Former Global Director of Operations Benchmarking at Amazon
Marcus Kolb spent over 17 years at Amazon and was most recently the Global Director of Operations Benchmarking. Marcus was responsible for Amazon's fulfillment processes to ensure best in class operations and to drive process and cost improvements inside the warehouse. Read moreView Profile Page
Can you lay out the major stages of a typical fulfillment process for an online retailer?
Well, as you know, I was involved more so in the front side, where you have the fulfillment and ecommerce, which is the order dropping and all this kind of, stuff upstream. Then it becomes fulfillment in the warehouse. It becomes then, when to buy, like the scheduling of inbound, the deliveries, the inbound deliveries and then all the deliveries of vendors and then basically it's the inbound piece that comes first. The inbound, it's called inbound. The inbound operations mean the dock, all the operations have to process at the dock doors.
The appointment first, and the dock doors basically, and then basically stuff coming in, and then the various differences among let's say, fulfillment providers. What happened from the dock there because they're the earliest point, they can already plan according to certain value streams or process path and so forth, because then we can get the operations where you have purely palettes coming in where the stuff remains on palettes and you have stuff that you know that will be dissembled basically, and received one by one, and then go into totes or something, and it's been stored away into shelving for example.
The process at the dock is called receive. Receive means to get the stuff into the system that you get delivered, so in your warehouse system. That is your inventory now, and then after you receive the stuff, and that's typically receive this physically.
When you talk about the typical items like your books and all the other stuff, so you unpack that stuff. There's like certain quality procedures that take place in order to enter that or do you order this order also what came in. With the certain feedback loops to vendors and stuff like that, but in a normal fulfillment process you get stuff in, get into the system so you receive it.
There's different setups for that like layouts and different lines where you have receivers for example at their workplaces and after everything was put from the palettes to the receivers and the receiver basically take the items to scan the items into the system so to say, and put them, most operation they put into totes like which can go on a conveyor belt further downstream, or they are brought directly from forklift drivers to where they are stored anyway as bulk storage.
Then you have a full palette of one item like Mickey Mouse DVDs, a full palette. Then the operation's simpler you just basically get the whole stuff into the system. Then you already go directly into the stowing process which comes after the receive, so you have the first physically in, then receive you take into the system by scanning stuff, making this basically available for stowing and then after receiving, it gets stowed. Stowed means it gets put into the appropriate storage location. That was called put-away in the early days.
And this is run by software?
Yes, so the typical stow operation would be firstly to take everything into a tote (a box container). The tote has also an ID so I scan the tote ID and I scan every item. Virtually you can always check in this tote, there's like 30 items and this is Mickey Mouse, they'll send them back towards this and this. Then this tote comes either through conveyors or I can also receive into a cart, into physical trolley or something but it's always the same. It's a container that always sits right.
How does the software link to the hardware throughout the operation?
Basically, you mean registered that it's on your stock basically? That's happened by scanning. That's happened physically by you have a like a bill of lading and all this paperwork coming with the deliveries. The receiver basically takes this information and, in the end, it opens certain IDs and then it says, "Hey this delivery has this many items." Then you scan item by item and the item is basically moved into the container you scanned it into and that's mostly tote, a trolley, or something so that now the system knows, "Hey, this Mickey Mouse ordered by this and this vendor and is now sitting in container one."
You do that for like 30, 40, whatever, until the tote is full and then the store comes into play because the stuff is then moving to the stow process in the store. The only task of the store is basically to move basically this stuff from this container, to stow it from this tote into a storage location. The storage location can be a bin, a bin ID, it's always have a bin ID, but it could be different storage types. Like we had library shelving is the typical one where you have like a single items of all kinds sitting in different bins or you have a bulk locations, library D etc. and all kind of storage locations. That's the simple shelf in the store. Scan the item, scan bin, put the item into the bin.
Is a human operating executing this?
In most operations this is a person doing this. It's already like in the receive for example, there's a certain process called License Plate Receive, for example, where already from the vendor, you have a certain code sitting there and you have a tote already delivered from the vendor and, you know, "Hey, in this code there's these and these items" and you directly put onto a receive tunnel which then drives through and if this stuff is then automatically received into the system.
There's some automation going on there however, the most operations like, I don't know 80% or something like this, is still put where people scan stuff into the containers but you have quantity features. If he have like 200 of the same you see just do 200 of them and then these things are moved into the container. Then the store is really everywhere in the warehouse and then they put it into the shelf.
80% of the volume is manual labor, pretty much?
I don't know how far they made progress now in the last days but it's the most, this is the operation to look at in the moment so you receive it and you stow it. Once it's been sitting then in the bin, when it's I think already at a certain point, you can already see when a customer orders against something. A customer can already order something when it says on stock. It's already when you have it already in the receive, when you already received them to container, and this is why it's important to have a low backlog so to say between receive and store.
You must quickly get it into a pickable location so to say, because nobody can take it from some containers sitting somewhere waiting to stow. You can take something because the customer, if they need something, it needs to go into the bin and this is why there should be low backlog and you need to get the stuff faster into a bin. And there's other software for these different things you can do with the bins, like to manipulate the hierarchy of which bins are, for example, by the system, taken first in favor of other bins because they're easier to reach and stuff like that.
For example, if you order a Mickey Mouse, and the Mickey Mouse is in five different locations in the warehouse, there's always fancy stuff in Amazon where it's optimized for picking later, so that it's not so labor-intensive so that they have the shortest route to get the item. There's a couple of settings you can do, but in bottom line you stow it into a bin, and then this is a faster process than picking or like stowing, I don't know how many stows per hour, but I think it can be a lot because you don't need to go to certain place to pick something, you just need space.
You need to go into certain lines in the warehouse, and then you deng, deng, deng, and you see that between 600 and 800 an hour.