BY VICTORIA KICKHAM, SENIOR EDITOR
ORDER FULFILLMENT
Material Handling
Creating a network of small satellite fulfillment
centers can ease transportation, labor, and
automation challenges for retailers—all while
raising the bar on the customer experience.
IN THE NEVER-ENDING QUEST TO SPEED UP ORDER
fulfillment and delivery, material handling systems integrators and supply chain consultants are helping retailers
develop satellite fulfillment strategies designed to keep
smaller, local distribution centers stocked with a steady flow
of items from larger, strategically placed “mother ships.”
Driven by a rise in e-commerce and the associated consumer demand for near-immediate delivery, the satellite concept is set to reshape the way many retailers are designing
their fulfillment networks.
“The thought process is to get the inventory as close to
demand as possible with the least impact on transportation
costs,” explains Carlos Ysasi, vice president of systems inte-
gration for material handling solutions company Vargo.
“You are trying to reduce the latter while at the same time
being able to compete in the Amazon world, with same-day
processing and next-day delivery.”
The satellite concept—in which a retailer operates a series
of regional master distribution centers that serve a larger
network of small DCs located close to consumers—can
help deliver on that promise by placing inventory closer to
customers and easing challenges associated with last-mile
delivery, Ysasi adds. The team at Vargo refers to the model
as an “in-market DC” strategy that allows retail companies
to utilize smaller local spaces in new ways and more easily
manage transportation, labor, and automation challenges.
Ysasi offers an example from the labor side of the equation:
Retailers can utilize their physical stores or small warehouses as satellite DCs, giving them access to a local labor pool
for picking and fulfillment jobs while easing the challenge
of hiring such workers at larger facilities in hub markets
(where third-party service providers and others may have a
lock on such employees).
“Companies can experience 18 times more volume during
peak season,” explains Art Eldred, Vargo’s client executive
for system sales. “For the mother ships [large DCs], trying
to hire all those additional workers is tough. If you change
Fulfillment
strategies
get local
