Over the past decade, distribution centers continue to adjust and adapt as “the Amazon Effect” becomes more pronounced. The Amazon Effect refers to the impact on the supply chain created by consumer demands changing to require smaller orders with faster delivery.
Amazon, the world’s largest online retailer, continues to deliver on those expectations in ways the supply chain has never seen before by delivering directly to consumers. Products that used to be distributed to warehouses, then major retailer hubs, then to the shelves now are expected to be delivered to consumers in less than two days. And the bar continues to be set higher and higher. In some cases, products can even be shipped to the end-location on the same day.
While that turnaround may be unrealistic for some industries, consumer behavior is not turning around any time soon. When was the last time you heard someone say they ordered something online and it got to their house too quickly? Luckily, there is a solution that companies are increasingly adopting to meet the demand of consumers: micro-fulfillment.
Logistics giant DHL refers to micro-fulfillment as “the concept of placing small-scale warehouse facilities in accessible, urban locations that are closer to the end-consumer.” This “last-mile logistics” solution has allowed businesses that offer e-commerce an option to reduce shipping costs and the time associated with getting an order filled.
In essence, micro-fulfillment centers take the most-ordered products from your warehouse and store them in smaller, more strategically located distribution centers closer to where the people are ordering them. This shift allows these centers to be more agile in fulfilling orders quicker, more accurately, and in line with what consumers expect in today’s environment.
There are a wide variety of industries making the shift to compete with Amazon and align with consumers. Even the rise of food delivery services like Hello Fresh or Blue Apron showcases the success and innovation that micro-fulfillment centers can bring to an organization.
However, some companies are slow to realize the potential these centers can bring to an operation. They think the investment in new facilities or highly sophisticated equipment comes with a price tag too heavy to justify increases in productivity and performance. But they may not have the expertise to look at creative, low-cost strategies employed by these centers that could be applied to their own operations.
While many of these new micro-fulfillment centers feature a high degree of automation, the same level of productivity can be achieved with the right mix of design, dense storage, and on-demand automation, and without the price tag of a fully automated facility. There are combinations of cost-effective solutions that can be dynamically implemented to supplement your labor force and optimize your operations.
Our team of experts would love to connect and learn about your challenges to see if micro-fulfillment is the best solution for your operations. Giants like Amazon will continue to grow and deliver on these rapidly changing expectations of consumers. Micro-fulfillment could get you closer than you may think, without the investment you think you need to make to get there. For us, making that shift begins with a simple, smart, and strategic approach.