E-commerce has grown rapidly since 2020 and there is a high demand for warehousing and logistics services to support online sales. Microfulfillment centers or MFCs require only a fraction of the space required by conventional distribution centers and can be deployed much closer to customers to shorten the last mile.
In addition to being compact and closer to the customer, micro fulfillment centers are also much smarter than typical distribution centers. Thanks to automation and robotics, an MFC can pick orders in a fraction of the time required by human workers. Warehouse automation can also reduce injury rates in the 3PL industry, as tasks that can expose workers to physical injury are performed by robots.
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In this post we will talk about 5 competitive advantages of micro service centers. With the fast pace of the digital market, retailers can no longer rely on conventional distribution centers and manual order fulfillment.
1) Faster order selection
When a customer purchases a product online, the clock starts ticking for the supplier as soon as the order is placed. To deliver orders in less time, the first step is to remove products from storage as quickly as possible. Customers now expect same-day or even one-hour delivery, and this exceeds human capabilities when combined with high sales volume. Online retailers are now using picking robots to keep pace with e-commerce.
The efficiency of picking robots can vary depending on the product category, but in many cases they are faster than humans by an order of magnitude. For example, a distribution center that can process 60 orders/hour with manual labor can complete 600 orders/hour with automation.
2) Faster order delivery
Microfulfillment centers not only reduce order pickup time, but also allow for faster delivery by being close to the customer. Installing a conventional distribution center in a residential area is unfeasible due to the need for space. Even with space available, such a project would likely face opposition from residents due to traffic congestion and noise caused by commercial trucks.
An MFC allows for an automated warehouse operation on a city corner, typically using less than 10,000 square feet, and some of the smallest systems fit in less than 2,000 square feet. This allows products to be stored much closer to the customer, which allows for quick delivery when purchased online. For a retailer that relies on a conventional distribution center in a rural area, same-day delivery is impossible unless the customer is nearby.
3) Lower operating costs
Microfulfillment centers are not only faster than conventional warehouses, but they are also less expensive to operate. A typical MFC requires an initial investment of $3 to $5 million dollars, but offers a payback period of just 2 to 3 years, according to Steven Hornyak, COO at Fabric.
Once an MFC is up and running, the retailer can expect a sharp reduction in operating expenses. Fulfillment costs of $10 to $15 per order are typical for manual labor, but are reduced to just $3 to $6 per order with warehouse automation technology. Online retailers can fulfill orders faster with MFC technology, while reducing the cost per order by around 60%.
4) Greater variety of products
An MFC uses space more efficiently than a typical warehouse, which also means that more products can be stored in a given area. Retailers can take advantage of this and start selling more products online without needing more space.
According to Loja Automobilistica , storage space can be used four times more efficiently with warehouse automation. This not only allows for larger inventories, but also a wider selection of products. Retailers can even expand into new product categories, increasing their revenue streams.
5) Better workplace safety
Warehouse automation can also make the 3PL industry safer , as dangerous tasks are delegated to picking robots and other autonomous equipment. The following are some examples of risky activities that can be avoided with MFC technology:
- Choose products stored well above the ground.
- Carrying heavy boxes.
- Working near heavy equipment such as forklifts
Picking robots can help prevent accidents such as falling from heights, colliding with equipment, back injuries from carrying boxes incorrectly, or even repetitive strain injuries.
Conclusion
Microfulfillment centers can make retailers more competitive by reducing order delivery times and operational costs. Warehouse automation also allows a wider variety of products to be handled with ease, and dangerous tasks can be delegated to robots. The initial cost of an MFC may seem high, but the increase in productivity results in a short payback period.
