"In 2012 Jeff Bezos scooped up warehouse automation firm Kiva. Everyone else is still trying to catch up" (AMZN)
From Bloomberg: How Amazon Triggered a Robot Arms Race
An Amazon warehouse is a flurry of activity. Workers jog around a
manmade 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, sentient
hockey pucks, piled high with towers of consumer gratification ranging
from bestsellers to kitchenware.
Those are Kiva robots, once the
marvel of warehouses everywhere. Amazon whipped out its wallet and threw
down $775 million to purchase these robot legions in 2012. The
acquisition effectively gave Jeff Bezos, its 52-year-old chief
executive, command of an entire industry. He decided to use the robots
for Amazon and Amazon alone, ending the sale of Kiva's products to
warehouse operators and retailers 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.
It's taken
four years, but a handful of startups are finally ready to replace Kiva
and equip the world's warehouses with new robotics. Amazon's Kiva bots
proved this kind of automation is more efficient than an all-human
workforce. The new robots being rolled out look different, partly
because the industry is still experimenting and partly because of patent
issues. Some focus on picking items off shelves, others zoom around
with touch screens. All are aimed at saving retailers money as they race
to get their wares to your doorstep as quickly as possible.
Amazon
has about 30,000 Kiva robots scuttling about its warehouses across the
globe. Dave Clark, the retailer's senior vice president of worldwide
operations and customer service, estimated the addition of the bots
reduced operating expenses by about 20 percent. According to an analysis
by Deutsche Bank, 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 the tech would save Amazon a
further $2.5 billion.
“To be great in e-commerce, you need to be
sophisticated inside the warehouse,” said Karl Siebrecht, chief
executive at Flexe, which bills itself as the Airbnb for warehouse
space. Amazon was the first company to confront the challenge of picking
a virtually endless variety of goods from warehouse shelves and
combining them in a single box for home delivery. Now that e-commerce is
a growing part of the retail trade, more companies are paying
attention. “The case for automation is building across the industry,”
Siebrecht said.
But it's really only Amazon that has this kind of
technology at scale, thanks in large part to Kiva. The world's
biggest retailers, including Wal-Mart Stores Inc., Macy's Inc., and
Target Corp., have yet to populate their warehouses with widespread
robotic systems. They rely on the old method—otherwise known as
humans: Hordes of pickers and packers who send boxes down conveyor
belts.
For the new breed of robot makers, the potential market is
wide open. Logistics companies that run their own warehouses started
designing automatons while ambitious engineers saw the hole Bezos blew
in the market and jumped in. One startup was even founded by former Kiva
employees. The race to automate was on.
Saving money on parking lots
The
modern warehouse is a rectangular box with 40-foot high
ceilings, loading docks on both sides, and often, thousands of parking
spaces for staff that swells during peak shopping seasons.
Lately
retailers have been demanding something new: floors that approach the
Platonic ideal of flatness, a feature that makes life easier for the
technologists managing fleets of warehouse robots.
While
automation has long been the looming threat to industrial workers,
there's reason to think their situation is about to become worse. There
were 856,000 warehouse workers in May, according to seasonally-adjusted
data from the Bureau of Labor Statistics. The average wage for those
workers is about $12 an hour, said David Egan, head of industrial
research for the Americas at commercial real estate firm CBRE Group.
Minimum wage hikes being considered and enacted nationwide could drive
labor costs higher, especially in locations close to city centers—sites
that are in high demand as retailers chase Amazon into the realm of
same-day delivery....MORE
