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Automation hitting new levels at distribution centers

February 9, 2009

In early April, the 110,000-square-foot Indianapolis distribution center of California-based medical-device supplier DJO Inc. will quietly roll out a revolutionary automated package-handling system.

If it works as advertised, it could signify the dawn of a robot-centric age for Indiana's distribution industry—a niche that, according to figures from the Indiana Department of Workforce Development, employs (as of the last quarter of 2008) 179,085 humans statewide.

The technology, called the Kiva Mobile Fulfillment System, is as innovative as its name is mundane. Developed by Woburn, Mass.-based Kiva Systems, it works by turning over large sections of distribution centers to swarms of bright orange, turtle-shaped robots—a concept that took a while to sell to potential customers.

"This solution appealed more to early adopters in the past, but we appear to be solidly into the mainstream now," said Mitch Rosenberg, Kiva's vice president of marketing. "It does take a lot of education. Usually, you have to see it to believe it."

Those believers now include heavyweights such as Gap Inc., Staples, Zappos (a purveyor of shoes and accessories) and Walgreens, all of which have adopted the technology for their operations.

The concept is so revolutionary because it stands the usual distribution center model on its head. In most such facilities, workers called "pickers" roam the shelves, pulling items ordered by customers and boxing them for shipment. This provides an excellent cardio workout for the pickers (who may cover 10 to 15 miles each day), but can be time-consuming and inefficient for the company employing them.

Which is where Kiva's business model comes in. Instead of going after orders themselves, human workers (usually located around the periphery of the warehouse, out of the robots' way) simply tell the machines what items to fetch.

If three different things are requested, three separate robots (navigating via a grid pattern on the floor) locate the correct racks, then haul them to the human's workstation and line up. The worker pulls the appropriate items (the locations of which are highlighted by a computer-controlled laser pointer) and punches a button to let the machines know the order has been fulfilled.

The robots (again without human intervention) return the racks to their proper spots. The machines track inventory, pull bins that need to be replenished, and can even handle tasks such as trash removal.

"For our current process, it is a real game changer," said Steven Martin, director of DJO's Indianapolis operations. "Currently, our order pickers walk through aisle after aisle to fulfill orders. Then the packed cartons are dropped off at a shipping station. Kiva allows the operator to stay at one point. They are continuously fed product without having to leave the station, so for us it is a real breakthrough."

There are other benefits, added Martin. "Because we can better utilize our existing floor space, we can bring in products from our other facilities and distribute them to our customers in the most efficient manner without having to expand the facility," he said.

Increasing efficiency

Of course, robots are no strangers to warehouses, where automated forklifts and cranes have served for years. The difference is that Kiva robots pretty much look after themselves. The relatively dimwitted mobile units are monitored by a computer, which uses artificial intelligence for everything from avoiding robot collisions to efficiently organizing the shelves. For instance, racks containing big sellers wind up nearest the humans, while slow movers get buried farther back.

Kiva asserts that this helps make it two to four times more efficient than the typical, human-infested distribution center (DJO envisions a 50-percent improvement in the efficiency of its picking and shipping). And customers who want to expand or speed up their operations need only increase the number of racks and machines.

"The robots don't require complex custom programming or interface to the existing system," Rosenberg said. "They just work. Work speed is thus increased by increasing parallelism, not by making the automation run faster."

Speed (and accuracy) are the names of the game for companies seeking to fill the thousands of orders generated by e-commerce. The annals of the young industry are already filled with cautionary tales of firms undone by lousy distribution.

"I use the analogy of hot water," said J. Mark Howell, president of the cell phone distributor Brightpoint Inc. and chairman of the executive committee of the Indiana Logistics Council. "When you turn on the faucet, you expect the water to be hot every time. And you take for granted everything that has to happen in order for that to be the case.

"Well, when you order something online, you want to get the exact thing at the exact time, exactly to your specifications. And you never really think about what's involved in the process of making that happen."

Howell and his associates at Brightpoint (which operates two Indianapolis distribution centers) think about it almost obsessively. In his view, more automation in the distribution business is almost inevitable, because ever-increasing demand for efficiency creates a nearly insatiable demand for the technology needed to provide it.

"Increasing technological capabilities increases opportunities for using that technology," he said. "As the demand increases, the research and development dollars increase. This further advances the technology, which creates more demand for technology."

Not your usual robots

Not that the Kiva system was such an easy sell. The concept (having the shelves come to the people instead of the people going to the shelves) was at first a bit too novel for some old warehousing hands to wrap their minds around. Plus, the idea of turning over a building to a bunch of robots was a tad off-putting. To avoid any science fiction allusions, Kiva usually avoids using the R word.

"Although these are clearly robots, internally and with customers we prefer to call them 'drive units' because the word robot carries so many preconceived notions of fanciful and futuristic science fiction " Rosenberg said. "Our robots are just another form of automation, not something that we try to romanticize."

While their clients may swoon about the efficiencies they produce, Kiva's customers are usually loath to reveal many details about what their systems cost, or even how many robots they employ. While DJO states that it will deploy about 50 robots tending roughly 450 shelving units, others are far less forthcoming.

Several Kiva customers are so paranoid about tipping their hands to rivals that they even shy away from discussing its installation.

"We can't divulge this information without the customer's approval because many customers consider this too much information that competitors could use to understand their capacity," Rosenberg said. "But we have customers running as few as 15 and as many as 505 robots, and one of our customers will have nearly 1,000 under one roof by mid 2009."

Leaving humans behind

With so many robots operating under one roof, it's fair to ask just how much human assistance they'll require. The answer: probably not that much.

And according to Carol D'Amico, president of Conexus, an economic development initiative for distribution and advanced manufacturing, the people who remain won't be forklift drivers or glorified gofers. They'll be highly skilled, computer-literate employees who can grease the wheels of e-commerce.

Unfortunately, Indiana isn't exactly well-stocked with those just now.

"We don't have the appropriate training programs, because most of the programs that are available are either at entry level or at the software engineer level," D'Amico said. "In reality, you need higher order technicians—people who can work on these robots, people who understand systems. So it's a much more complicated field than people understand."

While Hoosiers struggle to retrain and re-equip, the pace of technological innovation continues unabated.

"It's not unlike what happened in manufacturing," D'Amico said. "What used to take a thousand people to do 30 years ago now takes fewer than 100. And we're going to see that in [warehousing and distribution] as well. As long as companies have the incentive to look for better ways of doing things, technology is going to be pervasive."

But perhaps not utterly pervasive. Tom Andel, former editor of the trade journal Modern Materials Handling, has witnessed the crowds of people swarming around the Kiva exhibits at trade shows. He thinks the technology has a future, but doesn't foresee a time when distribution centers become human-free robot hives.

The machines are good, he says, but they aren't that good. Indeed, they might never be.

"I don't think you're ever going to get rid of [human] pickers," Andel said. "It's hard to replace the flexibility of a person. I really don't see that fl exibility going away anytime soon."

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