On-line retailers staffing up for the holiday rush are testing a critical hiring decision this year: man vs. machine. Ch.13 lists the options open to firms facing capacity issues, but robots introduce a new wrinkle. The Wall Street Journal (Dec.20,2010) highlights 2 firms with totally different staffing approaches: Crate & Barrel and Amazon. Both firms face a similar holiday crunch and e-commerce sales are up 12% overall, now accounting for 8% of US retail sales.
At Crate & Barrel, which sees holiday sales quadruple, the warehouse gets by with just double the number of employees, thanks to a cadre of 35 robots from Kiva Systems, a firm we highlighted in a recent blog. The machines carry racks of company products (8,000 SKUs) to people who pick and pack—no walking around the building at all.
By contrast, Amazon takes a more human-oriented approach. There, employees walk 18-20 miles a day down aisles lined with shelves, filling shopping carts with orders and carrying them back to packing stations. Amazon also quadruples its holiday staff—hiring a massive force of 11,500 seasonal employees at $11/hour. The firm tries to remove waste from the hand-picking process with weekly “kaizen” sessions. Amazon believes that people, not robots, give flexibility to handle its wider variety o
f products. It also uses hand held computers to guide workers to walk the shortest distance for each order, as described in an article in London’s daily, The Telegraph (Dec.21,2010).
“Which approach is better is a matter of debate in the 15-year-old e-commerce industry”‘ concludes The Journal. But Amazon does point out that it can now take orders up to Dec.19 and still guarantee Christmas delivery, a full 2 days later than last year.
Discussion questions:
1. Discuss the advantages vs. disadvantages of the human vs. robots staffing decision.
2. Where else has Kiva make progress in the fullfillment industry?