Lessons Learned from the Amazon Fulfilment Center

I stood before the gate of the Amazon fulfilment center in Koblenz, Germany. I was about to enter the company famous for logistics innovations like picking robots, experimental drones and a private global transportation network. I wondered what to expect. I found a well-oiled machine with some unorthodox elements and learned some interesting lessons.

We entered through a tourniquet and walked up the yellow tower and over the bridge into the 110 thousand square meters building. In the lobby there a monitor with the latest KPI scores. The employees of CGN1, Amazon names fulfilment centers worldwide after the nearest airports, had earned a performance bonus of 6% in February.

20 trucks

No bulk stock

Large products on pallets went from the goods receipt hall directly to one of the four picking halls. This, in effect, is the first notable principle in this immense operation: there is no bulk stock! All stock is at pick locations.

Order pickers travel around with pick carts and pick items in yellow totes for multiple orders simultaneously. Per round they pick a batch of approximately 50 items from the shelving racks. Single-piece and multi-piece orders are picked in separate rounds. With each pick, scanners display how long the pickers can do about it. After completing the pick round, they put the totes on a conveyor belt. Should they encounter items along the way that are damaged, then they put them in a damage location. Items lying around loose, they put in an amnesty location. The problem-solver then solves the matter so that pickers can always continue with their work.

Order-pickers pick items in yellow totes (Photo Wimp.com).

Wrangling

The conveyor belt delivers yellow totes with single-piece orders directly to pack stations. Totes with multi’s from different zones come together in so-called wrangling stations. Here operators sort totes by hand into batches. Given the immense scale of the fulfilment center, this is an extremely small and simple operation. Typically, warehouses have sizable intermediate buffers and sorting installations to consolidate goods from different zones. Amazon, however, manages to accurately synchronize the progress in the various zones, so that batches are ready at approximately the same time in all zones. To achieve this, Amazon’s self-made WMS needs intelligent controls. The essence of the control logic are, on the one hand, the standard times for picking that order-pickers see on their scanner screens. On the other hand, the chaotic storage plays an important role. Since a item is in several locations, the WMS can pick locations so select that the workload is evenly distributed across zones.

Re-bin station

From the wrangling station the yellow bins go on a cart per complete batch to the re-bin station. Here, items in the batch are sorted to mobile racks with a slot per customer order. If the batch is sorted, the mobile rack goes to a pack station. Here, customer orders are packed, the operator closes the parcel and attaches a small barcode label. Same as with receipt, there are no documents. The parcels move on the conveyor belt to the shipping area. Along the way, a shipping label is attached automatically. At the end of the conveyor, staff load the parcels into trolleys. The trolleys finally leave in trucks.

Year-end peak

It was clear during the tour that Amazon copes with seasonal peaks. For example, an entire hall was kept empty awaiting the year-end peak. For the same reason, several lanes with pack stations were covered under sheets.

Lessons learned

Now what were the most notable issues and what can eCommerce companies learn from Amazon?

1. 1. The process is totally paperless
      Definitely a best practice and a clear trend. Yet many companies are not ready yet.
   2. There is no bulk stock
      Many companies view their fulfilment center as a storage warehouse, while they might better consider it to be a shop. I would not say that bulk stock in fulfilment centers is a bad practice, but try to limit it to items with a throughput of more than one pallet per week.
   3. Products are stored chaotically
      Usually, this principle is considered bad practice because of increasing search time, less compact storage and higher error rate. Still, Amazon has devised a functioning variant here. I wonder which companies will follow the example of Amazon.
   4. Pick processes are synchronized
      By letting order pickers work in accordance with standard times and by eliminating delays, progress becomes predictable and plannable. Smart algorithms in the self-made WMS then ensure that in parallel are progressing in all areas thus combining orders is easy. Such intelligence I have not seen before in WMS. A great challenge for WMS vendors seems.
   5. Inventories are shared
      The long tail plays an important role at Amazon. However, it is costly to hold every item in stock at each site. However, to prevent lost sales, stocks are shared between fulfilment centers. Now, not every company has no nine fulfilment centers, such as Amazon in Germany. Yet other companies may find opportunities to supply missing inventory from shops or directly from suppliers.

Postscript: We were not allowed to photograph inside the walls of the fulfilment center. Therefore I used pictures from other sources. These photos were taken in other fulfilment centers of Amazon, but are very similar to what we saw in Koblenz.