Is a robot right for your fulfillment center?

The pandemic hit fulfillment centers with a double whammy: volume surged while their teams were slammed by COVID. That drove center managers to look more seriously at whether it’s time to consider their first robot.

The flight to online shopping was well underway years before the pandemic. But the many, lengthy lockdowns drove even more people, including many first-time online shoppers, to make their purchases via the web rather than visiting a store. According to McKinsey, “… these habits seem like they’re going to stick as US consumers report an intent to shop online even after the COVID-19 crisis.”¹ Trends indicate an average growth of 15 to 30% in online purchases.²

The recent flood of online orders swamped many e-commerce retailers. They were hit by the double whammy of trying to meet surging demand while being shorthanded. The staffing shortfall was due to employees infected with or quarantined due to, the coronavirus while drawing from the relatively tight labor pool of people willing to do the often monotonous jobs available in fulfillment centers. One major online retailer reported that only seven employees showed up for a shift that should have been staffed by close to 100 people. Some of the challenges of hitting fill rates can be attributed directly to the pandemic. But fulfillment center managers know that keeping their facilities fully and reliably staffed has been, and will continue to be, a major headache, pandemic or not. Many are asking themselves, “Is the cure for that headache the addition of some robots?”

In this article, you’ll learn why the answer is probably “Yes!,” and how and why you should go about exploring, and possibly installing your first robot.

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Reducing dirty, dull, and dangerous

When looking ahead to the expected growth of robots in fulfillment centers, it makes sense to look back at how they became a critical element in the auto industry. Back in the 1970s, the country entered an educational revolution. The better-educated workforce scorned automotive assembly lines where the work was dirty, dull, and dangerous. Those are precisely the kind of jobs that robots are well-suited for, and where they were first applied on a large scale. A critical, but decidedly dirty, dull, and dangerous activity in every fulfillment center is de-palletizing. Whether it’s bourbon, body wash, or barbecue grills, almost every product arrives on a pallet that has to be broken down and the items moved to a conveyor. The job can be physically taxing and ergonomically dangerous. Not so long ago, the fact that pallets often include mixed cases or are randomly organized made it difficult, if not impossible, to use robots for de-palletizing. That problem has largely been solved by a combination of robotic-vision systems and more flexible grippers. Depalletizing makes a strong case as the perfect entry point into fulfillment center robotics. The risk of investing in a robot for this use is very low, in part because it doesn’t have to tie into a warehouse management system (WMS). The de-palletizing robot can reliably perform its job relying only on its onboard programming. Of course, it’s possible at any point in the future to add an interface for integration with the WMS.

A different view of ROI

Traditional approaches to ROI calculations go out the window when thinking about adding a robot for an application like de-palletizing. You can’t take $12 an hour plus 30% for additives and multiply it by 2,080 hours times two years to figure the payback. That’s true for two major reasons. First, it doesn’t take into account the true value of the robot. What’s the value of being assured the de-palletizing job will consistently be covered? What’s the value of the increased speed and reliability of the robot? What’s the value of reduced injuries?

But more importantly, it’s not about just replacing a human with a robot. The fact is that most facilities that add a robot don’t reduce headcount. Instead, the people who would be de-palletizing are instead able to focus on higher-level, and typically less physically demanding tasks. That, in turn, reduces the high turnover that plagues fulfillment centers. In fulfillment center robotic applications, you need to look at ROI differently. Have someone from each area, including finance, operations, and engineering in the total-cost discussion so they can provide their perspective of the real value gained.

Where to start

Too many people go robot shopping for the wrong reasons. One of the worst is FOMO (fear of missing out) when someone on your executive team sees an MSNBC report describing how many companies are adding a fleet of robots, and decides their company should get some robots, too. The smarter first step in your considerations should be a self-assessment, what you might call an “automation audit,” to see if a robot makes sense. This primarily has to do with considering the potential scale or scope of your application. Your selection process, and the best partner to help you with your implementation, will be very different depending on whether you’re considering automation for a single facility, or a first implementation that you intend to expand to many other facilities. Once you’ve defined the objectives and potential scope of your robotics implementation, you have two likely points of contact: a robot OEM or a systems integrator. While it is likely both will be required, starting with the OEM may help shorten your search for an integrator. An OEM can lead you to a choice of integrators in your area that they trust based on your application and project scope.

Continued growth

The pace of robot deployment slowed in recent years, but industry watchers predict 12% annual growth over the next 4 to 5 years, with over a half-million new robots added per year. It’s clear that, in a number of industries, facility managers are looking for greater stability in work schedules by relying on resources that reliably show up for work every day. That’s especially critical in fulfillment operations that need to consistently hit their e-commerce fill rates. Robotics has moved far beyond science fair status. They’ve proven their ability to work faster and with increasing flexibility, two key factors in today’s environment where customers across most markets expect an ever-shorter interval between when they place their online order and when their delivery arrives. As a fulfillment center manager, your first, best step toward robotics is very likely in the de-palletizing area. You need to consider your unique situation and evaluate the cost/benefit equation, in almost every case, de-palletizing proves to be a winning application.

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References:
1 The great consumer shift: Ten charts that show how US shopping behavior is changing, McKinsey & Company https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-great-consumer-shift-ten-charts-that-showhow- us-shopping-behavior-is-changing#
2 McKinsey & Company COVID-19 US ConsumerPulse Survey