Let's Take a Closer Look at Micro Supply Chains

In this article we’ll take a closer look at the concept of micro in Supply Chains, Warehousing/Fulfillment and Services

Micro Supply Chains are built for agility and are highly customer-focused operating models that prioritize flexibility and resilience over traditional Supply Chain strategies. With decentralized, flexible supplier contracts and manufacturing close to the point of purchase, these mini-operating models can quickly adapt to changing demands and market conditions.

By personalizing products and policies for specific customer segments, companies can efficiently respond to shifting consumer preferences while minimizing waste and excess inventory.

Multiple standard work processes can run concurrently within micro Supply Chains, reducing complexity and costs while increasing efficiency. As the business landscape continues to evolve, many experts are predicting that micro Supply Chains will play an increasingly vital role in Supply Chain management, allowing organizations to stay competitive and responsive in today's fast-paced, unpredictable and uncertain market environment.

Production and assembly of products are local to the end market, embracing the move towards "modularization," where products consist of common components that can be easily customized to suit the requirements of individual consumers.

Micro Supply Chains involve short-term contracts, making it easier to scale volumes up or down.

There is greater collaboration across industries and between competitors in micro Supply Chains.

Micro Supply Chains are highly flexible, enabling manufacturers to switch sources, production, and delivery at short notice, introduce new products, quickly, and scale volumes up or down swiftly to adapt to changes in demand.

They achieve a level of flexibility and resilience that traditional supply models cannot match, strategically speaking this makes them very well suited in today's uncertain and unpredictable global business environment.

Micro Supply Chains are based around customers, not processes, and guide companies to customize products, policies, production systems, flows, and systems around specific segments.

Micro-fulfillment, a component of micro Supply Chains, focuses on the last mile, using smaller facilities that are much closer to consumers for speedy delivery or pickup.

Micro-distribution, another aspect of micro Supply Chains, revolves around e-commerce and online orders, with smaller, more local branches of the Supply Chain network.

• Flexibility: Micro Supply Chains are highly flexible, allowing for alterations in production and delivery, scaling of volumes, and introduction of new products at short notice.
• Resilience: They achieve a level of flexibility and resilience that traditional supply models cannot match, making them a good strategy for uncertain times.
• Customer-Centric: Micro Supply Chains are based around customers, not processes, and guide companies to customize products, policies, production systems, flows, and systems around specific segments.
• Local Production: Production and assembly of products are local to the end market, embracing the move towards "modularization," where products consist of common components that can be easily customized to suit the requirements of individual consumers.
• Efficiency: Micro Supply Chains optimize the fulfillment cycle, making it more efficient and reducing the time taken from placing an order to delivering it.

• Cost: Setting up micro-fulfillment can be expensive, especially without the technology to track and manage decentralized inventory. It may not be worth the cost for companies with successful logistics solutions already in place.
• Technology Requirements: Mid-sized companies may face challenges due to the cost of space and technology solutions required for micro Supply Chains.
• Inventory Management: Companies need robust inventory and transportation management systems in place for micro-fulfillment to work, or they need to find a partner to handle a decentralized inventory approach.
• Limited Application: Micro-fulfillment may not work for big and high-ticket items, such as computers, TVs, furniture, and cars.
• Constant Inventory Replenishment: Due to limited storage capacity, micro-fulfillment centers require constant inventory replenishment, as they can only store a few days worth of inventory.

While micro Supply Chains offer flexibility, resilience, and customer-centricity, they also come with challenges related to cost, technology requirements, and limitations in application for certain types of products.

Micro warehousing, also known as micro-fulfillment, is a strategy adopted by companies and e-commerce sellers to make the fulfillment cycle more efficient by setting up small-scale warehouse facilities or storage centers near densely populated areas.

Micro warehousing involves the establishment of small, fully, or semi-automated fulfillment centers situated near the end customer, covering an area between 3,000 to 10,000 square feet. These centers can be part of a larger warehouse or exist as standalone units or satellite, and they are also known as dark stores, where order processing and packing are fully automated with minimal human interaction.

Micro warehousing facilities are strategically located in accessible places such as shopping centers, strip malls, or densely populated areas to enable seamless rapid delivery and offer customers the option to pick up their packages locally.

These facilities are highly automated, aiming to improve operational efficiency and reduce the time taken from placing an order to delivering it.

One of the challenges associated with micro warehousing is the need for constant inventory replenishment due to limited storage capacity, as these types of centers can only store a few days' worth of inventory.

Micro warehousing brings inventory closer to end consumers, speeding up transit times and allowing businesses to offer faster delivery times.

It optimizes the fulfillment cycle, making it more efficient and reducing the time taken from placing an order to delivering it.

It allows smaller companies to compete with larger ones by offering same- and next-day deliveries, similar to industry giants like Walmart and Amazon.

• Faster Delivery Times: Micro-fulfillment centers located closer to consumers enable shorter delivery turnaround times, which is crucial in today's e-commerce landscape.
• Reduced Costs: Micro-fulfillment can help cut down on operational costs such as rent, inventory storage, and shipping overheads within specific geographic areas, resulting in less resourceful time spent delivering products.
• Improved Customer Service: Quicker delivery times, fewer lost or damaged products, and increased convenience lead to a better service experience for customers, resulting in greater customer loyalty and repeat business over time.
• Efficient Use of Space: Micro-warehousing optimizes space utilization, making it a flexible, data-driven, and robotic solution that allows companies to leverage new technologies as they emerge.
• Hyper Local Fulfillment: Micro-fulfillment centers located close to where shoppers live dramatically reduce the last-mile delivery cost, meeting the increasing need for fast, efficient hyper-local fulfillment.

• High Upfront Costs: Establishing micro-fulfillment centers requires substantial investments such as leasing or buying warehouse space, purchasing or leasing automation equipment, and hiring staff, which can be daunting for some retailers.
• Dependence on Customer Locations: Changes in the market and existing customer profiles can hurt operations, requiring constant reassessment due to the system's high dependence on customer locations.
• Constant Inventory Replenishment: Limited storage capacity makes it challenging to quickly adapt to unpredictable changes in demand, as consumer demand is constantly changing, and micro warehousing may struggle to keep up with these shifts.
• Storage Capacity Limits: Micro-fulfillment centers have smaller distribution hubs, limiting the assortment of goods available and making inventory management more complex.
• Inventory Management Challenges: Decentralizing inventory through a network of micro-fulfillment centers makes inventory management more complex, posing a challenge for retailers.

While micro warehousing offers benefits such as faster delivery times, reduced costs, and improved customer service, it also comes with challenges related to high upfront costs, dependence on customer locations, and inventory management complexities.

Micro Supply Chain services refer to the provision of finite, decentralized, and agile operating models that offer flexible supplier contracts and relationships, as well as manufacturing closer to the point of purchase.

Micro Supply Chain services are highly flexible, allowing for altering production and delivery, scaling volumes, and introducing new products at short notice.

These services are decentralized, aiming to create as much value as possible by being as close to the customer as possible, allowing organizations to benefit greatly from their independence in times of crisis or rapid change.

They guide companies to customize products, policies, production systems, flows, and systems around specific segments, making them hyper customer-centric.

Micro Supply Chain services involve the production and assembly of products that are local to the end market, embracing the move towards "modularization," where products consist of common components that can be easily customized to suit the requirements of individual consumers.

These services encourage greater collaboration across industries and between competitors, fostering a more interconnected Supply Chain ecosystem.

They are based around customers, not processes, and guide companies to customize products, policies, production systems, flows, and systems around specific segments, aligning with the evolving demands of contemporary consumers.

Micro Supply Chain services offer a more relevant modern approach to Supply Chain management, emphasizing flexibility, decentralization, and customer-centricity. They are designed to meet the complex demands of contemporary consumers and provide a level of resilience and agility that traditional supply models cannot match.

• Faster Delivery Times: Micro Supply Chain services, such as micro-fulfillment, promise faster delivery times due to warehouses and fulfillment centers being located closer to consumers, reducing the delivery turnaround time, which is crucial in today's e-commerce landscape.
• Reduced Costs: These services can help cut down on operational costs such as rent, inventory storage, and shipping overheads within specific geographic areas, resulting in less resourceful time spent delivering products.
• Improved Customer Service: Quicker delivery times, fewer lost or damaged products, and increased convenience lead to a better service experience for customers, often resulting in greater customer loyalty and repeat business over time.
• Flexibility and Resilience: Micro Supply Chain services achieve a level of flexibility and resilience that traditional supply models cannot match, making them the right strategy for uncertain times.
• Local Production: Production and assembly of products are local to the end market, embracing the move towards "modularization," where products consist of common components that can be easily customized to suit the requirements of individual consumers.

• High Upfront Costs: Establishing micro-fulfillment centers requires substantial investments such as leasing or buying warehouse space, purchasing or leasing automation equipment, hiring staff, and more, making it a high-cost endeavor.
• Dependence on Customer Locations: Changes in the market and existing customer profiles can hurt operations, requiring constant reassessment due to the system's high dependence on customer locations.
• Constant Inventory Replenishment: Due to limited storage capacity, micro-fulfillment centers require constant inventory replenishment, as they can only store a couple of days worth of inventory, posing a challenge for retailers.
• Storage Capacity Limits: Micro-fulfillment centers have smaller distribution hubs, limiting the assortment of goods available and making inventory management more complex.
• Inventory Management Challenges: Decentralizing inventory through a network of micro-fulfillment centers makes inventory management more complex, posing a challenge for retailers.

While micro Supply Chain services offer benefits such as faster delivery times, reduced costs, and improved customer service, they also come with challenges related to high upfront costs, dependence on customer locations, and inventory management complexities.

Micro Supply Chains, micro warehousing (fulfillment), and micro Supply Chain services are all related to the optimization and streamlining of Supply Chain operations, although they have similar overall goals, they have distinct differences.

Micro Supply Chains specifically focuses on the process of delivering products to customers. They involve managing the flow of goods from the point of origin to the point of consumption, often with a focus on local or regional distribution.

Micro Supply Chains aim to reduce lead times, improve inventory management, and enhance customer satisfaction by optimizing the delivery process.

• Amazon's delivery network uses small delivery stations and lockers located in urban areas to store packages and facilitate last-mile delivery.
• Instacart's personal shopping service, partners with local retailers to source products and deliver them to customers within hours.
• UberRUSH is a delivery service that connects local couriers with businesses and individuals who need goods delivered quickly and efficiently.

Micro warehousing refers to the use of small, localized storage facilities strategically positioned to improve last-mile deliveries and reduce transit times.

It involves building a network of small fulfillment centers in densely populated areas to enhance the efficiency of order fulfillment and distribution.

Micro fulfillment centers are small-scale storage facilities used by e-commerce businesses to store inventory closer to end consumers, reducing costs and transit times.

• Amazon's Flexible Fulfillment Centers are smaller, flexible warehouses that can be easily set up and taken down as needed to meet changing demand.
• Walmart's use of empty store spaces to create mini-distribution centers for e-commerce orders.
• Coop, a Swedish supermarket chain, has opened a series of tiny warehouses in urban areas to serve its online grocery delivery service.

• ShipBob is a tech-enabled fulfillment platform that allows e-commerce companies to outsource their fulfillment operations to a network of micro-fulfillment centers.
• Deliverr is a startup that helps e-commerce businesses offer fast and affordable shipping by leveraging a network of micro-fulfillment centers and machine-learning algorithms.
• Darkstore is a company that operates a network of secret warehouses inside city limits, allowing for faster and cheaper delivery of online orders.

Micro Supply Chain services encompass a range of solutions and technologies designed to optimize specific aspects of Supply Chain operations.

These services may include inventory management, order fulfillment, transportation optimization, and last-mile delivery solutions tailored to the needs of small-scale or localized Supply Chains.

They aim to provide agile and efficient support for businesses operating within micro Supply Chain environments.

While micro Supply Chains focus on the overall flow of goods, micro warehousing, and fulfillment specifically address the storage and distribution aspects, and micro Supply Chain services encompass a variety of solutions tailored to the unique needs of localized Supply Chains.

• Snapfulfil is a cloud-based warehouse management system designed specifically for e-commerce fulfillment and micro-fulfillment operations.
• Bringg is a delivery orchestration platform that enables businesses to manage their fleet of drivers and vehicles for last-mile delivery.
• FarEye is a predictive logistics platform that uses artificial intelligence and machine learning to help businesses optimize their Supply Chain operations, including micro-fulfillment and last-mile delivery.

The future of micro Supply Chains, micro warehousing and fulfillment, and micro Supply Chain services appears to be promising, driven by the need for faster, more flexible shipping and storage solutions, and the growing demand for quicker service and ultra-fast last-mile deliveries. Micro-fulfillment strategies are gaining traction as a solution to the last-mile delivery challenge, particularly for e-commerce businesses.

The concept of micro-warehousing and fulfillment, with its just-in-time inventory management approach and a limited inventory stocked in high-demand areas, is gaining prominence as a means to facilitate ultra-fast last-mile deliveries. This shift towards micro-warehousing is expected to reduce capital spend on inventory, improve efficiency, and decrease resource wastage, making it a key likely component of the future of fulfillment.

Supply Chain microservices are poised for significant advancements, driven by AI and the potential of microservices in Supply Chain software to enhance efficiency and streamline logistics management. Microservices, characterized by their small, independently deployable nature, enable faster coding, reduced downtime, continuous improvement, and cost savings in Supply Chain software development. This approach allows for the creation of domain-specific services tailored to the specific needs of users in various industries, domains, or niches, offering greater agility and focus across diverse business requirements.

As the adoption of microservices architecture continues to grow in procurement and supply chain management software, it is expected to enable parallel processing and the growth of different functionalities critical to these key business domains, overcoming challenges associated with bulky and unwieldy platforms.

[And, if you need a remote Supply Chain specialist, Subject Matter Expert, Advisor, Consultant, Project Manager or know someone that does, please feel free to connect & message me directly on LinkedIn.]