Wave planning for eCommerce Orders | Standard Retail Outbound Needs | Approach to D365 for Commerce with Adv WH Mgmt

Hi Guys, Hope you have read my previous post where we talked about the Facility Blueprint from the Outbound side of the Retail Warehouse. We also looked at different process that order goes through such as wave planning, picking, packing, loading orders onto trucks. In this blog, we are going to discuss about the Wave planning for an eCommerce order. Let us start off by discussing what does an eCommerce order look like.

What does an eCommerce Order Look Like?

Orders are really the fuel that drives a Retail Warehouse. eCommerce orders are different from brick-and-mortar orders because they are characterized and planned differently. When you think about an e-commerce order, and talk to a Retail Warehouse manager about them, they’re going to have two kinds of ideas that they keep in their mind when trying to process orders.

How many units in a Box?

They will refer to orders that involve more than one item as multis, or multi-line orders. And those orders that have just one unit associated with them as single-line orders.

This distinction may be somewhat bizarre but to a Retail Warehouse, it matters a lot, especially when dealing with a lot of e-commerce orders. Because how the multis get picked is quite different from how the singles get picked. And this is because they’re trying to reduce costs. They pick them differently to reduce the amount of walking that has to go on inside the warehouse. In fact, a lot of Retail Warehouse managers know the percentage of the orders that are multis versus singles inside of their warehouse. In a lot of Western warehouses, you’ll see the split usually somewhere around 45 percent multis, 55 percent singles. But if you go to Asia where transportation is a little less expensive and people can’t spend as much money on ordering multiple things at a time, the split is more like 10 percent multis and 90 percent singles. So if you visit a Retail Warehouse and they ship e-commerce orders, the Retail Warehouse managers know these splits because they’re very important to their ability to meet their budgeted cost numbers. So it’s something that you need to realize when you talk about an eCommerce operation because the requirements for filling these two types of orders are different.

Order Type

The next way in which Retail Warehouse managers characterize their orders is based on the order type. And this is best understood through the examples.

Normal Orders: The first order type is what is called a normal order. When something is sold to somebody over the Internet or through a catalog, there’s a guaranteed standard delivery and standard delivery time that is offered to the consumer for those kinds of orders. And these orders don’t involve any special processing, no gift wrap, no personalized merchandise. It’s just a normal order.

Rush Orders: These are orders that get placed today that have to be shipped out by the end of the day. And usually, there are different kinds of service agreements published on a Website that if you order before 2 p.m. and you order rush, we’ll ship it the same day. Some places it’s as late as 10 p.m. if they happen to be located close to a small parcel hub. But these have priority over normal orders as far as being shipped on a given day.

VAS Orders: The last set of orders that is referred are the VAS or personalized orders. These are the orders that involve picking something and then personalizing it to the tastes of the consumer who ordered it. And that personalization might involve, embroidery, monogramming, hemming. There’s a whole slew of things that can be done to uniquely modify that merchandise for the consumer. And these are usually processed separately from rush and normal orders because they require a lot more effort, it takes longer to get them out. You can’t necessarily make a VAS order into a rush order because you just can’t get the work done. So it’s considered as kind of a separate category into itself.

Wave Planning in eCommerce

So let us shift our discussion to how those orders actually get fulfilled and, in particular, how the wave planner in an e-commerce warehouse controls the flow of those orders onto the floor in such a way that they’ll get out on time and budget. When you look at a Retail Warehouse, compared to manufacturing, this process of wave planning is much more complex. In manufacturing and a lot of other kind of industries, you have somebody who takes an order and pretty much the minute that the order is taken, it flows down onto the floor almost immediately and somebody can start picking it.

In retail and e-commerce, that just doesn’t happen because you have to control the flow of orders down onto the floor. Because if you just let everything flow right through, you wouldn’t be able to get your rush orders out on time and other order would get out. And so, as a result, you have to introduce a process that’s between the order taking that goes on at the call center or the Website or even the kiosk inside of stores. And before you let it go to picking, you have to have it accumulate in these buckets. Each bucket is associated with a different kind of order type, and it sits there until wave planners decides that they need to release some portion of one of those buckets or dump some of the orders and flow them onto the floor. So in some ways what the wave planner is doing is they’re like the gas pedal and the brake for the overall operation.

If you’re getting behind on your rush orders, then you may choose not to release any more normal orders for today. You’ll work on those tomorrow. However, if you’re running out of work in your rush orders and you’re soon
going to get them all out, then you’ve got to keep those people busy. So then you may be willing to let some normal orders flow onto the floor. So this process of braking and stepping on the gas is going on continuously throughout the day at given wave planning points.

Usually there’s a wave right there when people come to work that’s in the morning at 7:30, there might be one at 10 a.m., there might be another one at 1 p.m., and then the last rush order wave is sent out at the cutoff point around 3:00. And so these waves are being dropped onto the floor in such a way that the pickers and the packers and everybody will stay busy but, at the same time, they will meet the commitments that they’ve made to the consumer.

Requirements for B2C Wave Planning

Next, we will talk about what really goes on inside the brain of the wave planner to make that decision, because it’s important to understand before you approach a Retail Warehouse and start talking about the requirements in this area. An e-commerce warehouse will have three different types of waves that are being worked concurrently at the same time. The wave planner will need the ability to separate the normal orders from the rush and the value-added service or personalized orders, and they will release those onto the floor in such a way that they’re going to treat the fulfillment of each of these orders as if they had their own individual warehouses.

And what I mean by that, is they’re going to line up separate people just to work on normal, separate set of people for rush and separate set of people for VAS. There may be a little bit of overlap, but generally they’re thinking about these three different types of orders as having their own pickers, packers, and replenishment people. And then they guide to make sure that those people in each of those channels have enough work to keep them busy in order for the orders to meet their scheduled shipping dates as well as the targets that they have for operating costs per unit for each of those types of orders.

Different Types of eCommerce Waves

So now we will drill a little bit further into the brain of the wave planner.

In their mind, they’re really thinking about the normal service orders as a separate warehouse, like a virtual warehouse No. 1, and they need to have people that are doing replenishments for that warehouse, cluster picking of the orders for the warehouse and packing. Along with this, they also have to keep in mind the amount of time they have to get those orders finished relative to their ship time. And hence they may need to be thinking about how many people they need in each of these different areas. The same thing goes for rush orders and thinking it as virtual warehouse No. 2.

Now let us go really deep inside the mind of the wave planner that’s overseeing an e-commerce warehouse. So what they have to do is they have to look at the time they have left and the number of orders that they have in that bucket. Remember, each one of these things has a bucket of orders. Let us look at this through an example.

The normal bucket currently has 4,000 orders in it. But the wave planner has eight hours to get that out. So they know that they have to run at 500 orders per hour in order to get all of these out on time. So now they know what their rate is for that virtual warehouse, they need to figure out how many people do they need to have in these different areas in order to get it out. So just to make this simple, let’s just think about that 500 orders per hour and the picking process.

Well, if you’re going to get 500 orders per hour and the average person can pick 50 orders per hour, that means he has to have 10 people in that area. Well, if he only had nine, then he would have to look at one of these other buckets and maybe steal people to come up and service the orders. However, if he could wait and not ship all of these 4,000 out today and he can ship some of them tomorrow, he might just leave it with nine and instead of releasing 500, he would release 450 because that would keep the pickers busy. But he’s also got to make sure he’s balancing all of the packing labor as well.

So, you can see that it is a complicated thing. And this really goes on inside the heads of a lot of the wave planners in these operations. But if you really want to understand the business, you need to watch the wave planner because he is the smartest person in the whole building as he is out there balancing all of these competing objectives in real time and doing it well which is really difficult.

Now from D365 FO, they’re going to expect this ability to manage or release the work by order type. They may also want to know how much labor do they have currently on the floor in each of these different areas to service a particular order type. So I hope you got a better understanding from a requirements perspective, that’s what you should expect them to be asking as far as wave planning functionality for eCommerce orders are a concern.

In the next blog, we’re going to look at Wave planning operation for a Brick and mortar Store orders.

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