Tips to Help You Master Your Micro-Fulfillment Strategy

Tip #1: Be Aware of the Potential Hurdles

While the future of micro-fulfillment centers looks bright, there are some serious considerations that must be made before a company goes all-in on a micro-fulfillment strategy. 

Inventory Needs

You will likely have to make considerable changes to your inventory strategy when starting out with micro-fulfillment. Goods will need to be available in the right supply and will need to be constantly restocked in the MFC as necessary. Because of this, other parts of your supply chain may be taxed in ways that they haven’t been previously. The last thing you want when opening an MFC is to be consistently out of certain high-demand items or overstocked with those that are only needed in small amounts.

Technology

Depending on how your company currently operates, an MFC could significantly affect the way you operate. This means that you will likely need to acquire new software and technology that can handle the needs of a micro-fulfillment operation.

For example, if a customer needs to modify a scheduled pickup time, your automated service needs to be able to respond appropriately. Furthermore, the automated technology you implement for your MFC may need to be specifically tailored for your company’s needs. Therefore, ensuring that the IT professionals you have on staff are appropriately trained on how to deal with the newly acquired MFC technology will be crucial to your success.

Up-front Costs

While there are different ways to open an MFC such as adding on a smaller building to an existing store, using a dark store, or opening a standalone MFC, each of these comes with a significant up-front cost. The exact amount you're looking at will vary based on a variety of factors such as location, size of the facility, etc.

But no matter how much or how little you have to pay up-front, be aware that this investment will likely pay off for many years to come if you ensure that you take all the proper steps in the early stages of the process.

Being aware of these potential hurdles before starting with your micro-fulfillment strategy is one of the best ways to address potential problems before they ever become an issue.

Tip #2: Clearly Define Your Micro-Fulfillment Strategy

As with any change in business structure, you’ll want to clearly define what you hope to achieve through your micro-fulfillment strategy. Micro-fulfillment centers can be an excellent way to serve customers and improve cost-per-order, but this is only true if the strategy is implemented thoughtfully. 

Before making this change to your business structure, be sure to sit down with your advisers and trusted team members to make sure that a micro-fulfillment is the best option for your current company needs and your future goals.

Tip #3: Work with a 3PL

Working with a third-party logistics provider, such as Redwood Logistics, as you navigate this new component of your business can help you more easily identify and overcome any issues you may encounter early on, or any that come up down the road. 

A good logistics provider will be able to pinpoint any weaknesses in your operation and help you make the necessary changes to ensure a successful outcome. This will provide you with more time to focus on other elements of your business and give you peace of mind that many of the tricky aspects of incorporating micro-fulfillment into your business are being identified and handled by experienced professionals.

Tip #4: Consider the Location of Your MFC

If you plan to open your MFC in a brand new location, ensure that you perform plenty of research on the surrounding area. 

At a minimum, you’ll want to identify:

• Who lives nearby.
• What the shopping habits and needs are of the local community.
• Taxes and other associated costs of opening a location in a given area. 
• Last-mile delivery considerations.

As was stated earlier in this post, opening an MFC is no small investment, but it can pay dividends in the long run. So make sure you aren’t too hasty when selecting the location for your facility.

Tip #5: Don’t Wait Too Long to Begin Formulating Your Micro-Fulfillment Strategy

MFCs started to become popular during the COVID-19 pandemic due to their ability to safely and conveniently serve customers. But once the dust settles and people begin to return to “normal”, it’s unlikely that consumers are going to ditch their newly realized love for online shopping and quick, contactless pickup/delivery. 

You don’t want to rush into anything before you’ve thoroughly weighed your options and determined the best course of action for your business. But at the same time, waiting too long to start your micro-fulfillment strategy may leave you in the dust of your competitors.

Ecommerce is here to stay, and micro-fulfillment centers are quickly becoming one of the best ways to serve customers, decrease costs, and improve the success of a business overall.