Order picking is when warehouse employees pick items off the shelves to fulfill individual customer orders. Although it sounds simple on the surface, order picking is highly labor-intensive and very costly. Order picking alone accounts for 55% of all operation expenses of a warehouse, making it the most important part of a supply chain process.
To maintain customer satisfaction and on-time shipping, order pickers must strive for as high accuracy with as few errors as possible. Order picking errors can seemingly start out minor, such as the transposition of two numbers in a SKU. But these errors can propagate throughout a supply chain and become real customer relations nightmares.
Some warehouses store inventory data in centralized databases or use paper-based manual processes to record data, making order picking extremely problematic. However, one potential solution that can solve problems with inventory accuracy and order picking is blockchain technology.What is Blockchain?
Blockchain is a distributed ledger that contains immutable data records. The defining characteristic of a decentralized blockchain is that it requires consensus to validate transactions. With degrading trust levels and unwillingness to share data throughout the world, blockchain aims to restore trust when doing business with others.
Imagine many people having access to a spreadsheet. Instead of storing this spreadsheet on a central server, access to this spreadsheet is distributed, meaning each person has a copy of the same spreadsheet. If someone wants to update an entry, every other person with the copy must approve this update. All this is done automatically without any middle intermediaries.
How Does Blockchain Help With Order Picking?
Fast and accurate order picking requires a 1) foundation of accurate inventory data, 2) ability to share that data with order pickers, and 3) ability of order pickers to update the inventory in real time as items are received, put away, picked, and shipped.
If order picking is done right, with an accurate and accessible database, manufacturers can make faster deliveries with fewer errors, resulting in a happier customer base.
Roughly 70% of time processing customer orders is spent just by picking the products off the warehouse shelves and bins. This means even the smallest inefficiencies can cause a huge drain in employee productivity. With full visibility into the inventory and supply chain, highly accurate data, and analytics on consumer behavior, blockchain technology can help warehouse managers eliminate these inefficiencies.
Combining Order Picking Strategies with Blockchain Technology
There are already many strategies manufacturers and warehouse managers can use to improve order picking efficiency, such as the following:
Whatever system manufacturers choose, it should involve an interconnected data repository with which mobile devices and bar code scanners can communicate. The data repository could be a blockchain where receiving, deliveries, putaways, and shipments can be tracked along the supply chain in real time.
Blockchain technology can help companies keep track of the locations of all SKUs in the warehouse, especially if they are kept in discrete bins for each SKU. By sharing inventory data with all pickers, blockchain can also help warehouse pickers consolidate their picks on single routes, shaving minutes and seconds off each order. Instead of workers spending 50-60% of their working hours walking around the warehouse, they could travel in a serpentine route picking up items along the way.
With higher inventory accuracy, fuller visibility into supply chains, and increased data veracity, blockchain can reduce the rate of customer returns, decrease the average order processing time, and increase picking accuracy. In the end, manufacturers can increase customer satisfaction with faster and error-free shipments.