Robots and software are improving warehouse ROI

Faced with a new normal of double-digit e-commerce growth, supply chains are tapping into capital wells to help rise to the challenge.

Target announced last year it was investing $7 billion, partly to retrofit 600 stores and to improve its digital presence. UPS, meanwhile, plans to invest $20 billion over the next three years in automation projects and equipment, according to The Wall Street Journal.

The two companies are not alone in their initiatives. They are part of a trend – one which sees companies investing capital in automation and software to boost productivity and fulfillment capacity.

This year, companies budgeted more for capital spending on materials handling, according to the Warehouse and Distribution Center survey. At least $30,000 more, in fact: The average for those with a pre-approved capital budget was $457,640, compared to the $422,260 allocated last year.

With the year almost over, however, a question remains: How did companies deploy those resources?

Robots make their case

Faced with low unemployment, companies are increasingly investing in automation.

Robotics can yield high returns, as the technology can often be implemented without drastic changes to infrastructure. Recent studies suggest adoption is on the rise, too.

Take Chuck, a collaborative robot produced by 6River Systems, which acts as a mobile bin for pickers. The robot is paired with a human worker in the warehouse, who fills Chuck’s bin over time. Once the bin is full, the robot goes to the packaging area, and the picker is paired with a new robot. The pairing makes pickers twice as fast, according to 6River Systems.

Fergal Glynn, 6River’s marketing director, explained the robot makes economic sense when a business has at least $30 million in annual revenue.

“We don’t invest in buildings, leases and robots, but in engineering.”
Divey Gulati, Co-founder at ShipBob

 

A capital investment of around $250,000 provides eight robots, each individually priced between $30,000 to $50,000 a bot – about the same cost as some associates’ yearly salaries. Glynn said customers typically order 1.5 robots per fulfillment worker, for purchase or rent.

The option to purchase or rent is essential for capital considerations. Logistics companies sometimes need additional robots during busy season — so robots-for-rent has become a common model for robotic vendors. Locus Robotics, for example, also offers to rent robots.

“That de-risks a lot of capital there,” Glynn told Supply Chain Dive, as renting looks better on the books compared to large capital purchases.

As a result, the robots are being used for distribution in ways the company did not initially imagine – such as fulfilling products to big box stores for restocking or using the robots to collect airplane parts for an on-site manufacturer.

Companies can get a return on the investment in 12 to 18 months, 6River claims.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s