Fulfillment center storage optimization

Abstract

Warehouses and fulfillment centers have traditionally been designed to handle bulk orders of pallet and cases. The growth in e-commerce is demanding operational improvements for efficient storage of large selections and the ability to quickly pick, fill, pack and ship single items and small orders. Online grocery fulfillment presents a new gamut of challenges due to the unique storage and handling requirements of grocery products. As demand increases, storage space can quickly become a performance-limiting constraint. Operations managers must find creative ways to fit more products into the same amount of space, while maintaining or increasing throughput to meet the increased demand and efficiency targets. This thesis proposes that an optimum fulfillment center storage system can be achieved by strategically balancing trade-offs between labor productivity and space utilization and by minimizing the impacts of variation. This document evaluates the relationships between these trade-offs and highlights five guiding principles of great storage systems for high-rate fulfillment centers. Amazon Fresh will serve as a case-study to provide a real-world complex application for testing the claims presented in this thesis. Research findings and the five guiding principles are are used to develop data-supported recommendations to address storage-related challenges at Amazon Fresh fulfillment centers. The insights from this research can be used to improve storage capacity and efficiency with a well-balanced storage system.