The impact of the omni-channel revolution is being felt across every element of business today including warehousing and fulfillment strategies. Customers today are more connected, more informed, and more demanding than ever before, and as a consequence, manufacturers are forced to reevaluate their fulfillment strategies in order to meet ever increasing demand for fast, accurate, and low cost delivery of product to the customer. One element of this adaptation is for manufacturing firms to evaluate the viability of a micrologistics network.
In addition to rapid, accurate, and low cost delivery, customers are also demanding a higher variety of products from which to make their purchasing decisions which is contributing to SKU proliferation throughout the manufacturing value chain and a shortened product life cycle. For the manufacturing firm, this shift in demand pattern and demand fulfillment requirements is driving a need to re-evaluate the fulfillment network in order to better support a greater mix of product, with 1-2 day delivery times, and still maintain a profitable business.
One approach to addressing the fulfillment challenge, that we are seeing an increased interest in, is the notion of the micrologistics network. Essentially, a micrologistics network is one that is characterized by a greater number of regionally located fulfillment centers that carry a product mix that is more aligned to the demand patterns of the geography in which it resides. For years, the concept of planning inventory at an aggregate level in a centralized location has been the mantra. Unfortunately, the market today is characterized by disruption, and there can be no doubt that innovators such as Amazon.com have figured out a way to better serve the demands of the consumer and thus disrupt the market in regards to fulfillment. Firms should now be evaluating their options to reconfigure their fulfillment network to provide better customer service with a better cost structure.
The complex and dynamic nature of supply chain fulfillment make this a subject with relevance across the value chain with heavy emphasis on manufacturers, solution providers, and third party logistics providers. In the IDC FutureScape: Worldwide Manufacturing Supply Chain 2015 Predictions, we predict that "by 2017, 50% of manufacturers will explore the viability of micrologistics networks to enable the promise of accelerated delivery for select products and customers". At IDC Manufacturing Insights, we believe that this step in the evolution of fulfillment networks will have a broad impact across the supply chain and will require significant collaboration throughout suppliers, manufacturers, and distributors.
In our IDC PlanScape: Implementing a Micrologistics Network - The Evolution of Supply Chain Fulfillment (document #256929) we take a look at what defines a micrologistics network, who they key stakeholders are and what is the impact on each stakeholder, why it is important for firms to begin exploring the idea of micrologistics network, and most importantly how to approach the idea. The document will serve as a starting point for those firms that considering reconfiguring their fulfillment network into a micrologistics network, but also covers some key points that solution providers should consider in the development of products to support manufacturers, and some key points that 3PL's need to consider when planning to support an evolving manufacturing fulfillment model.