Hyper-local fulfillment takes flight

Back in March at Modex 2020, two of the common denominators present in many of the conversations I had were the effects of the ongoing labor shortage inside warehouse/DC operations and the emerging concept of hyper-local fulfillment, often referred to as micro-fulfillment.

Fast forward two months, and we find the labor shortage issue could take a rapid turn for the better over the next couple months as recovery kicks into gear, while the concept of hyper-local fulfillment has not only moved front and center in discussions within senior-level supply chain circles, but it’s become a vital link for many around the globe during the pandemic.

Hyper-local fulfillment relies on a highly distributed network of very small fulfillment centers located close to consumers that can profitably complete same-day orders—think of grocery orders that were fulfilled at your local store and either dropped at your house or ready for curbside pickup. The concept was a response to growing e-commerce fulfillment and shrinking brick-and-mortar sales and was gaining momentum well before the pandemic set in—which was certainly fortuitous.

I had the chance to discuss the concept with Dwight Klappich, vice president of supply chain research at Gartner. Klappich joined me along with panelists Ian Hobkirk, founder and president of Commonwealth Supply Chain Advisors, and Norm Saenz, managing director at supply chain consultancy St. Onge, in the 2020 Technology Roundtable I conducted for our sister publication Logistics Management.

On the heels of the pandemic, this year our panel chose to place their focus inside the four walls as so many of our warehouse and DC operations quickly found themselves on the front lines of meeting an unprecedented challenge.

And as Klappich explains, the pandemic situation has supercharged the need for hyper-local fulfillment—and now’s the time to nail down the process. “Customers want instant gratification, so the days of distribution centers being hundreds of miles from them are over,” he says.

To get started, Klappich suggests supply chain organizations need to do three things. To start, companies need to develop their internal network design capabilities, invest in the necessary technology and systems, and grow internal competencies around these systems.

Second, the organization needs to start modeling and mapping out processes to ensure they build the appropriate hyper-local fulfillment operation for their business. “And third,” says Klappich, “since warehouse management is a core component of hyper-local fulfillment, companies must stratify warehouse operations to develop the right warehouse management system (WMS) strategy.”

And, while retail is the most obvious industry to adopt hyper-local fulfillment, Klappich says retailers are not alone in the need to provide an assortment of goods at the best price with delivery as fast as possible—and through channel options available at the customer’s fingertips. “We’re seeing large food and beverage distributors, 3PLs and even telecoms move to this model as they recognize the need to move forward more quickly,” he adds.