Customers are looking to get their product the same or next day, so the distance between consumers and the product will continue to shrink. What that means is the fulfilment centers need to be in urban demand centres which are prime real-estates unlike traditional fulfilment hubs in city outskirts. The model of micro-warehousing is not new. It is already established in major e-Commerce economies like US & China where same/next day delivery is becoming a norm, and not a differentiator.
Traditional supply chains were built for cost efficiency where distribution is centralized through one large format fulfilment center to bring in efficiency of scale. This approach however sacrifices on speed as fulfillment is centralized while demand is distributed. Modern e-Commerce supply chains are built for speed and follow the path of distributed fulfilment to get closer to customers. It starts with data - identifying the right network design, and smart inventory placement decision in that net-work. As the fulfilment will continue to get distributed as a long term trend, the size of warehouse will also go smaller as a key outcome.
Micro-fulfilment centers can be any empty space in an urban location - an abandoned mall, store space or an underutilized hotel. By giving proximity to consumers, micro warehousing can cut down on last-mile delivery times significantly, which helps in enhancing industry efficiencies.
What's better is that with a reduced size than its predecessors, micro warehousing ends up costing a fraction to the start-up. Ac-cording to studies, this could end up reducing order related cost by as much as 75% owing to the fact that it cuts down major costs like:
• The cost of the last-mile delivery through hyperlocal placement.
• The cost of storage, retrieval and picking via automation
• The cost of real estate through condensing fulfilment centres.
Aiming to combine the speed of localised, in-store pickups with the efficiency provided by large automated warehouses, micro warehousing can facilitate same & next-day delivery options that are becoming a necessity for retailers who want to keep up with the most disruptive competitors. This means that currently, micro-warehousing is one of the best methods for companies to compete with giants without incurring massive costs.
In addition to this, automation of logistics via digital ware-house design and predictive exception management can help in increasing efficiency in a fast-paced e-commerce supply chain scenario. These benefits flow to the consumers, by there being better product availability and faster, more accurate de-liveries. Leading players in the industry are now using models that have been powered by AI to predict sales of specific products in certain areas in cities and then stock the predict-ed amount of inventory in nearby micro fulfilment centres.
Owing To This Evolution - Today New Age Warehousing Solutions Are Offering Retailer Benefits Like:
• Faster delivery for end-customer (same-day or next-day de-livery)
• Lesser time for onboarding and commencement
• Elimination of the requirement of large scale industrial machinery setups
• Low cost for labour and better last-mile delivery
• A direct relationship between retailer and customer with no or minimum third-party involvement for enhanced customer experience
As the need for supply chain speed and flexibility continues to increase, moving ahead, the success of an organisation is largely dependent on how well it assesses the emerging trends and equips itself with the right technology, tools and innovative solutions as well as the right partners to enable all this. In fact, with the right approach and automation technology, micro warehousing can help businesses meet changing consumer expectations and also enhance the customer experience – thus leading to overall business growth and competitive dominance.