Micro Fulfillment Centers – an Emerging E-commerce Strategy

Innovative, adaptable, and automated ways to e-fulfillment, both in classic distribution channels and new micro-fulfillment techniques, are being dictated by rapidly changing market conditions. As retailers strive to meet ever-increasing fulfilment needs, their ability to satisfy next- and same-day delivery (or in-store pickup) expectations will be critical to their survival in this hypercompetitive market. Retailers who are early adopters of micro-fulfillment techniques will gain a competitive edge. To address the need for micro-fulfillment throughout the retail spectrum, warehouse automation solution providers such as Honeywell Intelligrated are integrating strong automation equipment and robots with smart execution software.

By utilizing existing distribution hubs and applying high-density automation technology in urban facilities and retail outlets, merchants may swiftly increase their fulfilment capabilities under an MFC model. MFCs are well-positioned to take advantage of the specific problems that today's retail industry faces. This necessitates not just speedier order fulfilment and delivery, but also the capacity to accommodate the rising customer desire for buying online and picking up in store (also known as BOPIS or "click-and-collect") – not just the following day, but frequently within a few hours. The introduction of BOPIS service level agreements can cause major disruptions to grocers and big box retailers' in-store operations and profit margins.

E-commerce pressures have produced a perfect storm of market circumstances for micro-fulfillment methods to develop, when combined with rising labor problems, real estate constraints, and the need to automate fulfilment and supply chain operations. E-commerce and omnichannel fulfilment are putting unprecedented pressure on businesses throughout the retail industry. More customers are shopping through their favorite online channels, as global e-commerce sales are expected to quadruple between 2018 and 2023. Despite the fact that next-day delivery is rapidly becoming a typical service level agreement (SLA), 56 percent of online shoppers aged 18 to 34 anticipate same-day delivery. These stringent SLAs necessitate advances in last-mile or last-hour delivery techniques, as well as fulfilment tactics that bring goods closer to customers. With growing order velocities and quantities, traditional manual fulfilment methods will struggle to keep up.

Two-day delivery, which was once considered groundbreaking, has given way to next-day delivery, which is fast becoming outdated as consumers want same-day delivery. During the COVID-19 epidemic, this practice has intensified, especially as more people find it comfortable to purchase perishable products and food online. The pandemic accelerated the pace of digital change for businesses by roughly six years. The grocery industry is unquestionably one of the most affected. When supply lines were interrupted early in the epidemic, several supermarket stores rushed to meet the urgent requirement to sell online and via mobile applications, and they had to develop new methods to satisfy demand.

There are also indications that the changes in the retail and food industries will be long-term, meaning that businesses will have to accommodate new shopping patterns such as home delivery even after the pandemic is under control. Large-scale industry players are aware of this, which is why they are taking proactive steps to retain new consumers. Micro-fulfillment centers for last-mile food delivery are one method for supermarket chains to meet consumer expectations in a cost-effective and efficient manner, allowing them to compete successfully in a changed micro-fulfillment centers industry.

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