Accelerated by soaring e-commerce volumes during the pandemic, micro-fulfillment centers (MFCs) are quickly becoming popular because they allow retailers to repurpose underperforming store space while improving customer service and trimming labor costs, experts said on a panel at the ProMatDX trade show today.
Under pressure to provide timely and accurate delivery, retailers and brands are creating MFCs by placing small-scale, automated warehouses in urban locations close to the end-customer, David Tavel, the chief research & development engineer at Advanced Handling Systems LLC (AHS) said in a session.
“That lets them offer speed and localized, in-store pickup, using the efficiencies we’ve all learned through large-scale implementation of automation in warehouses. We like to say it’s the traditional DC meets a vending machine,” Tavel said. “Certainly we know that the driver for micro fulfillment centers is e-commerce, but the nitrous oxide that’s pushing it forward is the pandemic.”
Companies are typically building MFCs in three types of spaces, including in-store retail space or back rooms, dark stores that provide curbside pickup and regional delivery, and online-only centers dedicated to shipping online orders in larger metro areas, he said. Other installations can sometimes be found in more unconventional locations such as central car parks, stock rooms at local shops, or the basements of office buildings.
To get the maximum benefit from a new installation, companies should also consider what type of inventory to stock in their MFC, said Zac Boehm, AHS’s director of innovative systems. While “A-mover SKUs” have enough value and velocity to make those stock-keeping units a good fit for a busy MFC installation, slower “D-movers” or delicate and chilled food items might be better stored elsewhere for the most efficient fulfillment, he said.