26. May 2021

Micro-fulfillment: Structuring e-commerce logistics for success

Any retailer will tell you that e-commerce is an impatient business. The sooner that ordered goods are delivered, the better. Consumers are becoming more demanding, placing greater stress on the supply chain structure and its management. Micro-fulfillment is an increasingly common response to this. But what does this term actually mean? And how can logistics specialists create a future-proof infrastructure that is both economic and successful?

Picavi Blog Micro-Fulfilment

Micro-fulfillment: How e-commerce is shaping the future of logistics

Once again, the coronavirus pandemic has accelerated an existing trend. Today, retailers find it difficult to survive without an omni-sales strategy that combines in-store retail with sales via online channels and platforms. Many are having to readjust to completely new customer demands. That is because online retail is a whole different animal. Consumers expect fast and on-time delivery, ideally on the same day and certainly no later than the next. This has huge implications for the supply chain, as it means goods need to be stored closer to consumers.

What is micro-fulfillment?

Retailers and e-commerce businesses are responding to these challenges through micro-fulfillment. This involves decentralizing logistics through so-called micro-hubs.

These small warehouse and picking centers are either integrated directly as part of the store, or serve as a stand-alone solution in densely populated inner cities or on the edge of town.

The aim is to reduce the distance to the customer, in order to speed up delivery and reduce logistics costs.

 

But before implementing a micro-fulfillment strategy, businesses must first answer two important questions:

 

1

What are the ideal locations for our micro-hubs?

 

2

What technical equipment do the micro-hubs require, in order to ensure efficient and economic order processing?

 

Location, location, location

Micro-fulfillment is all about finding solutions that make it possible to design last-mile services as efficiently as possible. The distance between the warehouse and the customer plays a major role here. The shorter the distance, the sooner the items can be delivered. This also has the welcome side effect of reducing transport costs. As a result, micro-hubs are often placed in densely populated areas like inner cities. But if finding a suitable and affordable location here is difficult, there are alternatives. Hubs can be integrated into retail stores, for example, or at the edge of town as part of a restructuring of existing commercial space.

What your micro-hubs need

When it comes to equipping their micro-fulfillment centers, companies are often advised to rely entirely on automation. But this comes with high investment costs. Given the tight profit margins in online retail, this risk should not be underestimated. It is therefore common among retailers to process e-commerce orders through manual order picking. The staff in the warehouse compile the goods for shipping with the aid of various assistance systems.

There are several order picking methods available that sometimes vary greatly in terms of productivity, ergonomics and vulnerability to errors. Our Vision Guide will tell you what you need to look out for when choosing a picking method. Download the free Vision Guide now!

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