Supply chain processes like manufacturing, packaging, and distribution face constant changes due to ever-evolving technology, global fluctuations in supply chains, and constant changes in the demands and expectations of end users. Distribution and fulfillment centers are no exception; managers of these types of businesses must find ways to continually adjust their processes to keep up with an ever-changing industry. One solution to this challenge is micro-distribution.
After years of being the latest trend in supply chain solutions, micro-distribution has become an invaluable way to create a faster, more flexible distribution process. Micro-distribution is the result of modern technological innovations as well as the evolution of customer expectations. Learn more about how micro-distribution is changing the supply chain, where it came from, and the effects it has on the future of distribution with this overview.
What Is Micro-Distribution?
Traditionally, companies have relied on expansive warehouses or distribution centers to serve as a central location for all products moving through their supply chain. These central warehouses have the space to house and process a massive inventory of products and materials. However, with that size comes a lack of flexibility; even the most adaptable centralized distribution centers are far away from the majority of end users.
Micro-distribution comes from the effort to deliver products to the customer in less time. Therefore, micro-distribution and micro-fulfillment centers offer more localized services closer to consumers. The focus of micro-distribution revolves around e-commerce and online orders; with smaller, more local branches of the supply chain, businesses can decrease transit times and offer more reliable last-mile services.
What Sets Micro-Distribution Centers Apart?
Size is the key difference between micro-distribution and fulfillment centers and their traditional counterparts. Instead of large structures that can handle a vast amount of goods, micro-distribution centers often exist in small properties under 10,000 square feet. Because of this smaller space requirement, businesses can set up micro-distribution and micro-fulfillment centers closer to their end users. This smaller, decentralized approach allows micro-distribution centers to move orders quickly through the last steps of the supply chain and create faster, more reliable deliveries.
E-Commerce Defines the Industry
The rise of e-commerce has led to a lot of changes in the way businesses manage their supply chains. As online shopping grew more popular, companies looked for ways to make their e-commerce fulfillment more convenient and reliable for customers.
One of the first major steps that set micro-distribution as a normalized process was Amazon’s promise of two-day shipping. The ability to receive an incredible range of items on such short notice drew many more customers to online shopping.
Other companies began to search for ways to match or even exceed the convenience of two-day fulfillment. Meanwhile, customers grew accustomed to short and reliable shipping processes. Small, flexible, and decentralized distribution and fulfillment centers became a reliable way to meet the growing demands of online customers.
COVID-19 and the Supply Chain
E-commerce was already popular, but the COVID-19 pandemic made it essential. Lockdowns and social distancing pushed consumers to order more products online than ever before. E-commerce expanded from goods such as gifts and clothing to everyday essentials like groceries. This led to an increased demand for fresh, perishable items, which in turn called for a process that could rapidly replenish these goods. The construction of closer warehouse locations has allowed for decreased transit times and makes it easier for customers to access such products.
At the same time, the COVID-19 pandemic caused major supply chain disruptions around the world. Businesses struggled to keep up with drastic supply and demand fluctuations, but localized supply chain branches created efficient and flexible solutions for getting goods to customers as quickly as possible in the face of these challenges.
Smaller Footprint, Greater Mobility
Improved speed and flexibility are two of the greatest advantages of micro-distribution. To achieve these qualities, micro-distribution and micro-fulfillment centers take advantage of automation and other cutting-edge equipment; advanced technology like robots and software tracking empowers greater mobility and efficiency, even in a smaller space. Micro-distribution centers benefit greatly from automated solutions such as fully automatic wrapping machines that can move products quickly and securely through flexible product packaging lines.
The Importance of Location
Strategic location also helps micro-distribution centers find success. Businesses carefully choose essential, densely populated areas for their micro-distribution centers. A strategic location puts these centers closer to end users and customers.
It’s also common to establish micro-distribution centers in unused or abandoned retail locations, such as old shopping malls. These properties serve as convenient locations that put the distribution centers close to customers without taking up a lot of space or costing businesses the time and money of a completely new construction.
Flexible Contracts and Suppliers
Another way micro-distribution boosts flexibility is through the types of partnerships and contracts these centers establish. By choosing smaller, more regional suppliers and other partners, micro-distribution centers shorten their supply chains and create an even more consolidated distribution and fulfillment process.
Micro-distribution facilities also tend to create shorter and more flexible contracts. This allows businesses to ebb and flow as supply and demand changes in their industry. Local partners and contracts give micro-distribution centers the ability to quickly fill in gaps and overcome various short-term supply chain challenges when the need arises.
Serving Urban and Rural Communities
Micro-distribution has the potential to serve more customers than ever before. By implementing a network of multiple small distribution centers, businesses can expand their reach and deliver products to more locations and more consumers.
While micro-distribution brings ease and convenience to urban consumers, it also helps businesses reliably serve rural communities that are traditionally ignored or forgotten in these types of processes. With micro-distribution networks, businesses can stretch their supply chains further and bring a new level of service and convenience to urban and rural communities alike.
Micro-Distribution and the Future of Supply Chains
Supply chain best practices are continuously evolving and adapting to changes in global supply and demand. Micro-distribution changes the supply chain by taking advantage of modern innovations to create more control and flexibility in a less-than-certain industry. Pairing micro-distribution centers with other solutions across your network gives you an adaptable and lasting supply chain that allows your business to keep serving customers even in the face of unexpected changes and challenges.