Tag: warehousing

OM in the News: Leased Robots Roll In

Logistics firms looking for extra help during the holidays are leasing temporary package-handling robots, which can be returned to their manufacturers when online shopping orders cool down after the seasonal rush.

Robots from Locus Robotics await deployment

Leased robots, which have grown in popularity across the industry in recent years, can be added to existing fleets of warehouse, distribution and fulfillment center robots at any time to support an anticipated jump in demand. The robots are increasingly being used for picking up and sorting packages, receiving and unloading them, moving heavy payloads and replenishing stock shelves, among other automated tasks.

The growing demand for robots in the logistics industry is being driven by a shortage of workers, ongoing supply-chain disruptions and continued momentum from a sharp increase in online shopping triggered by the Covid-19 pandemic, reports The Wall Street Journal (Dec. 7, 2022).

Spending in the global logistics robotics market, which was valued at $2.6 billion in 2020, is expected to grow at a compound annual growth rate of 23%, reaching $11 billion by 2027. Excluding Amazon, which is by far the sector’s largest robotics user, there are more than 20,000 logistics robots of all kinds in use today. Known as robots-as-a-service, leased robots are employed widely in manufacturing, but are relatively new to the logistics industry. Under the model, users are charged a subscription-like fee from third-party robotics firms.

By leasing robots, companies are spared high upfront costs and ongoing maintenance expenses. On the downside, orders for subscription-based robots have to be made well in advance of an anticipated upturn in demand. The process of outfitting a company with a leased robot typically involves taking a 3-D scan of a facility and feeding the data into an artificial intelligence-enabled program designed to generate a mock-up of a robot’s mechanical, electrical and software systems.

Classroom discussion questions:

  1. What is the main driver of robot leasing in warehouses?
  2. What is the difference between a “service robot” and one used in manufacturing?

OM in the News: Wearable Technology in the Warehouse

“Your next load of groceries may be moved by a modern-day bionic man or woman writes,” The Wall Street Journal (June 30, 2021). The U.S. supply-chain arm of supermarket chains Stop & Shop and Food Lion is expanding its use of a newer type of wearable robotic technology that workers strap on to help ease the strain of lifting heavy boxes all day.

exoskeleton2

The devices known as exosuits (shown in the photo) are a tech-filled step beyond the back belts that blue-collar workers often wear, laced with sensors and algorithms that detect how workers move and help them lift and load as they work though warehouses.

The devices are the latest entry in a distribution sector wrestling with concerns over worker safety and health in warehouse operations that have boomed over the past year as consumers under pandemic lockdowns have turned to ordering goods online.

Amazon.com has stepped up injury-prevention programs amid criticism of working conditions in its big fulfillment centers and warehouse operators are testing other technology aimed at reducing injuries from repetitive tasks.

Companies have turned to more use of robots in warehousing operations but many tasks requiring fine-motor skills still must be performed by people. Cambridge, Mass.-based Verve Motion says its battery-powered devices can reduce 30% to 40% of the strain from lifting, helping relieve workers’ backs without restricting their movements.

Classroom discussion questions:

  1. Why are Amazon and food warehouses implementing exoskeletons in warehouses?
  2. What are the disadvantages of such devices?

OM in the News: Amazon and Injuries

Amazon recorded 5.6 injuries per 100 workers in 2019, the last full year of data, compared with the 4.8 rate nationally for the warehousing sector. So the firm, after years of criticism over worker safety at its depots, is establishing a program focused on improving the health and wellness of its hourly warehouse staffers, reports The Wall Street Journal (May 18, 2021).

The new program, called WorkingWell, aims to better educate employees on how to avoid workplace injuries and improve mental health on the job. The firm began testing parts of the program 2 years ago and plans to expand it to 1,000 facilities by the end of the year. Amazon said it aims to cut recordable incidents in half by 2025.

amazon2

Amazon, which employs about 950,000 people in the U.S., says it is acting because of the frequency of workplace injuries in the warehousing industry and because the coronavirus pandemic has heightened the awareness of healthcare needs. It is particularly concerned about musculoskeletal disorders, known as MSDs, which account for 40% of its work-related injuries.

Under the WorkingWell program, warehouse employees gather on a rotating basis near their work stations to watch videos about injury prevention, including how to lift items properly. Employees also are given hourly prompts at their stations that guide them through 30-60 second stretching and breathing exercises.

The company also is installing kiosks where employees can watch videos that show guided meditations and calming scenes and sounds. New wellness zones provide dedicated spaces for workers to stretch or meditate. The company also is developing staffing schedules that rotate employees among jobs that use different muscle groups to reduce repetitive-stress injuries. Amazon’s program does not include a significant reduction in the rate at which employees are expected to work. That pace has been a source of worker complaints. Employees, for example, are expected to take about 300 items off shelves each hour.

Experts say introducing educational tools in workplaces is often not enough to substantially reduce injuries, and that measures that provide mechanical lifts or reconfigure how a workplace is organized have a bigger impact.

Classroom discussion questions:

  1. Comment on Amazon’s new program.
  2. What else can the firm do to improve worker safety?

OM in the News: Warehousing Moving to Retail Locations in the New E-Commerce World

Empty stores and shopping centers are increasingly being converted into warehouse and e-commerce distribution centers. One recent study, reported in Material Handling & Logistics (Feb. 4, 2019),  found a surprisingly wide variety of retail-to-warehouse conversions. The projects include the total demolition of obsolete malls to be rebuilt as warehouses in Baltimore, Atlanta, Chicago, and Detroit. Other retail structures that were left standing after the retailers closed their doors also have been repurposed for industrial uses, including a former Toys ‘R’ Us in Milwaukee now occupied by a transmission manufacturer, and Sam’s Club’s conversions of 12 of its stores to distribution centers.

Freestanding big-box stores closer to population centers than they are to warehouse districts are the primary candidates for conversion. These retail structures also typically offer dock doors, ample parking and clear heights compatible with industrial usage. Major retailers who are choosing to expand their omni-channel platforms are transforming underperforming retail properties into e-commerce-driven logistics spaces.

Larger-scale vacant retail properties, such as malls and community centers, are more often purchased by industrial developers and then demolished to be replaced by new industrial construction that is designed to meet the physical requirements of prospective space users. Factors favoring the targeting of retail space for conversion include the prime locations of many retail centers, which often sit at busy intersections or highway interchanges. Another advantage is site access. Standalone big-box stores in particular offer backend docks and easy access for trucks. They also have the needed high ceilings.

“These types of conversions were once unthinkable, and now they’re not only happening, they’re gaining traction,” says one industry leader. “That industrial uses can overtake what are usually higher-rent uses illustrates the strength of demand for industrial real estate, especially last-mile distribution centers.”

Classroom discussion questions:

  1. What are the advantages and disadvantages of converting malls to warehouses?
  2. What is happening to other malls as they lose retail tenants?

OM in the News: Amazon’s Jammed Warehouses

An Amazon fulfillment facility in New York.
An Amazon fulfillment facility in New York.

Amazon has a holiday message for the millions of merchants who rely on it to fill their online orders: Don’t clutter its warehouses with stuffed Easter bunnies or other out-of-season goods. Though Amazon has built more than 24 new warehouses this year, increasing its square footage by 30%, it says it needs all the space it can get to cope with the annual boom in holiday orders. That is why it is trying to discourage its 3rd-party sellers from stocking up on items that aren’t likely to sell by the end of the year.

“For the first time,” writes The Wall Street Journal (Nov. 4, 2016), “Amazon is charging its sellers a premium for storing merchandise in its warehouses during November and December.” Generally, warehouses overflow with 3rd-party sellers’ goods, especially as Christmas nears, straining its capacity and increasing costs. The company has temporarily stopped accepting shipments from new sellers, and established sellers are required to time their shipments to arrive by Nov. 9. Amazon also offered to remove sellers’ goods from its warehouses free of charge for return.

The idea is to speed the flow of goods and optimize use of space. Amazon says 1/4 of the merchandise sold on its site are part of its fulfillment program, which charges storage fees based on volume. Starting this month, storage fees are due to more than triple to $2.25 per cubic foot a month, up from 54 cents the rest of the year. A seller with 500 small Easter baskets in stock, for example, would pay storage fees of about $124 in November, up from $30 a month the rest of the year.

Amazon makes considerably more when its fulfillment customers make a sale than when their goods languish, racking up storage charges. The temporary increase in storage fees is called “surge pricing”—charging more for goods or resources when demand is highest. Other companies, including UPS have introduced peak surcharges to encourage shippers to make more accurate predictions of their package volume.

Classroom discussion questions:

  1. Why is Amazon resorting to this pricing measure against independent merchants?
  2. How else can its operations managers control the space issues at the warehouses?

OM in the News: Wal-Mart Squeezes Its Suppliers (Again)

A Wal-Mart Stores company distribution center in Bentonville
A Wal-Mart Stores company distribution center in Bentonville

Wal-Mart Stores will begin charging fees to almost all vendors for stocking their items in new stores and for warehousing inventory, raising pressure on suppliers as the world’s largest retailer battles higher costs from wage hikes, reports msn.money (June 24, 2015). The company  just started informing suppliers about the fees and other changes to supplier agreements. The changes will affect 10,000 suppliers to its U.S. stores.

The changes are aimed at bringing “consistency to the collection of allowances related to the growth of our business and suppliers’ use of the Wal-Mart supply network,” it said in a letter to suppliers. The new agreements mean a larger number of vendors will likely start paying fees, passing some of the retailer’s costs onto suppliers. For instance, Wal-Mart is seeking to charge a food supplier 10% of the value of inventory shipped to new stores and to new warehouses, both one-time charges, and 1% to hold inventory in existing warehouses. Currently, the supplier is not charged anything.

The move marks a shift by Wal-Mart, which unlike other retailers has sought to limit such fees in return for demanding suppliers give it the lowest price. This approach suggests that it is seeking areas to offset its increased investment in wages. Charges like the new-store and warehouse fees are common in the retail industry, but their broad application across all suppliers is a new step for Wal-Mart. The fees for new stores and for warehousing goods are a way of sharing the costs of growth and keeping prices low, a Wal-Mart spokeswoman said: “The changes we have outlined will help us ensure that we are operating at everyday low costs that yield everyday low prices.”

Classroom discussion questions:

1. Why is Wal-Mart changing its supplier agreements?

2. How does this impact the supply chain?