The rise of micro-fulfillment centers (MFCs) marks a new era in last-mile delivery as they help meet customer expectations of speed and convenience. While the average warehouse covers about 180,000 square feet, MFCs are much smaller facilities that might only cover 5,000 square feet. Here's a look at how these centers make life easier for manufacturers and their customers.
Geography of Last Mile Logistics
One of the most significant elements of a micro-fulfillment center is its location. Shortening delivery times from the warehouse to the customer comes down to strategically placing MFCs within the vicinity of local customers. The center can be located downtown or anywhere near the outskirts of the city so that e-commerce and last-mile logistics are optimized for efficiency.
Smartphones and e-commerce have sped up consumer buying habits. Consumers now demand and expect fast deliveries of whatever they purchase online. More and more consumers want and expect next-day delivery service. Decentralized logistics boost customer satisfaction, so it's important to understand this modern and efficient method for accelerating product distribution.
Suppliers have an opportunity to become much more efficient with the strategic placement of multiple MFCs in a large city. Companies can determine where to place MFCs by studying website analytics and order information on where clusters of customers reside. Here are some of the key advantages for a manufacturing company to invest in the micro model of distribution.
- Automated packaging - The use of automation at MFCs makes last-mile delivery more efficient in picking, packing and transporting products. Brands and packaging designers will need to analyze how last-mile automation works so they can make their products easier to handle in the final stage of the shipping process.
- Specialized inventory - Each MFC will be limited in its immediate inventory, as some of these small centers may just serve as locations to place orders while others specialize. The limited inventory will likely be based on the most popular selling merchandise.
- Sped up manufacturing - When MFCs are located close to customers, they create more direct engagement with the brand on a regular basis, which speeds up purchasing decisions. The more MFCs are able to fulfill orders in a timely manner, the more manufacturers can think about accelerating production and inventory cycles.
- Create a more competitive retail environment - Due to limited assortment and shelf space at the small centers, retailers will be more competitive in the brands they carry. It will allow certain stores to specialize in more niche products that are ignored by competitors.
Automated Turnkey Solution
Growth of micro-fulfillment centers will depend on investments in new technology and proper installation by technical experts. MFCs are attractive to manufacturers because they cut costs on storage, energy, and transportation with the strategic placement of small stores or hubs that connect orders with deliveries. Manufacturers will gain a competitive edge when they implement omnichannel strategies in their logistics systems.
While an in-store retail operation might typically be able to process 1,000 orders per week, an automation fulfillment center can process over 4,000 orders per week and still achieve one-hour fulfillment.
Maximizing space efficiency is another reason MFCs have proven to be an innovative distribution model that's clearly more than a trend. Firms have succeeded with this model by investing in software platforms that simplify and improve store fulfillment, e-commerce, and multi-carrier shipping applications. Selecting a powerful Warehouse Management System (WMS) is necessary for adopting an automated turn-key solution.
The spread of micro-fulfillment centers is a signal that the retail industry is going through a transformation driven by the need for greater economic efficiency and customer satisfaction. Placing these small centers in appropriate locations to meet consumer demands helps pave the way toward greater profit margins. MFCs ultimately fall under the umbrella of sustainable solutions due to how they streamline operations.