Imagine warehouse associates that work as long as you want them to - every day - for as many days as you need them. They never call in sick or show up late. They ask for no benefits and require no health insurance. They never complain. They spend every waking moment maximizing productivity, and their interactions with their coworkers are like a precise choreographed dance. Does this sound like a bunch of robots to you?

Our initial article, “Are ‘Bots’ In Your Future?” attempted to serve as a primer, describing the rationale behind the growing forces becoming more evident; labor scarcity, prospects of higher labor rates, reduced reliance on temporary or unreliable labor pools, and an aging workforce (since many millennials show little interest in warehouse work). These forces, plus a robot’s extreme flexibility (they can move autonomously from one aisle to another), and the constant pressure to increase warehouse productivity are the driving forces that have become a reality in many wholesale distribution environments.

The key success criteria

In most warehouses, the costliest element in order picking and inventory put-away is the warehouse associates’ travel time; often as high as 70 percent of their time is spent traveling (walking) to a specific warehouse destination. Travel time can therefore cap labor productivity. The ‘bot’ reduces travel time. With ‘bots,’ a warehouse associate can
remain within a limited zone, handling the manual selection of items in the zones, while using the robot to move product between the picking zones and the shipping or receiving area. So, the key, the primary goal, is to control picking and put-away labor; and one way to do that is to cut the cost of travel time. 

Periodically the ‘bots’ will autonomously retreat to a battery-charging area; it’s like getting a drink of water.

I suggest that most robot applications in the wholesale-distribution arena, over the next few years, will focus on collaborating with human warehouse associates. Although some head count reduction should be expected as the ‘bots’ contribute to higher warehouse through-put rates. So, for the greater mass of wholesale distributors, the costs involved, and the potential ROI will dictate their approach to this newer technology.

For some time into the near future, I think many ‘bot’ applications will focus on the low hanging fruit - fostering mobility, i.e. finding the stock locations for picking and inventory put-away placement; accomplishing that with a lot less walking-around than now required by warehouse associates. 

There is no doubt that robots can help (they can work multiple shifts without a coffee break!) and have a place in a distribution center/warehouse to empower people, for the simple reason: they lead warehouse associates through their work – collaborating and pushing those higher warehouse through-put rates. 

The focus will be on looking for opportunities to dramatically increase warehouse associate productivity, and ultimately to avoid future costs down the road as a company continues to grow and their volumes increase. Depending on smart warehouse design”and speed-of-flow initiatives, there will be a head count reduction impact as less associates are required to feed the ‘bot.’

Cost reduction     

Can investing in robotics be truly worthwhile? It may still be questionable for smaller distributors based on our current research and internal cost-justification rationale, although some robotics vendors are now offering attractive leasing alternatives as opposed to outright ‘bot’ purchase. That being said, you won’t have to be an Amazon or Walmart to participate in this revolution.

The ROI

Most disciplined companies make capital expenditure decisions based on an expected return on investment. For investments such as robotics, the ROI typically will be a function of increased efficiency.  The labor cost reduction and productivity/through-put will increase, and other benefits will occur such as increased order fulfillment accuracy, reduced cost of training, employee turnover reduction, inventory control improvements, reduced order cycle times, etc. 

I’ve found that the primary/critical success factors are really two-fold: (1) reduction of travel time (labor cost reduction/productivity improvement); and (2) the optimum ratio of warehouse-associates-to-‘bots.’ Consider a warehouse currently with 10 associates earning $19.50 an hour, with benefits, who spend up to 70 percent of their time travelling/walking even before they are in a position to complete the warehouse task transaction. Early research seems to indicate up to a 2X productivity increase - more lines picked with less people; that’s more than $202,000 in labor savings per year. The ratio of warehouse associates-to-‘bots,’ let’s say is projected at three robots to each warehouse associate – that second additional factor I mentioned in the ROI equation. In our example, let’s say, 5 warehouse associates would feed 15 ‘bots.’ Estimated yearly lease cost of $171,000. The net savings equal $31,000 per year; the larger the operation, the more savings. 

Smart design/speed-of-flow^* warehouse modifications, of course, will also influence the number of warehouse associates, as well as positively impact productivity - providing increased through-put now - and future cost avoidance as your company continues to grow. 

My thanks to the folks at Locus Robotics for their assistance in providing background information.

Finally

To maintain competitive advantage, progressive companies will now need to consider robotics to meet ongoing DC/warehouse and business improvement objectives. Who knows? Maybe warehouse associates may even be happy to let robots do the long-distance sprints!