Operations and Solutions Development

Prepare for the Future of Omnichannel Retail With Micro-fulfillment

Blog
April, 2020

Omnichannel fulfillment complexities are permeating every sector of the retail landscape, and many companies are adopting micro-fulfillment center (MFC) strategies to improve delivery time frames and shorten the distance between distribution centers (DCs) and their customers. Micro-fulfillment centers are highly automated, higher- density, small-footprint systems or structures that retailers can locate where they’re needed most — in stand-alone facilities or in (or near) existing stores.

From grocers to major e-commerce players and traditional big-box stores, retailers are trying to satisfy demands for faster delivery and provide the option for customers to “buy online and pick up in store” (aka BOPIS or “click-and-collect”). Combined with escalating labor challenges, the scarcity of real estate and the need to digitize fulfillment and supply chain logistics, e-commerce pressures have created a perfect storm of market conditions for micro-fulfillment strategies to emerge. 

Characteristics of a micro-fulfillment center

Necessity is the mother of invention, and micro-fulfillment strategies are allowing retailers to expand their fulfillment capabilities relatively quickly. By leveraging existing distribution hubs and implementing high-density automation technologies in urban facilities and retail stores, MFCs are ideally suited to capitalize on the unique challenges confronting today’s retail sector.

Small physical footprint — Compared to traditional automated distribution and fulfillment (D&F) centers, which generally range from 300,000–350,000 sq. ft., MFCs typically occupy spaces less than 20,000 sq. ft. This compact footprint offers the flexibility to be located within a small, stand-alone facility or integrated with (or bolted onto) a retail store.

Distributed fulfillment agility — MFCs support a hub-and-spoke distribution model — with a regional DC as the central hub and multiple MFCs located within proximity to urban population centers. Not only does this shorten the distance for last-mile or last-hour delivery, it also supports in-store pickup for retailers offering BOPIS fulfillment models.

High-density, high-velocity automation — MFCs can maintain an inventory of 8,000–15,000 SKUs with the automated efficiencies to enable accurate, high-velocity fulfillment. Depending on retailers’ delivery speeds, SKU counts and throughput targets, MFC solutions range from partially to completely automated scenarios and require proportionate investments in automation and robotics equipment. MFCs often benefit from supplemental inventory from an attached store or a regional fulfillment center hub.

Emerging technologies for MFC automation

Micro-fulfillment solutions benefit from the technological advancements made in the D&F sector over the past decade. From automated storage and retrieval systems (AS/RS) to sophisticated warehouse automation equipment and robotics, equipment manufacturers are leveraging these advancements to innovate new micro-fulfillment solutions. 

AS/RS goods-to-person (GTP) shuttle — Smaller-scale, AS/RS shuttles retrieve goods from one or more aisles of high-velocity inventory — such as dry goods and refrigerated items — and deliver them directly to an operator station for picking and order consolidation. In a typical online grocery scenario, the MFC could handle 600–2,500 totes per hour with supplemental inventory picked off the store shelves, coolers and freezer.

High-density storage — For a more automated GTP solution, cube-like storage structures combine robotics and AS/RS technologies to reduce storage space by up to 85%. MFCs provide fast, accurate robotic retrieval to ergonomic workstations — and can achieve up to 500 tote/bin presentations per hour at a single workstation. High-density storage configurations can be contracted or expanded to accommodate virtually any facility size footprint, or diverse fulfillment requirements. GTP picking stations can be located anywhere on the cube’s perimeter.

Enhanced robotic integration — For even less reliance on manual labor, both AS/RS shuttle and high-density storage systems can be equipped with mobile robots in a goods-to-robot (GTR) configuration or integrate robotic arm and artificial intelligence (AI) technologies for picking. Robotic MFC solutions are capable of processing high volumes of data for faster decision-making across a variety of process workflows. With this approach, AS/RS shuttle or high-density storage systems are responsible for storage and retrieval while mobile robots are integrated into the decanting, consolidation and picking processes — and robotic arms perform each picking at GTR workstations.

Download our Micro-fulfillment Strategies for the Future of Omnichannel Retail white paper to explore the market forces behind the emergence of these strategies and evaluate leading technologies for implementation. 

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