Micro fulfillment is a strategy used by retailers to improve the efficiency of the e-commerce order-fulfillment process. The objective is to stock the fast-moving SKUs in multiple small storage facilities situated close to the end customer. Micro fulfillment facilities make use of secondary real estate, i.e. lesser quality facilities that are cheaper and smaller in size with a layout optimized for pick and pack operations.
There are two main considerations with regards to micro fulfillment, namely optimizing cash flow and minimizing stock-outs. If an out of stock does occur, the product can be replenished quickly from the corresponding MFC. Retailers need to know their stock levels at each location and where the demand is. Moving products from one location to another, at the correct time, and choosing the most economically viable route can be challenging.
Doing micro-fulfillment is trivial, doing it in a cost-effective manner is very difficult. Managing this concept requires ongoing predictive optimization to ensure the process is profitable. The complexity and diversity is contingent on a wide variety of local situations and on the digital bridge between the retailer and the micro-fulfillment player.