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28.04.2016Back to Blog

Robotics in logistics: the next Supply Chain transformation

According to a research made by DHL on actual and future use of robotics in logistics, 80% of current warehouses are not automated and work manually.

This is a fact: the warehousing industry is trying to increase productivity as a result of customers high pressure on operational performance and « competitive » pricing but a few warehouses are automated. According to a research made by DHL on actual and future use of robotics in logistics, 80% of current warehouses are not automated and work manually.

This is going to change with the new robotics generation coming on the market: more agile, able to see, move, react and work on specific tasks together with humans. Robots are used in many industries but had a limited usage in logistics up to now because of work complexity: different types of products to handle in multiple positions in narrow spaces. 

But technology is now bridging the gap to create a new generation of low-cost robots more agile and able to work in a more collaborative approach within the logistics industry » recently said Matthias Heutger, Senior Vice President Strategy, Marketing & Innovation at DHL.

This is clearly a revolution. Many countries are already investing heavily in research : last year China and Russia jointly launched a 200 million $ fund dedicated to research in robotics. The EU launched a 700m€ SPARC program in 2014 that will be backed by a 2.1b€ program invested by euRobotics, a venture of 180 european companies. Japan has also decided to significantly support the robotics economic cluster by increasing the government funding from 5b$ today to 20b$ in 2020 !

Last but not least, Amazon (again !) has decided to go its own way and has made a 678m$ acquisition in robotics : Kiva Systems.

Next generation warehousing operation is already on its way in the 90,000 sqm Amazon distribution centre in Tracy, CA, USA : the «usual » order preparation process is labor-intensive as order pickers have to go into the racks and shelves areas to pick the products and prepare full orders. Different techniques exist – like orders wave preparation supported by WMS ideal picking route calculation – but it is still time consuming to go from one area to another in the warehouse.

Amazon Robotics (the ex- Kiva Systems) is completely changing the traditional warehouse layout using robots for picking : the person in charge of the order preparation does not move anymore as robots supply the order components on their own. The order picker is not looking after each product on the picking list : products are now coming to the order picker who manage 300 products per hour compared to 110 before robotics. Despite increased productivity and more focus of human resources on quality control and packing, some may consider that such an automation shall cut jobs in the warehouse. Amazon response is that they created 1200 additional jobs in Tracy (currently 2,500 workers) where robots have been implemented because of a better quality of service and an increased efficiency that facilitate a significant growth of the business !

If the biggest logistics providers like DHL are already investigating and investing in robotics, which strategy should follow medium-sized 3PLs – with limited investment capabilities –  to survive between DHL and Amazon on this ever changing and challenging warehousing market?

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