The rise of ecommerce in recent years has led to numerous experiments in the supply chain. Some of them – including utilizing drones to deliver packages – turned out to be more difficult and tedious than expected. However, another of these experiments known as micro-warehousing can actually be beneficial in a few scenarios. Here’s what you need to know.
Trouble with the Supply Chain
Early spring 2020 is difficult for many online retailers. Companies are struggling to procure the goods they typically sell due to kinks in the supply chain like manufacturing facility closures, postal delays, and more. Between the pandemic-fueled delays and Amazon’s continuous ecommerce disruption, online retailers are utilizing a variety of techniques to overcome supply chain problems as they relate to the warehouse.
It’s important to note that many of the warehouse management systems (WMS) available to businesses today focus almost entirely on the four walls of the warehouse, but the truth is that warehouse management extends far beyond that – the products currently in vehicles or on trucks, the ones coming off the assembly line, the ones being imported, and more.
Why Inventory Management Matters
Inventory management has a direct effect on the relationships that companies build with their customers. Failing to stock enough product, for example, leads to understock, which can cause order backlogs and frustrate customers who likely already paid for items. In turn, frustrated customers send emails or call your customer service team, which creates a backed-up queue and delays responses. By the end of the ordeal, more customers than ever are frustrated, and it’s all because of a lack of inventory that wasn’t accurately predicted.
The term micro-warehousing refers to a system in which much of the fulfillment ecosystem lies outside of the main warehouse walls. It involves opening very small warehouses in places like shopping centers and strip malls, which allows for seamless rapid delivery and gives customers the option to pick up their packages locally. Micro-warehousing is already in demand by business and consumers alike. True next-day delivery options are becoming necessities for any retailer who expects to keep up with the most disruptive competitors.
Compete with the Giants
Though not all industries can benefit from micro-warehousing due to climate control or even security needs, others – and primarily companies offering very common products found on thousands upon thousands of websites – can utilize it to keep up with the competition. While Walmart, Amazon, and other online giants gain the favor of consumers with same- and next-day deliveries, micro warehousing is currently one of the best options for smaller companies to compete. Alternatively, outsourcing order fulfillment services can be another great choice as it gives companies access to lower shipping rates, scalable warehouse space and security, and more.
Micro-warehousing is a great option for certain companies in specific industries as it gives them the opportunity to compete with companies 100 times their size. However, it is not without its limitations, and it does have a few drawbacks, so be sure to consider this and its alternatives – including outsourced order fulfillment – very carefully.