1. Automation In an E-Commerce Fulfilment Center:
Scope, Costs, Benefits and Sustainability
Priyadershita Singh1
, Ananth Rangarajan*1
, Rohit Kunal1
1
Fulfilment Center Design Team, Flipkart Internet Pvt. Ltd., Bengaluru, India
Abstract: With fierce competition in the Indian E-commerce industry, Speed and Cost have emerged
as the two most critical metrics which provide scope for differentiation and hence customer acquisition,
eventually leading to market dominance. Lead Time or Speed in the E-Commerce supply chain stands
for the time elapsed between placing an order online and the successful receipt of the order by the
customer. Hence, from the standpoint of the Fulfilment Center in an E-Commerce supply chain, Speed
in the Outbound leg of the supply chain cycle is of utmost priority and thus naturally has become one
of the prime metrics used to study the performance of a Fulfilment Center.
In the pre-existing scenario, time spent by an order within the Fulfilment Center was ~14% of the entire
Outbound cycle popularly referred to as the ‘Pick to Dispatch’ cycle in E-commerce supply chain
parlance. Furthermore, if the orders are aggregated into batches, this would translate into an additional
~37% of waiting time at the Packaging stage. Automation in intra - Fulfilment Center material
movement presents an attractive improvement to the aforementioned Speed. As the speed increases,
one could also reduce batching of orders and instead follow a streamlined flow, thus targeting
obsolescence of the ~37% waiting time. The reduction in total required manpower effort brought about
by the automation would then present significant decrements in the total operating Cost.
However, the feasibility of this transport automation hinges on a variety of parameters like: warehouse
layout, load capacity, frequency of transportation cycles, fatigue factor, continuous v/s batching of
goods and finally speed of the vehicle under consideration and the trade-off in terms of total cost
involved i.e. setup, operation and maintenance. Only after taking these factors into account, one could
assess whether Automation would render meaningful within the current scope and turn profitable in the
foreseeable future. It is very important to examine the cost-benefit impact of such automation as they
are extremely capital intensive.
For studying the impact of the aforementioned warehouse automation proposition, a simulation model
was built with scenarios considering each of the above mentioned parameters and a relative cost-benefit
analysis was performed with a comparative view among: Manual Transportation, Vehicle
Transportation and Conveyer Belt movement for goods within the fulfilment center. The Simulation
was successful in drawing out a relation between the above mentioned factors and cost, and thus helped
achieve a high level of clarity in deciding the course of action regarding Transportation Automation.
The ensuing paper delves deep into examining the growing need for automation in e-commerce
fulfilment centers. Holding the data captured and analysis performed at our fulfilment centers as a
central reference point, the paper attempts at providing a basis for automation by addressing important
questions pertaining to the various Costs involved and the foreseeable benefits. More importantly, the
paper sheds light on what lies ahead by addressing the question of future scope and sustainability of
automation in the e-commerce supply chain.
Keywords: E-Commerce, Fulfilment Center, Automation, Cost, Sustainability
*Corresponding Author