Amazon – leading the way through chaos

BüroklammernHow can something be random on purpose? Well, Amazon, the world’s largest online retailer, stores its goods in a chaotic disorder. But only at first glance, because there’s order behind the apparent disarray. It’s called chaotic storage.

How does chaotic storage work?

A warehouse for chaotic storage – sometimes also known as random storage – is basically a shelving system holding the products. So far, it doesn’t differ from a warehouse with fix storage positions. What makes a chaotic storage system so special is the flow of material.

This starts at the goods-in section: the warehouse staff takes incoming goods to the shelving system, where they are placed in unoccupied shelf positions. Each shelf space has a unique barcode and every product as well. The staff uses handheld scanners to record the shelf space and the corresponding product, thus telling the computer, where the goods are located.

When an incoming order requires these goods to be picked, the computer compiles a picking list. It then sends order pickers to exactly those shelf spaces where the requested products can be found, according to the database. In order to keep this database current, each article that is removed from the shelf needs to be scanned again.

By the way, chaotic storage does not imply automatic storage. Although it is possible to operate a chaotic storage system automatically, it is not always the best alternative. Amazon for instance, still needs quite a lot of manpower, because a simulation of the storage processes showed that hiring warehouse staff was more economical than automation.

What are the advantages of chaotic storage?

Chaotic warehouses are much more flexible than conventional ones and can respond to changes in the product range much easier. This reduces the amount of planning, because neither the range of products as a whole nor the sales volume of particular goods need to be known or planned in advance.

In addition, chaotic storage allows to use the available storage space more efficiently, because freed-up space may be refilled immediately. In a storage system with fixed positions on the other hand, some shelf space is always reserved for certain articles, even if their actual stocks are considerably lower.

Chaotic storage is a time saver, not just when stocking up on goods but also during order picking. Incoming goods are simply placed in free spaces on the shelves. The computer will then create picking lists with optimised routes whenever someone orders products. This way, the distance the warehouse staff needs to cover is shortened. Furthermore, picking lists at Amazon are not sorted by order, which means that the picked products have to be combined to shipments in an additional step.

The amount of training required by new employees is also remarkably lower when using chaotic storage. It is not necessary for them to memorise the entire warehouse layout or even single storage locations. This will allow you to replace staff more easily or hire seasonal workers during peak times.

What are the requirements for chaotic storage?

Intuitively, most people would store similar goods together, virtually sorting them according to predefined characteristics. This would place all books in one section of the warehouse and all toys in another section.

But that’s not necessary in a chaotic storage system. The products only need to share the most basic requirements with regard to storage (i.e. temperature, humidity). Further characteristics don’t have to be considered. In a chaotic warehouse, all kinds of different articles may lie directly next to each other, such as books, toys, sport equipment, electronics, DVDs, jewellery and digital cameras.

Exceptions are made for fast-moving articles, because it wouldn’t be worth storing them, and those items which are too heavy or bulky for normal storage operations. Articles like these have to be stored separately. Perishable goods are also not suitable for chaotic storage.

Needless to say, all the goods have to be barcoded and entered into the database. The same holds true for all possible storage spaces. The computer also needs a kind of map of the entire warehouse, enabling it to compute optimised picking routes.

Chaotic storage is dependant on a reliable warehouse management system. If the computer would freeze or lose data, warehouse operations would need to be suspended until the problem is solved.

This type of storage is particularly interesting for distribution centres handling a large number of items with small stocks each. This usually is the case in the online retail business.

Also, orders with articles from different categories are a common occurrence there, so storing them according to categories would not yield any advantages. Quite the contrary: the staff at Amazon takes care not to place articles from the same category directly adjacent to each other. This improves order picking accuracy because mix-ups are much less likely.

The term “chaotic storage” is by the way only justified from a human point of view, but is not at all correct from the standpoint of a computer. For a warehouse management software, a chaotic storage system is nothing more than a sequence of calculations and database operations.

Do you think that Amazon is a good example for a chaotic storage system or do you know a better one?

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