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Micro-fulfillment: big things come in small packages

Distribution e-commerce meat micro-fulfillment planning
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It’s amazing how quickly we are seeing the distribution models changing to meet consumer demand for quick delivery. If you’ve been in the automation business long enough you’ve watched businesses go from localized warehousing, to consolidated warehousing, and now we are seeing companies moving back to smaller, scalable and more flexible distribution models that allow for that “last-mile” delivery.

An industry that has seen the fasted area of online growth is the grocery industry.  The “stay at home” mandates, social distancing rules and long wait times for store entry has accelerated the acceptance of online grocery shopping.  Consumers are choosing convenience over the need to inspect and choose their own produce and meat products.

In France, Nielsen Research estimates online orders for home delivery rose 32% year on year in the week of March 2, while click-and-collect orders rose 29%.

In the U.S., Bricks Meets Click did a consumer survey for March 23-25 that the number of households ordering groceries online is up 145.3% compared with a Brick Meets Click survey in August 2019, which found 16.1 million, or 13% of households, bought groceries online that month.

No doubt this shift in consumer buying is driving a new wave of automation called micro-fulfillment. Micro-fulfilment refers to the idea of placing small-scale automated warehouse facilities in accessible urban locations, close to the end consumer who is making a purchase. For the grocery industry this could mean placing automated pop-up warehouses on the back of local grocery stores, or sometimes even placing them within the grocery store itself.

Clear benefits to micro-fulfillment

1. Reduced shipping costs

Micro-fulfillment centers are placed in the “last-mile” location reducing the distance for delivery or even allowing for easy customer pick-up, greatly reducing shipping costs.

2. Real estate savings

The cost of real estate in an urban center is at a premium, so building large scale distribution centers is cost prohibitive.  By using compact modular automation, you can greatly reduce the footprint required.

3. Fast installation with lower investment

Small agile automated picking warehouses can be installed in a few months versus years allowing you to respond quickly to the growing needs of the consumer. These systems are a fraction of the costs to automate large distribution centers.

4. Consumer satisfaction

With a miniature warehouse you can priority stock based on localized customer data, ensuring that the right products are always available which provides a better customer experience.

It’s pretty clear that online shopping is here to stay and the demand for faster delivery will continue to challenge distribution. Innovators such as Cimcorp continue to develop new solutions to answer these challenges.  To learn more about our automation solution, big or small, visit our case studies or contact sales.

Author Jarno Honkanen

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