Strategies like micro-fulfillment could solve common issues within your supply chain, especially on the heels of the COVID-19 pandemic. A few of the fulfillment problems that companies are faced with include:
- Increased demand for quick delivery.
- Higher quantities of consumers ordering online.
- Urban sprawl.
- Desire for curbside pickup.
Let’s explore what micro-fulfillment is and how it might work for your business.
What is micro-fulfillment?
The micro-fulfillment solution combines the benefits of local pick-up and delivery services with automated warehouses. Individually, both local and international fulfillment centers have flaws that can be solved by using the best components of each to maximize speed and cost efficiency. In the retail industry, micro-fulfillment centers can play a big role in the customer experience because it reduces the distance between the consumer and the retail product when an online order or curbside pickup order is placed.
Sometimes called nano-fulfillment, this method is being increasingly used by retail industry giants like Amazon and Walmart because online shopping has skyrocketed in popularity as a fulfillment strategy. More people than ever are doing their necessary shopping online and asking for either delivery or curb-side pickup, and the demand can be hard to meet. The percentage of people who did their grocery shopping online in 2020 doubled as compared to the previous year. Online grocery shopping became the norm for many.
How micro-fulfillment works
Micro-fulfillment centers (MFC) use highly automated software management systems that process online orders and AI that are often found in large storage facilities. However, a noticeable difference with MFCs as compared to large storage spaces is that they are small warehouses that can deliver the product to the customer far faster than massive warehouses because they are closer to the end location. A contracted delivery person picks the package up from the micro-fulfillment center and distributes it to the person who ordered it.
Micro-fulfillment centers: Location matters
Because these centers are so small, they can be conveniently located in spaces that otherwise would be far too little to qualify as a fulfillment center.
Think about the storage rooms behind a grocery store where products are kept as an example. Not only does having the centers in these convenient locations make the delivery process quicker, but it also saves the retailer money they would otherwise be spending on the cost of renting larger space. Perhaps you have driven by one of those huge Amazon warehouses, some of which can be anywhere from 600,000 to 1 million square feet. This can be compared to MFCs, which are typically only about 3,000 square feet.
Regional distribution centers prioritize using large spaces and automation to complete fulfillment processes, but are largely located on the outskirts of metropolitan cities due to their size. The center is there to service an entire region and they often employ many workers and utilize automation technologies.
While these centers are useful in their own way, their location can cause a delay in shipping. This is where urban ecommerce centers come in handy. As the population in America steadily grows, cities grow as well. 83.6% of North Americans live in urban areas as of 2020. In 1950, only 63.9% of people lived in cities.
Additionally, consumers want their parcels to be delivered faster than ever. In fact, 88% of customers would opt for same day delivery if that were an option. Instant gratification is the name of the game, and retailers that can live up to this expectation will stand out in the crowd.
In response, online retailers and ecommerce sites are looking to MFCs to solve the logistical issues they face with this problem. Because local fulfillment centers have more locations conveniently close to the customer, packages can be delivered more reliably than if they were shipped from a big warehouse.
Last mile delivery and logistics
The urban logistic industry is an ever-shifting space. With an increasing emphasis on fast lane orders, communication is key between all businesses who play a part in the delivery chain, as well as with the customer. The supply chain will need to rely on efficient and accurate communication methods internally and externally.
If something is not going to be delivered on the expected date, the buyer needs to be made aware. Automating update email and text messages can help with this adjustment in customer expectations in last mile delivery services. In addition, an increase in warehouse automation will assist in this goal.
As a parcel makes its way to its final destination, sometimes the most complex part of the delivery process occurs near the last stretch. There are many barriers that carriers may face in this “last mile” delivery. In extremely metropolitan areas, the city roads can be crowded and difficult for a truck to navigate. Some carriers do not have the capacity to transport a package to remote areas. Because of this, it takes a knowledgeable professional to manage the balancing act between contractors and subcontractors.
Micro-fulfillment solutions for you
This is where Green Mountain Technologies (GMT) comes in. A successful delivery relies on the right chain of capable carriers whose strengths are used to the best of their ability. This is called carrier network optimization. We make the otherwise complicated and time consuming process of last mile transactions and auditing contracts simple.
GMT are masters at analyzing real-time data to know when and to whom to subcontract deliveries to. The best carriers for the job are out there, and we know how to manage and create a functional network that goes above and beyond to produce the desired results, for both the supply chain and the customer.
Reach out to GMT to learn more about how to get started with micro-fulfillment.
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