Retailers Can Bring Automation into Their Micro-Fulfillment Centers (MFCs) with These Technologies

Retailers, more than ever, feel the pressure to deliver online orders to consumers at lightning-fast speed. To help make that happen, many companies are leveraging Micro-Fulfillment Centers (MFCs) that keep lower stock inventory levels and get orders out the door more quickly than traditional fulfillment centers. With 87% of retailers struggling with talent acquisition, automation is set to be a massive difference-maker in MFC success. In this post, you’ll read about five of the most promising technologies to carry out micro-fulfillment processes automatically.

Automated Storage & Retrieval Systems

Maximizing your available retail inventory space is essential to make MFC deployment worth the investment. The first MFC automated technology on the list, Automated Storage & Retrieval System (AS/RS) solutions, can make that happen.

This technology gives retailers and grocery chains high-density storage, allowing for Goods-to-Person (G2P) or Goods-to-Robot (G2R) applications. When AS/RS solutions are leveraged in large fulfillment centers, the technology usually picks full pallets from the racking system. But in a micro-fulfillment center, an AS/RS picks crates and totes, which are subsequently provided to workstation pickers to remove and allocate goods.

As retailers and grocers aim for faster and more cost-effective online offerings, AS/RS solutions will play a pivotal role. By 2027, AS/RS revenue in MFCs will reach around US$1.2 billion (check out the interactive chart).

For an in-depth review of some leading AS/RS vendors, please see ABI Research’s competitive assessment, Micro-Fulfillment Automated Storage and Retrieval System Vendors (CA-1312).

This table shows the market share for vendors providing Automated Storage & Retrieval System (AS/RS) solutions

Autonomous Mobile Robots

Another technology that enables retailers to automate their micro-fulfillment centers is Autonomous Mobile Robots (AMRs). By 2030, ABI Research estimates more than 3 million mobile robots to ship annually, up from 423,000 in 2022. Warehouses currently account for 55.5% of this market, with that proportion decreasing to about a third of the market as other verticals adopt mobile robots.

Instead of being a fixed inventory retrieval infrastructure, AMRs navigate throughout the MFC, picking items and totes for delivery to human staff. Below is a list of some of the benefits of AMRs in a micro-fulfillment center:

  • Multiple Tote Picking: Unlike most fixed AS/RS solutions, AMRs can stack multiple totes simultaneously. This helps manual MFC pickers get their orders out of the building faster because the retrieval technology doesn’t require as many trips back and forth.
  • Simplified Adoption Process: Retailers and grocery chains can take a gradual approach to AMR deployment in their MFCs. They can first introduce one or two AMRs to gauge the automation benefits before embarking on further technological investment.
  • Deployment Flexibility: Due to their size, adaptability to various racking, and flexible mobility, AMRs are viable in different types of MFCs. In addition to structured MFCs,  AMRs can be used in store-integrated MFCs and dark stores that don’t use a fixed AS/RS solution.

Item-Picking Robots

Item-picking robots are used to automate end-of-line picking and to build e-commerce orders. With this G2R technological solution, a robotic arm handles warehouse inventory.

Item-picking robots are either attached to an AS/RS, receiving totes from the storage structure directly, or an AMR delivers the totes to them. To ensure pick accuracy, the robotic arm of the item-picking robot uses computer vision and sensors.

On top of improving warehouse efficiency, item-picking robots help retailers build a shield around labor fluctuations. Technology that automates repetitive tote-to-tote tasks allows warehouse workers to concentrate on more important duties in the micro-fulfillment center. This is especially true for grocery MFCs because select items like fresh produce still require a manual picker for the final order.

Warehouse Management Systems or Warehouse Execution Systems

MFCs, like larger warehouses or fulfillment centers, need a Warehouse Management System (WMS) or Warehouse Execution System (WES) software. A higher level of automated equipment being used in MFCs necessitates a software solution that can provide greater visibility into warehouse operations. A WMS handles inventory control, order management, and auditing, while a WES directs and optimizes the flow of physical retail goods.

WMS and WES solutions provide the following benefits for micro-fulfillment centers:

  • Ensure granular visibility and precise flow of retail products. This is critical for accurate online order fulfillment and last-mile delivery.
  • WES solutions ascertain if automated technologies, such as stationery and mobile robots, are being used to their full potential or affecting the flow of operations.
  • Maintain real-time visibility and tracking of items at the unit level to mitigate stock damage or loss and reduce inventory shrinkage.

Artificial Intelligence and Machine Learning

When a retailer/grocer automates its MFC, more nodes are added to the supply chain, making stock allocation and data processing more complex. To help alleviate this problem, retailers are increasingly adding Artificial Intelligence (AI) and Machine Learning (ML) to their MFC strategies.

Retailers that leverage AI/ML for their MFCs see the following outcomes:

  • Stronger Replenishment Operations: Low inventory levels and high stock turnover is the nature of MFCs. This means coordination with the upstream retail supply chain must be spot on. AI can help here by providing more accurate consumer demand forecasts than a central planner can. From there, upstream supply chain operators are prepared for e-commerce demand fluctuations.
  • Learn Demand Patterns: AI software analyzes the throughput from individual MFCs, which helps retailers detect notable trends and enable automated storage systems to optimize inventory location. As a result, online orders can be picked faster and at a lower cost per unit.
  • Optimize MFC Connections: ML is an effective tool for optimizing the connection between deployed robotics and management systems. ML can allow the orchestration of the AS/RS, item-picking solutions, and AMRs to be continuously improved and adapted to meet MFC operational needs.
  • Streamlined Data Management: AI can take vast data analytics and turn them into key trends within an MFC. Consequently, retailers can respond to supply or demand spikes faster and make sound longer-term strategic decisions.

Will Automated MFCs Make Larger Fulfillment Centers Go Extinct?

Automated micro-fulfillment centers are not replacing larger fulfillment centers, but rather being used to augment current retail and grocery operations. An MFC deployment acts as another hub and spoke in the distribution model connected to the original network. As a result, this creates consolidation points for inventory and transitions stock from Business-to-Business (B2B) to Business-to-Consumer (B2C) on smaller delivery vehicles.

For more on the micro-fulfillment center market, check out the following resources:

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