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:

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

OM in the News: Walmart’s Food-Delivery Challenges

There are many hurdles Walmart and other large grocers face as they race to expand fresh-food delivery and gain an edge in one of the fastest-growing e-commerce segments, reports The Wall Street Journal (March 15, 2019). Despite Walmart’s resources and more than 1.5 million U.S. workers, it mainly relies on a patchwork of independent companies to expand its delivery services as quickly, broadly and cheaply as possible.

A Walmart employee makes her way through a store, collecting items to fill a customer’s online order.

Walmart, the country’s biggest seller of groceries, is facing pressure to push forward in delivery because Amazon, a chief competitor, is making inroads in grocery sales. (Walmart generated $200 billion in U.S. grocery sales last year, more than double Kroger’s take and 5 times as much as Amazon’s in the sector). In recent years, Walmart added a service for placing online grocery orders for parking-lot pickup at 2,100 of its 4,650 U.S. stores. About 35,000 U.S. Walmart employees called “pickers” now weave through aisles compiling online grocery orders– a slower and more costly process than fulfillment from specialized distribution centers.

Walmart is offering delivery from 800 stores, with another 800 planned this year, mostly by joining with firms like DoorDash that crowdsource drivers. Walmart pays a fee to the driving companies and charges customers $8-$10 per order to offset that cost. But filling online orders with store workers in spaces organized for shoppers can be complex and expensive. And drivers for delivery firms need an incentive to lug bulky grocery orders from their cars to customers’ doorsteps. Walmart is testing using its own store workers to make deliveries. And last year, it began arming workers with devices that tell them the fastest route through stores and the optimal order to place items into bags. Future remodels could tweak stores to better accommodate online ordering.

Classroom discussion questions:

  1. What are Walmart’s core competencies (see Chapter 2) as they relate to food delivery?
  2. What are its key success factors (KSF’s)?