In the food sector, while the product packaging looks similar, it can e.g. have different flavours. In fashion, the same garment can come in many different colors and sizes. The strategy behind offering a product in slight variations is called horizontal differentiation which touches upon nearly every industry in some way but is most common with food, cosmetics, and fashion.
In order to cater to increasing customer demands, retailers increase the number of products they are offering. This is known as SKU (stock-keeping unit) proliferation. That means we went from e.g. only one type of spaghetti sauce in the past to hundreds these days. Considering this happens for many products that are commercially available today, it’s not difficult to imagine what challenges these pose to the supply chain.
Mass production is an efficient and cost-effective way to produce a lot of one product. Unfortunately, this ‘one product’ will only suit the tastes of some and when competitors are involved, this can result in unsold units and waste. To counteract this, different types of e.g. sauce are produced in smaller batches, which carries much higher manufacturing overheads.
Space and storage are a considerable risk when having hundreds of different variations of products to distribute. If one style of product goes out of “fashion,” when there are still units to be sold, those units will take up a huge amount of storage space which could be put to better use.
This also affects how the warehouse is organized, a process known as “slotting.” While popular products are placed near the packing area to reduce travel time, less popular ones are moved further away. This reduces movement during peak times, making operations more efficient.
Slotting is easily managed when managing inventory for peaks, but variation trends are much harder to predict. This means the warehouse is arranged and rearranged more and more frequently to improve efficiency which takes much time and effort.
Accuracy: With smaller amounts of individual products but greater overall number of stock in denser locations, the chances of a mis-pick are higher. This directly affects the end customer’s experience. That’s why SKU proliferation drives the need for more accuracy.
Efficiency: Products are more spread out across the warehouse, even when slotting is carefully managed. As a result, picking full pallets takes longer, even when enough staff are available. Instead of concentrating their time on picking, workers spend their time moving between locations.
The impact of voice technology
Voice allows hands- and eyes-free work, allowing employees to concentrate on the task at hand. The worker receives instructions directly via headset which happens step by step. Each time a task has been completed, the worker confirms, and the action is recorded on the system before a new action prompt is issued. This ensures the correct product is always picked at the correct time which reduces mis-picks. Plus, it decreases the time spent looking for the correct items. In terms of efficiency, it makes it possible to process multiple orders simultaneously and utilizing team members’ capacities differently).
Plus, it’s easy to combine with warehouse management systems (WMS) and other efficiency-focused innovative solutions, such as robotics.
Voice-directed work gives warehouse operatives easy to follow step-by-step guidance. By setting defined operational rules, for example how to correctly build a mixed pallet, it increases both accuracy (up to 25%) and productivity (up to 35%). With a growing number of individual SKUs, the opportunity for quantity errors increases. Through a “countdown” capability, once an operative has stated the quantity of a product they have picked, voice will confirm the remaining stock level, with no further physical checking input needed.
The future of SKUs
Given the sheer volume of SKUs, it’s possible they could stay at this level, as certain products and variants fall out of favor. However, it’s unlikely we’ll see a decrease. That’s why it’s important for warehouses to meet managing proliferation complexities head-on. While voice is a solution for a part of these challenges, other problems such as space and storage have to be addressed otherwise, such as with automated storage solutions which allow greater storage density. Lastly, the multi-dimensional challenges require a multi-dimensional solution of which voice could form a part.
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