Supply Chain Trends

3 benefits of micro-fulfillment centers vs. traditional fulfillment centers

Written by
Jonathan Porter
Feb 6, 2022
2:45 pm
minute read

The world has experienced incredible shifts in the last five years. The way we buy and sell things has changed, and due to the dramatic rise in e-commerce, fulfillment centers and how quickly a company can ship an order has come into the spotlight.

Balancing a traditional purchasing experience with e-commerce is still something the organizations are figuring out. Some companies are opting from micro fulfillment centers to ensure product gets to customers as quickly as possible with as little transport time in between. Others are doubling-down on the traditional regional distribution center approach.

The truth is, both have their benefits. In this new way of the world, it is helpful to know how one or the other might benefit your business, employees and customers. 

Micro vs. Traditional: What's the Difference?

You might be asking yourself what is the difference between micro fulfillment centers and traditional distribution centers. In both scenarios, your customer hopefully receives their product, but the main difference is efficiency and wait time.

Mirco fulfillment places small warehouses in densely populated areas, making product readily available to those who purchase in that area. It works exceptionally well for e-commerce solutions where customers are more likely to expect their order fulfillment as soon as they checkout. Thanks to retailers like Amazon, customers expect services like two-day shipping, which requires an extremely efficiency and turnaround from when an order is placed to when it ships out. 

Traditional fulfillment is what we all might be more used to. Regional distribution centers paired with a more standard brick-and-mortar approach typically utilize static replinishments, a supply and demand system set up that has been regulated to restock stores on a regular interval. A truck sets out on a certain day with the goods needed to replenish the shelves, and this replenishment might only take place once or twice a week. Still, the wait could be long for some stores, depending on where the distribution center is located in comparison to the retail store.

3 Benefits to Micro Fulfillment Centers

The goal in your supply chain is to meet the demand you have effectively and efficiently. Truthfully, both micro fulfillment centers and traditional fulfillment centers do this. They just go about it in different ways. So do micro fulfillment centers change the game?

1. Cost-effective

While it may seem that setting up smaller fulfillment centers will cost a company more, in fact, they can reduce costs. By fully automating more activities in the fulfillment center, you cut the cost of finding, packaging and delivering a product drastically. Especially when you can layer in additional services levels, for example, customer pick up. Many large companies have already placed smaller fulfillment centers into densely populated areas to expand reach and effectiveness. 

2. Fast service, happy customers

With traditional fulfillment, customers could be waiting days or weeks for their product depending on shipping or transit between the warehouses. With micro fulfillment centers, customers receive their goods they buy as quickly as possible, which makes micro-fulfillment particularly well suited for e-commerce. This builds customer retention, which in turn builds your business. 

3. Flexibility

Integrating micro fulfillment centers into your business strategy also allows for flexibility. Warehouse space is no longer an issue. Companies can look for buildings reduced in size, keeping a smaller amount of pallets of product. This makes it easy to map and track stock. It also means when purchasing is low in one area, space can be repurposed as warehouse space rather than fulfillment. Companies can analyze their markets and use the space they have in several locations as opposed to just one. 

The New Mode of Fulfillment

It is clear from the rise of large companies using micro fulfillment centers as a business strategy that this way is the new way of thinking. Customers are looking for products to be reliable and delivered fast, a level of effectiveness only micro fulfillment can offer. 

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