4. Utilize Mobile Technology
The manual picking process takes more time as you have to log the entries into physical registers and then you have to update it in the inventory register. All these reduce the productivity of your pickers and increase the TAT.
Instead, use the mobile barcode and RFID scanners to your advantage. Since they are connected wirelessly to your central WMS and inventory management software, as soon an item is scanned and picked, it adjusts the stock count in the system.
Moreover, when you scan the wrong barcode, it alerts you with an error message so that your pickers don’t need to verify products manually.
5. Maintain an Optimal Layout for Your Warehouse
Your warehouse layout has a direct impact on your pick-pack-ship efficiency and accuracy. Hence, analyse your business volume and sales patterns so that you can optimise your warehouse layout.
For example, if you’re operating on a small or medium scale you can opt for a volume or class-based storage setup. Whereas, if you’re a high-volume eCommerce retailer you can consider chaotic and automated warehousing structures to keep up with the demand.
6. Utilize Business Intelligence and Big Data
Your warehouses generate and store a lot of operational data. When you dig deep into these data, it gives you insights into the processes that are helping you increase your picking and packing efficiency.
At the same time, it also reveals the bottlenecks that slow down your pick-pack-ship turnaround time.
Most of the advanced WMSs provide you with dashboards where you can easily generate specific reports. Thus, your warehouse management can use these data to make informed decisions and optimise your pick and pack process.
7. Streamline Handling of Returns
Though reverse logistics is not a part of the picking and packing process, don’t consider it as an afterthought. A survey by Invesp suggests that 92% of customers would like to buy again from a retailer if it’s easy to return the products.
The reason we are discussing this point here is that when your customers are returning or exchanging their products, they become even more impatient.
So you need a robust system in place that not only delivers products faster but also handles the returns seamlessly.
This is where third-party logistics (3PL) can come to your rescue. They take care of your entire order fulfilment process including the complex reverse logistics.
8. Train and Incentivise Your Warehouse Personnel
Whether you have employed human pickers or picking robots, you would still need packers and shippers. So there will always be chances of errors.
So you must train your warehouse personnel for the best pick-pack-ship practices to raise the efficiency and accuracy of your warehouse.
Also, note that rewards and recognitions always work their magic to keep your employees motivated and perform better. Hence you can reward them for an individual as well as warehouse performance.
You can reward them for:
- Achieving targeted accuracy
- Minimising turnaround time
- The volume of shipments, etc.
Whether you’re an eCommerce startup with low sales volume or a giant with thousands of daily orders, you need a well thought out pick-pack-ship process to optimise your time, costs, and shipping accuracy.
Therefore, check the stage and scale of your business and decide your warehouse setup, technologies, and pick & pack methods accordingly. Also, consider the pick-pack-ship process optimisation tips like cross-docking, ABC classification, and using technology to your advantage.
Frequently Asked Questions (FAQs)
What is picking and packing?
When you receive an order on your eCommerce store, your warehouse management system generates order information and the list of products to be taken from the inventory. The warehouse employee then picks the products as per the list and passes them to the packaging team. Once the items are packed, they are given to the shipping staff.
This entire process is referred to as picking and packing.
How do you pick and pack efficiently?
Your picking and packing strategy depend on the scale of your business and your warehouse infrastructure. However, using mobile barcode and RFID scanners can accelerate your pick and pack process. They also help you reduce picking errors.
What are picking strategies?
There are various picking methods like piece picking, batch picking, zone picking, wave picking, and cluster picking. You need to understand each method and decide the one or more methods that suit your eCommerce business.
What is a pick and pack fee?
The pick and pack fee is the cost of picking each product and packing it for shipping.
Which is the best pick and pack service in Australia?
Pack & Send is the best pick and pack service available in Australia.
Which is the best Pick and Pack software?
Here is the list of the best pick and pack software.