CSCMP's Supply Chain Quarterly
December 15, 2017
Supply Chain Executive Insight E-Newsletter
Each week the Supply Chain Executive Insight e-newsletter will include brief articles about developments that are often overlooked by other supply chain publications. We will present you with summaries of the latest research as well as new ideas on how to make your supply chain operations more effective. And we'll offer commentary that sheds light on what's happening in supply chains today.
Sign up now!

Most Read Articles

News from our sister publication
DC Velocity
Forward Thinking

To fulfill increasing customer demands, go small

Comment
A "micrologistics" approach will allow companies to fulfill the needs of omnichannel retailing and customers' desire for next-day delivery, says a report from IDC.

Here's a word you may not have heard before: "micrologistics." At first glance, you might think it has something to do with the storage, transportation, and delivery of tiny things. But it actually refers to the size of the logistics network, not the products or items that move through that network.

According to the market intelligence and advisory service firm International Data Corp. (IDC), micrologistics refers to using multiple, localized network nodes, such as smaller regional warehouses, to position product closer to the end customer and rapidly fulfill demand.

There's no doubt that increasing the number of distribution nodes at the local level will cause supply chain complexity to skyrocket. But IDC argues in its new report "Implementing a Micrologistics Network—The Evolution of Supply Chain Fulfillment" that companies will have to make this move in order to respond to the complex requirements of omnichannel retailing and to fulfill the growing demand for next-day and same-day delivery.

"The utilization of the large, centralized [distribution center] approach to demand fulfillment has been a mainstay network design for some time; however, the expectation of rapid (same-day, next-day) delivery has placed quite a bit of strain on that traditional distribution network," writes report author John Santagate.

A micrologistics network has the benefits of improved responsiveness, greater agility, reduced delivery time, and reduced delivery costs, according to IDC. Additionally, it allows companies to segment their markets in a highly specific, geographical manner so that finished-goods inventory can better match local needs.

But creating this decentralized distribution network will require a major investment in people, processes, and technology. According to the report, an increase in the number of distribution nodes, naturally, will require a concurrent increase in people to operate and manage them. For companies to get a good return on those added employees, Santagate writes, they will need to ensure that people are working as productively as possible, and they will have to scrutinize human resources costs more stringently than in the past. Additionally, companies will need a robust integrated business planning (IBP) process that includes regularly scheduled network evaluations and network-optimization planning. All of this will be dependent on technology that can provide network visibility and accurate inventory and cost data.

More information on the micrologistics report can be found here.

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.


Want more articles like this? Sign up for a free subscription to Supply Chain Executive Insight, a monthly e-newsletter that provides insights and commentary on supply chain trends and developments. Click here to subscribe.

We Want to Hear From You! We invite you to share your thoughts and opinions about this article by sending an e-mail to ?Subject=Letter to the Editor: Quarter : To fulfill increasing customer demands, go small"> . We will publish selected readers' comments in future issues of CSCMP's Supply Chain Quarterly. Correspondence may be edited for clarity or for length.

Want more articles like this? Subscribe to CSCMP's Supply Chain Quarterly.