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Top 5 Challenges (and Solutions) on The Road To Building Effective Micro-fulfillment Centers

It is hard to imagine a time when deliveries for online purchases took over two weeks!  Customers today are conditioned to expect faster deliveries. Businesses are pushing the envelope to identify ways to reduce the delivery timelines from days to a few hours. 

In today’s business world, companies need to provide a wide range of products to choose from and ensure quick delivery to meet the growing demand for convenience among customers. Businesses that can offer fast deliveries have a competitive edge over others, as they can deliver their products to the customer faster than their competitors.

This need for faster deliveries has led to the rise of micro-fulfillment centers. These MFCs bridge the gap between where the order is being shipped and the customer’s doorstep. Last-mile delivery, however, incurs the most costs among all the delivery stages and stands at an estimated 40-50% of the entire supply chain cost. MFCs help businesses minimize these costs from regional/central distribution centers to local distribution centers.

Navigating the MFC challenge 

MFCs are now essential to drive competitiveness, as they can provide companies with information regarding the purchasing patterns of people within a small geographical location. Reduced fulfillment cycles, faster deliveries, and greater customer satisfaction are some of the consequences of having a robust micro-fulfillment center. 

While MFCs operate as warehouses, they are much smaller in size. They can be standalone centers or can be a part of a large warehouse or dark stores. 

MFCs create hyperlocal delivery ecosystems that help businesses meet customer demands but can only do so if they address some key challenges that emerge when building micro-fulfillment centers. 

These challenges are:

Limited space 

Space is one of the biggest constraints of MFCs. These centers are usually between 3,000 to 10,000 sq. ft. Some micro-fulfillment centers can also be as small as 500 sq. ft. 

Given the size of these centers, increasing storage density poses a challenge. It is also important to make use of the space most efficiently and enable vertical stacking of products. 

Limited floor space and the inability to increase inventory and stock can impact order delivery and lead to delayed or missed shipments. 

These small spaces need intelligent automation solutions that are designed to address their unique needs. These centers must optimize space utilization and enable vertical stacking of more than 8 feet. 

Labor shortage

Micro-fulfillment centers not only improve delivery timelines, they also promise cost benefits. However, in the absence of the right automation environment, most of these centers remain highly dependent on manual labor. This dependence leads to higher operational costs.

Human error can lead to order inaccuracies and impact customer experience negatively. Manual operations are also more time-consuming and effort-intensive. Identifying, sorting, packing, and shipping the products becomes more draining on time and resources and does not deliver efficiencies at scale. 

Automation solutions are essential to drive operational effectiveness and increase the velocity and accuracy of operations. Automation and robotics increase worker safety and prevent injuries that could emerge from lifting heavy loads or falls. 

Robotic solutions designed for small spaces are the best solution to combat labor shortages, ensure labor safety, and divert human resources to more impactful and strategic tasks.

Delivering high throughput 

MFCs need to be enabled by the right technology solutions to deliver high throughput. These spaces need clever automation solutions that provide clear insights, increase efficiency, and accelerate packaging and shipping processes while negotiating the limitations of space and manpower. 

Traditional automation solutions do not work for these spaces since they are designed keeping the larger warehouses in mind. These solutions, quite literally, do not fit into the MFC space. 

MFC automation solutions need a smaller footprint. Unlike goods-to-person systems and autonomous mobile robots that are space intensive and cannot work in a small sub-10,000 square foot space, MFC automation and robotics have to optimize warehouse space and reduce order processing times. 

They also must be fast, agile, reliable, exhibit scalable characteristics, work with standard racking,  and enable vertical space utilization of over 8 ft. 

Batch and discrete order processing

An effective micro-fulfillment center allows businesses to toggle between fulfillment against orders with short turnaround times and batching orders for efficient order processing.

Given the limited space and inventory, achieving this can be difficult without customized automation solutions. Micro-warehouse operations also need to be nimble to adapt to micro-trends in demand and therefore need the automation solutions to be integrated with the demand planning engine. 

They should also enable dynamic adaption by placing SKUs differently and managing different types of order orchestrations based on demand patterns can pose a challenge for most MFCs. 

AI and ML become crucial enablers of these capabilities and help MFCs manage batch and discrete order processing by analyzing data to predict demand, improve forecasting, and optimize operations. The technology should also intelligently combine different modes of SKU picking for faster and more effective mixed order fulfillment to deliver high throughput and delivery speed. 


Achieving the ROI on automation and technology investments to optimize operations is essential to build an effective micro-fulfillment center. However, most of the solutions available are meant for large warehouses. Traditional automated storage and retrieval (ASRS), goods-to-person systems, and autonomous mobile robots are not suited for this space. 

Mapping automation needs, identifying whether they need to work with predictable SKU profiles or with the wide disparity in the order SKU mix, and implementing modular and scalable solutions that grow with the needs of the business are essential for ROI on automation investments. 

Solutions need to have a lesser installation time and should place no demands for floor space preparation. These, coupled with the right technology and processes can create an effective micro-fulfillment center.

To sum it up

Micro-fulfillment centers are an essential cog in the wheel to drive timely, accurate, and reliable order fulfillment.  In today’s unpredictable business environment, where customer demands are constantly changing and trust is a critical factor, well-designed fulfillment centers can help businesses navigate fluctuating consumer choices, manage the variety and volume of SKUs, and ensure rapid packaging and last-mile delivery.

Traditional automation systems and platforms are not equipped to manage the intricacies of the micro-fulfillment ecosystem. Micro-fulfillment centers need to be designed to optimize operations and need the support of experienced partners who can validate assumptions with digital twins, design and deploy the automation ecosystem, and allow businesses to automate fulfillment needs fast. Talk to us to understand how to launch your MFC faster and with minimal civil work or disruption to your existing racking.

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