Consumer expectations around convenience are rising, causing more e-commerce retailers to rethink their logistics strategies. MHD sits down with the Körber Supply Chain APAC team to answer the most pressing questions around micro-fulfilment.
As the number of online shops continue to grow, so does the competition. While the pandemic may have accelerated the need for retailers to enhance and develop their online capabilities, a better and faster online experience was already crucial to retail success.
“Sitting on the fence is no longer an option. Businesses who were waiting to invest in better, faster and efficient fulfilment solutions now need to dive right in and start reaping the benefits of low-cost and scalable fulfilment technology on offer. These solutions prove the case for businesses to make quick decisions,” Rizan Mawzoon, part of Körber Supply Chain’s sales team says.
Aggressive investment in infrastructure by retail giants such as Amazon has shifted consumer demands from three to four-day delivery window to next day or even same-day delivery expectation.
One strategy that is starting to be utilised in Australia is micro-fulfilment. Micro-fulfilment – also at times referred to as dark stores, hubs or sorter DCs – refers to small-scale warehouse facilities in accessible urban locations. The strategic advantage is the same, high speed order fulfilment and close proximity to the end customer or their transport routes.
Some micro-fulfilment centres are purpose-built centres, but there is also the opportunity to occupy existing space such as car parks, stockrooms, office buildings or shopping centres. This is also happening in the US, with Amazon reported to be in talks with the largest mall operator in the country to repurpose sites into micro-fulfilment centres.
Closer to home, Körber is already working on a number of pre-built or purpose-built micro-fulfilment centres in the APAC region. “We’ve been looking at table-top or on-the-ground sortation using AMRs. We see that these type of requirements and expectations will be commonplace in the future,” Rizan says.
While many preconceptions regard this endeavour as a long and complex task, the Körber Supply Chain team has been developing capabilities in this field for some time. “We realised very early on that we had to have our team and response rate on point so that we can have a micro-fulfilment centre ready with perfectly designed operational workflows in a matter of weeks or days,” Tim Baracz, part of Körber Supply Chain’s sales team says.
For Nishan Wijemanne, Managing Director at Körber Supply Chain APAC and global leader for AMR Solutions at Körber, local and mid-tier businesses have the opportunity to get ahead and compete with the likes of Amazon.
“We’re giving our clients a 24 month-head start on Amazon penetrating the Australian retail market on a larger scale. We’ve been offering this kind of flexible and agile supply chain fulfilment for the last three years and we know how to make next-day and same day delivery a reality,” Nishan says.
Micro-fulfilment offers what Nishan says is a sweet spot for many retailers and e-tailers. “The flexibility, agility and low barrier to entry, coupled with compelling throughput increase rates of 400 per cent plus, is a very compelling case for this kind of approach,” he says.
The five options for approaching micro-fulfilment
by Ravi Nath and Samir Rafiq, part of Körber Supply Chain’s AMR solutions team.
1. Fulfil in existing environment
This is micro-fulfilment in its simplest form. Many grocery retailers are utilising this approach. They are utilising staff to move around the store with pick carts using mobile devices.
While this is relatively easy to set up and doesn’t require much dedicated space, it requires staff to move in and out of aisles pushing carts around and causing congestion in a store that is also used by customers.
If a retailer is experiencing a demand in increase, they need to rely on additional staff to fulfil orders and many retail staff are not able to help customers instore.
2. Use dedicated space
This approach allows picking staff to be separated from retail floor space, where clients are shopping. Allowing for a greater flow of traffic and allows for some ability to adapt to growing demand.
However, there are challenges with regard to holding all inventory in this space, so retailers may need to place their high velocity SKUs in this space and may need to pick from the retail floor space to handle remaining SKUs.
This has limitations when it comes to growing online demand.
3. Flexible Goods-to-Person
Using a dedicated space while utilising a higher density storage capacity with Automated Mobile Robots (AMR). Goods-to-Person technology allows for increased flexibility and allows a much higher volume of inventory in a smaller footprint compared to manual picking shelving.
This model also offers a much higher throughput level, with many designs offering approximately 500 picks per hour with only two operators.
There is also the added value of being able to scale up and add more workstations or storage space to cater for growing online demand.
This kind of mobile automation is very quick to implement and can often be done in a matter of weeks, compared to the long lead times of traditional fixed automation.
Introduce Assisted Picking AMR technology through Order-to-Person. Orders are grouped and sent on robots to the closest operator-managed zone and are presented. They then continue to the next pick location in that zone.
This is easy to implement into an existing retail footprint. It provides the capability to increase efficiency and fulfil growing online demand.
However, this can be difficult to balance the retail floor with the growing demand so that congestion is avoided. Specific aisle widths are needed to ensure that operators can pass with adequate clearances.
5. Hybrid model – Goods-to-Person and Order-to-Person
This solution offers ultimate flexibility. Dedicated space is limited allowing higher velocity products to be stores and fulfilled with an AMR Goods-to-Person solution, offering a high throughput. This is then coupled with AMR Order-to-Person solution to travel the existing retail floor space for the remainder of the pick.
To find out more, visit: https://www.koerber-supplychain.com/