Pin Factory Redux: Fulfillment Technology

In 1776, Adam Smith described a pin factory to explain how division of labor increased productivity. According to Smith, the production of one pin required 18 distinct processes and operations – the straightening of the wire, the cutting of the wire, the crafting of the pin’s head, etc. At a time when one person was not infrequently responsible for all 18 processes, Smith proposed that each task be performed by specialized workers. Smith argued that the same number of workers could make 240 more pins if they divided the labor into separate disciplines.

Manufacturing and commerce has only become more complex since Smith’s time.

Smith’s insight – outsource what is beyond the scope of your core competency – still stands almost 250 years later in a post-handcrafted goods society.

Mission-critical yet unexpectedly complex, ecommerce fulfillment and its corresponding technology are the modern day pin factory, today’s illustration of the benefits of labor specialization.

Ecommerce infrastructure may include:

Warehouse Services

In today’s rapidly evolving logistics environment, warehouse services offer a variety of distribution, transportation and information services. Larger operators will also offer multiple distribution centers (DC) to reduce shipping costs.

Fulfillment

Commonly referred to as “pick pack,” there are a variety of business models from robotic automation to hourly workers who pick, pack, kit, prepare shipping labels, and in the event of returns, re-shelve products.

Shipping

Whatever the shipping method (USPS, FedEx, UPS), there is the complexity of managing pickups, tracking, invoicing, returns. In the event of multiple DCs, scheduling gets even more complicated given multiple inventory pools and facilities.

The infrastructure and the technology that enable seamless fulfillment are complex and expensive. Building them from ground up is too expensive for a business not yet at scale, but vital plumbing if scale is to be achieved. For the etailer who aims to scale, it’s critical to find a fulfillment technology and commerce infrastructure partner, leave their area of expertise to them, and focus on your piece of the pin.

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