The Paradigm Shift to NanoFulfillment®

Having been involved in many “Ice Castle” mega-fulfillment centers over the years, I often wondered why tens of millions of dollars were being spent on high-automation, only to handle much less than 100% of the required material flows inside the FC. It is rare that one form of automation will solve all the flow needs within a huge center. The end result was extraordinarily complex software and buffers needed to ensure right-place right-time delivery of the eaches. The expensive support resources required to execute and optimize the system is almost always overlooked and can drain your bank account for years to come.

With the dramatic rise in E-Commerce even before Covid-19, only a few of the top 10 retailers could afford to drop buckets of cash on these massive systems. And in a world post-Covid-19, you can expect that companies will have to operate on a tighter budget, thus limiting their spending on new automated systems We can therefore reasonably expect a shift to smaller, more affordable, high-performance automation.

We all started automating fulfillment systems with Pareto designs; one tech for the AA moving sku’s, one for the A movers, another one for the B’s and yet another for the C’s and long tail of slow-moving articles. Pareto designs are wonderful when slotted correctly and re-slotted often based on cube and velocity. That effort to ensure you have the correct sku in the correct technology at the correct time is immense and often is the first thing to slip when op’s gets busy. It also took some heavy lifting to get the software tweaked to orchestrate the movement of goods, so they all arrive at a consolidation point at the same time to fulfill the individual orders.

Then came the “matrix” solutions of any sku to any pack/put station at precisely the correct time. Again, millions of dollars for software, hardware and an even more urgent need to manage the system continuously. As system complexity grew, so did their acquisition and support costs.

And these mega-centers are so big, that they can’t be located near their targeted audience because either the space doesn’t exist, or the space is unaffordable. They find themselves in large fields near small towns…miles from the customer. What is the benefit of being able to possibly fulfill and order within 1h, but not deliver it? I am simply not leveraging my fulfillment speed and capability, as I still face the challenge of being in a sub-optimal location. And above all, these systems are too expensive! It’s comparable to flying in the late 50’s. While it was an amazing experience for those who could afford it, most people simply could not. Small to mid-sized businesses have been categorically ignored by large automated system suppliers for decades. That is about to change!
Now, come with me to the not-so-distant future where these Mega-Centers are like dinosaurs. Monuments to Supply Chains Past. Inflexible and averse to change.

These centers are too far from their clients and unable to make a healthy and sustainable profit when sending hundreds of delivery vans to cover a 200+ mile radius. Next day delivery turned to same day which has driven a demand for delivery within hours of order. This model is not sustainable or possible in any way when you are located many miles from your clients.

What if?

What if these mega centers switched back to case picking? The average worker can sling about 100 cases per hour, average case = 8 units, That’s 800 eaches/hr. (About the same as a high performing, high cost and complex GTP …plus you still need the FTE)!
These Mega-Case Centers can pick cases at a high rate, fill up less vans, and deliver directly to a network of neighborhood fulfillment centers…hyper-local and with a very clear understanding of what my particular neighborhood buys every day, every week and every peak. Let the de-trash and decanting occur at a slower pace in a smaller way right at the localized FC.

Technology comparison