The three examples often cited are Amazon, Wal-Mart and Diapers. Amazon implemented a lot of their own systems using partners, Wal-Mart has invested billions and Diapers.com implemented with Kiva Systems (amazon now own diapers).
Amazon and Diapers could automate end-to-end because they had fixed product sizes and packaging. A lot of other retailers like Wal-Mart are attempting to paletize their goods for this reason. It is very expensive to completely automate end-to-end with retailers who have a broad inventory (which is why the vertical online retailers such as Diapers and Zappos did so well, they could lower margins with an easier to manage supply chain).
I used to follow Amazon stock and filings. They spent hundreds of millions of dollars on automation in their initial warehouses. They spent so much on the servers that run software controllers that the RedHat stock got a big bump when it was announced that they were the partner implementing it (Amazon made up a double-digit percentage of RedHat revenue).
I remember headlines of Amazon investing ~$100M into updating single warehouses. A lot of time was spent analyzing the outlay and returns - it was definitely a long-term investment rather than something you can immediately identify as being more cost-effective in the short term.
So if you have varying inventory and demand cycles it is less cost-effective to automate supply chain. There is also the part where you need to integrate with backend systems - SAP, Oracle, Sage, etc. which again involves consulting time and multi-million dollar projects.
From this story, it sounds like this warehouse as a very broad inventory. For eg. one bin contains batteries mixed with DVD's etc. which isn't suitable for robotic system since all they do is grab the basket, knowing what is inside it, and bring it to the packaging conveyor. It sounds like they already do this for the most popular products, and it is the rarer products where having a dedicated area for its stock just isn't feasible. This is also why Wal-Mart went straight into investing billions into RFID rather than the barcode scanning model used by Kiva.
IIRC, just the automation robot hardware market alone is ~$3B p.a, and online commerce with goods is ~$30B p.a, so already 10% of revenue is being invested back into hardware alone, which gives you an idea of costs and limitations. It may be a market that is ripe for disruption, since the deployment model seems to be similar to how large backend enterprise systems are implemented with Oracle, IBM etc. there doesn't seem to be any solution at the low to medium end of the market, although that is part of Kiva's pitch as well (they have standardized robot and bucket sizes).
The whole area is really interesting, I have tons of bookmarks on another laptop if you want me to send them to you. I looked into it some years ago as part of just analyzing tech companies and their margins (my main takeaway was narrower inventory, vertical market = better margins and better automation, and that it gets very expensive for broader inventories). To find more, a good starting point is the companies that sell the hardware and implement the systems such as Kiva: http://en.wikipedia.org/wiki/Kiva_Systems. They must have a good PR department because their customers and implementations have been written about a lot in Wired, the WSJ, NYTimes etc. as the future of warehouse automation, for eg.
Amazon and Diapers could automate end-to-end because they had fixed product sizes and packaging. A lot of other retailers like Wal-Mart are attempting to paletize their goods for this reason. It is very expensive to completely automate end-to-end with retailers who have a broad inventory (which is why the vertical online retailers such as Diapers and Zappos did so well, they could lower margins with an easier to manage supply chain).
I used to follow Amazon stock and filings. They spent hundreds of millions of dollars on automation in their initial warehouses. They spent so much on the servers that run software controllers that the RedHat stock got a big bump when it was announced that they were the partner implementing it (Amazon made up a double-digit percentage of RedHat revenue).
I remember headlines of Amazon investing ~$100M into updating single warehouses. A lot of time was spent analyzing the outlay and returns - it was definitely a long-term investment rather than something you can immediately identify as being more cost-effective in the short term.
So if you have varying inventory and demand cycles it is less cost-effective to automate supply chain. There is also the part where you need to integrate with backend systems - SAP, Oracle, Sage, etc. which again involves consulting time and multi-million dollar projects.
From this story, it sounds like this warehouse as a very broad inventory. For eg. one bin contains batteries mixed with DVD's etc. which isn't suitable for robotic system since all they do is grab the basket, knowing what is inside it, and bring it to the packaging conveyor. It sounds like they already do this for the most popular products, and it is the rarer products where having a dedicated area for its stock just isn't feasible. This is also why Wal-Mart went straight into investing billions into RFID rather than the barcode scanning model used by Kiva.
IIRC, just the automation robot hardware market alone is ~$3B p.a, and online commerce with goods is ~$30B p.a, so already 10% of revenue is being invested back into hardware alone, which gives you an idea of costs and limitations. It may be a market that is ripe for disruption, since the deployment model seems to be similar to how large backend enterprise systems are implemented with Oracle, IBM etc. there doesn't seem to be any solution at the low to medium end of the market, although that is part of Kiva's pitch as well (they have standardized robot and bucket sizes).
The whole area is really interesting, I have tons of bookmarks on another laptop if you want me to send them to you. I looked into it some years ago as part of just analyzing tech companies and their margins (my main takeaway was narrower inventory, vertical market = better margins and better automation, and that it gets very expensive for broader inventories). To find more, a good starting point is the companies that sell the hardware and implement the systems such as Kiva: http://en.wikipedia.org/wiki/Kiva_Systems. They must have a good PR department because their customers and implementations have been written about a lot in Wired, the WSJ, NYTimes etc. as the future of warehouse automation, for eg.
http://www.wired.com/magazine/2010/12/ff_ai_essay_airevoluti...