Integrating Robotics Into The Supply Chain

Smart-Robotics1After acquiring the robot manufacturer, Kiva in March for almost a billion dollars, Amazon had to take 50,000 additional temporary workers for the holiday season. Although robots help warehouse workers save time and effort significantly, they are still limited in the tasks they can do and they aren’t ideal for periods of peak demand since they don’t have the labor flexibility. Zintro experts discuss whether robots will lead to job cuts and replace workers in distribution centers and warehouses in the long-term.

Lawrence Sasso, an expert in medical device development and production, indicates that the value robotics could offer in any industry depends on how well the system is integrated with the human workforce. “We’re seeing firsthand in the medical device industry how robots like the Da Vinci system are augmenting, not replacing, human hands,” he explains. “At one particular company’s (Walgreens) regional distribution center, lift truck operators worked in conjunction with robots like the Kiva system, in some cases sharing the same floor space. Robots performed better for repetitive and predictable tasks.” Sasso also agrees that robots are much better suited to labor instability. “It is true that these robotic systems will supplant some of the manual labor, which will continue to skew job listings toward higher skilled openings,” he notes. “In time, though, the robotic systems being implemented in distribution centers like Amazon’s will become more scalable to workload variations, which will help to reduce instability in labor demand.”

According to Shaju Madhavan, consulting director in manufacturing and logistics, Amazon acquired Kiva in order to reduce the labor costs (as high as 60% of total operating costs in a warehouse) and improve customer service levels (same day deliveries), which is a high point in retailing. “Kiva’s robots are designed to handle order lines in the WH or DC of Amazon and their initial cost of ownership is pretty high if the scale is not available and/or scale up doesn’t happen quickly,” says Madhavan. Furthermore, Madhavan gives emphasis to how robots can do the job faster than a worker, thereby reducing picking time and increasing productivity. “Post deploying the robots from Kiva, if Amazon had to deploy additional part time workers during holiday season – the reasons could be high skew in demand; complexity of the demand or order; location design of product or order lines inside the large DC/ warehouse,” Madhavan adds. “Any day robots and automation are ideal for large DC’s like these which are in the range of a million sqft and above as this will reduce the total operating costs by 30% YoY and enable a ROI on automation somewhere in the region of about 30 to 36 months.”

As automation consultant and engineer, Frank Lamb points out, a large system can take over a year to install and debug, by companies with experience in these systems. “Warehouse storage and retrieval systems can be very expensive and involve much more than the fairly simple hardware used in storing and retrieving products. Database management, computer or PLC control of the system, safety and maintenance all enter into the equation. Automated systems don’t necessarily reduce labor costs either,” he explains. Lamb also believes that even though there may be a net loss in jobs, it would still be a small percentage of the total. “Automation may provide other benefits such as a smaller, more vertically-oriented warehouse, more accurate and efficient shipments and higher throughput, but not always at a labor savings. Many of the logistics and warehousing jobs would simply be replaced by skilled maintenance and IT positions,” he adds.

By Idil Kan

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