As we move beyond the pandemic, one of the positive trends kicking off during the supply chain turmoil peak of 2020 was the emergence of the Micro Fulfillment Center (MFC). Supply chains have made rapid seismic shifts to accommodate new business models during the pandemic and have gained a new attitude toward resilience and repair what remains broken. Technology exists to make incremental changes that will help manufacturers, brands, retailers and supply chains meet a new and uncertain future.
A 2017 report by Credit Suisse estimated that by 2022, 20% to 25% of malls would be closed. By 2019, retailers had already announced more than 8,600 store closures, and when COVID-19 arrived in 2020, that number skyrocketed. Retailers in every category have disappeared or become shadows of their former mighty brick-and-mortar selves.
There is hope on the horizon as smart retailers begin to breathe new life into their brands – and storefronts – by turning mall stores into showrooms.
The Mall of the Future may look very different to consumers and retailers. Department stores and branded stores will give way to exhibition centers. These stores may have one of each item in a range of sizes for customers to choose. Although it may take a few beats for consumers to get used to not having the item to take home, they will instead have an easy opportunity to visit a nearby mall to pick up their item. MFCs located near the Showcase Center may ship the item directly to the customer, possibly even the same day – due to last mile cuts.
MFC in retail environments is a reality and supply chain managers need to keep it on top of their minds because COVID has accelerated this trend. Retailers have the resources to make simple changes and will immediately benefit from being away from doing tasks in their stores. They also have options: set up their own MFC or contract with an MFC company that has an operation near the store location and has the technology to handle and fulfill the retailer’s inventory.
Automated super local scale MFC has the unique ability to lower e-commerce costs for retailers by reducing such costs related to warehousing, retrieval and picking, as well as last mile delivery and real estate.
The main advantage of MFCs is that automation can be achieved at the end of the supply chain, and this can be done seamlessly through deployment using RFID technology. Simply put, MFC operations focus on the basic metric, “Do I have the right product to fill this order?” Whether it’s by a person, via a barcode, or using vision automation, there’s always a pause that needs to happen to answer this question. RFID automatically checks for the right product for the right order without the need for this downtime.
Automation with RFID also solves front-end regeneration problems. The fact is that replenishing items from the manufacturer or local distribution center can still be done manually today. However, widely used technology such as RFID can open up an automated mechanism for picking items from the warehouse and “following them up” through the MFC and eventually the customer.
Implementing a comprehensive supply chain solution
A comprehensive RFID solution addresses the number one challenge of knowing where each product is physically located, at every point in the entire supply chain. The industry understands that RFID solves the problem of visibility into inventory, whether in stores, in a distribution center, or through a contract with MFC.
The language of supply chains is changing, and there is a new focus on what the industry calls “translation tools.” In an RFID solution, these tools include:
- RFID labels to distinguish products at item, case and/or pallet levels
- RFID readers such as tunnels, rooms, gates, vaults, covers and portable
- Software systems that allow product data to be captured, interpreted, stored, shared, and communicated (MFC likely has systems that are adaptive to read RFID tags)
The main advantages of RFID in MFCs
RFID technology improves the fulfillment of the retailer’s needs and is essential to meet the multi-channel requirements of local distribution in e-commerce. The advantages of using RFID in MFCs are significant, allowing for accuracy, immediacy and speed for local distribution. Most importantly, the RFID solution eliminates the need to validate requests through legacy processes, because RFID automates these processes. The best news is that with RFID, decentralized MFC distribution and retailer-generated last-mile operations, same-day delivery becomes an achievable goal.
RFID in MFC supports sustainability goals. Less distance traveled in the last mile requires less gas and, by reducing error, entails lower returns, which in turn means less use of fuel, crates of paper and other resources.
What’s next for MFCs
Prepare to see more and more MFCs in locations where customers are likely to reside. As e-commerce continues to play a more central role for consumers, retailers will be tasked with shipping to customers’ homes or opening customer-friendly financial finance centers. As MFCs gain prominence in the omnichannel race to retain customers, a comprehensive RFID solution will bring retailers across the finish line.