Logistical acceleration of e-commerce and a turbo boost for smart cities
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Published on: February 10, 2021 / Updated on: February 24, 2021 – Author: Konrad Wolfenstein
Micro-fulfillment, the logistics concept of the future – What is micro-fulfillment?
Image: E-Mart @Xpert.Digital
The e-commerce and omni-channel turbo: Micro-fulfillment
E-commerce, initially ridiculed and neglected, has not only transformed the global world but also the internet into a “local” shopping center, while simultaneously completely changing our habits and expectations.
Without digital platforms, our world as we know it today would be unimaginable. Who still remembers going to the video store when now we simply pick up the remote and access Netflix, Amazon Prime, Disney+, and all the other online video services? Many people book their trips almost exclusively online and don't even bother going to the local travel agency. And of course, we already order a large portion of our gifts, gadgets, and other accessories online, including from Amazon, eBay, and Google.
Omni-channel concepts provided the solution. But what few people know is that it is primarily thanks to logistics and logistics managers who are increasingly bringing the growing demand for "order today, delivered today" ( same-day delivery ) closer to reality.
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To ensure increasingly faster delivery in a sustainable way, in-stock goods must be brought closer to the customer. Goods that have to be shipped from China to Germany for each order have no chance of sustainability or repeat business. Even if goods have to be shipped from Hamburg to Munich for an order, there is a delay of up to three days in the worst-case scenario. At best, there is still a one-day delay.
Accelerating the delivery of online orders looks different. A complete reorganization of the supply chain will be unavoidable. Retail companies must react quickly to avoid falling behind. This is also known as micro-fulfillment or micro-hub strategy.
This also presents a challenge and an opportunity for fulfillment service providers to expand their logistics network and simultaneously specialize in micro-fulfillment.
A key characteristic of micro-fulfillment is the establishment and expansion of local, decentralized hubs . Their small size allows them to be ideally positioned near key locations such as metropolitan areas, cities, and residential areas.
Customer brand loyalty can no longer be determined by product quality and performance. Many products are already similar in price and performance. The overabundance of goods also frequently leads to a reluctance to buy.
Consumer reluctance due to oversupply – Image: Xpert.Digital
Only service, advice, user experience (UX), and above all, delivery speed are important if you want to retain customers. This is primarily Amazon's recipe for success.
The defining characteristic of a micro-fulfillment warehouse is automation. Precise inventory management and control (networking of micro hubs), error reduction, and automated returns management, along with the right warehouse management system (WMS), also require the know-how for autonomous retail systems .
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The prerequisites for micro-hubs already exist in Germany!
Converting the central warehouses of retail companies or logistics centers into micro-hubs would be possible without major problems. Initially, it would suffice to expand only a portion of the operation for micro-fulfillment and adapt it to the market using scaling solutions. For example, existing supermarket chains could be converted into micro-hubs, or a section of them could be restructured as a micro-fulfillment solution.
Concept: Autonomous and automated retail systems for online shops/e-commerce – Image: Xpert.Digital
Concept: Autonomous and Automated Retail Systems Shop/E-Commerce - Image: Xpert.Digital
Concept: Autonomous and automated retail systems for central warehouse logistics centers/e-commerce – Image: Xpert.Digital
Smart city with micro-fulfillment
At the same time, micro-fulfillment contributes significantly to the successful concept of smart cities.
Smart Cities represent the implementation of digital technologies in urban areas. The comprehensive networking of administration, utilities, households, businesses, and municipal facilities is central to this concept.
Proximity to the end customer reduces delivery costs. Last-mile delivery can be made more efficient and traffic-compliant by using alternative means of transport instead of a delivery van, such as drones or bicycle couriers. This would significantly reduce traffic congestion and substantially lower the consumption of fossil fuels.
What happens next?
Micro-fulfillment is not an off-the-shelf solution. Entire supply chains and scenarios need to be rethought and replanned. This requires several steps, from initial assessment to implementation using state-of-the-art technology. Reliable partners with experience are essential.
Logistics planners and managers are well aware of market changes. The success of current developments to date is primarily due to their foresight and years of planning for implementation. We can help them keep pace with these rapid developments and take the right measures. No one person has the solution alone, but together we can better see the opportunities for competitiveness and market development. Intralogistics is not some secret science known only to a select few. But there are few who can plan and design solutions individually, taking into account the customer's requirements and building on experience.
Talk to me. I am happy to assist you at any time.
Konrad Wolfenstein
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