As per the PWC, in the US, 88 per cent of shoppers are willing to pay for faster delivery or same-day delivery. Another study by Zebra Technologies Corporation found that close to 80 per cent of logistics companies expect to provide same-day delivery by 2023.
There’s been a lot of talk lately about retailers using micro-fulfilment centres or dark stores, to fulfil online orders seeing the rising demands. As the popularity of e-commerce and online shopping increases, the number of micro-fulfilment centres (MFCs) are also growing proportionally. It is not wrong to say that MFCs represent an important aspect of the future of retail strategy. It is expected that by 2023, approximately 60 per cent of all fashion businesses will use MFCs in some form. Micro-fulfilment centres offer numerous benefits that traditional warehouses cannot, including shorter lead times, lower shipping costs, greater flexibility and scalability. Retailers must consider a number of factors when choosing an MFC, including location, size, services offered and cost. However, it is important to carefully consider all factors before choosing an MFC to ensure that it is the right fit for business.
Retailers eyeing micro-fulfilment centres for better service
Bricks-and-mortar retailers in nations like the USA are closing due to the declining foot traffic in stores and the increasing number of customers who prefer to do their online shopping. More than 12,000 American retail establishments went out of business since the pandemic and this trend is expected to continue as more consumers shift their spending to online channels. As per UBS projection, the number can go up to 50,000 as well. Notably, in the West, the cost of labour is on the rise and increase in minimum wage is taking place in a growing number around the States. Furthermore, the price of providing benefits like medical insurance and retirement savings plans have been rising for employers and the hiring of new staff is in a glitch now. Because of this, managing stock is becoming more difficult. All these reasons have caused a paradigm shift towards e-commerce and more fulfilment centres.
Interact Analysis estimates that 7,300 or more automated MFCs will be installed by 2030. Automated MFCs could be one of the fastest-growing segments of logistics.
MFCs have a competitive edge, but location matters most
MFCs are becoming increasingly popular in the retail industry due to their ability to reduce expenses and improve inventory management. However, there are some challenges associated with MFCs, such as finding the right location and integrating them into existing infrastructure. Despite these challenges, MFCs help businesses increase productivity and compete more effectively.
Traditional warehouses are unable to keep up with the ever-changing trends in the fashion industry, but MFCs can as they are flexible and backed up by solutions that update the information of the ongoing sales time-to-time. This is especially important for fashion brands that often have time-sensitive orders.
With MFCs, however, brands can track every stage of the process and make on-the-spot adjustments as needed. Having a facility close to the factory has advantages, as does setting up an MFC in the same district or region. Also, with various tech-enabled solutions of Automated Storage and Retrieval Systems (ASRS), MFCs prove to be advantageous to fashion brands looking to stay ahead of the competition by allowing them to quickly adapt to changes in demand and inventory levels.
Eyal Yair, CEO and Co-founder of Israel 1MRobotics’ platform states that a small warehouse of robots that pack orders — can be installed nearly anywhere and does not require regular maintenance, ideally removing some of the logistics associated with delivery. Yair explains that by using AI, the system ‘optimises’ the warehouse’s stock in response to supply and demand patterns gleaned from the order flow of the goods stored there.
Automated micro-fulfilment centres are the next level to MFCs
There is no point if the MFCs aren’t keeping pace with online orders of 5000- 10,000 per day or even more. To ease out the functionality, technology-enabled MFCs are gearing up for the next battle to tackle the influx of orders.
The goal of the high-tech MFCs is to find the best combination of these technologies for the specific needs of retailers. MFCs are constantly evolving and new technologies are being developed all the time. It can be difficult to keep up with all the latest innovations, but it’s important to consider what automation options are available when designing an MFC. Some of the most popular automated technologies for MFCs include shuttle-based AS/RS, Autonomous Mobile Robots (AMRs), hybrid AMR & AS/RS Systems, Vertical Sequencing Modules (VSMs), cube storage systems, modular conveyors and more. By automating as much as possible, retailers can improve efficiency and productivity while reducing costs on manpower.
Fabrics has raised over US $ 300 million at a valuation of over US $ 1 billion for its micro-fulfilment robotics technology. Attabotics, Nimble Robotics and more established competitors like Autostore are additional competitors.
For each of these technologies, one technology does not create a complete order fulfilment system, and other peripheral machines, conveyors, software and components are required to build an optimal fulfilment solution. Autonomous Mobile Robots (AMRs) are also leveraging the tech-equipped fulfilled centre self-navigating robots that can move around the facility independently to pick up and deliver items as needed. AMRs are a good option if retailers need more flexibility than what a shuttle-based system can provide. Hybrid AMR and AS/RS systems are also speering widely. This is a combination of autonomous mobile robots and an automated storage and retrieval system.
Micro-fulfilment is a strategy that places small-scale warehouse facilities in densely populated urban locations closer to the consumer to improve delivery times. Micro-fulfilment centres allow adaptable, faster and environmental-friendly shipping for both online purchases and in-store pickups.
Way ahead
Despite the trend, nearly all existing last-mile facilities are still not fully automated for the time being. The win-win scenario will only be possible if small retailers join hands to automate the supply chain in a plug-and-play format, in comparison to the larger, better-funded retail giants. Experts believe that the future of commerce will involve a network of fully automated and geographically dispersed micro- and nano-fulfilment sites. Additionally, this is also a major trend in 2023 as stated by Apparel Resources’ Fash-Tech Journal.
