automated warehouse – The OM Blog by Heizer, Render, & Munson

OM in the News: CVS Aims to Make Inventories Leaner

CVS Health is restructuring its distribution network, reports The Wall Street Journal (Aug. 7, 2024), as the pharmacy chain seeks to speed up the flow of goods to its stores and online customers. It has closed 3 of 33 warehouses, automated one of its largest distribution centers and is opening a building dedicated to bulky items this fall, part of a multimillion-dollar plan to upgrade its supply chain to cut costs and improve profit margins.

The chain’s efforts in distribution operations that handle goods from general merchandise to pharmaceuticals are meant to” (1) help restock its stores faster and (2) free workers to help customers in stores and fill online orders for pickup and delivery.

CVS operates more than 9,000 retail locations nationwide, and 85% of the U.S. population lives within 10 miles of a store. The company wants to use that proximity to shoppers to its advantage. CVS has been squeezed by rising drug costs and lower foot traffic while sales of Covid vaccines and test kits have waned.

CVS joins other retailers, including Target, Walmart and Walgreens, that have focused on fulfilling more online orders from stores to speed up shipments, streamline inventory and make more use of bricks-and-mortar sites. It recently spent millions of dollars to automate a 1.2 million-square-foot warehouse in N.J. serving stores in the Northeast.

The automated storage and retrieval system there brings items bound for stores directly to workers, who no longer must walk warehouse aisles to retrieve merchandise. Workers then hand the products to an automated system that sorts items into bins based on destination.

CVS previously would send half-empty bins to stores throughout the day, taking up space in stores as well as workers’ time as they unpacked multiple shipments. The company now waits until bins are full and then groups them by store. The change has reduced bins it ships containing beauty products by 42%.

The tactic has also trimmed the time it takes to replenish a store down to a single day rather than several days. Moving merchandise faster allowed CVS to cut $2.5 billion worth of inventory since 2022. CVS plans to double the size and volume of the new warehouse system next year and roll the technology out across other warehouses.

Classroom discussion questions:

Why is CVS trying to become “leaner”?
What is the goal of the new automated warehouse in N.J.?

OM in the News: Dancing Pods at Amazon’s Warehouse

“At Amazon’s fulfillment center in Carteret, N.J., the workers don’t walk to and from shelves,” writes The Wall Street Journal (Sept. 5, 2023). The shelves come to workers. (Click on the 7 second video below). About 45,000 pods—the name given to the four-sided shelving units—are shuffled around the 1.3-million-square-foot facility on self-driving units that hoist and carry them to workers in a kind of choreographed waltz. Those workers either fill the pods with arriving goods or empty them to build packages for shoppers.

Most of the facility’s 3,000 employees, including the top manager, aren’t allowed to enter that area, even to lean over to retrieve an item they have dropped. The specialists permitted to move amid the shuffling units must don a specialized vest that syncs up via radio and acts almost like a sort of electric force field, helping direct the pods around them. An AI system situated in the cloud helps oversee the pods’ movements.

Amazon calls the approach of moving the shelves a “goods-to-person” strategy. The design, which uses artificial intelligence and sensors, is meant to promote a mix of efficiency, ergonomics and safety, with the thinking that it is ultimately better to have shelving units, rather than employees, scurrying around its cavernous facilities. Globally, Amazon has about 750,000 autonomous robots to move around its shelving pods. Though most operate in specialized zones, its newest design is intended to mingle with workers and move around them as though navigating a cocktail party.

Amazon said its lost-time injury rate has fallen 69% from 2019 to 2022. Last year, lost-time injury rates were 21% higher at sites that didn’t use robotics technology. Proponents of the technology say it can help prevent injuries that can be ruinous for workers and costly for employers. Some workers say they find the technology creepy, but others say it can keep them out of harm’s way, preventing some of the costs—financial and otherwise—associated with a workplace injury.

Amazon has ample resources to put toward safety initiatives—the company has about 8,000 staff who work on safety matters.

Classroom discussion questions:

Why is Amazon changing the warehouse order-filling process?
What are the advantages and disadvantages of this new “moving shelves” approach?

OM in the News: Robots Go to Bat in Warehouses

Automatons from Nimble Robotics help fill orders at Puma North America’s warehouse

More robots that can pick up separate objects are moving from laboratories to warehouses as the technology improves and labor-strapped logistics operators look to automation to meet surging demand. Businesses are using software-powered robotic arms to sort clothing and e-commerce parcels, pack bread and industrial supplies, and pick electronics and consumer products from larger bins to prepare orders for delivery.

The technology isn’t replacing human workers anytime soon. But the latest steps show warehouse robots are evolving as the computer vision and software that guide them (see Chapter 7 in your Heizer/Render/Munson text) grow more sophisticated, allowing them to take on more tasks that have been largely done by people.

Puma is using several robotic arms to assemble orders of clothing and shoes at a distribution center in Torrance, Calif. The technology uses a combination of cameras, grippers and artificial intelligence to pluck items from bins that another automated system delivers to workstations usually staffed by people. Remote operators are on hand to assist if the robot has trouble picking up an object. The robots perform with about 99% accuracy, about as well as their human counterparts, and can run for two shifts straight.

Interest in robotic picking is up considerably in the pandemic as e-commerce orders have surged and competition for workers intensified, accelerating broader demand for logistics automation, writes The Wall Street Journal (Jan, 11. 2022). Last year SB Logistics opened a highly automated fulfillment center in Ichikawa, Japan. The center uses robotics technology to pick and pack items including electronics, household products and canned goods. The facility stores about 50,000 products, with robots doing about half the picking, and aims to eventually automate all operations.

Some businesses are deploying high-tech mechanical arms for other distribution work. Bimbo Bakeries uses robotic grasping technology to pick and pack bread. GXO Logistics is using a robotic arm equipped with camera vision to help speed up the order fulfillment process at a warehouse in the Netherlands.

Classroom discussion questions:

What are the OM advantages of using robots in warehouses?
The disadvantages?

Video Tip: The Automated Warehouse of the Future

It is called “the hive,” or “the grid” — a huge structure that fills a warehouse the size of 7 football fields, and seems to be a huge chessboard populated mostly by robots. There are thousands of them, each the size and shape of a washing machine, and they wheel about, night and day, moving groceries. Their job is to be cheaper and more efficient than humans.

The hive-grid is the creation of Ocado, a British online-only supermarket that’s made a name for itself designing highly automated warehouses and selling the tech to other grocery chains. Ocado’s latest operation processes 3.5 million items or around 65,000 orders every week. It’s an example of the wave of automation hitting countries around the world. The tasks being undertaken by Ocado’s bots are so basic they’re best described by simple verbs — “lifting,” “moving,” “sorting” — and that means they exist in various forms in a range of industries.

Imagine a huge machine, with groceries going in one end and shopping orders coming out the other. Humans do the unpacking and packing, while in the middle, robots sort and rearrange this vast inventory 24 hours a day. Individually, the robots aren’t intelligent; they don’t make decisions for themselves. But their actions are all coordinated by a central computer. This means the robots can be used as efficiently as possible. If you want to pick a typical, 50-item Ocado order, they will help each other. A group of robots can come together in a huddle, split up, and pick that order in a matter of minutes. In a traditional warehouse where items are scattered around on distant shelves, this process can take hours.

Ocado has made deals with supermarket chains in France, Canada, and Sweden to upgrade their warehouses. Such deals should make it easier for these firms to offer online grocery shopping (the UK is a relatively early adopter of this trend) and will help stave off fears of technologically savvy rivals (such as Amazon’s Whole Foods) muscling in on their territory.

Nothing is perfect, of course, and we note that major fires have broken out at Ocado warehouses –the latest this past July when 3 robots crashed into one another.

Nonetheless, your students will enjoy this 3 minute video of one of Ocado’s automated warehouses.

OM in the News: Picking Inventory at Amazon With Humans and Robots

While this Amazon center is highly automated, some tasks are likely to remain in human hands for years to come.

Every day, about 50 truckloads of merchandise turn up at Amazon’s warehouse in Staten Island, NY. One group of workers unloads the goods, and another group distributes them to work stations. There, a third group, stowers, transfers the items onto large shelving units that hold several dozen bins, and are attached to robots that move through the building. Stowers choose the bin where they want to place each item, trying to make the task as easy as possible for the worker, a picker, who will have to grab items out of the bin.

Picking inventory off shelves to fill customer orders is usually the most common job at an Amazon warehouse, and the company has worked for years to make its pickers more productive. At many warehouses, pickers walk miles each day in search of items, but algorithms provide them with the optimal route. In robotics fulfillment centers like the one on Staten Island, the pickers are stationary and the robots deliver items to them. (These warehouses account for more than 50% of its 175 centers).

The robots have raised the average picker’s productivity from 100 items per hour to 300 or 400 –and help explain why Amazon managed to ship more items than ever during last year’s holiday season with about 20% fewer seasonal workers. But robots have also made the job far more repetitive. Unlike pickers in manual warehouses, the pickers on Staten Island have almost no relief from plucking goods off shelves

Amazon plans to fully automate picking in the near future, reports The New York Times (July 7, 2019). It calculated that there was so much productivity to be gained from reducing the millions of miles its workers walk each year that it was better off finding robots well suited to moving goods all those miles, not worrying whether the system would later be compatible with robotic pickers.

Classroom discussion questions:

Why would it be hard to replace the human pickers?
Outline the process of merchandise flow in an Amazon warehouse that uses robots vs. one that does not.

OM in the News: The Rise of the Collaborative Warehouse Robot

Two Locus Robotics mobile robots at work with a staffer picking products at a warehouse

Locus Robotic Corp. robots resemble motorized stools with shelving and touchscreens. They operate in groups and use sensors to navigate through warehouses as workers pick items and move on. They are part of a new generation of automated tools known as collaborative robots because they work with human staffers. They come equipped with software that ties together inventory management data and warehouse management systems to help the robots quickly locate products in vast warehouses and figure out the fastest, most efficient path to the goods.

The robots can double the efficiency of human workers by cutting the time workers spend walking between shelves, reports The Wall Street Journal (April 23, 2019). “We do that by surrounding a human with the robots, and we have algorithms that dramatically decrease the walking time in a building,” said Locus’ CEO. “Instead of walking up and down aisles, the human will work a zone and the robots will come to you.”

Most warehouses still rely largely on people who pull carts through the aisles, and even automated facilities like some of Amazon’s vast fulfillment centers require hundreds of workers to pick and pack goods for shipping. But the market for logistics robots is growing as online sales surge, pushing companies to fulfill orders faster for rapid delivery, and a tight labor supply makes it harder and more expensive to hire warehouse workers.

A report last month said that heavily automated warehouses worldwide would grow from 4,000 last year to 50,000 by 2023 and would put some 4 million commercial robots to work.

Classroom discussion questions:

What are the strengths and weaknesses of collaborative robots?
Why are warehouses pushing to automate?

OM in the News: Amazon’s (Sort of) Smaller Urban Warehouses

Amazon’s first major NYC distribution center is nearly the size of 15 football fields and can spit out one million items a day. But the 855,000-square-foot facility on Staten Island is a tightly packed site compared with most of the sprawling warehouses the firm has spread around the country, writes The Wall Street Journal (April 2, 2019). It is 20% smaller than Amazon’s usual fulfillment centers, stuffed with twice as many robots as human workers and able to handle 50% more inventory than traditional warehouses.

The space is used as efficiently as a New York studio apartment, and for Amazon and others companies determined push to deliver goods to consumers as fast as possible, that makes the center a likely model for the future of urban e-commerce fulfillment. Smaller sites are the latest example of how online sales are reshaping logistics networks. As retailers move inventory closer to big population centers, they’re squeezing big distribution operations into smaller buildings that use automation and build up rather than out to get more out of every square foot.

The Staten Island facility has four levels where autonomous Kiva robots help human workers assemble online orders. Inventory is stored on shelves that the robots pick up and deliver to people at workstations on the perimeter. That limits the number of steps human workers take, and allows the company to store more goods in the robot-only sections of the warehouse because they don’t have to build out long lines of racking and walkways for humans to fetch the products. Much of the inventory is presorted at other locations, freeing up space that would traditionally be used for inbound docking and receiving to house additional merchandise.

Classroom discussion questions:

What are the advantages and disadvantages of building vertical warehouses?
How does Amazon make the smaller site work?