Making A Case for Warehouse Robotics

Many people hear about warehouse robotics and think it’s too futuristic, yet there are ecommerce fulfillment applications being installed today. They are not theoretical. Some may scoff at this technology, but we think it would be a mistake to say “that will never apply to my company.”

Consider how your operation is growing, and how quickly technology can change. In the mid-1970s no one could have imagined that PCs, desktop technology and distributed computing would wipe out most mainframe systems. Or that starting in the mid-1990s, the internet and ecommerce would cause a sea change in retail.

Today’s robotic applications are all based on existing applications and technology, not uncharted research, and each generation of technology gets cheaper. Here are five important considerations when looking at applying warehouse robotics today.

Available, Reliable Labor

Many markets have a shortage of quality, reliable labor, driving up hourly wages. In a recent opinion piece, The Wall Street Journal said, “For every job opening in America, there’s barely more than one unemployed person available to take it.”

Employment data from the U.S. Department of Labor showed job openings rose again in January to the highest level since 2000. In mid-2015 there were 2.3 more unemployed people than open jobs. To be “unemployed” you have to be actively seeking employment, excluding people who have taken themselves out of the workforce. This also suggests wages may have to rise to bring people off the sidelines and meet expansion needs. In April 2018, unemployment reached a 10-year low of 4.4%.

If the new tax and jobs bill continues to fuel investment and create new jobs, this could make fulfillment recruitment and staffing that much harder for companies. It makes a case for robotics in selected jobs.

Human/Robot Collaboration

Many companies, including in ecommerce, are using warehouse robotics in collaboration with employees. The best example is in picking. Studies show that pickers in large warehouses may walk as much as 15 miles per day, with about 75% of day spent in travel time. Robots travel between zones, while employees generally stay within a pick zone.

Picking accuracy is enhanced by the various ways that robotics can be employed. Much like other technologies such as voice, robots have the ability to have the touch screen communicate in the picker’s native language, dynamically changing based on a badge worn by the picker.

In the right environment, the addition of warehouse robotics can double pick rates. Picking is a tiring process. Anecdotally we hear employees are happy to not have to walk those long distances daily.

Cost Justification

Typically, there are two major costs to warehouse robotics you need to consider: implementation and the monthly system lease. We’ve seen from early adopters that once the fully loaded hourly labor cost reaches $15 to $16, robotics can be cost justified. They work longer without needing breaks and can run from 12 to 14 hours on a charge. As labor availability becomes tighter and wages push up, more companies will find a profitable application.

Complex Fulfillment Environments

Small-to-medium-sized warehouses may not be able to cost justify robots at the present cost structure but that will change as the technology becomes more commonplace. Currently the best candidates are large warehouses with long pick routes and large SKU assortments. The latter often adds distance and makes accuracy more difficult due to colors, sizes and similarities between products. Businesses such as third-party logistics (3PL) with multi-client assortments have mainly been the earlier adopters to date.

Add Flexibility to Fulfillment

Warehouse robotics may have another benefit when compared to sortation and other automated conveyance systems: Flexibility. We’ve seen early adopters insert robotics into an existing conventional warehouse without any changes to the physical layout such as racking.

As beneficial as sortation and conveyance systems are, they are also inflexible when major changes to product assortments take place.

If you see your fulfillment operation needing to grow quickly over the next two to three years, we recommend you research where the technology is today, and where it will be in the near future. In the right environment, warehouse robotics will reduce costs, boost productivity and improve customer service with greater accuracy.

Brian Barry is president of F. Curtis Barry & Company