How do micro-fulfilment centres work?
Micro-fulfilment centres, which are small distribution warehouses strategically situated to fulfil orders in urban areas, are gaining traction in the food industry. They often have a significantly smaller footprint than the massive warehouses that retailers have traditionally used. To facilitate swift fulfilment, micro-fulfilment centres house high-demand, fast-moving commodities. Instead of concentrating goods in a big facility on the outskirts of town like traditional warehouses, they are dispersed throughout urban areas.
Important characteristics of micro-fulfilment centres include:
Micro-fulfilment centres use modular automated technology to expedite last-mile delivery and fulfil orders more quickly. For order pickup, technologies such as mobile robots, pallets and shuttles could be used. To enhance efficiency, automation eliminates as many repetitive, manual, labour-intensive activities as possible.
Grocers connect networks of micro-fulfilment centres with warehouse automation software and execution systems to provide real-time order management. Customisation is also possible because of connected networks, which can be done based on delivery location and consumer preferences. The centres will be able to deliver thousands of orders per day in this manner.
Processes such as storage, order processing, dispatch planning, packaging and shipping are all digitised at micro-fulfilment centres. This allows the supermarket chain to streamline core processes, increase delivery speed and ensure accurate labelling and delivery of goods.
Micro-fulfilment facilities can often handle up to 5,000 orders per day, allowing grocers to service customers in urban areas more quickly than ever before. That's why it's a popular solution for grocery stores and other merchants looking to overcome last-mile issues and differentiate themselves from the competition. In the online grocery market, which is expected to account for more than 20% of all grocery purchases by 2025, competition is fierce. That said, it's critical for supermarket chain executives considering a micro-fulfilment centre strategy to have a thorough understanding of the process. Grocers can benefit from a variety of opportunities with this strategy, but there are also some barriers to entrance that decision-makers should consider.
The advantages and disadvantages of using a micro-fulfilment centre:
Obstacles at the last mile, logistics and labour expenses, inventory management limits and increased customer expectations all necessitate innovative grocery store solutions. Grocery chains may overcome all these issues and more with a micro-fulfilment centre strategy. The following are some of the advantages of using a micro-fulfilment centre:
- Last-mile fulfilment that is expedited: Because of the close proximity to consumers, pickups and deliveries are speedier and orders are delivered within an hour or two of being placed.
- Costs of logistics are reduced: Many delivery charges, such as fuel costs are reduced by automation and proximity, while logistical operations are streamlined.
- Labour costs have been reduced: Micro-fulfilment centres often require less human intervention due to digital and automated operations, which reduces labour expenses.
- Customer satisfaction has increased: Deliveries that are accurate and timely improve the consumer experience and increase brand loyalty.
These are all strong arguments in favour of grocers using a micro-fulfilment strategy to gain a competitive advantage. However, before committing to such a strategy, it's vital to understand the implementation challenges, which include Deployment investment. Micro-fulfilment centres necessitate a substantial upfront investment in high-quality machinery and automation technologies, which can be intimidating to some retailers. Here are a few of the challenges.
- Limits on the amount of data that can be stored. Although the micro-fulfilment technique maximises space usage, distribution hubs are significantly smaller, limiting the range of goods supplied.
- Inventory management issues are a common occurrence. Inventory management becomes more complicated when inventory is decentralised through a network of micro-fulfilment centres.
While none of these roadblocks will prevent grocers from establishing a micro-fulfilment centre network, they should all be examined. It's vital to carefully assess the advantages and disadvantages before making a decision.
In the grocery sector, last-mile optimisation is important.
Before the Covid-19 pandemic, grocers and other businesses were already engaged in overcoming last-mile challenges. However, Covid-19 has hastened changes in consumer purchasing behaviour, forcing more businesses to embrace omnichannel marketing as a need. Now is the moment to consider the future, with vaccine distribution providing hope that normal commercial operations can resume. Whatever way grocery store executives choose, it will have to address recurring last-mile challenges.
For some businesses, a micro-fulfilment centre strategy may be the key to success. The most competitive businesses in the grocery industry are already integrating modern technologies such as artificial intelligence and machine learning to optimise their supply chains, accelerate fulfilment and ultimately win the future.
Trident Worldwide’s solution: Trident’s network of flexible warehouses provides a solution for businesses looking to store excess inventory without the commitment to additional space. Only pay for the space you need, when you need it. Strategically distributing inventory across multiple locations not only improves delivery times, but also reduces fuel costs and mitigates risks associated with adverse weather and traffic disruption. Trident understands that growth is not always steady. Flexible warehousing allows for unlimited growth, whatever the pace and without compromise. All you need to do is search and store on-demand. We’ll handle the rest.