Black Friday and Cyber Monday are the second biggest retail and ecommerce sales events globally each year (second only to Singles Day). During this time, companies would historically hire an abundance of temporary labor to ramp up their ability to move product onto their racks and move this material off of those same shelves to the customer. But, the well documented shortage of labor in many major markets, including the US, Japan, Germany, and more, has made it more difficult and more expensive to increase capacity in this manner. Companies today, however, have a new set of tools at their disposal to help ramp up capacity. Robots are helping companies more quickly adapt to short term capacity increase requirements.
According to a study by the National Retail Federation (NRF), the 2018 Black Friday to Cyber Monday saw an increase in multichannel shopping of almost 40% compared to the same period 2017. Consumers are increasingly relying upon online shopping as a channel to perform research and, more importantly for the fulfillment business, complete product orders. The same study found that only 21% of shoppers only relied on retail stores for their holiday weekend shopping. This means that 79% of all shoppers completed some percentage of their Black Friday weekend shopping online.
What does this mean? This means that the amount of orders being fulfilled through ecommerce fulfillment centers is increasing, and therefore the capacity at these facilities must also increase to support the growth. Amazon, a significant user of robotics in fulfillment, is looking to hire 100,000 temporary seasonal workers this year. This represents a nearly 17% DECREASE in the number people Amazon is hiring compared the temporary seasonal labor it hired in 2017. So, as the volume of online orders is going up, one of the World’s largest ecommerce fulfillment companies is actually hiring less workers to fulfill its seasonal increase in demand.
This is possible by the increased use of robotics to enable flexible automation. Across the network of ecommerce fulfillment centers there is a significant increase in the use of autonomous mobile robots (AMR’s) being used in collaboration with human operators within these facilities. In our North American Commercial Service Robotics Survey, we found that increasing operational capacity was a top 3 reason non-manufacturing organization are deploying or planning to deploy robotics and it was the top benefit achieved by those that have deployed the technology.
Increasing capacity is a critical element in today’s fulfillment center. Labor scarcity is making it harder to fill open jobs and those that are being filled are coming at an increasing cost. The way to combat a shortage of labor is to look to increase the capacity of the people that are already in place. I recently spent some time speaking with Bruce Welty, Founder of Locus Robotics and Quiet Logistics about what he was seeing during the 2018 Black Friday period. Bruce mentioned, “a significant deficiency in labor for the latest holiday season at both Quiet Logistics and at the client sites that are using Locus Robotics.” He went on to say that “even with a shortage of labor, we were able to meet the fulfillment expectations because we saw this coming and were able to prepare and deploy robots that helped increase capacity with robots”.
Another AMR vendor, 6 River Systems, noted that its collaborative CHUCK robots had helped to fulfill over 1 million units over the holiday sales weekend. “This is a huge win not just for our customers, but for the entire collaborative robotics industry,” Jerome Dubois, co-founder and Co-CEO of 6RS said. “Logistics leaders have new options for automation. They don’t have to settle for traditional automation that is clunky, non-scalable and expensive.” Scalability is incredibly important for fulfillment centers since they must be able to quickly and efficiently increase capacity during seasonal peaks and also be able to flex down following these peaks. Addressing this problem is about more than deploying robots to increase capacity but being able to enable companies to temporarily increase capacity. Many in the AMR community realize this and offer their robots as-a-service. This model gives customers the ability to add short term capacity when needed, but not have too much excess capacity and cost when it is not needed.
As the amount of sales that are fulfilled through ecommerce, or even direct to consumer, continues to increase and the ability to acquire the labor to staff fulfillment centers continues to be a challenging and expensive, we can expect more companies to turn to robotics to help mitigate these challenges. The technology is successfully being deployed and delivering on the benefits that are expected. However, it is still early days for this technology, so there is a lot of room for growth. The key thing is, companies that are embracing the technology are realizing the benefits that they have set out to achieve most of the time.