Tuesday, January 06, 2009
The Speed of Demand and Supply Blog
07

 It is now obvious to me that I am small-minded. I kind of thought that a world in which robots held day jobs was at least a few years off. Turns out it’s old news; Staples has been employing foot-tall super-rats in their distribution centers since 2006. And, of course, like all self-respecting robots, they are bright orange.

But that is not the future-past that I want to discuss right away. After reading an excellent article on the fulfillment needs specific to the e-commerce industry, it is obvious that many things will soon change to cater to the modern consumer. The article rightly pointed out the inherent differences between the consumer demands in the days of Henry Ford and those of the E-bay generation, citing the need for more dynamic supply-chains to deal with not only smaller order sizes, but also rapidly changing SKU demands. It argued that only by re-thinking the approach to DC management could consumers’ ‘overnight, on-time’ demands be consistently met.

This was where I became a little skeptical. He advocated the development of ‘robotic warehouses’ where advanced order processing algorithms and mini-sensors act as the brain and eyes of a team of robotic search dogs, trained to stock and slot inventory in a, likely haunted, futuristic warehouse. The robots would be able to work 24/7 and be able to optimize the inventory handling process. It sounds a little far-fetched to be practical, right? Turns out, it already exists, kind of.

Staples and Walgreens have implemented similar systems in a few of their DCs over the past few years. In Staples’ case, the orange search robots slide along evenly spaced bar-code stickers on the floor and bring merchandise racks to human handlers that sort the recently-received orders. This renovation has increased order processing by over 60% in one of their ‘most automated’ warehouses. The robots work 16 hours a day, 7 days a week, and are responsible for 50% of the facility. In addition, they are creepily reminiscent of the cybernetic attack dogs in Neal Stephenson’s Snow Crash, which must be loads of fun for the few human workers at the facility.

So how likely is it that e-commerce merchants implement such systems? Probably pretty likely, as one insider said Staples’ 50,000 sq ft facility would only cost around $5 million to build from scratch. In fact, the writer of the above article reminded me that “advances in wireless communications, sensor miniaturization and image processing have made this kind of system possible”. True point. It also turns out that this writer is the mastermind behind Staples’ system, so he probably knows what he’s talking about. Either that, or he’s just a robotic-dog-lover and wants to make the world a happier place for them. In either case, it’s worth keeping an eye on the technology, since in a not-so-distant future even the small-minded like me will probably be placing online orders to similar types of robotic warehouses.

Posted in: Demand Planning

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