Picking technologies: When inaccuracy leads to lost customers
The true cost of a mispick is measured in service levels—and by a dwindling customer base when consumer and B2B buyers turn to sources that get orders right.
Victoria Kickham started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for DC Velocity.
Most organizations understand that mispicks can add up to big losses—in money, time, and labor—but the biggest bite comes from losing a customer due to service problems associated with slow deliveries, receipt of the wrong item, and the hassle of a return. In today's fast-shipping world, where two-day (or faster) delivery has become the norm thanks to the likes of Amazon.com and Zappos.com, companies serving both consumers and business-to-business customers must meet higher-than-ever expectation levels or suffer the wrath of a dissatisfied customer.
"Service is now the big issue," says Steve Mulaik, Atlanta-based director with global supply chain management consulting firm Crimson & Co. "[A mispick] can add two days to an order's processing time. This is huge in the cut-throat e-commerce world. This sort of thing ends up in complaints on Facebook and elsewhere that drive [customers] to sites that have better service."
The situation is putting pressure on distribution center leaders to improve accuracy in the picking process. The list of remedies is long and includes technology solutions, process changes, and new approaches to training DC workers. But before a DC can tackle any of that, managers and staff must understand what a mispick is, what it costs, and how to address the weak spots in their operation.
MISPICKS: WHAT THEY ARE AND WHAT THEY'RE COSTING YOU
A mispick occurs when the wrong item or wrong quantity of an item is picked, when an item is omitted, or when a damaged or mislabeled item makes its way into an order. Mispicks occur primarily through human error; a worker picks the wrong item, pulls from the wrong location, picks the wrong quantity or unit of measure, puts an item into the wrong tote, or in some cases abandons the pick task along the way. Mispicks also can occur because of vendor errors or because a product has been misreceived.
Experts say it's tough to put an industry-standard price tag on the cost of a mispick because so many factors come into play, including the value of the product being picked and the costs associated with shipping, returning, and restocking the item—as well as the labor required to handle it all. Soft costs—including resulting inventory inaccuracies and customer dissatisfaction—further muddy the waters.
Despite those challenges, there are some industry statistics that highlight the severity of the problem: A 2012 study by research company Vanson Bourne estimates that DCs lose nearly $400,000 a year due to mispicks, and Crimson & Co. estimates the labor cost of a mispick in cart-picking operations at $3 to $7 per error.
"It's different for every organization," says Peter Gerbitz, system sales manager for Lightning Pick/Matthews Automation Solutions, a Wisconsin-based provider of light-directed and advanced order fulfillment systems. He adds that awareness of the problem is growing, although he says efforts to mitigate it lag. "About half [of organizations] have really drilled in and can put a dollar amount on the cost of a mispick. In the half that haven't done so, they have a general idea of the elements and realize the severity of the issue. And there are a number of them that don't understand the cost associated with it [at all] ... For some reason, they may shy away from the investment needed to correct the problem."
Those reasons often include the high cost of new technology solutions or upgrades, and the time and training involved in developing new picking processes or redesigning existing ones. Gerbitz and others say DC leaders should look past such hurdles to find affordable and creative ways to address the problem. They also point out that, for some firms, a hefty high-tech investment will not only alleviate the pain of mispicks but may also yield game-changing productivity improvements throughout the DC. In either case, improving the picking process can mean the difference between a satisfied and dissastisfied customer base.
"Customers have zero appetite for mispicks and inaccurate orders," says Doug Card, director, systems and special applications, Americas, for Kardex Remstar, a Westbrook, Maine-based manufacturer of automated storage and retrieval systems. "Almost everyone has multiple sources they can get something from, so if you ship someone the wrong product, if it's not a perfect experience, they will go somewhere else."
There are three primary ways to mitigate the risk of mispicks: technology, design, and training. Technology is often the first thing that comes to mind, with solutions that range from simple bar-code scanners and radio-frequency identification (RFID) systems to more advanced voice- and light-directed picking technologies. Such solutions rank high because they make an impact.
"The more you automate, the more accuracy you are typically going to see," says Gerbitz. "On the flip side, the more you [automate,] the higher the cost."
As an example of high-tech automation, he points to the light-directed order fulfillment solutions Lightning Pick provides. Pick-to-light technology, as it's commonly known, is an order fulfillment system that uses alphanumeric displays that light up to guide and expedite the manual picking process. Such solutions incorporate other technologies—including bar-code scanning and RFID tools—and are designed to integrate with a company's warehouse management system. But not all companies will benefit from such solutions.
"There are deltas on both ends, where [a company] may not have the order volumes to justify it, and we see that the [return on investment] won't be there. On the other hand, depending on the product, [a company's needs] may be beyond what we can provide," says Gerbitz. "But there is a very large group of customers in between that can benefit from this type of technology."
Outside of automation—and, often, in conjunction with it—experts urge DCs seeking to reduce mispicks to conduct a detailed review of their picking process to identify—and address—areas where errors are most likely to occur and evaluate how well they train and motivate their picking staff to get orders right. These are areas where DCs can get creative—but they must be persistent, Mulaik advises.
"Tuning or redesigning a picking process to produce 0.1-percent errors without outside help can take multiple quarters, if not years, and should start with a thorough review of the kinds of picking mistakes that occur most commonly in the organization," he says, adding that managers should then address those issues one by one.
"It's more about how we deal with [errors] so that they don't happen," he says. "Sometimes, I think people just don't get creative enough."
As an example, he points to a bar-code scanning system that gives the same auditory signal for a pick as it does for a mispick. Simply programming your system to use a different sound for each will help reduce some of the mispicks.
"You need to think through the design process—within your system's capability," he says, adding that developing training programs and creating awareness about how mispicks happen is also a key part of the process.
Card agrees that solid processes are the foundation of any good picking solution.
"[Reducing mispicks requires] a combination of technology, process, and other things," he says. "Implementing new technology like automation can certainly help, but if you don't have good processes and policies around it, you're not going to [achieve] peak accuracy."
People are the other key element in the mix.
"You have to buy into how important the work environment is, because it plays into being able to reach that peak accuracy," Card adds. "Technology is only going to get you part way there."
Training programs for order pickers become an important piece of the equation, especially if a DC is working with system limitations—in most cases, this means a situation in which a system upgrade or replacement is too costly. Mulaik says developing awareness of where problems occur and training workers on how to deal with or work around those problems is vital to improving accuracy. Card adds that managers should reinforce training by rewarding workers for picking accuracy. This can be done creatively—with bonuses, time off, or some other form of recognition.
"[DCs] should look at their overall processes and say, 'How can we incorporate technology?,'" Card says. "But then you have to say, 'Are we doing things the right way? Are people motivated? Are they being rewarded for accuracy?' It's a combination of all that."
Successful integration of these elements helps drive organizations toward the ultimate goal of providing the best possible customer experience.
"Ultimately, it's about service," Mulaik says. "It's not so much about the cost of the mispick itself. Companies get upset about how [inaccuracy] impacts service."
Most of the apparel sold in North America is manufactured in Asia, meaning the finished goods travel long distances to reach end markets, with all the associated greenhouse gas emissions. On top of that, apparel manufacturing itself requires a significant amount of energy, water, and raw materials like cotton. Overall, the production of apparel is responsible for about 2% of the world’s total greenhouse gas emissions, according to a report titled
Taking Stock of Progress Against the Roadmap to Net Zeroby the Apparel Impact Institute. Founded in 2017, the Apparel Impact Institute is an organization dedicated to identifying, funding, and then scaling solutions aimed at reducing the carbon emissions and other environmental impacts of the apparel and textile industries.
The author of this annual study is researcher and consultant Michael Sadowski. He wrote the first report in 2021 as well as the latest edition, which was released earlier this year. Sadowski, who is also executive director of the environmental nonprofit
The Circulate Initiative, recently joined DC Velocity Group Editorial Director David Maloney on an episode of the “Logistics Matters” podcast to discuss the key findings of the research, what companies are doing to reduce emissions, and the progress they’ve made since the first report was issued.
A: While companies in the apparel industry can set their own sustainability targets, we realized there was a need to give them a blueprint for actually reducing emissions. And so, we produced the first report back in 2021, where we laid out the emissions from the sector, based on the best estimates [we could make using] data from various sources. It gives companies and the sector a blueprint for what we collectively need to do to drive toward the ambitious reduction [target] of staying within a 1.5 degrees Celsius pathway. That was the first report, and then we committed to refresh the analysis on an annual basis. The second report was published last year, and the third report came out in May of this year.
Q: What were some of the key findings of your research?
A: We found that about half of the emissions in the sector come from Tier Two, which is essentially textile production. That includes the knitting, weaving, dyeing, and finishing of fabric, which together account for over half of the total emissions. That was a really important finding, and it allows us to focus our attention on the interventions that can drive those emissions down.
Raw material production accounts for another quarter of emissions. That includes cotton farming, extracting gas and oil from the ground to make synthetics, and things like that. So we now have a really keen understanding of the source of our industry’s emissions.
Q: Your report mentions that the apparel industry is responsible for about 2% of global emissions. Is that an accurate statistic?
A: That’s our best estimate of the total emissions [generated by] the apparel sector. Some other reports on the industry have apparel at up to 8% of global emissions. And there is a commonly misquoted number in the media that it’s 10%. From my perspective, I think the best estimate is somewhere under 2%.
We know that globally, humankind needs to reduce emissions by roughly half by 2030 and reach net zero by 2050 to hit international goals. [Reaching that target will require the involvement of] every facet of the global economy and every aspect of the apparel sector—transportation, material production, manufacturing, cotton farming. Through our work and that of others, I think the apparel sector understands what has to happen. We have highlighted examples of how companies are taking action to reduce emissions in the roadmap reports.
Q: What are some of those actions the industry can take to reduce emissions?
A: I think one of the positive developments since we wrote the first report is that we’re seeing companies really focus on the most impactful areas. We see companies diving deep on thermal energy, for example. With respect to Tier Two, we [focus] a lot of attention on things like ocean freight versus air. There’s a rule of thumb I’ve heard that indicates air freight is about 10 times the cost [of ocean] and also produces 10 times more greenhouse gas emissions.
There is money available to invest in sustainability efforts. It’s really exciting to see the funding that’s coming through for AI [artificial intelligence] and to see that individual companies, such as H&M and Lululemon, are investing in real solutions in their supply chains. I think a lot of concrete actions are being taken.
And yet we know that reducing emissions by half on an absolute basis by 2030 is a monumental undertaking. So I don’t want to be overly optimistic, because I think we have a lot of work to do. But I do think we’ve got some amazing progress happening.
Q: You mentioned several companies that are starting to address their emissions. Is that a result of their being more aware of the emissions they generate? Have you seen progress made since the first report came out in 2021?
A: Yes. When we published the first roadmap back in 2021, our statistics showed that only about 12 companies had met the criteria [for setting] science-based targets. In 2024, the number of apparel, textile, and footwear companies that have set targets or have commitments to set targets is close to 500. It’s an enormous increase. I think they see the urgency more than other sectors do.
We have companies that have been working at sustainability for quite a long time. I think the apparel sector has developed a keen understanding of the impacts of climate change. You can see the impacts of flooding, drought, heat, and other things happening in places like Bangladesh and Pakistan and India. If you’re a brand or a manufacturer and you have operations and supply chains in these places, I think you understand what the future will look like if we don’t significantly reduce emissions.
Q: There are different categories of emission levels, depending on the role within the supply chain. Scope 1 are “direct” emissions under the reporting company’s control. For apparel, this might be the production of raw materials or the manufacturing of the finished product. Scope 2 covers “indirect” emissions from purchased energy, such as electricity used in these processes. Scope 3 emissions are harder to track, as they include emissions from supply chain partners both upstream and downstream.
Now companies are finding there are legislative efforts around the world that could soon require them to track and report on all these emissions, including emissions produced by their partners’ supply chains. Does this mean that companies now need to be more aware of not only what greenhouse gas emissions they produce, but also what their partners produce?
A: That’s right. Just to put this into context, if you’re a brand like an Adidas or a Gap, you still have to consider the Scope 3 emissions. In particular, there are the so-called “purchased goods and services,” which refers to all of the embedded emissions in your products, from farming cotton to knitting yarn to making fabric. Those “purchased goods and services” generally account for well above 80% of the total emissions associated with a product. It’s by far the most significant portion of your emissions.
Leading companies have begun measuring and taking action on Scope 3 emissions because of regulatory developments in Europe and, to some extent now, in California. I do think this is just a further tailwind for the work that the industry is doing.
I also think it will definitely ratchet up the quality requirements of Scope 3 data, which is not yet where we’d all like it to be. Companies are working to improve that data, but I think the regulatory push will make the quality side increasingly important.
Q: Overall, do you think the work being done by the Apparel Impact Institute will help reduce greenhouse gas emissions within the industry?
A: When we started this back in 2020, we were at a place where companies were setting targets and knew their intended destination, but what they needed was a blueprint for how to get there. And so, the roadmap [provided] this blueprint and identified six key things that the sector needed to do—from using more sustainable materials to deploying renewable electricity in the supply chain.
Decarbonizing any sector, whether it’s transportation, chemicals, or automotive, requires investment. The Apparel Impact Institute is bringing collective investment, which is so critical. I’m really optimistic about what they’re doing. They have taken a data-driven, evidence-based approach, so they know where the emissions are and they know what the needed interventions are. And they’ve got the industry behind them in doing that.
The global air cargo market’s hot summer of double-digit demand growth continued in August with average spot rates showing their largest year-on-year jump with a 24% increase, according to the latest weekly analysis by Xeneta.
Xeneta cited two reasons to explain the increase. First, Global average air cargo spot rates reached $2.68 per kg in August due to continuing supply and demand imbalance. That came as August's global cargo supply grew at its slowest ratio in 2024 to-date at 2% year-on-year, while global cargo demand continued its double-digit growth, rising +11%.
The second reason for higher rates was an ocean-to-air shift in freight volumes due to Red Sea disruptions and e-commerce demand.
Those factors could soon be amplified as e-commerce shows continued strong growth approaching the hotly anticipated winter peak season. E-commerce and low-value goods exports from China in the first seven months of 2024 increased 30% year-on-year, including shipments to Europe and the US rising 38% and 30% growth respectively, Xeneta said.
“Typically, air cargo market performance in August tends to follow the July trend. But another month of double-digit demand growth and the strongest rate growths of the year means there was definitely no summer slack season in 2024,” Niall van de Wouw, Xeneta’s chief airfreight officer, said in a release.
“Rates we saw bottoming out in late July started picking up again in mid-August. This is too short a period to call a season. This has been a busy summer, and now we’re at the threshold of Q4, it will be interesting to see what will happen and if all the anticipation of a red-hot peak season materializes,” van de Wouw said.
The report cites data showing that there are approximately 1.7 million workers missing from the post-pandemic workforce and that 38% of small firms are unable to fill open positions. At the same time, the “skills gap” in the workforce is accelerating as automation and AI create significant shifts in how work is performed.
That information comes from the “2024 Labor Day Report” released by Littler’s Workplace Policy Institute (WPI), the firm’s government relations and public policy arm.
“We continue to see a labor shortage and an urgent need to upskill the current workforce to adapt to the new world of work,” said Michael Lotito, Littler shareholder and co-chair of WPI. “As corporate executives and business leaders look to the future, they are focused on realizing the many benefits of AI to streamline operations and guide strategic decision-making, while cultivating a talent pipeline that can support this growth.”
But while the need is clear, solutions may be complicated by public policy changes such as the upcoming U.S. general election and the proliferation of employment-related legislation at the state and local levels amid Congressional gridlock.
“We are heading into a contentious election that has already proven to be unpredictable and is poised to create even more uncertainty for employers, no matter the outcome,” Shannon Meade, WPI’s executive director, said in a release. “At the same time, the growing patchwork of state and local requirements across the U.S. is exacerbating compliance challenges for companies. That, coupled with looming changes following several Supreme Court decisions that have the potential to upend rulemaking, gives C-suite executives much to contend with in planning their workforce-related strategies.”
Stax Engineering, the venture-backed startup that provides smokestack emissions reduction services for maritime ships, will service all vessels from Toyota Motor North America Inc. visiting the Toyota Berth at the Port of Long Beach, according to a new five-year deal announced today.
Beginning in 2025 to coincide with new California Air Resources Board (CARB) standards, STAX will become the first and only emissions control provider to service roll-on/roll-off (ro-ros) vessels in the state of California, the company said.
Stax has rapidly grown since its launch in the first quarter of this year, supported in part by a $40 million funding round from investors, announced in July. It now holds exclusive service agreements at California ports including Los Angeles, Long Beach, Hueneme, Benicia, Richmond, and Oakland. The firm has also partnered with individual companies like NYK Line, Hyundai GLOVIS, Equilon Enterprises LLC d/b/a Shell Oil Products US (Shell), and now Toyota.
Stax says it offers an alternative to shore power with land- and barge-based, mobile emissions capture and control technology for shipping terminal and fleet operators without the need for retrofits.
In the case of this latest deal, the Toyota Long Beach Vehicle Distribution Center imports about 200,000 vehicles each year on ro-ro vessels. Stax will keep those ships green with its flexible exhaust capture system, which attaches to all vessel classes without modification to remove 99% of emitted particulate matter (PM) and 95% of emitted oxides of nitrogen (NOx). Over the lifetime of this new agreement with Toyota, Stax estimated the service will account for approximately 3,700 hours and more than 47 tons of emissions controlled.
“We set out to provide an emissions capture and control solution that was reliable, easily accessible, and cost-effective. As we begin to service Toyota, we’re confident that we can meet the needs of the full breadth of the maritime industry, furthering our impact on the local air quality, public health, and environment,” Mike Walker, CEO of Stax, said in a release. “Continuing to establish strong partnerships will help build momentum for and trust in our technology as we expand beyond the state of California.”
That result showed that driver wages across the industry continue to increase post-pandemic, despite a challenging freight market for motor carriers. The data comes from ATA’s “Driver Compensation Study,” which asked 120 fleets, more than 150,000 employee drivers, and 14,000 independent contractors about their wage and benefit information.
Drilling into specific categories, linehaul less-than-truckload (LTL) drivers earned a median annual amount of $94,525 in 2023, while local LTL drivers earned a median of $80,680. The median annual compensation for drivers at private carriers has risen 12% since 2021, reaching $95,114 in 2023. And leased-on independent contractors for truckload carriers were paid an annual median amount of $186,016 in 2023.
The results also showed how the demographics of the industry are changing, as carriers offered smaller referral and fewer sign-on bonuses for new drivers in 2023 compared to 2021 but more frequently offered tenure bonuses to their current drivers and with a greater median value.
"While our last study, conducted in 2021, illustrated how drivers benefitted from the strongest freight environment in a generation, this latest report shows professional drivers' earnings are still rising—even in a weaker freight economy," ATA Chief Economist Bob Costello said in a release. "By offering greater tenure bonuses to their current driver force, many fleets appear to be shifting their workforce priorities from recruitment to retention."