Tag: Kiva

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

The NYC Amazon distribution center

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:

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

 

OM in the News: How Robots Will Change Retail Forever

This Amazon distribution center in Baltimore can fulfill a million orders in a day. It may not need humans for long.

What if your company could store and deliver goods as easily as data? Amazon, Walmart and others are using AI and robotics to transform everything from appliance shopping to grocery delivery. “Welcome to the physical cloud,” writes The Wall Street Journal (Oct. 15, 2018).

Take, as an example, Amazon’s one-million-square-foot distribution center in Baltimore. Its scaffolding and seemingly endless conveyor belts disappear at a vanishing point within the building. The machine is a dazzling combination of chutes, ladders, rollers and 11 miles’ worth of conveyor belts. Customers’ orders move from shelving into bins and from bins into boxes as they travel via the machine straight into delivery vans, passing by stationary workers at various points along the way. Humans are rarely required to move around here. It’s much faster, and cheaper, to have stuff brought to them.

This is where robots come in. Kiva robots can carry up to 750 pounds of goods in their 40-odd cubbies. After a customer places an order, a robot carrying the desired item scoots over to a worker, who reads on a screen what item to pick and what cubby it’s located in, scans a bar code and places the item in a bright-yellow bin that travels by conveyor belt to a packing station. AI suggests an appropriate box size; a worker places the item in the box, which a robot tapes shut and, after applying a shipping label, sends on its way. Humans are needed mostly for grasping and placing, tasks that robots haven’t mastered yet.

Amazon’s robots signal a sea change in how the things we buy will be aggregated, stored and delivered. The company requires 1 minute of human labor to get a package onto a truck, but that number is headed to zero. Autonomous warehouses will merge with autonomous manufacturing and delivery to form a fully automated supply chain.

Classroom discussion questions:

  1. How does this latest Amazon facility differ from the one we describe in the Global Company Profile that opens Chapter 12?
  2. How is AI being used in this warehouse?

 

OM in the News: How Big is the Role of Robots in Shipping?

Humans and robots work side by side in a FedEx distribution center. The green “tugger” robots pulls heavy goods.

In 2012, Amazon acquired the robotics company Kiva. Since then, it has moved more than 100,000 Kiva robots into its network of  210 fulfillment and package-sorting centers. Now, writes The New York Times (March 19, 2018), many Amazon competitors are moving in the same direction, including shipping and logistics operations like FedEx and DHL. But what is happening at all 3 firms may be a surprise to people who fear that they are about to be replaced by a smart machine: a robot might take your role, but not necessarily your job.

Yes, the robots replace a few jobs right away (typically taking 25 jobs in a facility that employs 1,300 people). But warehouses create lots of new jobs every year — and a heavily robot work force still seems like the distant future. Inside Amazon the need for human labor is growing much faster than the robot work force. Since deploying its first robots, Amazon has expanded its work force by 300,000 people.


A control center inside a FedEx distribution hub

As people have become more comfortable buying online, big and bulky goods like car tires, canoes and boxes as big as a coffin have accounted for an increasing percentage of the packages flowing through distribution centers. These ungainly items can’t fit on a conveyor belt.

McKinsey recently predicted that about 1/3 of workers in the U.S. will have to switch occupations because of technology-driven automation by 2030. “What people underestimate is the time needed for this to happen,” said a McKinsey partner.

Classroom discussion questions:

  1. Why can’t distribution centers be fully automated?
  2. What roles can robots play in distribution hubs?

 

 

OM in the News: Beyond Kiva–How Amazon Triggered a Robotic Arms Race

kiva“An Amazon warehouse is a flurry of activity,” writes Industry Week (June 29, 2016). Workers jog around a man-made cavern plopping items into yellow and black crates. Towering hydraulic arms lift heavy boxes toward the rafters. And an army of stubby orange robots slide along the floor like giant hockey pucks, piled high with towers of consumer products.

Those are Kiva robots, once the marvel of warehouses everywhere. But Amazon whipped out its wallet and threw down $775 million to purchase Kiva in 2012. The acquisition effectively gave the firm command of an entire industry. And it decided to use the robots for Amazon and Amazon alone, ending the sale of Kiva’s products to competitors that had come to rely on them. As contracts expired, they had to find other options to keep up with an ever-increasing consumer need for speed. The only problem was that there were no other options. Kiva was pretty much it. The world’s biggest retailers, including Wal-Mart, Macy’s, and Target, have yet to populate their warehouses with widespread robotic systems. They rely on the old method humans: Hordes of pickers and packers who send boxes down conveyor belts.

It has taken 4 years, but a handful of startups are finally ready to compete with Kiva and equip the world’s warehouses with new robotics.  Meanwhile, Amazon has about 30,000 Kiva robots at its warehouses across the globe, which has reduced operating expenses by about 20%. Adding them to one new warehouse saves $22 million in fulfillment expenses. Bringing the Kivas to the 100 or so distribution centers that still haven’t implemented them will save Amazon a further $2.5 billion.

About half the 856,000 U.S. warehouse laborers slog away on simple, arduous tasks that involve moving stuff around. It’s strenuous work, with employees often walking more than 12 miles a day. As new robots become available, particularly to e-commerce warehouses, these jobs will be at risk.

Classroom discussion questions:

1. Discuss Amazon CEO Bezos’ decision to buy Kiva.

2. Why are robots so important to warehouse operations?

 

OM in the News: The Robots Chasing Amazon

The Fetch warehouse robot can carry as much as 150 pounds at a time
The Fetch warehouse robot can carry as much as 150 pounds at a time

In Fetch Robotic’s mock warehouse, stocked with granola bars, breakfast cereal, sponges, and other household goods, a worker plucks items from shelves and places them in a plastic bin. The bin is set atop a small wheeled robot that follows the employee’s every step like a puppy. When the container is full, the robot darts off with it to a packing area; a second robot with an empty bin then picks up where the first left off, allowing the worker to keep gathering items without pausing or having to push around a heavy cart. Fetch Robotics, reports BusinessWeek (Oct.26-Nov. 1, 2015), is one of a handful of startups working on warehouse robots aimed specifically at e-commerce companies.

As with most things in the world of online retail, Fetch exists because of something Amazon.com did. In 2012, Amazon paid $775 million for warehouse robot maker Kiva Systems; shortly after, it stopped Kiva from selling its machines to anyone else. “When Amazon drops nearly $1 billion on something just to keep it out of the hands of competitors, it sends a really strong message to the market,” says an industry analyst. With a goal of plugging that hole, Fetch says its robots can keep up with a briskly walking person for 8 hours on a fully charged battery. It has just started selling its robots, for $25,000 apiece, and is considering renting them for $4 an hour–meaning the full purchase price should pay for itself in 6 months.

The cost of greater automation, of course, is fewer jobs. But the rise of online shopping created one of the relative bright spots in the U.S. job market: The warehousing industry employed 778,000 people in September, up 22% from 5 years earlier. For now, the Fetch robots are meant to be mechanical pack mules, supplementing humans who have the vision and dexterity to quickly recognize and retrieve the desired products. Fetch, however, is developing a robot with cameras and clawed arms that it says will eventually be able to grab items from the shelves, too.

Classroom discussion questions:

  1. How does the Fetch robot differ from Amazon’s Kiva?
  2. Why is robotics so important in warehouse management?

OM in the News: Amazon’s Robots Get Ready for the Holidays

These orange robots are the fruits of Amazon's 2012 purchase of Kiva Systems for $775 million
These orange robots are the fruits of Amazon’s 2012 purchase of Kiva Systems for $775 million

“Amazon‘s robot army is finally falling into place,” writes The Wall Street Journal (Nov. 20, 2014). The Seattle online retailer has outfitted several U.S. warehouses with squat, orange, wheeled Kiva robots that move stocked shelves to workers, instead of having employees seek items amid long aisles of merchandise. At a 1.2-million-square-foot warehouse in Tracy, Calif., Amazon just replaced 4 floors of fixed shelving with the robots. Now, “pickers” at the facility stand in one place and wait for robots to bring 4-foot-by-6-foot shelving units to them, sparing them what amounted to as much as 20 miles a day of walking through the warehouse. Employees at robot-equipped warehouses are expected to pick and scan at least 300 items an hour, compared with 100 under the old system.

In May, Amazon said it planned to deploy 10,000 Kiva robots by year-end, up from 1,400 at the time. At the heart of the robot rollout is Amazon’s relentless drive to compete with the immediacy of shopping at brick-and-mortar retailers by improving the efficiency of its logistics. If Amazon can shrink the time it takes to sort and pack goods at its 80 U.S. warehouses, it can guarantee same-day or overnight delivery for more products to more customers. The robots could also help Amazon save $400 million to $900 million a year in fulfillment costs by reducing the number of times a product is “touched.” The robots may pare 20% to 40% from the average $3.50-to-$3.75 cost of sorting, picking and boxing an order.

This is our 4th blog about the Kiva robots at Amazon over the past few years. To read earlier posts and view a short video, just type Kiva into the search engine box on the right.

Classroom discussion questions:

1. Why did Amazon buy Kiva Systems?

2. What are the advantages and disadvantages of using robots in the fulfillment process.

OM in the News and Video Tip: Rise of the Robots

 

robots industrial“The exponential growth in the power of silicon chips, digital sensors and high-bandwidth communications improves robots just as it improves all sorts of other products,” writes The Economist’s special report (March 29-April 4, 2014).  Three other factors are also at play.

One is that robotics R&D is getting easier. New shared standards make good ideas easily portable from one robot platform to another. A robot like Rethink Robotics’s Baxter, with two arms and easy, intuitive programming interface, would have been barely conceivable 10 years ago. Now you can buy one for $25,000. A second factor is investment. (The biggest robot news of 2013 was that Google bought eight promising robot startups.) The third factor is imagination. In the past few years, clever companies have seen ways to make robots work as grips on film sets and panel installers at solar-power plants. Aerial robots—drones– let farmers tend their crops in new ways, give viewers and broadcasters new perspectives on events, monitor traffic and fires, look for infrastructure in need of repair, and more.

While society may benefit greatly, robots’ growing competence may make some human labor redundant. Aetheon’s Tugs, for instance, which take hospital carts where they are needed, are ready to take over much of the work that porters do today. Kiva’s warehouse robots make it possible for Amazon to send out more parcels with fewer workers. Click here to watch a great 3 minute video on Amazon’s robots. Driverless cars could displace millions of people employed behind the wheel today.

The advent of robots that are cheap and safe enough to be used outside big factories is one reason for a resurgence of interest in robotics over the past few years.  Foxconn, a Taiwanese company that manufactures and assembles electronics, is aiming to robotize much of its operation with hundreds of thousands of its own relatively cheap Foxbots.  Car companies use the lion’s share of industrial robots; they account for over 50% of robot installations in the U.S.

Classroom discussion questions:
1. Why are robots proliferating?

2. Why did Amazon buy Kiva Systems?

OM in the News: Before the Drones, Amazon Lets Loose the Robots

kiva2Amazon  received a lot of news coverage for its sci-fi drone-delivery idea last week. But an immediate robotics effort under way in the Seattle retailer’s warehouses could save the company more than $900 million a year. Amazon’s rollout of robots from a company it bought last year, Kiva Systems Inc., could help pare 20% to 40% off the $3.50 to $3.75 cost of fulfilling a typical order, reports The Wall Street Journal (Dec. 9, 2013). The robots can shuttle shelves full of merchandise to warehouse workers, relieving of the workers of having to dash throughout the warehouse. “We believe this could be a significant opportunity to drive higher operating efficiency across Amazon’s massive fulfillment-center network,” says one industry expert.

Amazon has been working to reduce order costs and speed delivery, in part by constructing more warehouses closer to urban centers. While many of its latest efforts focus on deliveries themselves, Kiva robots could improve efficiency within warehouses, where humans—and human error—still rule the day. Amazon just disclosed that it has 1,400 Kiva robots in 3 of its warehouses. A broad rollout of Kiva robots could save Amazon $458 million to $916 million a year.

Perhaps more tantalizing is the potential for Amazon to sell the robots to other companies. Before Amazon bought Kiva, the robotics company was charging about $2 million for a kit of robots and as much as $20 million for large installations. Meanwhile, warehouse robots will remain a source of fascination. Indeed, Amazon’s announcement of its drone-delivery idea appeared to have prompted to disclose its effort to build robots.

Classroom discussion questions:

1. What are the advantages and disadvantages of introducing robots in the Amazon system?

2. Compare the use of drones vs. robots in improving OM efficiency.

OM in the News: Amazon Adds That Robotic Touch

“In the battle between man and machine, the robots  just scored a victory in the world of e-commerce,” writes The Wall Street Journal (March 20, 2012). Why? Because Amazon this week bought Kiva Systems, which makes squat orange robots used in shipping centers,  for $775 million. Although Amazon has used some automation in its fulfillment centers in the past, it depended heavily on people, hiring thousands during the peak holiday seasons to cruise through gigantic warehouses to pick items from shelves.

With Kiva, Amazon is looking for a more automated approach. The robots, which we have blogged about earlier, are already used at Zappos.com and Diapers.com, two websites that Amazon acquired. Rather than a worker walking to the shelves, Kiva’s robots bring the product shelves to a stationary warehouse worker. The robots  locate the items in a customer’s order, move the products around the warehouse, and help get packed boxes to the shipping dock. This improves productivity by bringing the products directly to employees to pick, pack, and stow.

Kiva claims that a packer working with its robots can fulfill 3-4 times as many orders per hour, but Amazon, with over 56,000 employees, says it won’t eliminate jobs. The firm now has a total of 69 fulfillment centers (with 19 new ones added last year alone).

The Journal article is accompanied by a short video of the robots in action.

Discussion questions:

1.Compare the old and new Amazon picking  systems. What are the advantages and disadvantages of each?

2.Why did Amazon buy Kiva?

OM in the News: Robots vs. People for Holiday Staffing

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 of 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?