How an online retailer doubled their order fulfillment speed

Case Study

How an online retailer doubled their order fulfillment speed

Goals: optimize order processing workflows, increase warehouse productivity, reduce costs in operations, enhance fulfillment efficiency, and achieve sustainable improvements

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Company background and market trends

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 order fulfillment process.

Confronting inefficiencies in order fulfillment 

The company’s rapid expansion into e-commerce uncovered several critical inefficiencies that hindered operational performance. These challenges affected the speed and accuracy of order processing and the company’s ability to adapt to growing market demands. Key issues included:

  • Outdated warehouse layout: Inefficient use of space and workflows resulted in unnecessary delays and operational bottlenecks.
  • Time-consuming order picking: Disorganized stock and outdated inventory made locating and picking items excessively slow.
  • Inventory management challenges: Difficulty balancing popular product availability with surplus stock created logistical issues.
  • Resistance to change: Concerns over high investment costs and uncertain outcomes led to delays in implementing much-needed improvements.

These challenges highlighted the need for a comprehensive approach to streamline operations, improve efficiency, and enable the company to meet customer expectations more effectively.

Implementing a Kaizen-driven transformation

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:

Lean methodologies in action

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 with DMAIC

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.

Streamlining operations with the 5S methodology

Implementing the 5S methodology – Sort (Seiri), Set in order (Seiton), Shine (Seiso), Standardize (Seiketsu), and Sustain (Shitsuke) – enhanced 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

Establishing clear standard operating procedures (SOPs) for all tasks allowed to streamline operations further. 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 fixed immediate issues and ensured continuous improvement over time. This ongoing refinement 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.

Measurable operational gains and team success

The company’s partnership with Kaizen Institute led to significant and measurable improvements following a comprehensive approach to overhauling and optimizing operations. 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.

Optimizing warehouse flow and layout

The warehouse redesign played a pivotal role in achieving these results. Every item was assigned a strategically smart location, eliminating clutter entirely. This reorganization contributed to reduced processing time and simplified inventory management, reducing the risks of stockouts and overstocking.

Increasing team engagement and involvement

The operational enhancements extended beyond logistics and efficiency. Warehouse staff experienced a notable increase in job satisfaction, thanks mainly to their involvement in the transformation process. Enhanced training programs and establishing 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 and prospects

This transformation underscores the value of a structured, collaborative approach to continuous improvement. By integrating Lean tools, data-driven decisions, and employee empowerment, the company achieved significant outcomes:

  • Order processing times cut by more than half.
  • Streamlined and highly efficient warehouse operations.
  • A motivated and engaged workforce poised to sustain future success.

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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