Micro-Fulfillment Centers: Transforming the eCommerce Fulfillment Process

Online shopping has witnessed a massive surge, especially in times of COVID 19. Retailers are scrambling to configure their supply chains to keep up with the demands of the market while ensuring fast delivery, superior customer experience, and increased profits. With same-day and next-day product deliveries on the rise, retail giants are setting up micro-fulfillment centers (MFCs) in major cities to bridge the gap between the order and the delivery process. This is basically changing the last-mile delivery scenario, making the e-fulfillment process quicker and cheaper.

MFC defined

Exactly what are these MFCs that retailers big and small are betting on to successfully navigate the new normal in eCommerce fulfillment?

MFCs are small, compact, automated warehouses that assist in fulfilling localized online orders rather quickly and efficiently. In simple terms, MFCs are small distribution centers, the product of the micro-fulfillment strategy, which is a scalable and configurable solution to guarantee on-time delivery of products. MFCs are usually located closer to the end customers around accessible locations in the urban landscape. The proximity to those who have made a purchase ensures seamless, faster, and affordable delivery services.

The role of robotics in MFCs & how it works

Retailers have been leveraging the benefits of robotics for quite some years through traditional fulfillment centers. However, with the rise of MFCs, there has been a growing need for innovative robotic technology to design robotic systems for smaller warehouses. Catering to this need, many robotic companies are striving to design and offer better automated solutions to make it big in the micro-fulfillment market. Using a standalone robotic solution, retailers are gaining an edge over the last-mile delivery and benefiting through improved customer experience, good return on investment, and higher profit margins.

MFCs comprise of two main components – automated software management systems that take care of online order processing, and the physical system or infrastructure that leverages advanced distribution and fulfilment technologies to include robots for storage, pick up, and shuttling of products to the packaging staff, mostly a human worker. Artificial intelligence software keeps track of different products and its movements across the MFCs. Automated systems help reduce errors and increase the rate of order fulfilment.

Key advantages of MFCs

Robotics and automation allow MFCs to successfully address fundamental challenges and expedite the last-mile delivery process. Some vital MFC benefits include:

  • Significantly lower investment for initial setup
  • Efficient utilization of unused space
  • Reduces product-picking labor costs
  • Provides deeper insights into local inventory
  • Lowers last-mile delivery costs

Catching up with the MFC trend

The emergence of MFCs is surely transforming the operational processes of the logistics industry and providing retailers, big and small, with numerous interesting opportunities to stay ahead of the curve. For instance, the retail juggernaut, Amazon, has already taken a huge leap and is setting up its own MFCs in an effort to cater to its promise of faster delivery and cut costs associated with it. The e-commerce giant already runs MFCs in five major US cities to efficiently deliver 3M products on the same day that the order is placed. Many other companies are following suit, which proves that MFCs are here to stay and revolutionize the ways of the retail and logistics industries.

Even when the pandemic subsides, it will have changed the way consumers live and shop, and retailers will still be challenged by digital growth. There is a definite need to look at solutions such as MFCs in the hope to survive in a constantly emerging digital environment.

Read More:Mastering the Complexities of eCommerce Fulfillment

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