The robots are coming: Swisslog shows the US ecommerce crowd its automated fulfillment tech

By Michael Carney , written on March 29, 2013

From The News Desk

Before the US had Gilt, Shoedazzle, and Fab, Europe pioneered the addictive discount and curation models with Vente Privée and Net-a-Porter. But it’s not only the brick-and-mortar busting business models where the US ecommerce sector has drawn inspiration. More recently, robotic fulfillment technology born out of Europe’s land crunch has made its way stateside and is dramatically impacting the way warehouses and supply chains operate.

That’s right. We’re talking about freakin robots.

Swisslog, one of the largest companies in the space, has introduced a new Click&Pick technology to the US market aimed at the unique way ecommerce businesses operate. In the case of traditional retail, fulfillment centers have always receive palettes loaded with cases of a single item, and then distribute those cases to the store network. Swisslog has made simple robots to handle these tasks for decades.

In ecommerce, however, the process is far more granular and resource intensive, requiring that warehouses carry a larger number of SKUs and that outgoing packages include multiple individual items to meet specific orders, which are then sent to consumers. Further, two-day delivery has become standard, next-day deliver is just an upgrade away, and rumors put same-day delivery by the biggest players just around the corner.

Historically, this has been accomplished through employees walking throughout the warehouse with a “pick list” and manually assembling the order. This may seem intuitive. Humans are perfectly capable of deciphering which brand of toothpaste you ordered and seeing that it finds its way into your box for shipping. But the process is painfully inefficient, requiring lots of walking, bending, and searching – often in a multi-hundred thousand square foot warehouse facility. As a result, efficiency limited by the fitness, motivation, and fatigue of each individual worker at any given time. And logistics is an efficiency game. The solution also doesn't scale to meet tens or hundreds of thousands of orders per day.

Swisslog’s latest technology, Click&Pick, automates this otherwise inefficient process with the use of high-speed robots and sophisticated control software to execute these pick lists. The system combines Swisslog's existing AutoStore inventory storage technology and high-speed pick stations with its fulfillment software suite.

The product was first implemented in Scandinavia in 2005 and is currently used in 25 facilities across Europe. The first US system will go live early this summer at a Medline medical supply facility outside of Chicago, which carries more than 125,000 product SKUs.

Click&Pick can achieve a staggering 1,000 picks per hour per operator, nearly five times faster than the fastest warehouse employee can achieve manually. Robots can operate 22 hours per day before requiring a recharge – a process they manage themselves, like any well-mannered robot should. The system saves time both in its handling of orders as well as in processing and restocking returns. In the ecommerce sector, return rates can climb as high as 40 percent, presenting a major drain on a business. Click&Pick can alleviate much of this burden.

In addition to its speed benefits, Swisslog adds dramatic space savings by removing all aisles from the warehouse setup. With the robots operating above and amid the inventory along a 3D grid, the system allows companies to store up to two-and-a-half times as much inventory in the same space. This space savings makes smaller, urban warehouses feasible in many cases and will likely play a major role in the creation of nationwide same-day delivery infrastructure for many of the industry’s biggest players.

It’s not uncommon to hear complaints that robotic systems like these eliminate jobs. But a quick glance at the company’s product video shows bots whooshing across a warehouse floor, picking bins containing desired items and returning them to human operated command centers. Rest assured, Click&Pick still requires many human operators and technicians to oversee the machines and complete final packaging.

The system means that slightly less manpower is needed and that those who do accept these jobs hate them less. Because let's be honest, as numerous exposes and feats of investigative journalism have revealed, those traditional warehouse jobs are miserable, thankless existences. The automated systems allow workers to be more efficiently and remain safer than within the legacy warehouse environment. And because the system is largely autonomous, interfacing with computerizer order and inventory management systems, those who do operate it need only five minutes of training before they are fully qualified and capable of filling the role. 

Click&Pick is a fully modular system that is customized to the specific needs of each client, and can be upgraded or modified easily at any time post instillation. The system can integrate with existing inventory and order management software, or companies can choose to implement Swisslog’s proprietary system. A typical deployment into an existing facility takes five to six months, and clients should expect to invest a minimum of $1 million. Accordingly, this system doesn’t make sense for everyone.

“You really need to be doing 5,000 order lines per day to justify robotics,” Director of Business Development Bill Leber says. “But once you get to that level, if you’re not talking to us, you’re hampering your growth. The golden rule that everyone looks for is that the investment pay for itself within two to three years, which is relatively easy for us to achieve within a growing business.”

Swisslog is on the process of setting up leasing partnerships to make it systems available to smaller etailers that can’t afford the upfront cost, with a typical lease term being five to six years. Due to the modular nature of the systems, they can be easily disassembled and relocated to a new facility, whether it be due to the growth or closure of a current lessee.

As recently as last year, Swisslog wasn’t the only player in this category, but its largest competitor, Massachusetts-based Kiva Systems, was acquired by Amazon for $775 million and its technology no longer available to outside competitors. As a result, Swisslog has seen a spike in demand for solutions like Click&Pick. Kiva, for what it's worth, used a different technology relying on ground-based robots to scurry throughout a warehouse, retrieving portable shelves and bringing them to human pickers to choose the desired product. Regardless, this is Amazon's baby now, and it's not sharing.

Swisslog has partnered with a number of supply chain and operations consulting firms which are often hired by physical and online retailers to design their fulfillment systems. Through these relationships, combined with traditional sales efforts based out of its Newport News, Virginia US headquarters, the company is in talks with a number of the largest – non-Amazon – ecommerce players in the country. In fact, according to Leber, a deal was in the works with Amazon subsidiary Zappos before it decided to hand over its warehousing operations to its parent company last summer.

Given the bleak predictions for brick-and-mortar retail its likely that direct to consumer fulfillment will continue to grow in the coming years. As the demands on this nationwide infrastructure spike, it will be advanced robotics technology that must carry the load. Swisslog's Click&Pick is currently the best of breed.