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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13 Responses to Amazon – leading the way through chaos

  1. Jon says:

    That is fascinating. It is so much more intuitive to sort the items and group like items together, but from a computerized system standpoint it doesn’t make any sense. It is a quantum leap in logic going from the mechanical age to the information age. Wonder what other applications there are for this type of quantum logic update? Great story.

  2. Dave Dargo says:

    Back in the early ’80s I worked for a grocery store chain that utilized this type of storage, though we didn’t call it chaotic storage – we just called it more efficient and cheaper. Ours was fully automated.

    This was done for our frozen food distribution center where work rules dictated that workers would work 15 minutes “on” and 15 minutes “off” because of the temperatures. Essentially, we needed double the work-force because they only worked half the time picking orders to fulfill store inventory.

    Our system used robotic forklifts. When new product arrived the system would direct the forklifts to stick the pallet in an empty slot. The forklifts would move pallets to a picking line in older-first order where devices would “pick” the correct number of units for a particular store’s replenishment order. These units would move down conveyer’s until they exited the colder storage area into a room where humans would stack the differently sized products onto a pallet destined for a specific store.

    The system would assemble the orders from all the stores, sort them and then instruct the mechanical pickers to do their picking in just the right order so that a single store’s order would all arrive in a single stream to a single human stacker and there would be about ten stackers lined up at the end of ten conveyers.

    It was fascinating to watch. One would enter the distribution center and watch the autonomous forklifts moving new pallets to empty slots, moving the oldest pallets to the pickers and a concert of picking arms all firing at just the right time to make a single store’s order request line up and arrive at the stacker’s station. I remember that, at the time, the forklifts had never operated in such a cold environment and that just added to the risk we took when implementing the system.

    We didn’t know enough at the time, or at least I didn’t, that this was called a chaotic storage system. We just thought it was pretty neat to conceptualize and implement.

    I was just a programmer at the time and don’t know how much of the concept we borrowed or bought from others but that distribution center was something wondrous to behold.

    Given the types of items I often order from Amazon I can understand their use of human pickers and I was happy to be able to read how they fulfill my orders. Thanks for the great article.

    • Thanks for sharing your thoughts on chaotic storage. I can tell from your writing that you know more about warehouse logistics than you give yourself credit for and I really appreciate that you read our blog.
      BTW not everybody calls this type of storage “chaotic”. Some also refer to it as “dynamic storage” because “chaotic” has a negative meaning for many people. Maybe that’s why your company called it “more efficient and cheaper”.

  3. Dave says:

    A general-purpose computer filesystem stores data in just this way. I know you were looking for real-world examples, but the similarity interested me.

  4. Years ago I learned that some libraries were storing books based on their size, not Dewey Decimal or Library of Congress classification number. Lots of cubic inches are wasted with Dewey or LCCN because tall books are placed next to short books and the shelf space has to accommodate all sizes. There is no need to have 14 inches available for books that are just 7 or 9 inches tall. The libraries use their own catalog numbers that point to a particular shelf and there is a D-D cross reference so readers can search by D-D number.

  5. Biff says:

    Sounds like my kid’s bedrooms, everything all over the bloody place…..

  6. Jakester2k says:

    Actually there’s a very good example of this kind of chaotic storage all around us. It’s called the hard drive. When data (shipment) comes in, it’s assigned an address (barcodes), put on the drive (load in) and kept track of in the filesystem (management software). When specific data (product) is needed, the filesystem knows where the it is on the drive and gets it. A nice bonus is that the data remains there after it’s gotten (neverending supply?). Or it can be deleted, clearing the space for other data. Up to the capacity of the drive (warehouse), data can be added, retrieved and deleted without real regard for size or content – if need be, the data can even be broken up and fit into empty spaces, because the filesystem always knows the location of every part of the data.

  7. PeterY says:

    Very interesting. It seems as though Amazon is treating their warehouses like a hard disk. Random access. And since a database can locate and search for any item then the grouping of items etc is virtual and dynamic. Obvious in retrospect.

  8. Tony Toews says:

    General Electric Medical Systems had just such an randomly stored but automated warehouse in the mid 1980s in Milwaukee, Wisconsin. They shipped parts for Xray and other similar devices around the world. (Including CT or MIRI scanners or whatever was available back then.) The items were stored in boxes on pallets totally randomized on the shelves. The pallets where just high enough to store the open topped boxes and of many heights depending on the size of the part. Rubber o-rings didn’t need a lot of vertical space.. the automated forklifts went and brought back the pallets with the boxes and the order was assembled and shipped. I do recall the staff doing the picking did a lot of waiting around but then I only had a tour. The manager showing us around asked how long one light had been burnt out down the one “alley way” The operator replied a few months.

  9. Julian says:

    9gag has released some pictures of how this chaotic storage actually looks like, pretty awesome.

    via 9gag.

  10. Jon Perry says:

    Life is chaotic. In this case Amazon adapts to chaos rather than becoming overwhelmed by it. It is simple, yet genius. It takes all structure of industrial engineering and twists it into an elementary computer rather than human issue.

    Amazon has to many products. Logically, I can see how this saves money. I could only imagine the labor costs of a structured system.

    Great article! I really enjoyed it.

  11. Chelsea says:

    Sounds a lot like how Argos works. Their items are taken directly from delivery cages and put onto a shelf. The person then inputs into the voice system they use where they’ve put it, so the computer knows where it is. When it’s ordered, a picking ticket is generated, then the picker simply goes to the aisle, location and shelf shown and gets it. I don’t know if they deliberately try not to place similar items together like Amazon seem to, but there are, for example, rarely two sets of different Lego on the same shelf, so usually if a ticket is generated with a description of “Lego”, it’ll be the right one. The catalogue numbers still have to be checked, but yeah.

  12. George Ives says:

    As someone who normally refers to this kind of warehouse operation as ‘dynamic storage’ I enjoy Schaefer’s use of ‘chaotic’. I have been to Amazon’s warehouse in Swansea (UK) and I think chaotic is an understatement. Although it must be said that using the right storage solution ensures that it is ‘organised chaos’ and most importantly, efficient.

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