Among the select group of people who had a banner year in 2020 are founders of warehouse robotics startups, who saw venture capital investment in warehouse automation shoot up more than 50%.
The money flow coincided with a massive surge in e-commerce orders and a shift toward smaller batch items (people ordering one pair of socks or a six-pack of baby formula).
These trends are sending manufacturers and brands on a frantic hunt for ways to bring down the costs associated with warehouse tasks — sorting, picking, ordering and packaging — as well as improve radically the efficiency of the entire operation.
The market shows no signs of slowing. The global warehouse robotics sector was valued at $3.5 billion in 2019 and is expected to reach $6.8 billion by 2025.
Smaller, cheaper, more mobile
Quantity and lucre aren’t the only defining features of the industrial robotics age.
A new generation of autonomous mobile robots has started to replace the massive, expensive fixed systems that characterized early-stage warehouse automation, opening up opportunities for smaller e-commerce businesses to take advantage of the efficiencies wrought by more portable machines.
“Suddenly companies that don’t have tons of cash, or they’re putting their cash into inventory, they can create an opex and scale things up and down easily,” said A.K. Schultz, co-founder and CEO of SVT Robotics, a platform that allows companies to quickly integrate robotics systems with business software.
Looking ahead, Schultz expects continued diversification, with a focus on cheaper, modular and point solution systems that don’t require massive infrastructure investment to install.
Melonee Wise is CEO of Fetch Robotics, a company that makes autonomous mobile robots, a scalable system that aligns with the vision Schultz describes.
Among other trends, Wise sees 2021 accelerating implementation of so-called Industry 4.0 principles: the use of technologies such as Internet of Things (IoT), big data and AI to improve basic warehouse processes, with a goal of creating a smart, connected and autonomous distribution environment.
That movement “has made a big push to create connectivity,” Wise emphasized, “but only now are we starting to see some of the actual outcomes of the notion of 4.0 and connected devices in industrial settings.”
In recent separate interviews with FreightWaves, Wise and Schultz elaborated on new tech and business models coming down the pike, where their young companies fit into the smart warehouse phenomenon and how companies new to automation can adopt robotics solutions without breaking the bank.
Robots as hall monitors
In supply chain circles circa 2021, visibility drives innovation. The new wave of warehouse robots is no exception, “shining a light into this black box” that is the warehouse, said Wise.
“We have a good understanding of what goes in and comes out,” she elaborated, “but we don’t have a sense of what is happening in the facilities in real time.”
Smart mobile robots can help with that, as the machines are equipped with sensors that pick up on what’s happening in real time in the facility.
So instead of having to put sensors on every single fork load, companies seeking insights can potentially use autonomous mobile robots to act as rolling “hall monitors” that could detect, for example, the velocity of fork loads, ultimately improving congestion, safety and inventory management.
“Those types of things are very exciting,” Wise enthused.
Looping back to the theme of connectedness, Wise said Fetch is working on syncing robots with other parts of the warehouse — conveyors, automatic doors, elevators — aiming to make all of these functions easy to coordinate.
“Just as Salesforce connected CRMs to disparate systems in the software realm,” she said, Fetch is starting to do that in the automation realm.
Warehouse tech goes the way of the (Android) smartphone
Schultz drew on smartphone analogies to describe both the industry trajectory and SVT’s approach to warehouse technology management. BlackBerry laid the groundwork, he observed, followed by Apple’s paradigm-shifting iPhone that brought down the cost of hardware.
When Apple’s robust ecosystem locked out the competition, Google got into the game, at which point companies were able to sell hardware that integrated easily into the open source Android operating system.
That evolution resonated with the SVT team, who looked at Android as a model, Schultz concluded, embedding the notion of democratization into the company mission. “So if you want to develop applications in our technology, we will let you,” he said.
SVT aims to be a toolbox, he added, offering opportunities to innovators lacking capital. As such, he “can’t wait for the Angry Birds equivalent or whatever is going to end up on our platform written by somebody who isn’t us.”
Platform-as-a-service and robot-as-a-service
Founded in 2015, SVT is built around the idea that “you can buy all the new machines you want, but if they don’t talk to business software, it doesn’t do any good,” said Schultz.
While most robotic integration projects cost hundreds of thousands — even millions — of dollars, SVT’s relatively inexpensive “integration platform-as-a-service” allows customers to try out different options quickly and flexibly. (If they try one robot and want to flip to another, they can repurpose the license.)
That approach aligns with Fetch’s “robot-as-a-service” model, which includes maintenance, upgrades and IT support for a monthly fee. Because Fetch is heavily software-based, the team can scale up robots on demand, just as Google spins up corporate mail “at the click of a button,” commentedWise.
Think like a venture capitalist
Despite the market potential and influx of cash coming into the warehouse tech ecosystem, the number of facilities incorporating automation is still quite small, according to several reports, with around 80% of warehouses in the U.S. still manually operated.
Plenty of companies have yet to embrace warehouse robotics, Schultz agreed. “Coming out of COVID, plenty of companies know they need to do it.”
Enumerating first steps, Schultz said in a fast-changing market, companies shouldn’t try and build a $20 million installation right out of the gate. Instead, logistics professionals should take a page from the venture capital playbook and “make lots of small bets, understanding that only a few will pay off.”
That practice breaks from traditional logistics automation strategy, which tends to focus on one big trusted partner. “No one got fired for buying the IBM model,” Schultz observed. But the problem with that approach, he cautioned is “you’re playing to not lose.”
More proactive is to do $5,000 to $10,000 or $100,000 pilots targeting simple tasks, such as automating long transport from the picking station to the dock. “Test them out quickly,” he said, “validate that it’s going to have impact and then peel off the half of them that just didn’t work out.”
And with the platform- and robot-as-a-service models, more e-commerce companies can pivot as their businesses grow and shift.
“Whereas before only the largest companies in the U.S. could afford automation,” Schultz commented, the new service options allow smaller, nimbler players access.
The big picture
Lurking behind the new automation trends is the specter of one particularly large company.
Warehouse robotics used to focus on a single ROI: how to replace labor, Schultz said. Although labor is still a driver, the trend now is toward using robotics as an enabler to achieve service levels.
“It’s not: ‘How can we replace people?’ It’s: ‘We can’t get enough people and we’re not shipping on time, causing us to have to expedite freight.’ So there is this customer satisfaction aspect and market share.
“And that has been driven by trying to keep up with Amazon.”