CASE STUDY SS-FC-BS-01 | Business Services
2M Square Foot Fulfillment Center
Fueling Their Own Growth: Cutting Order Costs by 53%
[53% ↓
Order Fulfillment Cost Reduction
40% ↑
Labor Productivity Improvement
+8%
Storage Capacity Optimization
Challenge
High-Cost Fulfillment Footprint Threatening Growth
- Massive Footprint, Hidden Inefficiencies: Operating over 2 million sq. ft., the fulfillment center faced disproportionately high order costs compared to competitors.
- Order Picking Chaos: Existing batching logic created inefficient, crisscrossing paths, wasting labor and time.
- Poor Inventory Placement: Inventory velocity was not used to guide stocking locations; fast-moving items were often hard to access.
- Ineffective Packing Process: Pickers handled individual orders in a disorganized way rather than batching SKUs efficiently.
- Data Gaps: Lack of clear KPIs and dashboards prevented prioritization of high-impact improvement areas.
Solution
LEAN Principles and Data-Driven KPI Dashboards Streamlined Fulfillment
- Velocity-Based Slotting: High-demand items were moved to “golden zones” near packing stations, reducing walking time for pickers.
- Interim Bulk Picking Logic: Re-engineered picking to gather components for multiple orders simultaneously, improving efficiency.
- KPI Dashboards: Implemented real-time dashboards to monitor performance, prioritize waste reduction, and guide continuous improvement.
- Process Standardization: Optimized packing workflows and picking sequences to eliminate redundancy and errors.
- Staff Training and Adoption: Engaged teams in new processes with hands-on training to ensure sustainable productivity improvements.
Results
Reduced Order Costs, Increased Productivity, and Maximized Storage Capacity
- 53% Cost Reduction: Fulfillment costs dropped from $0.68 to $0.32 per order line.
- 40% Productivity Improvement: Optimized workflows and picker paths increased labor efficiency significantly.
- Storage Optimization: Improved inventory placement increased usable storage capacity by 8%.
- Faster Fulfillment: Batch picking and smarter processes reduced order cycle times.
- Competitive Advantage Realized: The center transformed from a cost-heavy operation to a scalable growth enabler for clients.