How an online retailer doubled their order fulfillment speed

Case Study

How an online retailer doubled their order fulfillment speed

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The Company

Online retail, particularly e-commerce, is experiencing significant growth. As of 2024, global retail e-commerce sales are expected to surpass 5.8 trillion euros and continue to rise annually. A prominent Dutch men’s fashion retailer specializing in business suits and smart casual wear has successfully leveraged this upward trend.

Established in 2001, the retailer quickly built a reputation for style, quality, and convenience. As they expanded to increase their market share in men’s fashion online, they encountered significant challenges related to order fulfillment. They partnered with Kaizen Institute to address these issues and enhance their overall order fulfillment process.

The Challenge

As fashion trends shifted toward more business casual attire, the company’s warehouse layout became outdated, leading to inefficiencies and wasted space.

Picking online orders was excessively time-consuming due to an unclear flow and cluttered stock, which included hard-to-move outdated items. Inventory management emerged as a critical challenge.

Despite recognizing the need for operational changes, there was considerable hesitation to overhaul the existing setup, mainly due to the significant investments already made and the lack of guaranteed success for the proposed changes. This hesitation complicated efforts to improve efficiency and adapt to evolving market demands.

The Approach

In response to the operational inefficiencies and to strategically overhaul their warehouse, the company partnered with Kaizen Institute, leveraging our expertise in continuous improvement. They adopted the Kaizen approach, renowned for its practical, measurable changes that yield lasting results. Here is a breakdown of the strategy developed and implemented:

Applying Lean Methodologies

Recognizing the need for a transformative change, we designed a comprehensive strategy incorporating several lean methodologies to address and rectify the core issues.

Structured Problem-Solving

Rather than hastily redesigning the warehouse layout, the DMAIC (Define, Measure, Analyze, Improve, Control) framework was applied. This systematic approach allowed us to thoroughly understand the existing problems and develop optimal solutions tailored to the company’s specific challenges.

Warehouse Optimization

The initial step was to conduct an ABC analysis to identify the most frequently moved products. This data-driven insight guided the complete redesign of the warehouse layout, optimizing the flow of goods from storage to dispatch, thereby streamlining operations and reducing time waste.

5S System

We implemented the 5S methodology – Sort (Seiri), Set in order (Seiton), Shine (Seiso), Standardize (Seiketsu), and Sustain (Shitsuke) – to enhance workplace organization. This approach transformed the warehouse into a highly organized environment, akin to a well-arranged garage where every tool is easily accessible, facilitating quicker and more efficient work processes.

Standards for Success

We established clear standard operating procedures (SOPs) for all tasks to further streamline operations. This not only improved workflow efficiency but also ensured consistency in performance. Regular progress check-ins and data-driven reviews were also introduced to maintain and adjust operations as needed.

Additionally, a built-in feedback loop was integrated into the new system, which not only fixed immediate issues but also ensured continuous improvement over time. This ongoing refinement process gives the company a serious competitive edge in the dynamic fashion industry, allowing them to adapt more swiftly and effectively to future challenges and market changes.

Employee Involvement at the Gemba

Understanding that the most effective changes occur where the work happens (Gemba, in Japanese), we focused on involving warehouse employees directly in the transformation process. By engaging them in problem identification and solution development, we cultivated a sense of ownership among the staff. This involvement was crucial in building genuine buy-in and transforming the team members into proactive stakeholders in their work environment.

Comprehensive training, ongoing coaching, and the use of visual tools were employed to demonstrate the impact of employees’ contributions. At the same time, mechanisms for continuous feedback were established to ensure their voices were heard.

This approach motivated the team and instilled a strong sense of pride in the improvements achieved, creating a dynamic and responsive workforce committed to sustaining operational excellence.

Results

Following a comprehensive approach to overhaul and optimize operations, the partnership between the company and Kaizen Institute led to significant and measurable improvements. These changes not only met but exceeded the predefined goals. Here is a closer look at the transformative outcomes:

Fulfillment Time Reduction

The efforts to streamline operations proved highly effective. Initially, it took 13 minutes to process an online order. With the new systems in place, this time was reduced to just 6.2 minutes, marking a reduction of over 50% and surpassing the target of 9 minutes. This drastic improvement has enabled faster order shipping, increased the volume of orders handled, and significantly boosted revenue.

Warehouse Design Improvement

The warehouse redesign played a pivotal role in achieving these results. Every item was assigned a strategically smart location, eliminating clutter entirely. This reorganization not only contributed to the reduction in processing time but also simplified inventory management, reducing the risks of stockouts and overstocking.

Team Motivation Increased

The operational enhancements extended beyond logistics and efficiency. Warehouse staff experienced a notable increase in job satisfaction, thanks largely to their involvement in the transformation process. Enhanced training programs and the establishment of clear standards have raised their confidence levels and fostered a more positive, motivated work environment.

Standard Work

The introduction of standardized processes and regular daily check-ins has ensured that all team members are aligned, making warehouse operations smoother and more coherent. This new level of organization allows for quick identification and resolution of issues before they escalate, maintaining operations efficiency.

Lessons Learned

The success story of this transformation underscores the effectiveness of the Kaizen philosophy and the importance of continuous improvement in business operations. The collaborative efforts have not only cut order fulfillment times in half and maximized organizational efficiency but also significantly enhanced team morale. By adopting Kaizen principles, the company is better positioned to adapt to evolving retail demands and has established a robust system for ongoing improvement that will sustain its competitive edge into the future.

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