Analyst insight: As online shoppers demand greater convenience, retailers are seeking new and inventive ways to meet their busy schedules. Micro-fulfillment centers (MFCs) are rapidly gaining momentum as a low-investment, low-operating-cost solution to provide fast, local deliveries. There’s no shortage of automated solutions coming to market that promise unlimited order fulfillment capacity.
Today’s automated, small-format urban MFC solutions promise dense storage, high selectivity, fast installations and throughput capacity to meet the daily peak surges in customer demand. But in reviewing the offerings, it’s apparent that there are major gaps in designs that will limit the effectiveness of these solutions.
Here’s what the solutions are getting right and wrong — in both “dark store” formats and open retail environments.
On the positive side, MFC solutions succeed in their main goal: the ability to densely store and access an SKU-intensive, low-unit inventory so that a customer order can be quickly and completely filled. In this sense, the solutions being offered today meet that goal. Robotics and selective tote racking can quickly retrieve every item in a customer order and bring them to a pick station for fulfillment.
However, this design doesn’t consider the demands that customers might place on an MFC. Instead of seasonality, MFCs must resolve the daily swings in consumer schedules. Customers are going to place orders and expect receipt whenever it’s convenient to them, and MFC operators will need to meet these short demand spikes and deliver within expected service windows.
To do this, systems must minimize the automated tote presentations. Pick stations cannot become a bottleneck by allowing only a limited number of orders to be fulfilled simultaneously. Nor should they require the storage tote to be routed to multiple stations and pulled multiple times to fill many orders simultaneously.
Further, the typical automated MFC equipment being sold today includes static storage systems that are infrastructure intensive. While advertised for installation almost anywhere, a lot of designs require permits, in-rack sprinkler systems and insurance policies. They’re not easily portable, which can result in long lead times and limited flexibility. A successful MFC network needs agile systems for rapid deployment and portability to minimize real estate investment — and allow finetuning of the network as it’s built.
Today’s automated MFC systems still need work. They can’t continue with restrictive picking processes, and they must begin to include sortation components that allow for simultaneous fulfillment of large order numbers in a seamless operation.