The productivity benefits from Amazon ‘s Kiva robots

An article in Quartz (http://qz.com/709541/amazon-is-just-beginning-to-use-robots-in-its-warehouses-and-theyre-already-making-a-huge-difference/) claims that the “click to ship” time at Amazon has decreased from 60-75 minutes with human operators to 15 minutes using Kiva robots. In addition, with robots, warehouse inventory can increase by 50%, thus decreasing operating costs by 20%. Will all of this efficiency translate into lower prices for consumers or higher profits for Amazon or both? Do you expect similar benefits for other warehousing operations? Is there a benefit to creating focused warehousing robots rather than using general purpose solutions?

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48 Responses to The productivity benefits from Amazon ‘s Kiva robots

  1. Li Yize says:

    Does the warehouse inventory should be decreased by 50%?
    All of those improvements will help company to lower cost inventory cost obviously, but it will bring some new problems like new robot technology and management team, technology outsourcing or self exploration. Those problems will bring new challenges to the company. For the big company, it has relative resource to manage those new corresponding issues well but for the small company, it will be a disaster to add new complex issues into the operation system.
    There are other methods to manage inventory well like optimizing operation plan, offering better training for warehouse employees and so on.
    I have positive opinions on the robot technology, especially when the robot industry matured, the production and exploration reach economic scale, the cost will be in a low level and quality will be very reliable. the robot as a new technology will boost the industry productivity very well in the future.

  2. Hee-kyoung Han says:

    In addition to having more space for inventory with decreases in operating time and cost, I think the biggest benefit is that by implementing robot-focused operations, it is possible to significantly lower uncertainties in managing warehouses. This will obviously bring Amazon or any companies economic benefits, but at the beginning, it is not very easy to expect to use this profit to lower prices for having more customers or to improve the company’s financial performances because of the initial investment (usually very huge) on new working environments using robots. However, in the long run when the capital investment is cancelled out with the accumulated profit, Amazon will have additional capability to lower the price for customers without harming its profit, which will help the company stay the most competitive in the industry.

  3. Pauleth Charris says:

    The time, space and cost efficiency that robots are providing to Amazon business directly puts the online retailer in a competitive advantage position. Nowadays Amazon is targeting single-day delivery, and part of the strategy to achieve that milestone is new sophisticated kiva robots prototypes. All these improvements translate into better customer service, unbeatable competitive position, higher profits (although implementation costs are very high), larger sales and possibly better prices for customers. If we consider Amazon future plans to expand operations in Asia, definitely using this technology will help to optimize the space, time and service for a huge market like China and India, and better compete with giants such as Alibaba and Walmart.

  4. Mengying Song says:

    Amazon bought storage robot Kiva Systems for $775 million which was a tremendous expenditure. For the whole industry, this is undoubtedly an innovative behavior. As mentioned in the article, amazon indeed could benefit from the use of intelligent robots in the long run. But for general companies, the difficulties of the application of intelligent warehousing robots were its high cost and high standardization requirements on the working environment. In the absence of strong corporate assets like Amazon, seeking for general warehousing solutions may bring more immediate economic benefits.

  5. Li Zhao says:

    It’s a trade-off between inventory cost and operating cost. Robots can improve efficiency for sure. However money saved in operation won’t be enough to cover the roaring part of inventory. If the gap can’t be filled between increasing inventory cost and decreasing operating cost, eventually, it would decrease the profits and consumers won’t have the benefit of lower prices. Automation is an irresistible trending and technology development would affect more on efficiency. Now is just 20% decrease but it would increase influence on efficiency improvement.

  6. Ke Wan says:

    The Use of robots or other automatic equipments for warehouseing activities has become a future trend in this industry. However, only a well-funded multinational enterprises like Amazon can afford huge research expenses, otherwise small companies will face enormous economic pressure to blindly develop automated warehousing technology. Even amazon have to paid about $1.7 billion to install this system.
    But what makes me optimistic for this field is that the development of technology will reduce the difficult to entry this market and the cost of automatic equipments. We can already see more and more industry giant into this field and more and more exciting breakthorugh for this field. For example, Chinese e-commercial giant JD already annouced its nationalwide automatic warehousing basement, the Asia 1, or even Amazon can still save $800 million by use its currently automatic system. There is no doubt that the development of this industry will continue to increase the impact of these enterprises on traditional warehousing operations.

  7. Ryan Ma says:

    The efficiency saved would definitely benefit Amazon tremendously. They don’t really have to pass on the savings to the customers because they just have to be competitive enough when compared to traditional retailers and other online e-commerce sites. The initial cost of setting up the Kiva robots is really high at fifteen to twenty million dollars. So, it would be better spent on developing new jobs to better service the Kiva systems and installing them in new facilities. Only when a majority of the warehouses have been converted to the Kiva system, should they invest in lowering prices for the consumers to knockout the competition. The big benefit for using robots is that they basically can work 24 hours a day, 7 days a week. The only downtime would be servicing and charging time.

  8. haocai1227 says:

    In my opinion, for huge E-commerce companies like Amazon or JingDong, it is worthy to have its own warehouses, goods and robots’ equipments. Actually, with these fix cost investment, the efficiency and reliable of logistic can be guaranteed than previous. Take JingDong in example, with its own logistic system, customers can get their orders in 4 hours later of the same day. Because this huge companies have enough economic strength, they can afford to wait for the long investment return times. In the long run, companies will make profit eventually.
    Speaking of robots, the operating time and costs reduces siginficantly, while the warehouses can hold more inventory. There is no doubt that the total labor cost, holding cost and lead time all will be decreased. Therefore, the competitive strength comparing with small E-commerce company isn’t at the same level.and It will lead to the increase of Amazon or other oligarch’s market share. In a word, this efficiency can be translate into lhigher profits for Amazon.
    For big company like Amazon, the robot solution is more customized than general purpose solutions, so it will function well for Amazon but maybe not for other common companies. Because of that, I won’t suggest other companies copy Amazon’s act until the robot technology becomes mature and cheap in the future.

  9. Shane Bryant says:

    The Kiva robots are definitely transcending the Amazon warehouse “picking” operations (click to ship process). These robots eliminate the major role of the Area Manager at these fulfillment centers (FC) which is monitoring the pick rates of the employees. From recent talks with Amazon employees, Amazon plans to implement these Kiva robots throughout there large network of their FCs. These robots have obviously proved dividends to the company by reducing overhead and increasing capacity. As an employee familiar with the process, I still see the need to complement the robots with “pickers” in the FCs, I don’t see a FC operating strictly with Kiva robots in the near future. In terms of cost savings, I believe the profits will retain with Amazon (status quo in terms of low prices to the customers and same prices for Fulfillment by Amazon with suppliers). Amazon is in a great scenario with this prisoner’s dilemma they have with Walmart. Once Walmart proves they can offer the same low prices on the same variety of products at the same delivery time, then Amazon will act and pass further cost savings onto the customer. If borrowing capital was just as easy as Amazon does it (less than 3% cost of debt) and other companies had similar financial statements, then I believe implementing robots in warehouses would be a great idea for manufacturers. Given the fact that most companies cannot justify the feasibility of implementing robots, I see that they will continue operating with human capital.

  10. Aanchal Narula says:

    Using robots for the picking process in the warehouses not only reduces costs for Amazon but also increases efficiency of the process. Right now these robots being used for just one part of the process are reducing a lot of otherwise required human effort. It is interesting to see how a combination of automation and human effort can optimally be used for customer order fulfillment. But the cost of investment of automation are high.There will be a cost trade off. The translation of these benefits to customers might only show up if there are additional competitors for Amazon.
    One of the most interesting things is the extra space utilization – because in my opinion with increasing demand and shorter lead times to get the product to the customer – smart facility planning in warehouses is going to become more crucial to try and use the available space as efficiently as possible. And if automation helps with that, there is great potential in focusing on warehousing robots.

  11. Kartik Misra says:

    Amazon acquired Kiva for a whopping $775 million and spends almost $15-20 million to deploy Kiva in a single warehouse.
    The advantages of using the Kiva robotic system are numerous such as lowering operating cost by 20%, increasing warehouse capacity by 50% and reducing the overall time for picking and shipping by 5times. The ROI of the system would be ensured by providing better customer service through faster and accurate delivery. Deploying the KIVA system and though the advantages, Amazon would stand out from its competitors, and become the number one go-to destination for online shopping and selling.

    Till the time, none of the other competitors can match with Amazon services; Amazon should make hay while the sun shines, and get into increasing the profit for themselves.
    The should think about passing the profits to the consumers when other competitors have caught up using systems that entail the same benefit as using the KIVA system.

    Is there a benefit to creating focused warehousing robots rather than using general-purpose solutions? Yes, indeed there is since warehouse operations are specialized, creating a warehouse robot is the right thing to do, than a general solution. The latter, I feel, may no create that much advantages as a specialized system for specialized operations.

  12. Hsing Chiao says:

    Amazon has decreased from 60-75 minutes with human operators to 15 minutes using Kiva robots and that bring more profits to the company. I won’t say if all of this efficiency translates into lower prices for consumers, the company would make the best of these profits, because “lower price” is not the priority that Amazon users pursue. On the other hand, Amazon continuously develops new technic and its own transportation that help the delivery system as quick and efficient as possible. And that needs much capital be invested in. Now, E-Commerce companies are having a big war of market competition. For Amazon, they are finding a way to absolutely delight the customers. In the long term, by gradually creating warehousing robots rather than only using general purpose solutions, the company can have more opportunities to create value that meet the needs of future market.

  13. Rui Luo says:

    Amazon, one of the greater E-commerce company over the world, pay a lot of efforts to help decrease the cost of each process of delivery for years. For the Kiva Robots system, amazon spends 7.75 billion dollars to buy the system, can help amazon find the answer to a critical problem: Under today Amazon’s size, how to reduce the cost of sorting and grouping. This is actually easy to understand, in essence, Amazon is a retailer with more than 353 million SKUs. Customers would buy anything irrelevantly at the same time. Considering the physical location and position of the warehouse, it could be a huge burgeon for workers who try to sorting those products even they already know exactly where the products are. Comparing with other competitors, effectively sorting method can carve out a way to the next greater success for Amazon. Meanwhile, the time of sorting saved will be represented in this whole process since order placed by customers and delivered which bring better customer feeling not only satisfied current customers but also attract more potentials.
    In shorty, this system should be a brilliant method that amazon chose to use. But sometimes method couldn’t be also suitable for everyone. Take a real example here, some warehouses in China, they also need to deal with the problem that worker needs to group products in different areas of the warehouse. But if we take the education, warehouse facilities improvement, most important system introduction fee into our consideration, the cost will increase tremendously. By the way, in China, most of these work done by people instead of machines and robots because the labor cost is the cheapest one in their business.

  14. Aloma DSouza says:

    Decrease in the operational costs by 20% directly translates into increased profits for Amazon. Additionally, with the “click to ship” time decreasing drastically from 60-75 mins to 15 mins using Robots, it would result in increased customer satisfaction ultimately increasing customer orders from Amazon.
    What is not being considered here is the investment made by amazon in implementing the robots at their warehouse. Though operational savings will generate cost savings for Amazon in the long run, as of one cannot include it as profit generated at Amazon.
    The benefit associated with including focused warehouse solutions is that there would be improved space utilization which would have a direct impact on the company profits.

  15. Hanoosha Nagireddy says:

    With the significant decrease in “click to ship” products amazon can definitely reduce consumer prices to attract more customers by giving these products at cheaper as their operating costs decreased by 20% thus increasing profits for amazon. It is true that with 50% increase in inventory the working capital of amazon is stuck but this can be profitable provided the demand is high. Usage of robots is definitely profitable and is recommended in all other warehouse operations as well. This not only increases efficiency but also reduces human error. While usage of general purpose robots gives more flexibility so as to do different operations, focused robots though may cost initially for customization will long term serve profitable.

  16. Sumit Singh says:

    I have worked in a warehouse which dealt with 2 different types of industries i.e. luggage and bath fittings. My experience with human workforce is that though a lot of inefficiencies exists, they cannot be replaced with robots in most of the cases. Warehouse carries out a lot of value-added services such as relabeling, stickering, kitting, unbundling etc., which are complex procedures and require human intelligence.
    Talking about eCommerce warehouse where only putaway-pick-dispatch activities dominate robots can be useful, thus application of robotics should and must be function focused. A mix of man and machine is actually the way I see future warehouses.
    Whether a company will decide on passing on some of the benefit to the customer cannot be commented on, but I feel they will not do it as soon as one might expect. Covering the huge investments that will go into warehouse automation will take considerable time.

  17. Archit Bimal Shah says:

    Use of Kiva robots has certainly been beneficial to Amazon, where they have reduced operating cost, order turn-around time. Although it is unlikely that Amazon will pass on these benefits to the customer in any near future as they are able to provide the service and product in lowest cost compared to any competitor, it leaves out space for future adjustments to drive out competition. Thus it is bound to increase profits for Amazon in North America and make up for the global loss in e-commerce in other global markets, and they can implement this robot in other markets to drive down warehouse operating cost.

    The use of robots in warehouse has brought advantages like reducing operating cost, less downtime, increase warehouse holding capacity, plus further integration with other systems such as understanding orders and delivering it will even further reduce the costs. Thus investing in specific/targeted robots/automated system ensures Amazon leadership in e-commerce with the lowest operating cost, keeping competitors at bay. Moreover, this system can be implemented in other global markets to drive operating costs further.

  18. Jilan Liu says:

    The implementation of robots in its warehouse definitely brings Amazon significant cost saving. Despite whether passing the savings to customer or keeping the savings to enlarge its profit margin is at Amazon’s own discretion, this part of cost saving will give Amazon competitive advantages. Yet, the robots may not be beneficial for all businesses. As the initial investment required of replacing human labor by robots is still high, for smaller businesses, the benefit of using robotic labor might not offset the cost without economies of scale. Therefore, decision regarding the implementation of robotic labor in warehouse and whether developing highly focused robots for warehouse usage should be made under the consideration of the proposed scale of implementation.

  19. Gokul Siddharthan J says:

    This is one of the main reasons why Amazon is able to lower its prices compared to its competition. They have undercut the operating cost drastically compared to the competition. The savings trickle down as lower prices for consumers and higher profits for Amazon, but what percentage of the savings is going towards lower prices remains a mystery, one that amazon wouldn’t share. Think about it this way, if they show the entire savings as lower prices then the price of a product will be so low that consumers will question the credibility of the product sold. Realistically the company will compare the price with its competitions and price just below theirs, and thus the remaining savings goes to Amazon’s profits.

    Using economy of scale, yes it is easily transferable to other warehouses. There might be some hidden constraints to using robots, such as political constraints in locations where laying off workers because of robots might create problems. There are benefits to using Robots for few use cases rather than being versatile. All of these depend on the need for robots, and proper management or utilization. Compare it to humans, do we need one person with many skillsets or skills distributed across many?

  20. Abhishek Chokshi says:

    The use of Kiva robots in Amazon’s warehouse is a typical example of how it is leaving it’s competitors far behind in innovation. The introduction of robots have reduced the “click to ship” time significantly. Since none of Amazon’s competitor is close to achieving such efficient levels in its ordering handling and matching the price that amazon provides for it’s product, Amazon is unlikely to pass on the benefits to it’s customer and enjoy a larger profit. It is justified as they are using this extra profit to make innovations in the entire supply chain operation. With robots, amazon can optimize the loading, unloading and transportation to get even more better performance. Furthermore, as long as the robots are satisfying the task they are required to achieve, there isn’t a need for amazon to invest in developing focused warehousing robots. Only when other players in the business start reaching close to the amazon standard, do they need to invest in newer specific robots to make themselves stand out again.

  21. Aishwarya P B Naga says:

    Having robots has increased the inventory capacity by 50% and decreased the operating costs by 20%. This shows that the robots have higher efficiency. Higher efficiency can help to offer better customer service, reduced delays and thus higher profits since more customers are attracted. Amazon is targeting one day delivery service and so this technology would definitely help to meet its deliveries well in time as the operations of the warehouse would be very quick. Since Amazon operates in different locations, there must be focused warehousing robots rather than general purpose robots to cater the operations of a local warehouse.

  22. Gautam says:

    With a projected savings of about 800 million dollars, taking into consideration the cost of installing Kiva robots in all of Amazon’s 110 warehouses, it is evident that this shrewd acquisition will benefit the organisation. Whether or not it translates to lower prices for customers, needs to be seen. The optimal approach would be to keep the prices comparable to the competition while advertising quicker delivery. When their competition is able to guarantee quicker delivery, Amazon can use the profits they generated from Kiva installation to provide competitive prices, thereby retaining the customer base. All warehousing functions will be required to work in tandem with the robots and here is where Amazon may face a challenge where human robot interaction needs to be optimized. Creating focused warehousing robots would be absolutely necessary as every warehouse would differ in shape, size and various other factors. Moreover, these robots would be required to do specific tasks, ones which general purpose robots would not be able to accomplish.

  23. Gautam Venugopal says:

    With a projected savings of about 800 million dollars, taking into consideration the cost of installing Kiva robots in all of Amazon’s 110 warehouses, it is evident that this shrewd acquisition will benefit the organisation. Whether or not it translates to lower prices for customers, needs to be seen. The optimal approach would be to keep the prices comparable to the competition while advertising quicker delivery. When their competition is able to guarantee quicker delivery, Amazon can use the profits they generated from Kiva installation to provide competitive prices, thereby retaining the customer base. All warehousing functions will be required to work in tandem with the robots and here is where Amazon may face a challenge where human robot interaction needs to be optimized. Creating focused warehousing robots would be absolutely necessary as every warehouse would differ in shape, size and various other factors. Moreover, these robots would be required to do specific tasks, ones which general purpose robots would not be able to accomplish.

  24. Siddharth Sourabh says:

    The benefits of robots are known to the world and there is no doubt that they will always be faster, more efficient and consume less area than humans. The defects per units numbers will always be better with robots than humans but the question is that whether the improvement brought about by robots in processes can be matched by other process schedules so that the end result i.e sales/dispatch/implementation is achieved faster. As we learn from the book The Gal, if other processes do not match up to the speed of robots, then all robots do is increase pile up of inventory, besides from looking cool. The real question is do other processes complement the robotic operations and whether the plant could be scaled up to full automation to generate any topline benefits from increased speeds and efficiencies.To achieve this sync, Amazon and other companies looking at robotic utilization will need to create customized robots for specific purposes.

  25. Keqian Hou says:

    In short run, Amazon cannot see the pay back immediately since the initial investment for Kiva is huge. But I believe in long run, this efficiency will translate into higher profits for Amazon.
    I don’t expect the benefits for all other warehouse operations. The initial investments, maintenance cost, and technical talent required are the things that only industry leaders can afford. Companies like Walmart and Costco can pursue this efficiency benefit.
    In general, for the entire industry, I don’t see there is any benefit that companies need to focus on warehousing robot. Not everyone can afford that. For most company, developing general solutions is still the best way.

  26. Deboleena Sen says:

    This summer, I had a first-hand experience at a warehouse working as an Operations Manager intern. During my time at the warehouse, I learnt that Operations is about processes, people, communication and technology. Excess inventory can’t translate into maximum operational efficiency until Root Cause analysis, data analysis, Continuous Improvement of processes, development and application of metrics, trust between team members are in function at the warehouse. These functions ensure that excess inventory gets effectively picked and sorted into orders, eventually increasing the shipping volume and ensuring incredible customer service. Without these functions, the inventory will be simply adding to the capital costs (from buying the inventory), holding cost, maintenance costs, depreciation costs and obsolescence costs. Unless robots capable of tackling these functions are installed at the warehouse, tangible benefits from warehousing operations such as replenishing, picking, sorting, loading and unloading are not practical.

  27. Yu-Ting Hung says:

    Using Kiva robots will definitely increase efficiency, but the time, cost and space to implement these systems will not affect customer prices and Amazon’s profits in the short term. Amazon can achieve economies of scale only when the robot is mature enough to be used in most operating systems. At that time, Amazon’s savings could be shared with its customers and even with manufacturers to coordinate lower retail prices. In my opinion, more and more industry leaders are using robotic process automation systems to increase efficiency, reduce costs and provide a better customer service experience. All these improvements will put them in a competitive position. In addition, they will have more time to focus on adding value by developing new strategies.

  28. Pardha Sai Vangavolu says:

    According to the ‘Amazon Flywheel’, which was originally designed by Jeff Bezos as the business model of the company, a lower cost structure ultimately translates into lower prices for the customer. In practice however, with the use of Kiva Robots in its daily warehouse operations, Amazon would tend to create a ‘differentiating factor’ with respect to its competitors and reduce costs. Since the investment in Kiva robots is huge and the ROI unlikely to be soon enough, Amazon would continue to reach maximum efficiency levels and derive profits before switching over to offering lowering prices for its customers.
    Having said this, I came across an interesting article on Amazon’s blog : https://www.aboutamazon.com/amazon-fulfillment/our-innovation/what-robots-do-and-dont-do-at-amazon-fulfillment-centers/.
    It discusses about how certain operations such as packing and sorting are still reliant on human workforce, since robots are yet to reach that level of understanding. Hence, certain tedious tasks such as picking, heavy-lifting of pallets etc., can be performed by Kiva robots, while other tasks can be handled by both humans and bots.

  29. Abhilasha Satpathy says:

    I do not agree that keeping higher inventory warehouses translates to higher operational efficiencies. Quite the contrary, higher inventory levels need higher capital, thus higher operating costs.The DPMO rate will always be better with robots than humans. But the process rate is the rate of its bottleneck. Thus, it (automation using robots) may not necessarily increase the rate of processing. The robots will however have a higher pick rate than individuals.
    Thus, the success of this automation initiative will be determined by how well the robots can be synced with the rest of the process. Further, even though the implementation of these robots can be expensive, its results in the long run can be beneficial and scalable to other warehouses. These efficiencies can translate to higher savings, most of which will contribute to the bottom line of the company and some of it might come as lower prices for the customers.

  30. Jayasri says:

    Nowadays, technology has become an indispensable part of supply chain. For an e-commerce giant like Amazon, it is necessary to invest in technology to bring value to customers. Competitiveness in this industry will require further improvements in decreasing the lead times to customers. In order to keep up with that, it is inevitable for Amazon to decrease the time for non-value added activities. KIVA robots are huge investment for Amazon but still it proves effective in decreasing the lead time as well as the inventory and operating costs. It is logical to conclude that in a way the savings in time is passed on to customers by decreased lead times. In my opinion, customers cannot enjoy lesser price due to this improvement because the margins are too low in this industry. Acquisition of KIVA robots is also a competitive strategy as it did not renew the contracts of the previous customers of KIVA, such as Gap, Walgreens, Staples etc. Also, it is efficient to have a dedicated robot for focusing on the warehouses than a general purpose robots, as the warehouse needs are specific like weight lifting, sorting, separating etc. Unlike humans, robots don’t have fatigue, therefore efficiency can be increased multifold, this fact justifies the investment.

  31. The efficiency by implementing Kiva robots translates helps avoid inventory mismanagement by:
    1) More accurately & efficiently tracking inventory volume, location in warehouse;
    2) efficiently routine handling of products;
    3) reduce dangers that may occur to warehouse workers.
    which lead to:
    1) Less shelf-spaces being left empty;
    2) avoid inventories being misplaced;
    3) increasing of warehouse capacity reduces the capital investment in warehouse with same business volume that Amazon may need if it is done manually;
    4) decreasing the human labor needed to do product picking and shelving and track goods on site;
    5) decrease accident rates in warehouse and corresponding financial and ethical impacts it may lead to.
    The cost reduction of warehouse space and human labor although may associate with a huge capital investment on acquiring Kiva robots and well as its necessary softwares to carry out the works done by Kiva, in long-term, the cost reduction will exceed the capital investments. Thus the savings will benefit both Amazon and its customers, with lower inventory holding and handling cost, it can be reflected on consumer purchase price making Amazon even more competitive and ultimately enlarge its market share.
    With our ever-growing technology through time, I would expect similar benefits of Kiva doing product boxing and truck loading by accurately maximizing load spaces with matrix calculating regarding product’s weight bearing capacity and other specs.
    If Amazon move towards focused warehousing on top of its current operation mode, it may lead to human labor hour reduction which may be otherwise focus on more value-added cost projects, and storage, parcel, truck space fully utilization may result in more savings for Amazon for its further investments.

  32. Dan Sun says:

    By using robots and AI, Amazon not only increases its warehousing efficiency, but also reduces its operating cost. In this sense, both Amazon and customers will benefit from this innovation. However, not every company is able to afford the cost of introducing robots. So, it is hard for us to expect similar success in other warehouses. Still, if focused robots are used, those robots will only focus on the operations in warehouses, thus, the work can be done more efficiently. Also, cost is expected to be lower for focused ones, since general solutions may require more complex programming calculation, as well as their internal and external design.

  33. Krishnajit Bhattacharyya says:

    Increased productivity with KIVA robots as compared to humans and the increased inventory holding capacity for Amazon that translates into 20% reduction in Operation costs, will no doubt result in higher NET profits for Amazon by lowering the bottom line. Whether or not this profitability translates into benefits for consumers, is at the discretion of Amazon’s pricing policy. However, in the case of stiff price competition, the increased productivity and decreased operations costs will help Amazon command lower prices which will, in turn, benefit the consumers. This benefit, however, needs to be weighed against the loss of purchasing power of the consumers. Robotization, if it results in unemployment, will put stress on the consumers to buy products. The same benefits and stress conditions will apply to other warehousing operations that employ robots. Additionally, as far as companies like Amazon are concerned, I feel specialized robots are better than general-purpose ones, because Specialized robots can increase productivity even more as their functionalities are suited to particular jobs.

  34. adityavats31 says:

    Automation is the need of the hour in any facility as the machines are robust, can work without break and efficiently with less or no error as compared to their human counterparts. Saying so, acquisition of this technology has high costs as well that can be seen in the case of Kiva robots.

    No doubt that the efficiency has increased by a great factor after implementation of Kiva, and thus Amazon is going to reap the profits thus obtained. However, saying so Amazon has become a giant brand of trust and reliability for customers, thus for striving and sustaining that level, this technology should be implemented in all of Amazon’s warehouses. Thereby incurring huge operating costs in this process. Thus, the question of passing this profit to customer is not relevant if the automation is not spread out and the initial operating costs are not recovered.

    However, Amazon to dominate in business shall soon utilize these profits and market offers for customers. Indeed, these benefits can also be expected in other warehousing operations as well, as automation will reduce human dependency and produce considerably low error.

    Robots having targeted operations to conduct in the warehouse are more reliable than any other solution. These robots shall be programmed to perform the overall warehouse management and create less intervention of humans (and thus human error or abrasion)

  35. Akshara Anand says:

    Using robots, Amazon has increased its shelf space (50% increase), lowered operating costs (20% or $22 million per warehouse), reduced “click to ship” time from 60-75 minutes to 15 minutes, with increased precision and low error rate. These results have only been achieved when robots have been deployed to automate one process. What results can be seen if they are deployed for more operations can only be imagined from the numbers mentioned above.

    In the article published by Quartz, the one time savings realisation by Amazon would be $800 million. It would be interesting to see what Amazon uses it in – to increase automation, provide better prices to customers thereby increasing competition even more, or keep increasing its own profits by cost savings. With the competition gearing up from Walmart, Amazon could look to improve its warehouse processes, as it is already investing heavily in logistics.

    If Amazon wants to automate its entire warehousing operations, it would be beneficial to program the robots for each warehousing solution such as like sorting and filling orders on their own, delivering those orders, and even understanding orders placed by humans. Benefits of using focused warehousing robots would help Amazon keep better track of information, add features or updates to each robot type depending on its skill set and better management. It could also use a variety of robot suppliers – niche players providing automation solutions for one or more processes, instead of depending on just one provider.

  36. Debashis Tarafder says:

    Amazon has been able to reduce its “Click to ship” cycle 60-70 minutes to 15 minutes by using KIVA robots. All the e-commerce companies are competing with each other to reduce delivery time. Delivery time directly impacts the customer satisfaction and which in turn will raise the top line of the company. These robots has also helped Amazon to reduce operating cost by 20%, which means it has also improved the bottom line. Now even if Amazon doesn’t share this increased profit with customers, customers get benefitted by faster delivery of purchased items.

    If Amazon can get the similar efficiencies in smaller warehouses as that it has in bigger warehouses by using the KIVA robots, Amazon can actually locate its warehouses nearer to the demand locations, and thus Amazon will be able to reduce the delivery time even further. Focused warehouse robots will always work better than general purpose robots, because warehousing includes tasks of specific skill and expertise. For example, truck loading and unloading can also be done by robots. Last but not the least, robots can perform more consistently and reliably than humans. In future warehouses, humans will only perform the cognitive activities.

  37. Shih-Feng Chiu says:

    Nowadays, with the advent of the latest technology, we all benefit from automation. The amazon robot is a very typical example of automation. The robots can help you carry heavy items, ship items to different corners of the warehouse….. With the robot, the operating cost of the warehouse decreases, and the time for shipment insider the warehouse decreases, too. With the high efficiency, both consumers and Amazon benefit from it. With the huge amount of saving in all the Amazon warehouses, the product prices could be even lower, attracting more consumers, and with the savings for labors and utility costs in the warehouses, Amazon can definitely increase their margins. However, the robot is not a human being. Some technical problems may occur and are unpredictable. If Amazon wants to keep focusing on this warehousing operations, then some mechanical engineering experts are necessary to solve the potential problems at the first moment, to minimize the loss due to the robot malfunction.

  38. Apurva Desai says:

    Kiva’s relatively new approach to automated material handling systems for order fulfillment is gaining traction in E-Commerce fulfillment, retail restocking, parts distribution and medical device distribution operations. The system is much more efficient and accurate than the traditional method of having human workers traveling around the warehouse locating and picking items.
    As of September 2017 Amazon had more than 100,000 of the robots working in their warehouses.
    Over time, after such a technology is fully standardized and customization and replacement of such systems becomes commonplace, the same system can be employed to create an industry 4.0 grade processing fleet. What this implies is the mass customization of the production process, not just the material handling aspect. Consider that instead of just material handling, the bot has a tool mounted atop it and the manufacturer purchases a fleet of such bots fully equipped with a dynamically learning and self-correcting centralized control. This would ensure greater customizability in the models, which they are supposed to make; it could also be possible to produce different products entirely. What all of this ultimately leads to is the creation of standardization in the production factories itself, as well as a complete and utter decoupling of human intervention from the production aspect. This could lead the next industrial revolution in the direction that is being currently envisioned.

  39. Shekar Sankar Raman says:

    The idea of using robots in warehouses could prove extremely beneficial for a company like Amazon. Reducing the “click to ship” time is key change that would increase the customer traffic at Amazon and thus satisfy the 50% increase in inventory at the warehouse. Robots are programmed to do one thing thereby reducing the chances of errors that would have occurred in case of human workers. This also increases the efficiency which translates to the decrease in operational costs by 20%. All this, not only contributes to the increase in profits for Amazon, but also reduction in prices for customers.
    A company with a scale of Amazon, would be more comfortable in investing on these warehouse robots. The article sheds light on the investment involved in implementing this technology in warehouses, which could range from $15-$20 million. Amazon and other large market bullies would be get away with it seeing that there is enormous savings in their scale. It could also incur other costs like investing on employees to troubleshoot issues with the robots. It would not be very wise to try to implement this in a smaller scale. Although in my opinion, even companies like Amazon would only invest further if there were a need to participate in the competition. When it comes to the idea of using specialized robots, it may or may not be necessary depending on the state of the market at the time.

  40. Li-Ren Syu says:

    The influence of Amazon’s extra saving may not necessary translate into lower prices for consumers, however, it’s likely being spent on continuous improving based on their “invent and simplify” policy to keep on providing their consumers impressive service such as 1 day delivery in the future. In fact, Amazon’s net income barely changed before 2017 due to its huge spending in supply chain innovation, and such spending result in more market shares and better control over supply chains making Amazon able to maximize benefits from implementing different solutions with economy of scale.

  41. Sanjula Sinha says:

    As the wedge between cost and price will increase, it will benefit both Amazon and the end consumer. In fact, it will translate to benefit for every participant in the supply chain.
    The issue remains whether its cost at the phase-0/1 would be too high that it becomes deterrent for most of the market and hence providing a competitive benefit to some key big players. Warehouse nowadays are providing value-added services which requires various touchpoints and needs human intervention. Such companies will not be benefitted from robots.
    It is more than important to manufacture logistics focussed automation. Key benefits of the same would include affordability, specificity, customization, and more customer satisfaction.

  42. Srijan Saurabh says:

    Use of robotics in warehouses has made the operations, intelligent, and most importantly, affordable. With these benefits of robotics, it is no wonder that they have found jobs in every field.
    The benefits of kiva have increased their flexibility by being capable of performing a variety of tasks and applications. They are more precise and consistent than human workers. Kiva can also allow for increased production and profit margin because they can complete tasks faster. They can work around the clock since they do not require vacations, sick days, or breaks. They also make fewer mistakes than humans, saving Amazon’s time.
    It is just the start of the introduction of automation in warehousing. With the improvement in technology and with the pressure of the consumer industry, we are going to see many job-specific bots.

  43. Ravleen Kaur says:

    Kiva robots significantly reduce picking time and increase inventory accuracy. Reduction in order to delivery time increases efficiency leading to better customer service ,hence providing Amazon- competitive advantage and higher profits . Customers can expect benefits from the increased efficiency. However, other warehouse operations such kitting, unbundling, etc require human intervention and to optimize the operations ,engineers ,consultants are required .Focused warehouse will further help to increase efficiencies and customer service.

  44. Junaid Imtiaz says:

    Since the robots have not been deployed universally across all of Amazon’s warehouses, Amazon’s costs initially may soar and would not lead to any beneficial pricing for consumers. However, with eventual across the board implementation, Amazon’s profits will rise due to greater storage space, reduced operational costs and increase in orders. The increase in the processing time of orders will ultimately be noticed by consumers leading to an increase in reliability and demand of Amazon’s services. The lower operating costs may not automatically translate into lower prices since the investment required for the implementation of the project demands a steady revenue stream.

    This trend may not be practical for other warehouses since such a significant capital investment may not be feasible for smaller corporations. The eventual answer to the feasibility of the venture for other warehouses depends on their purchasing power and the scale of their market.

  45. Vrinda Vishal Chopra says:

    The warehouse robots have many advantages like lesser operating time, higher inventory space and thus reducing the operating costs overall. These savings would add to Amazon’s bottom line over the period of time. Initially as the investment is very huge to have robots installed, passing on the profits to customer would not be something Amazon would consider. But it would increase delivery times and thus increase customer satisfaction. Having general solutions over specific warehouse would be helpful as they can be implemented in more than just one type setting but can be used at other facilities as the initial investment is huge. Also, this setting would give any company edge over others in the industry as they would be optimizing the operations to a significant level and saving heavily on day-to-day basis.

  46. Fast response, efficiency & low cost are main focus area to succeed in e-com business.
    From last more than 20 years, Amazon created a footprints & became a largest retailer. The major highlight of Amazon success is that it has been able to develop world’s most advanced & quick supply chain. Warehouse & fulfillment center always played a vital role.
    This warehouse & fulfillment center is a critical & crucial for Amazon’s operation & contribute a major portion in overall operational expenses.
    Maintaining inventory & fast fulfillment at low cost are keys to Amazon’s differentiated value compare to all other online retailers.
    Any improvement in warehouse strategy can make a big improvement in cost structure. And if such improvement is result in great accuracy & cost benefit, Then it’s a point to work on.
    Automaton with robot not only cut down the labor cost but help to make picking, packaging & delivery faster.
    This help Amazon to continuous improvement in delivery time. Now Amazon prime even offer few hours delivery in certain case.
    Robots are helpful to improve working condition for workers also. It avoids some area difficult for worker to operate such as in hot or cold temperature in warehouse, robots can provide better efficiency than worker.
    Definitely, some part of this improvement is beneficial for end customer also. Efficiency increase helps Amazon to keep cost structure lower on one hand & on another hand, fast delivery attracts more & more customer ultimately increasing Amazon’s profit.
    But it will be a point of discussion in future that how Amazon will justify worker displacement by robot & its impact on human life. It will also raise a question that how profit-making organization like Amazon will own the responsibility for impact of automation.

  47. xuan dong says:

    Using robots will help Amazon achieving production efficiency without a doubt. However, for this implementation, Amazon has to make huge initial investment and will face continuous maintenance cost. While initial suck cost could be amortized over time and eventually offset by cost-saving realized by using robots, those continuous maintenance costs will be taken into consideration in terms of profit. The answer is uncertain if the overall cost saving would outrun those associated costs. If Amazon could earn positive net profit by using this technology, more than likely, this cost-saving will not be translated into a lower price for customers. Amazon win customer over its competitor base on its on-time delivery and prime membership. No reason for Amazon to lower its price further when it already offered a lower price based on its core competency than most of the competitors. For mid-size companies or companies that don’t have mature warehousing management system. The robotic operation may not be suitable.

  48. Yeqi Wu says:

    Kiva robots is not only about robots, but also about the whole system that support these robots to work. That system also focus on how to do optimize the inventory system, which includes general purpose solutions, like how to layout. That would bring benefit to Amazon, and I think Amazon would keep those benefit to themself in order to develop, which might indirectly benefit customers.

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