Robotics Solutions For eCommerce Inventory Management

    Posted by Sean Elliott, CTO on Oct 18, 2019, 9:00:00 AM

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    Although many businesses still feel like robotics are years away from mainstream adoption, vendors aren’t waiting for slow adopters to come around. Shopify’s acquisition of robotics company, 6 River Systems, shows just how fast the warehouse automation landscape can change. This move makes it easier for many online retailers to solve complex eCommerce inventory management challenges, which we’ll dive into in a bit. Sometimes a moving, evolving field might be met with a “wait and see” approach. But, with vendors making adoption easier and more palatable, we expect just the opposite for robotics.

    Robotics vendors aren’t getting buzz solely because of the cool factor. As the latest additions to supply chain automation, robotics address the same issues as traditional automation, but in a new way. In short, these solutions add strategic and operational flexibility. Flexibility in overhead costs. Flexibility in resource deployment. Flexibility in warehouse design. Flexibility in growing your business.

    Here are two prime examples of flexibility afforded by robotics:

    Labor IssuesIn our recent Warehouse Automation Survey Report, we discovered that labor was the top challenge leading to automation. The equation is simple: As labor becomes scarce or more expensive to retain, robots can augment existing labor and increase productivity of the people already in the process. And the deployment models are becoming more manageable and less cost-prohibitive. Robotics as a Service (RaaS), for example, allows businesses to acquire units as needed to scale to current needs. This on-demand workforce meets the business needs in real time, and businesses can even keep spare units on hand for unexpected spikes. As a service-based model, RaaS costs roll into operational expenses, which alleviates procurement projects many businesses prefer to avoid and in some cases can accelerate time-to-value.

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    Scalability – Through robotics, businesses can expand and contract with the needs of the business. When expanding into new regions, robotics can be deployed en masse after the initial programming. This could be for microfulfillment centers (MFC), pop-up DCs, dark sites, greenfield sites, or even to a 3PL’s facility to ensure orders are executed according to specifications. It could also mean scaling the workforce within existing operations to handle more SKUs and fulfill orders in shorter timeframes. For eCommerce shops that need to expand quickly, waiting on new hires or temporary workers may hurt profitability or time-to-value.

    Automation has been around for decades, yet modern robotics are breaking the automation mold. In our warehouse automation survey, we discovered that 31% of companies will implement some form of automation within the next three years, joining 23% of people stating they’re already leveraging some form of warehouse automation. Robotics, of course, is a part of this.

    We’re seeing the robotics market mature before our eyes, and Shopify’s move is a perfect example. eCommerce inventory management can be a problem for many small and even large online retailers. As a result, trends in robotics strategy are taking shape that address these key challenges and may quicken robotics penetration in the market.

    Emerging Models in Warehouse Automation and Robotics

    From our point of view, robotics and supply chain automation vendors can be categorized into three general models. Each model brings benefits and challenges, which we outline below. These models will help online retailers and other businesses better understand the vendor and solution landscape as they evaluate robotics as a supply chain automation strategy.

    Vertically Integrated eCommerce Supply Chain Management

    This model follows what we’re seeing from companies like Shopify. Bringing together tools and resources under one roof creates an end-to-end model well suited for businesses looking to beef up capabilities from relatively minimal (or non-existent) supply chain infrastructure. Essentially, it’s a shortcut for new eCommerce operations to ramp up quickly.

    Pros

    + Pre-packaged: This model may include solutions from point-of-capture to point of delivery. This checks a lot of boxes and helps businesses take a large leap, quickly.

    + Single Partner: Less partners can simplify implementation, maintenance, training, etc.

    + Simplified: There’s less to configure or customize. As an out-of-box, plug-and-play solution, value comes through fast implementation and go-lives.

    Cons

    − Lite: Solutions may not be as robust as a best-of-breed approach. There may be some SCM capabilities, but there will be limitations as your needs change or the market pivots.

    Closed: Not great at integrating with other solutions. There could be less value for those with pre-existing SCM solutions.

    − Inflexible: Limited customizations could put a ceiling on flexibility. This may create some future-proofing challenges when pivoting becomes necessary.

    Seeking a partner with a vertically-integrated solutions stack can be a great way to keep up with the Amazons and Wayfairs of the world. Combining a robotics-enabled workforce, eCommerce platform, and a 3PL-like fulfillment network is an attractive one-stop-shop well suited for businesses with minimal existing supply chain investments. But, it’s important to be mindful of flexibility. Unique challenges sometimes call for unique solutions, and out-of-box solutions can be limited in options and integrations.

    Middle-Man Brokerage and Partnerships

    Few companies can do everything well. Here we see a “de-coupled” model, where a partner can play as your navigator—helping you connect the dots and point you in the direction of niche players. This can be helpful for businesses with existing systems that need to “bolt-on” supply chain automation or other systems.

    Pros

    + Best-of-Breed: Leaning on the relationships and experience of a partner, you can pick the best vendor and solutions for your needs.

    + Network: Supply chain and robotics can be hard to grasp, with a lot of overlap between large vendors and niche solutions. A partner with a beefy Rolodex can give you valuable exposure and connections, quickly.

    Cons

    − Longer Time-to-Value: Evaluating vendors can be a time-consuming approach. And then there are integrations with multiple partners potentially lengthening implementation times.

    − Hands Off: The navigator may point you in the right direction, but may not provide implementation assistance. This could necessitate a third-party implementation consultant or other resources to facilitate a successful project.

    Navigating the expanding vendor pool in supply chain automation and robotics can be daunting. A partner can save you critical time in evaluating and vetting potential partners. But, you may be on your own to integrate and optimize your systems.

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    Unified Supply Chain Automation

    Typically when a business invests in high-dollar systems like warehouse automation, they’re forecasting a return on investment over a span of five, ten, or even twenty years. As we know, markets shift faster than this. Even when building a robust solution, there’s a need for multiple modes of operation. In other words, whether you’re a small online retailer slugging it out with the big brands or a large business trying to gain share, businesses need the means to execute and pivot. This model combines the aspects of a one-stop-shop with the flexibility of an “open” or agnostic architecture. This opens the door to adding solutions or changing processes to always have the best operations possible.

    Pros

    + Flexibility: Whether it’s changing processes or bringing in a new solution, adaptability equals longevity in fast-paced markets.

    + Simplicity: These systems can be changed and optimized internally, opening opportunities for fast changes and operational agility.

    + End-to-End: This model includes a full suite of supply chain management and warehouse automation solutions from a single provider.

    + Open: With an “agnostic” architecture, it’s possible to integrate with systems from multiple vendors as needed.

    Cons

    − Emerging: This model is only a theory at this point. It’s possible for some players in supply chain management to offer this model, and we’ll be watching this market closely to see how this approach comes to fruition in the market.

    − Limited Providers: This model requires a backbone designed for process adaptability and rapid integration, which many players in supply chain management simply aren’t built for. A small pool of players limits options for businesses.

    The unified approach to automation and supply chain management is a best-of-both-worlds scenario, combining a complete stack of solutions with the openness to accommodate a best-of-breed approach for point solutions. With robotics emerging as one of the most dynamic solutions for today’s labor and throughput challenges, it wouldn’t be surprising to see more supply chain management and logistics providers gravitating toward this model in the not-too-distant future.

    Supply Chain Automation on the Rise

    It will be interesting to see how the market, both vendors and online retailers, respond to Shopify’s robotics move. We wouldn’t be surprised to see more market consolidation, but it’s very early days to make these predictions.

    Robotics and warehouse automation, in general, is a fascinating field right now. Amazon set the table years ago. To borrow its phrasing, they’re challenging competitors to innovate above the line. Vendors observing the market are finding opportunities by making robotics and other supply chain solutions more palatable for online retailers and eCommerce inventory management. These offerings aim to increase the value propositions, eke out profitability in the thinnest of margins, improve time-to-value, and deliver on the high expectations of an increasingly demanding customer.

    Topics: eCommerce, warehouse automation, inventory management