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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161 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.

  49. Zihan Lin says:

    Adopting robotics in the warehouse decreased operation cost as well as the inventory level. Also, this kind of artificial intelligence lower the error rate, increase warehouse safety and bring higher customer satisfaction. The high efficiency will both lower prices for customers and higher profits for Amazon. It is no doubt to increase the margin of the delivery expense. When the company benefits a lot from this technology, it will leverage the deliver cost and customers will also receive the reduced prices. While, the benefits of warehouse robot depend on different industries. If the features of the product are not suitable to be moved by the robot, it still requires manpower. I think creating focused warehouse is a plus solution to lower the operation cost, but the general purpose solution still be needed.

  50. Szu Han Huang says:

    According to the data, the robot has significant impact on Amazon, which not only save the operation time but also decrease the cost. It can definitely help Amazon make more profit due to the cost down. However, I am not sure if it will reflect on the customer. Will Amazon save those money to provide the customer better service? I am in doubt.
    I think it cost a lot to adopt a robot in Warehouse therefore it may not be suitable for every warehouse or company. And I think the robots cannot completely replace the manual operations.

  51. Mengwei Li says:

    1. Time saving. Decreased from 60-75 minutes with human operators to 15 minutes using Kiva robots.
    2.Cost saving and space saving. Warehouse inventory can increase by 50%, thus decreasing operating costs by 20%.
    3. I don’t think that all of this efficiency will translate into lower prices for consumers or higher profits for Amazon or both. Other variable costs could be happened to the occupation, maintenance and procurement of the robots.
    4. Comparing with other warehousing operations such as managing people vs managing robots are totally different level of management.
    5. There are advantages to creating focused warehousing robots while there are also disadvantages. For focused warehousing, it improves efficiency for delivery time and labor costs by using robots while general solutions warehouse will cover wider range of services.

  52. laford13 says:

    Amazon has made an excellent move to help with the efficiency of their supply chain by implementing robots in their warehouse operations. All of these efficiencies will translate into higher profits for Amazon rather than a lower cost for the consumer. It is possible that Amazon would decide to lower the price of some of their products since the holding cost per item went down drastically due to the 50% increase in inventory a warehouse can hold. Amazon is more likely to charge the same price when the robots are first implemented. Before Amazon will lower their prices, they will want to experience a time period where they have reduced their operating costs while serving their customers products at the same price. They will want to experience this to ensure that the efficiency was capable of being maintained for a long period of time. As a result of implementing the robots, Amazon will experience higher profits. If other companies replicated the use of robots in their warehouses, you should expect very similar results. Their operating costs should decrease, but to stay competitive in the market these competitors will need to lower their prices as well. Other companies need to consider all of their alternatives to stay competitive with market players like Amazon. If companies are able to use specialized robots in their supply chain instead of generalized robots, this will continue to give your company a competitive advantage.

  53. nguye685 says:

    An article in Quartz 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%. All of this efficiency translates into lower prices for consumers and higher profits for Amazon because this is double marginalization. It creates a win-win situation by coordination between Amazon and customers. Customers create a demand for Amazon, and they use the technology to lower the costs, from there, they can be able to lower the price for the customers to attract them to stay with the platform or attract a new pool of customers. Similar benefits for other warehousing operations, depending on industry and R&D stage of the companies that could affect customers or not. Sometimes it helps the companies to do inventory more efficiently. However, sometimes, the costs of R&D exceed the saving costs, so no benefit goes to consumers.

  54. tiandai says:

    I think Amazon’s integration of robots into its warehouse management system is a very inspiring attempt. Obviously, this decision is to reduce inventory costs and warehouse operating costs through a one-time investment. From the current point of view, the cost of retrofitting a single warehouse is very high. But I think technology is a dynamic process. The programming system, hardware performance and material cost of robots are all in the process of continuous development. In other words, they are getting better and cheaper at the same time. Amazon’s transformation of the warehouse is not an instantaneous process, and this process may last for several years or even longer. Such a long period of time can allow Amazon and its consumers to gradually adapt to this model and make adjustments based on previous attempts. I think that in the long run, the trend of warehouse digitization and automation is inevitable. Companies that make early attempts may take relatively large risks, but they also contain huge opportunities. If an automated warehouse management system can greatly improve operational efficiency and reduce costs, then I think the goods ultimately delivered to consumers will be cheaper.

  55. Zhewei Tao says:

    As we all known, Amazon is one of the greatest ecommerce retailers in the word. It’s always working hard on the innovation to find the alternative methods to decrease the cost of delivery. Based on the content, Amazon spent $7.75 billion dollars to purchase the Kiva Robot system and by using this system for picking process can not only reduce the cost of the process but also can improve the efficiency level for the entire process. Especially by lowering the operating cost by 20%, increasing the warehouse capacity by 50% and reducing the overall time for picking and shipping by 5times. And it makes possible that Amazon can decrease the price for some products that benefited from the system to increase their competitiveness in certain market. Which can be a win-win situation for both customers and Amazon. Since Amazon is kind the first mover in the innovation process, it will take some time for his competitors to catch up thus other smaller warehouses might not enjoy as much benefits as Amazon does.

  56. Robert Waggoner says:

    It is hard to tell whether or not these savings will directly effect the price consumers pay for certain products, or if all the money saved will be turned into higher profits for the company. Regardless of where the money initially goes, Amazon is going to profit the most in the long run. Amazon could offer lower prices to consumers, but they won’t do it unless competitors force them to do so.

    With regards to other warehouses operating like this, I think it depends on volume and what products they are selling. However, I think majority of warehouses could expect similar benefits, but it may not outweigh the costs associated with implementing it. Sometimes, generic, general purpose solutions can get the job done just as well if not better, but it all depends on the type of product and the amount of money you are willing to invest in something to decide whether or not it will be worth your while. For a company like Amazon or Walmart, who is dealing with hundreds of millions of products throughout the year, it probably makes sense to invest in material handling equipment in order to effectively improve efficiency and lower costs throughout the logistical process.
    All in all, it think we will continue to see large corporations follow in Amazon’s footsteps, in terms of automation and A.I. related technologies, but for majority of the small business in the world I think it will take a much longer time to implement.

  57. Jorge Chamorro says:

    What Amazon is doing in terms of warehousing solutions is amazing! I believe that the savings gained through those operational efficiencies would -in general- translate in both lower prices and higher margins for amazon. I think that amazon considers low prices an important dimension of competitiveness, hence price reductions should be expected.

    These solutions Amazon is implementing could be replicated to other warehousing operations, since the process it follows is pretty standard. Additionally, the complexity of these warehousing environments increases the need for focused (i.e. warehousing robots) instead of general solutions.

  58. Adam Hupp says:

    Amazon’s robotics is likely to first translate into higher profits, and then to lower prices. With improved efficiencies Amazon can afford to both decrease costs while also maintaining, or even increasing profit margins. This article focused on the picking and shipping process, but it is likely that robotics can be applied in other areas as well. For instance, robotics could be used to place inbound inventory in their proper location.

    Amazon benefits from using specialized machinery because of its status as an online retailer. The core process of picking and shipping can be used for millions of different types of products, which means that Amazon can create robots that are specifically tailored to their processes. This is in contrast to some manufacturing machinery that must be adaptable to new products designs and specifications. Amazon’s processes operate largely the same no matter what the product is, thus there is less of a need for general solution robotics.

  59. Shrey says:

    Because of the tremendous growth of e-commerce, robotics is becoming an effective solution for warehouses, reducing the fulfillment cost, and increasing the efficiency. These robotic solutions provide faster shipping times, maximize inventory, higher inventory turns and keep cost at a price the customer wants to see. There would definitely be higher profits for amazon.
    Also, I do expect similar benefits for other warehousing operations as well but as mentioned in the article, it does require a huge capital to install such robots in warehouses. Small companies, unlike Amazon might not have enough budget to leverage this incredible technology.
    Companies are using robotics mainly for automated storage solutions, for retrieval solutions, and also for handling materials. Amazon kiva robots bring entire shelf to picker so picker can select the needed item to fulfill an online order. It is indeed visible that there is a benefit of focused warehousing robots, these specialized robots can increase warehouse throughout by performing functionalities more consistently and reliably than human counterparts.

  60. Shrey Bansal says:

    Because of the tremendous growth of e-commerce, robotics is becoming an effective solution for warehouses, reducing the fulfillment cost, and increasing the efficiency. These robotic solutions provide faster shipping times, maximize inventory, higher inventory turns and keep cost at a price the customer wants to see. There would definitely be higher profits for amazon.
    Also, I do expect similar benefits for other warehousing operations as well but as mentioned in the article, it does require a huge capital to install such robots in warehouses. Small companies, unlike Amazon might not have budget to leverage this incredible technology.
    Companies are using robotics mainly for automated storage solutions, for retrieval solutions, and also for handling materials. Amazon kiva robots bring entire shelf to picker so picker can select the needed item to fulfill an online order. It is indeed visible that there is a benefit of focused warehousing robots, these specialized robots can increase warehouse throughout by performing functionalities more consistently and reliably than human counterparts.

  61. lvargass says:

    The investment that Amazon has made for this type of technology is huge, $775 million is an amount that all companies can afford. So definitely this give an advantage to Amazon from its competitors. The results are favorable and have already proven to decrease their “Click to Ship” cycle times using Kiva Robots, increasing inventory but decreasing operating costs at the same time. This robots on top of being more efficient take less space than human workers.
    By the amount of investment made, I don’t think this benefit will be translate to lower prices to the customers, since this efficiency does not direct impact in the cost of the products sold by this company, but it does impact in the quality of service and how fast they are able fulfill the demand. Other warehousing operations in regards of other companies, I would expect them to be oriented to future investment towards similar technology, but this might take them longer to be able to afford.

  62. Vincent Coltellino says:

    I know a lot of people have said this already, but it seems less feasible for less established warehouses to implement this new technology. It would take a company with a smaller revenue stream much longer to reap the financial benefits. I think specialization of robots can create efficiencies in the task at hand, but could complicate maintenance and operation of the robots. Having a maintenance team be well read on a large variety of robots could cause complications, while having a generalized robot that all team members know thoroughly would create efficiencies in upkeep.

  63. zhixinli says:

    Kiva robots have significantly improved the efficiency of Amazon warehouses. The $775 million to acquire Kiva is not a small amount of money, but from a long term perspective, this acquisition will bring considerable benefits to Amazon. I don’t think this decision has much impact on the prices of Amazon products since the maintenance cost of these robots is not cheap. If Amazon can standardize the automated operation at all warehouses and provide proper training to its management team, I believe other warehouses can also benefit from this operation. Automated warehouse management is a trend nowadays in the supply chain industry due to the significant returns it brings to companies. It will definitely be more popular in the future. However, the warehousing robot is not the most suitable solution for all companies. As stated in the article, for Amazon $775 million may not be a big deal, but those small companies really need to evaluate the risks and benefits before taking this approach.

  64. Antoine Minier says:

    If Amazon become a monopolistic company in the ecommerce industry, it is fair to say that this cost saving would only benefit Amazon because they would retain it for their profit. However, even though Amazon is the largest ecommerce company in the world, they are still competing with giant like Walmart or Alibaba. Therefore, it is critical for Amazon to always propose the best deal because customer can very easily switch to other companies to make their purchases. I presume that Amazon will retain an higher profit but will also decrease prices on their website to be even more competitive.
    Even if at the end of the day everything could be automatized with the right technology, as of now, I do not see robot replacing other warehousing operations other than manutention. We could imagine a robot that would sanitize and clean the warehouse eventually.
    It makes absolute sense to design specific robots for warehousing operations because it is a very specific job with unique constraints that need to be taken into account during the design phase of the robot.

  65. Yuchen Zhang says:

    With more space to warehouse and less overhead cost for workers, Robots bring efficiency to the inventory management thus lower the costs for customers and increase the profit margin for Amazon. They are more suitable for repetitive works than human. I can see the trend in automation for warehouse management as most of the tasks are repetitive and can be easily finished by robots. It would be more beneficial to create task-focused robots rather than using general purpose solutions. Sorting, filling, or delivering orders are completely different tasks while all are repetitive. Robots need to be programed and engineered based on their specific tasks to make the most of the technology. With the increasing usage of them, overhead cost can be decreased significantly over the long-term.

  66. Sheng Yu says:

    First of all, drones are developing and we now see great potential in them working in warehouses and provide transportation options for lightweight objects. However, will the cost of multiple drones to compete with moving belt is another question. Assuming the case where drones are believed to be helpful – picking smaller items from inventory and send them onto the packaging station. Drones need to land on the objects to pick them up meaning all objects would be stored on an open area with nothing covering them – at the current stage, I don’t think drones would be able to fly into narrow spaces. This means no stacking of different skus and no shelf – impossible for current warehouse utilization. Also considering drone flying point to point – they would not beat the belt system if the belt system is carefully designed, not to mention the cost for drones are still higher than the belt system. In general, I believe without a significant improvement in drones – especially on their flexibility in narrow and dark space and stability when coordinating with other drones, robots and belts are still by far the easiest and cheapest solution for the warehouse.

    • Sheng Yu says:

      This reply should be directed to another article at https://aviyer2010.com/2015/09/21/drones-for-material-handling-in-plants-and-warehouses/#comment-7443
      Sorry for misleading.

      For this article, first of all, I believe the efficiency would somehow lower the overall cost for Amazon’s inventory system but the price of goods or profits of Amazon is just too big a scope – and inventory cost is really just a tip of the iceberg. Thus I doubt if this saving can actually be passed on to consumers – but again the increased efficiency will bring savings for sure. I would expect similar benefits to other warehouses as well, especially those in the retail business. When talking about the choices of robots, however, I believe the answer would be different for each industry. The food industry needs a delicate robot that can work in freezers, the steel industry needs big robots, and even for retailers, Walmart and Marathon would carry different goods and thus might need different robots – a general-purpose robot would probably not be feasible and cost-effective.

  67. Pooja Gupta says:

    Technological innovation and advancement like this in warehousing industry has finally started showing its effects with Amazon saving on operating costs and being able to replace human counterparts while saving time, labour and in operations and increasing the inventory holding space by around 50%. The question remains will the benefits be translated to reduction in prices for its customers. One thing that no one seems to talk about with the implementation of such technologically driven changes in any industry is the costs involved in the maintenance of the machinery, costs for the training to run that machine, along with the high purchasing costs. This might make it a bit challenging for companies of small to medium range to invest in such technology. Needless to mention that this is going to be the future of warehousing but only a select few will be able to keep their ‘customers happy’ even after facing exorbitant high delivery costs

  68. Zi Wang says:

    Although the investment for robots is huge, the return is accumulative and evident. With robots becoming more and more developed, they can carry out more diverse and advance tasks, which would replace traditional human workers’ jobs for more efficiency. As an e-commerce magnate, cost-saving from the warehouse takes up a great proportion, and using robots would become more and more profitable. However, I don’t think it’s highly possible consumers would get lower prices because of this improvement (Although personally I hope so). I think increased efficiency in the warehouse thus faster service would definitely increase consumers’ satisfaction with more loyalty. That is to say, Amazon can itself enjoy a higher profit margin with changes in process optimization. For different warehousing operations, scenarios would be different especially considering different sizes. Clearly not too many companies can acquire an IT company as Amazon did, thus using robots need to consider cost and customized design issue to get a promising return. Creating focused warehousing robots would be better because it’s more specialized. Every field has its master, a general robot may have “memory” which is not necessary for the warehouse, and most functions are from human input and need modification. A warehousing robot will be able to use its self-learning to improve its behavior to continuously improve efficiency in the warehouse.

  69. Karun Nambiar Manikoth says:

    The efficiency would surely translate to higher profits for Amazon, due to reduced operating costs, reduced errors, higher picking and sorting accuracy and the higher capacity of the robots which can function 24/7. Whether this translates to lower prices for customers may be in question, because Amazon only has to keep the prices at a range which keeps them competitive, and not below that.

    The initial capital, various costs for research, development, hiring, expertise will prove too be too much for small companies of low to medium scale operations. Large industry players like Amazon and Walmart have the capital and scale to utilize such robots for increased efficiency.

    The benefit to creating focused warehouse robots carrying out the warehouse operations, would be many, from increased accuracy for picking and sorting, and improved data collection to higher capacity of robots.

  70. Haowei Lai says:

    It;s never too surprising to see how fast the industry is developing with the advance of technology. Companies are improving efficiency in production and logistics faster than ever. However, for companies like Amazon which has few to none competitors, it is hard for any of this margin to be shared with customers.

    It would be hard to see the same benefits to be applied to other warehouse operations. As good automated packaging and shipping sounds, it requires a well designed system from the front interface with customers to the back where products are shipped, It has a high prerequisite if the system should be integrated.

    Certainly, as shown in the article, there are many benefits to creating robotic focused warehouses. Space utilization is greatly increased, labor cost is greatly reduced and more importantly service time is greatly reduced, allowing a much supply chain with much more flexibility and capacity.

  71. yujintao says:

    Amazon is now the biggest ecommerce platform in the world. With robots helping increase the efficiency of the warehouse, it can be transferred into higher profits for Amazon because labor costs and operating costs are decreased. Also, warehouse inventory can increase by 50%, which means that there’re more places to store products in the warehouse and the prices of products can be reduced because the batch sizes are enlarged.
    I doubt whether other warehouse operations can get the similar results as Amazon because, first of all, the cost of installing robots in each warehouse is very high and other companies may not want to pay such a high one-time spend in the warehouse. Besides, Amazon has enough scales to support this change but others may not. Their operating costs and inventories are different and may not benefit from this as Amazon does.
    It would be more beneficial to create focused warehousing robots rather than general purpose solutions because most of the jobs in the warehouse still need to be done by people. The jobs that robots can do is limited so that there’s no need to spend more money to use more functional robots in the warehouse. Single function like move products from conveyor to plate is good enough for now.

  72. chizhang says:

    I think all of this efficiency will gradually translate into both lower prices for consumers and higher profits for Amazon in the future. To build such efficiency require Amazon a huge amount of investment if they want to imply to all warehouses, thus higher profits from those robots will appear on the financial report after several years. Then competitors may also try to use robots to improve their competences, at that time Amazon could reduce their price to keep their market share and attract more customers.
    From my perspective, creating focused warehousing robots won’t give more benefit than using a general-purpose solution. Amazon is a huge company, designing a multifunctional robot is more cost-efficient and less time-consuming if we look at the big picture. Developing multifunctional robots with modular design could cover more areas in the company’s business, and using these robots could simplify maintenance and easier to upgrade.

  73. yutzu_huang says:

    I think this efficiency will translate to higher profits for Amazon. If the companies are big enough and have the money to invest not only the hardware in robots but the software inside the robots, such as the coding to optimize the orders, deliver the orders to the truck based on area, or fill and sort orders on their own, I believe it will be helpful and worth of investment. But if the company is small, the money to replace the system to new robot one, I don’t think it is an effective method and have much risk. Focused warehousing robots can save space because they reduce the wide aisle. They only need to organize the routes for robots to go.

  74. cpeplin21 says:

    After first reading the article, it is tough to determine if Amazon’s greater efficiencies will translate to lower prices for consumers or not. It is likely that if there is competition then Amazon will pass more of the savings onto their customers. Without competition, Amazon will likely keep the majority of the extra profits for themselves, especially if they intend to use robots in more warehouses since it costs them $15-20 million to install.
    As I just mentioned, installing the robots requires a significant capital investment and beyond that the technological know-how. For smaller warehousing operations the capital investment might not be feasible. It is likely that large warehousing operations will explore opportunities like robots or potentially drones like we discussed earlier this week. Creating focused warehousing robots will allow Kiva to charge higher prices for robots because they are selling more than the robot at that point. They are helping to solve the implementation problem for the customer, who might not have the technological know-how to setup the robots.

  75. Nagendra Kumar says:

    Implementing robots in the warehouse can be a tedious project requiring a huge budget. Even for companies such as Amazon, proceeding with such an ambitious project requires years of coordinated work, several test runs, development and maintenance of AI, etc. However, these one time costs will pay off in terms of warehousing costs saved over time. Amazon can you use these saved costs to improve customer satisfaction by reducing prices, providing free delivery, etc.

    Amazon can benefit from creating warehouse focused robots for its warehouse operations due to their extensive network of warehouses and DCs. However, such companies should be aware of maintenance and overhead costs associated with the robots and have solid failsafe plans to prevent/mitigate any robot related problems that may occur.

  76. Karan Shah says:

    Acquiring KIVA robots was part of Amazon’s competitive strategy to improve its warehouse productivity and simultaneously decrease operating costs. As the ecommerce industry grows and demands more operational efficiency and effectiveness, Amazon will have to invest in such innovative technologies to improve its warehouse and overall supply chain processes. Maintaining fill rate and reducing order fulfillment cost are important to survive in this competitive industry. Additionally, these cost savings, better picking accuracy and increased inventory capacity will translate into greater product variety and availability for customers, thus helping Amazon grow its revenue. Amazon’s long term strategy on improving customer service should translate into lower product prices for the customer.
    But such technologies should be implemented with caution because of their high capital costs and overhead costs, but in the long run this would result in a positive ROI

  77. Felix Fu says:

    The efficiency pick up would first be used to cover the capital invested in developing and maintaining the robots with the remaining probably first going into Amazon’s profits until a competitor could replicate it as well. I believe that robots could serve as a temporary competitive advantage for Amazon. The high development cost would restrict these benefits to companies that could make the investment. Smaller companies could see the benefits once robot use has been more widespread and commoditized. There will be a benefit to create focused warehousing robots. It probably would able easier to develop robots focused on a single task and would allow the company to realize the efficiency gain a lot quicker. Warehousing focused robots could also be tailored to specific warehouse needs and complexities.

  78. Atharva Sabnis says:

    This is a classic example of how Industry 4.0 can transcend the way we think about supply chains. If Amazon has indeed increased warehouse inventory by 50% while decreasing costs by a significant 20% and improving the overall fulfilment efficiency by reducing time to ship from 60-75 minutes to 15 minutes, they have every right to cut competition further by offering lower prices to customers and enjoy an increased market share. We have always heard of operating costs increasing as a result of higher inventory, but this move will allow them to not only have high availability of a wide range of product assortments, but at the same time have better service level for the increased demand. That being said, they are eyeing for even more benefits through advanced robotics that are capable of performing many other complex operations beside sorting and picking. Flexibility in customizing general purpose solutions to be more warehouse specific is an organic process and will have diminishing returns. Labor costs amounting to 80% of the total transportation cost is such a huge opportunity for self-driving technology to revolutionize logistics! Reduced transportation costs can further be leveraged to improve fill rate and increase their competitiveness. However, it has its own resistance from factors ranging from unemployment to the dark side of technology. Costs associated with risk mitigation and setting up a robust and efficient IT infrastructure for this level of autonomous communication would need to be factored in.

  79. Diego Palacios says:

    Amazon is famous for being a customer centric organization. They want to provide things fast to the customers at a very competitive price. I believe they are using this initiative to generate more profits and also offer better prices for customers.

    I see here that Amazon si working on three C’s:
    – Capacity: to use the space that they currently have to manage more inventory and decrease their response time to clients.
    – Coordination: Robots communicate directly to the system, don’t need several breaks a day and optimize their route.
    – Competitivenes: Amazon is always aware of competitors and how they can be better at serving the customers to ensure sustainability of their operations and attract more buyers and sellers.

    In my opinion, Amazon will use this to strengthen their platform, encouraging seller to use their channel and attract customers by having best combination of prices and delivery time.

  80. Mathews Oommen says:

    Automation is the need of the hour and almost all industries have implemented it in one way or the other. Use of robots can optimize the use of warehouse space leading to an increased inventory and that in turn reduces the operating expenses of the entire warehouse. It will definitely increase the net profits for Amazon, but whether it will lead to a decrease in prices for customers is something that we need to wait and see.

    Again, coordination among different activities in the warehouse is critical. There may still be activities that are carried out by humans which can directly or indirectly affect the performance of robots. Amazon can work on automating more of its warehouse operations such as sorting, understanding orders placed by humans, etc. An initial investment is required, but the cost savings with the use of robots can be realized in the coming years.

  81. Rustam Kalimzhanov says:

    Unambiguously, Amazon will benefit from the implementation of robotic warehouse operations. Confirmation of this is the calculations of Deutsche Bank. As the costs of Amazon will decrease, prices for customers will be reduced accordingly. This is a mutually beneficial process.

    Definitely, this kind of technology can be applied to other company operations. For example, using drones to sort goods into pallets, loading onto conveyors, and so on. Robots today perform simple and repetitive actions. But in the future, the company may benefit even more from smarter robots.

    On the one hand, the advantage in creating special robots for warehouses is obvious. At the moment, in the fulfillment centers are working more than 125,000 employees full-time. All these employees work together with robots. The replacement of 20% of employees with additional robots in the company’s warehouses can bring the company about $ 780,000,000 in salary savings.

    On the other hand, the question of how profitable the company will be to participate in the development of complex robotic technologies remains open. Does it make sense to invest? What will be NVP, ROI?

    We can see that the company is moving towards automation of warehouse operations, and is gradually introducing new technologies. Therefore, it should be expected that in the near future the percentage of robots, drones, and other technological solutions in the company’s warehouses will increase. Eventually, the entire technological chain will be coordinated in such a way that it will be possible to manage it by a small number of personnel.

  82. Yuanyuan Hu says:

    As Munz, the founder of Kiva, once said that the distribution center using Kiva can increase work efficiency up to 4 times. Kiva system can not only assist customers in processing more products, but in a sense the technology itself is actually more intelligent than artificial or even intelligent. In warehouses managed with Kiva technology, robots can continuously organize inventory according to the order flow. For example, if sales of corduroy pants increase, robots will place these varieties closer to workers. The less popular products are moved to the inner warehouse instead. The co-founders of uidsi, Marc Lore and Vinit Bharara, praised Kiva, because it helped the company save enough costs so that the company was able to pay for orders over $25 Providing 70% of the U.S. “Free shipping has now become a standard service,” said Cathy Halligan, a former Walmart executive and now senior vice president of PowerReviews. This service can increase customer return rate. “If the company cannot operate at the lowest cost, then profits will inevitably suffer.”

    In addition to the characteristics of greatly reducing labor costs, improving picking efficiency and accuracy, the intelligent warehouse robot system also has many advantages, such as:
    (1) The project implementation speed is very fast, the delivery cycle is short, the project deployment can usually be completed within 3 months, and the on-site installation and commissioning are simple. This is a huge advantage for fast-developing industries such as e-commerce.
    (2) The system is flexible. The intelligent warehousing robot system can increase or decrease the amount of robots at any time according to business needs to realize the flexible deployment and expansion of the system. The shelf layout can also be flexibly adjusted according to the frequency of product picking.
    (3) Low investment and short return period. As labor costs and management costs have been greatly reduced, the overall project investment payback period is shorter than that of traditional automation projects.

  83. Achraf Lokmani says:

    Traditionally, goods are moved around a warehouse using conveyors or forklifts and workers need to walk aisles, picking up the items. With robotic technologies that use machine learning and sensors, it’s the robots that bring shelves and items directly to them. This definitely speeds up the online retail process and results in decreased operating costs of up to 20%.

    Warehouse operators will be able to handle much larger volumes of goods per day by using robotics. Robots can increase accuracy by lowering errors in routine operations and accelerating repetitive processes when used side-by-side with human employees. That being said, using this approach will inherently have a big impact on lowering prices and delivery time, resulting in improved customer satisfaction.

    Using a similar approach of Kiva robots will open up great opportunities for other warehousing operations to respond to the current and future challenges and will offer an answer to productivity challenges if harmoniously integrated side-by-side with employees for better results.

  84. Shannon Hadley says:

    Purchasing $775 million worth of the Kiva robots for Amazon was a significant acquisition that undoubtedly will require a high return on investment in order to have been a profitable decision. Taking into account the decrease in time that it will take for the robots to complete shipping tasks in just 15 minutes that would take employees an hour or more to do will cut cost for the end consumer considering a significant drop in time to complete their shipping as well as saving money that Amazon would have been paying for an employee to do the same task.
    In terms of other warehousing operations, not many are on the same scale as Amazon so it is difficult to compare their benefit with that of their competitors, however I think that if it is financially feasible, similar benefits would definitely achieved by other warehouse operations through the utilization of robots in their significantly increased efficiency compared to employee counterparts. Focused warehousing robots versus general purpose solutions is just another way to increase the efficiency of warehouse operations. The more specified the robots are to each particular warehouse, the higher the increase in efficiency will be as well.

  85. hsuehmouhuang says:

    Robotics technology is growing well for nowadays, and Amazon uses this technology well to save more costs. By using robots, Amazon do work efficiently in processing orders and has ability to deliver on time, even can shorten the deliver time and attract more customers. This is one of the advantage Amazon has to get Amazon grow faster. In addtion, this saving can also be shown in the price. Once they make reduction for inventories, they get more space to adjust the price to be lower, or they provide more discounts to attract customers to do shopping in Amazon. I think other warehouses can consider investing more robots in the future, but there is one condition: their scale are bigger with more tasks. When consider investing, we should always consider whether it is worth investing or not. For example, if the warehouse is small with fewer tasks to do, it is not worthy to purchase more robots becasue the money spent on robots are bigger than the efficiency that robots will make. In addition, I don’t think putting too much money into robots is always benefitial for a warehouse. If the system of warehouse or layout could not catch up or fit into robotics, it will not be able to create value, or even get the warehouse into chaos. Therefore, I think before making decision about whether invest robots, we should look into details of warehouse and do analysis to assess it’s feasibility.

  86. Miheeth Gala says:

    Amazon would be able to achieve a lot of operational efficiencies by using the robots. Errors could also be minimized because of using such technology. I do not expect them to reduce the price for the customers yet unless required. A profit making company would want to make as much profits as possible. So getting a chunk of money from the operational efficiencies would help them to achieve greater profits. However, to remove competition in case required they might reduce the prices for the customers.

    Yes, I expect simlar benigtis could be acheived even during use of these machinery in other warehouse operations as well. I believe using focused robots is a better option as the major goal of using such technoology is to reap more profits and so general purpose solutions are fine but to get more benefits Amazon will need to implement focused solutions. Also it is a matter of fact that these investments are fixed one time costs for the company and so it is important to wait if required for a better technology.

  87. Aishwarya Marreddi says:

    Amazon standalone retail is not a very profitable business. AWS is the cash cow for Amazon group as a whole. With the high end customer satisfaction and prime features they offer, it is bound to spend a lot more. Free-shipping to consumers comes at cost. We can agree that Amazon has changed the way shopping is done and really set the bar-high for its competitors but for Amazon the volume is the key. The market size they have today in online shopping is unbeatable in the near future. So I see all these operational efficiency Amazon is adopting as ways to reduce their losses. Therefore they need not necessarily transfer their savings to consumers. But then there are no limits when it comes to customer satisfaction in Amazon, it would not be a surprise if they further reduce the prices to consumers.
    Yes, these benefits can be taken by other warehouses where it is suitable in terms of the goods they handle. As we have seen in drone article for light weight products such as Pharma, Cosmetics drone could be of large help. With the variety of goods we handle today I do not believe there is a “one fit for all” solution here. Therefore focused warehousing robots would be a of a better use. That being said what is the cost of this warehousing robots? Can the organization afford for such technology? Giants like Amazon are first movers and are taking the benefits of these solutions but small to medium scaled businesses should evaluate their cost-benefits of such technology before they invest heavily into them.

  88. tripat16 says:

    The prices on the products and the delivery time has been decreasing for customers since the advent of robotics or improved operations in warehouses for Amazon. Amazon currently has AR warehouses where a combination of humans and robots work but Amazon is still to have a completely automated robotic warehouse. In future this presents an opportunity to improve the overall output of the warehouse and the benefit would be transferred to customer while increasing the profits and customer base for amazon. The only shortcoming for Amazon’s robotic warehouses is that the capacity of the warehouses cannot be altered for sudden variations in demand. Robotic centers need a lot of investment and are typically designed for maximum capacity. Thus for manual center where manpower can be increased or decreased as per demand, robotics warehouses do not provide that flexibility. Thus amazon currently maintains a combination of manual and robotic centers in regions which can be a norm in future also.

  89. Soumya Ajmera says:

    As is evident from the articles, Kiva robots have rejigged the Amazon’s warehouse floors to enhance their operational efficiency while simultaneously trimming the cost. This practice has been implemented in a limited number of major warehouses of Amazon for just picking, packing, and shipping of products. When this practice is extended to include other warehousing activities and that too in the warehouses nationwide and worldwide, then the result and profitability analysis might not remain that simplified. Before extending the practice to other operations, careful analysis of the technical limitations of robots and infrastructural constraints of warehouse floors must be done as there is a range of associated activities.
    Profits for Amazon are inevitable from the value imparted by the use of Kiva robots. But whether the savings of Amazon will also render into low prices for customers will depend on various other factors too, like competition. Primarily, the low prices offered by companies are to meet or beat the competition. Amazon might prefer to initially translate its savings into profits as long as they have no major contenders and gradually strategize the low prices for products so as to further gain competitive advantage.

  90. Aakash Jangir says:

    Robots in warehouse might require regular repairs which will incur some costs but in the long run there will be significant cuttings in overhead costs. Due to increase in productivity and better utilization rate Amazon can translate the reduced costs into either profits or investing in other department. Moreover, with robots that have faster response rate in inventory management which will ultimately deliver a product to customer quickly. For a customer this can be considered as a higher quality of service but not direct reduction in cost unless Amazon decides to translate the savings from robots into selling prices.

  91. Sayak Mishra says:

    I agree that robots can bring down the price fro Amazon operations. Given that robots decrease operating cost by 20% and bring in more items to be shipped within a given time, Amazon can actually sell more (read ship more) at relatively less cost. I’m currently not sure what direct impact robots can bring in terms of cost over human employees. However, increased turnover and less operating cost can bring huge impacts on Amazon’s profitability.
    Since Amazon now owns Kiva, Amazon has the capability and flexibility in fulfilling its requirements. However, I would be skeptical whether the same benefits will be transcended to other companies.

  92. Himanshu says:

    Amazon Test case with robots is a great example of rapid changing environment especially in logistics operations. They has successfully shown how efficient and cost effective this has prove for Amazon. I don’t see any reason why it would be also a great choice for warehouses primarily for light products to start with. Robotic technology has evolved in leaps and bounds in recent years, with exceedingly limited capacities for highly specialized computer parts capable of conducting increasingly complex tasks. It remains to be seen if the factory of the future will be completely automated, but there is little question that robotics will play an increasingly influential role in this field, limiting humans to help in supporting such tasks.

  93. Reduction in expenditure achieved via reduction in manual labor and increase in efficiency due to robots will be limited to company and I feel this reduction in cost will not be passed on to the consumer. Also, automation can great resolve several manual labor issues hence these benefits are actually scalable and can be applied to other warehouse operations.

    Yes. Creating warehousing focused robots will allow companies to obtain customized solutions tailored to their specific needs. As every industry is different, distinct material handling solutions might be needed so as to ensure synergy between robots performance and companies expectation.

  94. Wenzheng Jiang says:

    It can be seen from the article that although the cost of acquiring the robots is relatively high, Amazon can still make more profits from the use of Kiva robots in the long run. Consumers won’t get a direct price cut, but faster delivery will lead to better service. So it’s a win-win. But for other firms, the cost of acquiring the robots is higher, so the benefits may be less than the costs. Thus it doesn’t necessarily have the same economic benefits. Compared to the general-purpose solutions, the benefits of creating focused warehousing robots are stable operation (low error rate) and no need for rest.

  95. Akul Manoj Kumar says:

    The robots have next generation robotic vision with a visual perception based robotic autonomy device that incorporates deep learning and stereoscopic cameras. Certainly its the next big movement even in the warehouse industry. UPS in its experiment with robots in its warehouse and assortment centers have successfully implemented and shown great results which lowered their TCO by 15%. This mix of human, AI and automation skills is becoming the chosen approach for tomorrow’s warehouse. With the demands of e-commerce increasing, the supply chain and its staff need to make the best possible use of all efficiency technology available. Warehouse are not lagging behind and Amazon experiment could be taken as model case for the smae.

  96. Rujuta Mamadapur says:

    The efficiency revolutionized by introducing robots in Amazon warehouses, that decrease inventory and operating costs translate into lower overall prices. Now the question arises if this is going to be customers margin or Amazons. In my opinion, it is going to be both. Since Amazon is highly customer-obsessed, an initiative like this which would reduce the prices that customers pay for products via Amazon would help Amazon to retain its highly valued customers and attract more customers expanding their business as well as having substantial profits for themselves. Companies which have investing capabilities at par with the scale of Amazon can look into adopting similar practices. In fact, from anecdotes that i gathered over my internship at Amazon, a few of Amazons customers are in awe of the level of automation that Amazon has in their warehouses and would like to adopt the same.

  97. Rishabh Jain says:

    Automating material handling, majorly the picking process in a warehouse help in synchronized operations and reduction in the picking time (as opposed to manual picking from the bins by the associates). Amazon AR facilities have robots that take the bins to an associate for taking the item out of that bin so that the associate doesn’t have to move among the bins to pick the items. This significantly reduces the time and hence helps to decrease the lead time to the customers. While the AR robots move in a two-dimensional space, the picking/ material handling process through drones will be in a three-dimensional space and will be able to reduce the picking time further. These innovations will help the associates do their jobs quicker. There are a few precautions that need to be taken care of while automating the operations like the Safety. There needs to be a designated space for the drones to fly that should not be frequented by the associates. Apart from that, there should be a check on the maintenance schedule and accidents.

  98. Rishabh Jain says:

    The increased efficiency of the warehouses due to the Kiva robots in Amazon facilities are specifically designed for the picking operations of the bins with the specific capacities and dimensions. Other warehouses that have high demand than the associates’ capacities can be helped by these robots. I believe that different warehouses will have different requirements and should get customized robots.
    The reduction in the cost is directly or indirectly is impacting the customers. From my internship experience at Amazon, Amazon is the most customer-centric company and majority of the things are aimed to increase the customer delight. If the AR facilities in the Amazonian operations network is improving the efficiency and reducing the costs then either the prices charged to the customers will be decreased or the cost savings will be put to other operational improvements that will help increase the customer delight in the long term, as the lead time reduction and better service.

  99. Sheng-Yang, Chou says:

    It’s a trade-off between inventory cost and operating cost. Even for companies such as Amazon, proceeding with such an ambitious project requires years of coordinated work, several test runs, development, and maintenance. The high development cost would restrict these benefits to companies that could make the investment. So for small companies, using money to replace the system to a new robot one, will be an ineffective method and have many risks.

  100. Aman Arora says:

    Implementation of Kiva robots in warehouses by Amazon definitely helps them reduce costs which will eventually trickle down as savings for consumers. This eventually will lead to more and more customers ordering from Amazon which will eventually lead to Amazon getting better economies of scale. It is in interest of Amazon to implement this at their warehouses and also in the interest of consumers for the long term. Having said that, it will take time since every Amazon warehouse might have different nature of product and thus the type of robot required will be different. There is a lot of thought that will go in understanding this and adapting the capability of robot to operate certain specific functions.

  101. Ali Amer says:

    Question:
    Will all of this efficiency translate into lower prices for consumers or higher profits for Amazon or both?

    Answer:
    Yes, these decrease in “Click to Ship” times utilising the Kiva robots will lead to lower operating and inventory costs. This efficiency as a whole does translate to lower costs for Amazon Operations.
    Whether this translates into lower prices for consumers should be clear in the longer run, what in the short term we should see is even faster shipping to customers (Prime 2-Day shipping) along with a wider range of selection for this expedited delivery. This efficiency should further translate to Amazon meeting on the customer promise, even faster. With new and improved delivery features on a wider selection of prime products.

  102. qiyaoliu says:

    Equipping KIVA robots to improve operator efficiency and inventory management productivity which would lower the operating costs. Amazon would have been investing a lot in robot technology, and bringing in new robots would also increase the maintenance cost. Therefore, in the short run, company profitability might not increase. Since the impact on overall costs is vogue, it is also hard to estimate if it would bring benefits to the customers. Honestly, creating warehousing robots would be a very costly and time-consuming project, for amazon, it might be affordable and worthy. However, for other companies, the huge amount of initial investment and high technology requirements might hinder them to create warehousing robots. In that case, general solutions, which can help companies to reach the same goals but with fewer costs would be more practical.

  103. Matt Wright says:

    Utilizing Kiva robots instead of human labor increases efficiency 400-500%, significantly increasing throughput. In addition, the fact that less space is needed for the robot to navigate that the human would need increases the warehouse capacity and decreases holding cost per item. Both changes lead to a decreased operating cost, which will either increase Amazon’s profits, decrease consumer prices, or both. Consumer prices will decrease from this increased operational efficiency only if competitors implement similar technologies that allow them to also achieve cost savings. If competitors do not close the gap with Amazon, then there will be no price competition and no reason for Amazon to lower consumer prices, leading to significantly increased profits. Similar results can and will be achieved at other warehouses, especially those who compete closely with Amazon such as Walmart. However, this technology works best for smaller items such as the ones a company like Amazon ships to consumers, and would likely not work with large items such as appliances at a Whirlpool warehouse or lumber at Menard’s. Having focused warehousing robots does bring benefits in that warehousers such as Amazon can not just eliminate human labor for undesired jobs, but can also incur significant cost savings and operational improvements at the same time.

  104. Guillermo Cerutti says:

    I believe it can go both ways but depends on Amazon. Yes, definitely it will lower the costs for Amazon as it can be used to lower inventories as well as increase the efficiency. It can be good for customers if Amazon decides to either lower prices or maintain the same prices when other costs go up a bit and soak up those costs.
    Other benefits can be achieved by Amazon, like decreasing work accidents and absentees. All these are benefits that can also be achieved by Amazon’s competition like Walmart should they develop the same type of robots.
    Developing robots specifically for your own warehousing needs is a great way to gain a competitive advantage that can bring more efficiency to your company so I am sure that this will also be at least evaluated by Amazon’s competitors.

  105. David Ng says:

    The Kiva robots not only can help Amazon to create more space in its warehouses, but also reduce time to ship the products to customers. Obviously, the Kiva robot will help Amazon reduce its operating costs and increase inventory efficiency; however, for companies that are not as big as Amazon, it will be difficult for them to invest in this technology. Therefore, I don’t expect other small companies can have enough capital to invest in robots. Even if they have the same capital, it may not be as beneficial as one may think. Amazon, arguably, may handle millions of products every day; therefore, having Kiva robots to sort through the items are necessary to reduce time and cost. However, for small companies, they maybe only handle couple thousands a day; therefore, investing in robot may not be as beneficial as having human manages the inventory. Depending the industry and the size of the firms, robots can be beneficial.

  106. Amanda Tronchin says:

    Amazon will do both to be competitive with other retailers. It will lower prices and increase profits. Likely, they will increase profits to increase the stock price further. Today, Amazon has not paid a dividend and has reinvested its net profits back into the company.
    As Amazon’s success continues with this new strategy and competitive advantage, competitors will replicate its design. This will lower Amazon’s competitive advantage and increase other warehousing operations.

    A company like Amazon needs to create focused warehousing robots that are tailored specifically to its business. Also, it makes it more difficult for other companies to replicate by doing business with the warehousing robots. Competitors will need to create their solution or wait for another warehousing robot company to form and source.

  107. Anantharaman Gomathyshankar says:

    All this efficiency will both lead to increased profits for Amazon and increased competitiveness in pricing for the customers. The total economic value and cost of production of the product remain constant. Decrease in logistics cost provides Amazon an amazing opportunity to create value in the supply chain which could be shared by both Amazon and its customers. Similar benefits could be achieved by coordinated automation of warehousing operations.

    The argument for creating focused warehousing robots rather than using general purpose solutions is one of “specialization” vs “generalization”. Industrial and large-scale applications of robotics and automation need to be highly calibrated to perform complex functions at a statistically robust level for efficient warehouse operation. This paves the way for creation of focused robots for warehouse automation.

  108. Chia-Yen Lu says:

    The efficiency improvement will generate higher profits for Amazon. According to the article, the robots in the warehouse would save 22 million dollars per warehouse and the cost to implement the robots is 22 million which means that the payback year of the robot investment would recover in less than 2 years! And from my point of view, the way that Amazon is so successful is that they reinvest their profit into technology innovation, with the technical competency, Amazon doesn’t need to lower the price to attract customers. Amazon could just benchmark the price in the market and set the price as same as other competitors. Other warehouse operations would likely have similar benefits, when the processing time is reduced, the cost would be lower.

  109. Emma Wellington says:

    I think the added efficiency from the Kiva robots will translate mostly into higher profits for Amazon, but some of the cost savings will be passed along to consumers. Since Amazon acts as an online market place, it is likely that Amazon will use these cost savings from efficiencies to further invest in their business and improve profits. I would expect that similar benefits could be seen in other warehousing operations if they were to implement robots like the Kiva robots. As mentioned in the article, time to pick the items and the overall “click to ship” cycle was greatly reduced with the use of robots. This could be applied to other warehouses for retailers and grocery stores. Although there may be a greater upfront cost to creating focused warehousing robots rather than using general purpose solutions, there are benefits associated with this decision. By customizing the robots and software to the company and warehouse, the robots can more efficiently and specifically perform the tasks necessary. Additionally, the company can better implement the technology in a way that yield the most meaningful contribution.

  110. Vinay Krishna Devulapalli says:

    Amazon had achieved this operational efficiency by investing heavily in the R&D of process automation. In the initial years, amazon will reap the benefits of having additional inventory and increased operational efficiency. However, Profits are indirectly transferred to the customer by increasing service level. With amazon prime, we are receiving the products in a relatively short amount of time compared to a few years back. To keep this up, Amazon should develop a skilled workforce for servicing the Kiva robots and expanding them to other warehouses. With robots working continuously, Amazon could reduce the prices and thereby gaining a competitive advantage. However, standardizing the warehouses and investing in robotic technology is not recommended without deep pockets for other companies.

  111. Zachary McClurg says:

    While the efficiency will rise and overtime after the initial investment in the technology and robots, Amazon will see higher profits. They will also be able to gain more customers because they will be able to charge a lower price on items to remain competitive. However, I don’t believe they will lower the price enough to spread the savings to Amazon users. They will only go low enough to have a customer buy from them over Walmart or other major competitors. With the reduced time it takes to click and ship, there will still be a convenience fee that customers are willing to pay. Therefore, I only see this translating into higher profits for Amazon. Raising capacity of the warehouses will lower holding cost of items and reduce the required number of warehouses needed to support a given region. Also, robots show up to work every day. This will maintain day to day operations smooth. Robots also process data at rate that humans cannot. This will likely lead to less mistakes. In the case of robots being used in warehousing, I think it is a great benefit to have them have focused capabilities. They have one job and that job is not going away anytime soon. The better they can be built, designed, and programed for warehousing, the better. General purpose solutions would be better in manufacturing where the robots job could potentially change from product to product and day to day.

  112. Sara Fortman says:

    This efficiency will mostly translate to higher profits for Amazon. The Kiva robots will be saving millions of dollars per Amazon warehouse, and the ROI on the robots will be relatively quick, Then I think eventually some cost savings or lower prices for consumers will arise, because Amazon will be able to lower their prices once they are making a substantial profit off of the robots. Amazon can use these cost savings to make it seem like the customers are getting a good deal, but it is still in Amazon’s gain. I imagine there being similar benefits for other warehousing operations as the Kiza robots for Amazon. Picking time will be reduced anywhere these robots are, which will benefit the warehouse no matter what, it is a matter of when the said company can breakeven on the robot investment. I do think there is a benefit to creating focused warehousing robots rather than using general purpose solutions, because robots will do exactly the tasks they are told to do, and this could lead to less errors and downtime (no human errors/downtime). As long as the robots are working correctly, this can reduce the labor costs in warehouse picking.

  113. Calei Kelly says:

    I think this efficiency will mostly translate into higher profits for Amazon that can be reinvested into more innovations. Most companies already can’t compete with Amazon on price, and until they have a direct competitor on that, I think they will keep prices around where they currently are. Due to some of the ongoing labor shortages, I could also see this efficiency being turned into higher wages for the employees they still need. I think that these benefits could extend to other warehousing operations. A lot of Amazon’s warehouse and shipping center processes are repetitive and manual labor heavy. With the right technology, these labor costs and inventory costs could be reduced across even more Amazon warehouses. At Amazon, I think there is a benefit to creating focused warehousing robots rather than using general purpose solutions. They have the capital and the sales volume to pursue that. However, there are probably lots of general purpose solutions that could make an impact without a large capital investment.

  114. Dakota Ropp says:

    I think it will do a little bit of both of the options stated above. It all really depends on what kind of profit margin Amazon wants to have. If they are looking to decrease costs but keep prices where they are, then the price for the customers will stay the same. This would lead to Amazon getting an increase in profits. If Amazon wants its consumers to have lower prices, they will decrease the prices along with the costs. They could also have some type of margin in the middle. They could decrease their costs, but decrease their profit margin less than that of the costs. Either way, it will be Amazon who decides which way it will go. Now, as for the benefits to Amazon, not only can this help their consumers it will help the rest of the business as well. Less of a cost means more money that you can use to help the company. So, overall it is a very good thing for Amazon.

  115. Rubin Mao says:

    Although the Kiva robots required a large investment when being applied initially, but it lowered the operating costs in a long run. As a result, the price for customers to place orders will decrease and the profits for Amazon will increase since lower operating costs and higher volume of orders. This mode is not suitable to all other warehousing operations. First of all, it will be a large amount of investment and may not worth for some companies since they may not have similar order amounts and ability to make profits. Also, for Amazon, their orders usually contain several products in one order, which takes more time to process than some other warehousing that only process one product per order. When the efficiency between human operators and robots, there is no need to apply Amazon’s mode. For the benefits, just like what I mentioned before, it is still depended on the industry of the warehouse and their order characteristics.

  116. Yilun Xie says:

    In my opinion, both things could happen depend on the competition Amazon face from its competitors. When there are other competitors in certain area competing with Amazon, Amazon would be thinking about lowering their price for its customers as that can give Amazon competitive advantage. But as competitors got driven out of the business or as Amazon starting to have dominant market share, Amazon will be thinking about having a higher profit as they have the power to do so at the time. Of course, with more robots doing warehouse operation, Amazon will save a lot of money on labor expenses and saving a lot of effort on improving operation efficiencies. As for creating robot for warehousing, I would say in the short future, it might not be viable to invest into this as probably only Amazon have such volume of needs for such robots. But in the longer future, it would be beneficial to manufacture warehouse-focused robots as more and more warehouses will become more automated. At the time, there will be huge demand for warehouse-focused robots.

  117. Aadav Srimushnam Sundaranathan says:

    As people shopping online increases, robotics provide a way for managing complexities in warehousing operations. Some of the advantages include reducing picking errors, flexibility to last minute changes, managing peak shopping seasons and definitely ROI as the cost of skilled labor is only bound to increase over time. The question of whether it will be passed onto customers will be questionable considering Amazon players have other metrics to bargain for such as delivery timelines, availability leading to reliability and faster processing times. As these cost reductions lie in the shadows, it is much more beneficial for Amazon to reap these benefits and these provide Amazon the bandwidth to reduce prices depending on its threat from competitors.

    Manufacturing robots are customized to suit the production lines, similarly the warehousing robots will also find its place and flexibility for customized operations to meet the operational requirements. Focused warehousing robots will pave way for more efficiency considering the scale and number of SKUs of varied sizes and volume are available in a warehouse. Increasing demand from online shoppers will increase the demand for focused warehouse robots for fast moving goods and other goods.

  118. Darsh Shah says:

    The KIVA robots has been one of the most promising technology and a great acquisition decision by Amazon. The efficiency improvement resulting from the use of KIVA will definitely have an impact on customers and will enable Amazon to provide better services at lower price. In addition, it will increase their competitive advantage in the market. As the company is expanding exponentially, it should implement this technology in all their warehouse as it will have long term benefits. Labor costs are rising and in the long run Kiva technology will reap more benefits for the company.

    Focused warehousing robots sounds like a great idea but the technology should be designed to have multiple uses to maintain high utilization rate of robots. It will be very exciting to see how future technologies digitize and automate end to end supply chain.

  119. Mu Hua Hsu says:

    For Amazon, focused warehousing robots can bring more benefits compared to general-purpose solutions. The robots not only save 75% time of processing in the warehouse but also save more inventory due to having more shelf space. Amazon becomes more efficient after applying this technology. Due to the cost reduction, the total margin in the supply chain grew. Amazon can choose whether share this margin with customers. In my opinion, Amazon might retain some of the margins so that it can invest more in research and development as well as reach the expectancy of stockholders. Yet, parts of the margin will transfer to customers, such as providing lower shipping fees or discounts, so that Amazon becomes more attractive. In this way, it can prevent customers from moving to other platforms and improve customer stickiness. The competitive advantage will therefore become more solid.

    Competitors might want to follow up on the technologies. However, the cost might be enormous to them if their scales are not large enough. Since applying the technologies means restructuring all of their warehouses and changing their labor composition, it not only takes large of funds but also takes time. Other warehousing operations might require shutting down before the restructure finishes that might be unbearable for them. As for the large corporation, they might have the ability to do so and have a high chance to follow up. In the long term, if all of the big corporations apply focused warehousing robots, for Amazon, the benefit from this competitive advantage might vanish, and the margin shared by Amazon and customers might be gone.

  120. Sruthi Madadi says:

    Amazon using robots in warehouses is an amazing strategy as it not only reduces the touchpoints in the supply chain but also aids to reduce their lead time. Using robots had helped Amazon to reduce their delivery time from 3-4 days to 1-2 days. An additional benefit of it is as the robots occupy less area the warehouse space could be optimized to maximize the hold of inventory; it will work out for Amazon as it has a high inventory turnover ratio. Carrying inventory helps Amazon to not only decrease their ordering cost but also increases the customer service level and avoid stock-outs.

    Using Robots for monotonous and manual jobs helps to reduce human error, avoid inconsistencies/variances, reduce man-hours as the work can be accomplished 24*7 without interruption. Companies implementing robots are always benefitted from all the above-stated functions.

    Especially during the Covid times using robots helps not only to avoid the spread of the disease but also supports the supply chain to be resilient towards human resource constraints. This is a good start and moving on I think it would help companies if they had warehousing robots specific to their requirements.

  121. Sara Yung says:

    Amazon’s investment in using Kiva robots is a great way for the company to process orders and have customers receive their orders faster. With the addition of robots, this has led the warehouse inventory to increase and operating cost to decrease. Because of this efficiency this could translate to higher prices for consumers and higher profits for Amazon. Over the years, Amazon has raised their Prime membership costs, this may be the reason for offsetting costs of Kiva robots and other automatic equipment. Amazon also is using their quick delivery and service as a big selling tool for customers, so consumers that need convenience may be willing to pay a higher price for an Amazon product. Amazon though, does have products that are less expensive compared to a big-box retailer store to drive more customers to their site. I expect there will be similar benefits for other warehousing operations because Amazon’s leadership principles are geared in efficiency, convenience, and competitiveness. Robots, like Kiva, help Amazon be closer to this goal. There is a benefit in creating warehousing robots because with an operation like Amazon’s it will need help and efficiency in organizing and maintaining the various products that it has. General purpose solutions are not needed for Amazon’s workforce because that is not the focus of their business.

  122. Nicholas Reverman says:

    I believe Amazon including robots in their warehouse operations will result in Amazon having higher profits in the long run. However, I do not believe it will be as much as people believe it will be. They may be able to decrease their direct labor cost, as well as other operating costs with respect to handling packages and items, but to manage these robots and to keep them running at full speed and operating correctly will require many experienced maintenance technicians. This new cost will offset some of the efficiency gain that they would have had otherwise. Overall, there will be a net gain in this new efficiency.

    Other than profitability motives, Amazon has incentives to use robots, as they can work 24 hours a day, 7 days a week, no breaks, no sick days, and no vacations. Not only this, but if they are programmed correctly, errors in shipments should essentially be zero. They can lift as much weight as they need to as well, with no risk of human injury/liability either. The only downside I could possibly see, is that it will require a decent amount of capital to install and set up in their warehouses. However, Amazon has plenty of capital, and an existing flow of cash due to their large sales volume, and I believe they can set the standard for retailers online and box stores when it comes to warehouse automation. There are probably much cheaper general purpose solutions for Amazon to pursue, however, automation is the way of the future, and they want to be at the forefront of it.

  123. Brian Mbui says:

    This project will yield efficiency for amazon in very appealing numbers however I think that it will take some time before this efficiency in the process translates into profits for Amazon and subsequently lower prices for customers (at Amazon’s discretion). The reason I am saying this is because to shift a huge number of warehouses from man power to robots is at a great price and Amazon will need to device ways to get their ROI. Therefore, the profits might stay within amazon for a while before customers feel any other difference apart from faster shipping times. Apart from that, these robots might need constant updates and maintenance which might not come at a cheap price considering quantity, thus rendering this a huge investment in efficiency but not necessarily a direct aim at higher profit numbers. This is a project that I wouldn’t foresee other warehouses taking upon because of the cost factor but if they become mainstream then they would have a place in the small scale supply chains.

  124. Li Ci Chuang says:

    Amazon is the largest E-commerce provide around the world. Using the Kiva robots to facilitate overall supply chain will absolutely benefit the company.
    First, machines always operate faster than human brains and can reduce error rate as well, making the whole process more efficiently and effectively. Currently, the robot was utilized for one particular process only: “click to ship”, which already significantly reduced the operation time, and the benefit will be more obvious if it can apply to more, creating an optimized eco system. However, I would say that people is still needed in the decision making part, because machines can not think, even though ML (Machine Learning) and AI (Artificial Intelligence is getting more developed nowadays. A method with mix of people thinking and RPT (Robot Process Automation) will be the best practice in the future, from my perspective. Customers’ waiting time decrease, the Amazon attracts more orders at the same time, it is a win-win policy.
    This new solution may be applicable to warehouse decision as well, because warehouse cares about efficiency and inventory allocation, RPA can help such issues.

  125. Zihan Zhang says:

    I am pretty sure this transformation will make amazon have a higher profit and make customers buy products from Amazon in a cheaper way. Robotic processing will be the future of the supply chain system for its speed, low rate of displacement, and cheap operation cost. But I hesitate to say that using robots to process orders in a warehouse will be beneficial to giant companies like Amazon or Alibaba, but to a small company, it may take longer to reach its return on investment. Also, there are some industries that robots are not as developed as those robots which are designed for special use.
    I also consider that it is unrealistic to design a robot that is for general use. Different business has different supply chain system and warehousing considerations. It is a good idea to use a universal design that can solve all problems, but more efforts need to be put into implementation for each company. Some success stories can not be simply replicated.

  126. Juan Bautista Rigal says:

    I believe it depends completely in Amazon. It is difficult to predict what would the company do when they lower costs by implementing new technologies. It will probably allow Amazon to provide a better service without changing costs or have flexibility to offer discounts and promotions.
    Moreover, if robots take over warehouses there could be less human error and also setting up warehouses strategically without thinking about workforce. It can open a whole new strategy for Amazon, and this could lead to competitors to rethink their approach. It will give amazon a competitive advantage over others, and it will set a new standard in service level and cost efficiency.

  127. Chou Yen Hung(Misha) says:

    Amazon can increase more profits by focusing on warehouse robots systems rather than general-purpose solutions. However, it is difficult to predict how much capital expenditure Amazon needs to spend. Furthermore, robots can save not only 75% of processing time in a warehouse but also save more inventory space. In my opinion, the increased profits are from Amazon’s side. Thus, Amazon can choose where share margin to customer.

    Because of the uncertainty of capital expenditure, I would recommend Amazon save some profits for future facility development or technology research. Amazon can share some profit by subsidy logistics cost or offer students discount to gain more customers base. By sharing profits, Amazon can gain a win-win situation to maintain the world no.1 eCommerce company.

    In conclusion, I think using warehouse robots is a great decision. However, Amazon should think more about the risk from technology such as cyber security, AI wrong decision, or power shortage issue. A method with a mix of people thinking and AI solutions might be the best method in the future.

  128. Jiandong Hu says:

    I believe that all of these efficiencies will benefit end customers and Amazon. As mentioned in the article, robots in the warehouse could save on workforce costs and improve safety. With warehouse robots handling more tasks, so human workers could reduce injury risk. Also, there are always “hiring” sign outside the warehouse, especially during the pandemic, the shortage of warehouse workers would not impact the operation if using robots in the warehouse. In addition, the warehouse with robots could hold 50% more inventory, which means the saved space by using robots could fill more inventory, increase the fill rate and satisfy more demands.
    Warehouse automation is the trend in the future regarding its accuracy and efficiency since customers who order online always expect faster delivery. The automation is about the robots and the integration of the entire system, not only just picking and sorting, so the robot’s development should focus on the warehouse specifically.

  129. Lindsey Prommer says:

    I believe that all of this efficiency will turn into slightly lower prices for consumers but much higher profits for Amazon; Amazon will likely desire to slightly undercut competitors’ pricing but will pocket the higher margin. I would expect similar benefits for other warehousing operations because Amazon’s ingenuity widens their margins; Amazon has no close competitors necessitating them to give their margin away to customers. There is a benefit to creating focused warehousing robots, which is that they are built specifically to aid in the warehouse and therefore yield higher value to the warehouse rather than a lower utility as a more general purpose solution. That said, it is certainly a costly decision for Amazon to invest heavily in a limited-use robot.

  130. Ting Lin says:

    In the short run, Amazon needs to have the initial investment in order to develop reliable technology of using robots to replace humans. The accuracy of the robots are also extremely important to the success of this change. If they were not accurate, they would increase the warehousing operation costs even more to have workers manually correct and confirm the orders. I think customers do not benefit as much as Amazon does from the successful implementation of robots. Amzon will have higher profits from the efficient use of robots. Other warehousing operation costs such as transportation cost will not be impacted since it refers to before the inventories arrive at the warehouse. The use of robots save cycle stock costs and in-transit costs since the warehouses can carry less inventory and it requires significantly less time to process the order.

  131. abhinao kumar ojha says:

    Given the amazon focus of being customer centric it seems that they would want to transfer the profit to their customer. Amazon would actually benefit more in long term if they are able to transfer this to their customer.
    Whether there is a benefit to creating focused warehousing robots rather than using general purpose solutions depends of scale. In case of amazon if the improvement is at an elementary level it can translate to huge profit but that might not be the case for other small scale warehouses.

  132. Vasif Yusifzada says:

    Robots definitely have a great impact on Amazon’s business since these robots are able to reduce the delivery times of orders, increase inventory efficiency and reduce operating costs. As mentioned in the article, if Amazon can implement the Kiva robots strategy in the rest of the 110 warehouses, they can save up to $2.5 billion. This efficiency will increase the profits for Amazon and on the other side, cost savings can possibly decrease prices for consumers. In my opinion, lowering the prices would not be the most efficient decision for Amazon because the company can easily maintain the higher customer convenience levels with current prices. Instead, the company can use these cost savings to further improve this technology and enhance the efficiency of the operations.
    I think we can expect similar benefits for other warehousing operations since these robots are doing a great job in reducing the “click to ship” cycle, improving inventory capacity, and reducing the operating costs significantly. Businesses need to do a cost-benefit analysis before investing in this technology because it is an expensive technology and may not be suitable for all types of businesses and warehousing operations.
    Finally, I think there is a greater benefit to creating focused warehousing robots rather than using general purpose solutions. If Amazon can improve this technology to carry out more diverse and advanced tasks, it will help the company to be more competitive in the market. This decision would definitely incur higher expenses for Amazon, but it will definitely have a huge positive impact on the efficiency of its warehousing operations in the long term.

  133. Anupam Choudhury says:

    Robots are being used in the manufacturing industry for decades to increase efficiency and precision. Amazon took a leaf out from that book to automate their warehouse operations, and why not? With Amazon’s economies of scale, it is essential that they automate processes to improve efficiency in operations. I am not sure if that would translate into customer savings but would undoubtedly increase customer satisfaction and thus more profits for the company in the long run. Amazon’s experiment will also open doors for other warehouses to replicate the process, but smaller businesses may not access the technology due to the initial high cost. As the use of robots gains, traction and prices will come down, and new companies will try to innovate in this space leading to more widespread use of the technology.

  134. Zeyu Hu says:

    I think all of this efficiency lead to slightly lower price for consumers but a handsome profit for Amazon. Warehouses that using Kiva robots not only have higher efficiency, but also hold 50% more inventory than centers without robots. With higher inventory levels, Amazon could respond better to demand fluctuations, thus helps Amazon to gain more market share. If it can make better use of the warehouse space, Amazon can also reduce the number of warehouses while maintaining the same total inventory level so that total operating costs will be further reduced. In the long run, with the continuous improvement of artificial intelligence technology, using robots to replace labor in other warehouses is an effective way to improve both efficiency and profits.

  135. Su Tien Lee says:

    Using the Kiva robots is really good news for customers and the business. As a customer, I enjoy the efficiency and the quick delivery time provided by Amazon. I highly agree that with the lower operating costs, Amazon can provide a lower price compared to other e-commerce platforms. As long as the price doesn’t differ a lot, the efficiency in delivery will render customers satisfaction in the buying experience. As for Amazon, they may suffer from the high development cost of robots and the infrastructure cost at the beginning, but as the business model becomes stable, they would start be benefit from this investment and gain profits. All in all, the investment in Kiva robots will benefit both the customers and Amazon.

    Suppose the commodities in the warehouse were originally displayed in the sizes, then categorized by different usages and domains. With the initiation of the robots, Amazon can simply store its products in alphabetical order. The robot would precisely recognize the position of a specific product with its built-in AI system and need not worry that they will be confused by how the products are displayed. The robots are able to reach out to products in a higher spot, so the overall warehouse can become more squeezed.

    Though with the positive result that the robots may bring in, they sometimes may still make mistakes and require human interruptions. Amazon may create focused warehousing robots, but they should not forget that humanity is also required in the warehousing process. I would recommend that Amazon go hybrid – create the focused warehousing robots and use general purpose solutions at the same time to provide a win-win for both customers and themselves.

  136. Coumba Niang says:

    When labor cost is decreased, customers get the chance to gain lower prices overall which is attractive and turns into higher profits for Amazon as more customers will be interested . Also, the acquirement of these robots place Amazon among the top online retailers as today technological advancement has a positive impact on customer’s buying decision. In addition, robots are less prone to make human mistakes which means that complaints will significantly decline. I also expect similar benefits for other warehousing operations because these robots will create a sense of security for the workers in regards to injuries, and warehouses will look much more organized. The only inconvenient is about warehouse workers who might lose their jobs due to the introduction of the robots. However, I believe that Amazon has the power to create new jobs, or job alterations to those workers. The workers could be trained to operate the robots, verify orders accuracy or any potential damages.

  137. Esha Kaushal says:

    In my opinion, implementing Kiva robots has helped Amazon redefine expectations for modern customers. Amazon should continue to focus on assistive robotics for other warehousing operations as it will speed up and reduce errors in menial warehouse tasks like transporting products across massive warehouses.
    The predictive nature of robotics will also result in a reduction of uncertainties in the warehouse operations resulting in low variability while planning.

    Though immediately customers may not see the profits gained by the efficiency of these robots as the initial investment to expand robotics to other Amazon operations is high but in long term, customers may also start experiencing the benefits in terms of lower prices.

  138. Hasit Yarlagadda says:

    Kiva robots have given so many advantages for Amazon logistics. They help in reducing the time from click to ship, increased inventory in warehouses and decrease in overall operating costs. Although research and developing these robots might involve a high initial cost, the final savings they provide will surpass the costs. These savings can be shared by both the customer and Amazon. Depending on the competitors’ prices, Amazon can decrease their price a bit to gain competitive advantage and keep the remaining savings for their own profits. Picking is the one of the warehousing operations requiring the highest manual intervention. Robots could be used to load and unload the cartons into the trucks as this also requires manual effort which could be eliminated and decrease operating costs. Focused warehousing robots can make the specific work more efficient and do it with accuracy. Focused warehousing robots might be helpful only if the warehouse or the number of warehouses using these are high in number. Spending effort, time, and money in designing new robots would be useless if they do not have many warehouses to use these.

  139. Hao-Wen Weng says:

    I do not believe that the efficiency will translate into lower prices for consumer. The profit might be used by Amazon for focusing on the technology and how to aggregate their own assets instead of paying back to the customers. Customers will not know that Amazon use robot in the warehouse and save tons of money. If other warehouses want to introduce the same system on operation is very difficult. First of all, they need to have enough funds to invest at the beginning and it is not easy. There is two way that can be done, one is the company did it by their own, but it requires strong coordination between engineering team, logistics team and management team. The other way is outsourcing, but it also requires money and the costs on communication as well. But introducing robots benefits the transportation and the operation in the warehouse a lot. The data can be uploaded in-time, the robots do not need monitor, and robots do need rest. The data in the warehouse will be more accurate to be managed, and the labor costs and overhead costs will decrease significantly. The benefits of robots are huge, but to the small company, it is a risky option for them when they don’t have strong capitals.

  140. Alexander Rabold says:

    The use of robots in warehouses would result in savings for both Amazon and customers, although the degree of benefit to each is largely still dependent on Amazon. The reduction in costs per warehouse is noteworthy, but it remains to be seen whether Amazon will transfer the majority of these savings to the customer or use the savings to fund further improvements to their warehousing and logistics systems. The use of similar robotics would doubtlessly benefit other warehousing operations and companies, but given the high entry costs, it’s likely that such improvements won’t occur until the technology becomes cheaper.

    The benefit of general purpose robots would be much the same as the more focused designs Amazon is using right now: further operating cost reductions. If such a machine was implemented, it could dramatically cut costs in terms of human personnel, as well as allowing fore more efficient operations. However, the benefit of more focused designs is that they are both easier to design and easier to implement. Kiva’s more limited designs are already providing cost savings, while the general purpose designs under development may take years to be ready for operations.

  141. Wei-Ling Huang says:

    The click-to-ship efficiency with Kiva robots will definitely help Amazon reduce operating costs and thus increase profits, and also give Amazon more competitiveness in terms of shorter delivery time. Amazon has been taking advantage of this to promote Amazon Prime membership for customers who want to have orders delivered sooner than normal shipping time, so I think such efficiency will not necessarily translate into lower prices for consumers, but perhaps higher values for consumers and for sure higher profits for Amazon.

    Warehousing operations have different focuses between brick-and-mortar and e-commerce businesses. E-commerce businesses need to look for a variety of products in the warehouse to fulfill an order, so its warehousing operations are not only storage but also more complexity than traditional ones. For those e-commerce in a large scale as Amazon has, I expect they will have similar economic benefits to amortize high fixed costs of one-time installation over tremendous volumes.

    I think for specific tasks that require customized functions for each warehouse, there is a benefit of creating focused warehousing robots. But for the long run, general purpose solutions would be a cost-efficient option by reducing costs through standardization for tasks that do not vary across different warehouses.

  142. Haoning Wang says:

    As we all know, Amazon has the best supply chain in the world. Therefore, it is not strange that they are using robots to increase warehouse inventory and decrease operating costs. In my personal perspective, this efficiency will make higher profits for Amazon for sure, because the operating costs will decrease. But it will not affect the products’ price. All they want is to make the system much more professional and efficient in order to reduce the lead time and better customer satisfaction for their customers. On the other hand, the system dealing with the ten thousand level’s SKU still needs to undergo rigorous testing for a long time. This will cost a lot in the future. How to dynamically identify and process SKUs of more than ten thousand levels while ensuring accuracy and stability still needs to deploy tests in the complex warehouse environment. There is no doubt that this is a competitive way to ensure efficiency. The robot can reduce a lot of mistakes rather than human beings. They can ensure the accuracy as said.

  143. Wenbo You says:

    From the efficiency by operating the Kiva robots, customers will likely be able to enjoy the lower prices and Amazon will likely be able to generate higher profits. However, there will be uncertainties in terms of profitability when they shift from labor to AI. Amazon will need to be aware of managing the costs from robot acquisition, management, and maintenance and the according overseeing labor costs.
    Whether all warehouses will benefit from automation, highly depends on the characteristics of their inventory management. Firms should decide the degree of implementing robot-using based on where works can only be done by human labor. In general, automation would bring more efficiency to larger warehouses.
    In my opinion, creating focused warehouse robots is the better choice over general purposed solutions, but Amazon needs to be aware of the possibility of unit and system malfunctions which can lead to different degrees of shutdowns.

  144. Colton Kaplan says:

    Reducing operating costs by 20% will allow Amazon to significantly improve its margins. It will take time to make up the initial investment of 775 Million dollars but it will be beneficial long term. I believe there will be a slight decrease in prices for consumers. However, since they are already a leader in the industry they do not have to decrease their prices for customers to still shop with them. It will benefit the workers by reducing injuries and shifting the labor to other tasks that do not take as much manual labor as picking items. Automation is the future and Amazon and its competitors will continue to innovate by creating robots for specific warehousing tasks. The benefit of making robots for specific tasks will allow to increase efficiencies, reduce labor expense, lead time, and allow for more demand.

  145. Daniella Cobos says:

    I think that having the kiva robots will create higher profits for amazon because it will reduce operating costs as well as reduced human errors. I am not sure if this will lead them to reduce costs for consumers. Allowing for faster service could be a way to charge the consumers more. Other companies will want to use these robots to better compete with a giant like amazon but they could run into the challenge of not having the capital to invest in this technology.

  146. YING-HSUEN TSAI says:

    According to the article, Amazon ‘s Kiva robots helped to decrease the operation cost by 20%. However, it’s not necessary that Amazon’s customers be beneficial from this huge saving. If Amazon’s competitors keep the current price level, then there will be no incentive for Amazon to cut the sales price. The saving will end up as an addition to Amazon’s margin. For the second question, the answer without a doubt is “that depends”. Warehouse automation is the future because robots can make the whole warehouse management more efficient. However, there’s always as mentioned in the article, it takes $15-$20 million to install robots in each warehouse. The fixed cost is very high, so enough degree of economies of scale must be ensured to offset it. For those smaller warehouses, it might not be a completely good idea to do what Amazon is doing. In summary, creating warehousing robots can bring a great number of benefits and as well as costs. Therefore, the major players in the warehouse robotics game will be those large companies like Amazon and Walmart. For the smaller-sized companies, trying to come up with general-purpose solutions might be more feasible and bring a better balance of extra profit and cost.

  147. Shivang Batra says:

    During the pandemic, there has been a drastic increase in online shoppers with the increasing trends in the coming future. The efficiency of using KIVA robots when labor cost is increasing has been one of the great investments by Amazon. But the question that saving will pass to customers is questionable. In my view, the cost will pass on to both customers and Amazon. Amazon will use the cost-saving to invest more into technology and will lower the price for the customer to compete with other big players.

    Robots can be customized as per the need of the requirement. One of the perfect examples is the manufacturing industry. So, similar benefits can be achieved for other warehousing operations like sorting and filling.

    Focused warehousing robots will provide more efficiency considering the range of products for which they are designed resulting in fast and efficient working as compare to general-purpose.

  148. Nilo M Cedeno says:

    Amazon always surprises the world. This is an innovation that all the retailers want. Saving 20% of the operating costs switching human labor with robotic labor is a huge achievement; if my company sells $1,000, I can save $200, but Amazon sells billions of dollars. Customer obsession is the most important of Amazon’s principles; they are looking for ways to satisfy customers pleasing them in all the ways (cheapest prices, variety, quick deliveries, etc.) Considering that the goal of all the companies es to minimize costs and to maximize profitability, if Amazon save costs, honestly I do not believe that they will reduce too much prices for customers. All this efficiency will be translated translate into higher profits for Amazon more than lower prices for consumers, in fact, I would say that they will reduce prices only if competitors have more attractive prices. I also believe that this automatization is desirable in all the companies that really could set up, where robots work as a perfect substitute of humans.

  149. Patrick Todjalla says:

    The primary responsibility for company executive board as well senior managers is to create value for company shareholders/owners. It is understandable to see these efficiency efforts translate into higher profits for Amazon primarily. Indeed, some costs savings would eventually benefit consumers, especially improvements utilized long term as well as economy of scales realizations. Amazon has been innovating and improving their technical abilities for a while now and it is difficult to point out how that benefited consumers significantly. The nature of tech, where innovation is never ending, competition is fierce, it is safe to predict that if any, only little of these efficiency savings would return to Amazon customers. Most of the costs savings would need to be reinvested into innovation and technical advancements in addition to providing acceptable ROIs to shareholders. The reinvesting in further technical advancements and efficiency is simply a requirement in the industry, survival and success of the company depend on that.
    Looking at the horizon within tech and online retail industry, I believe the trend is showing that similar benefits will ensue for other warehousing operations. One of the primary purposes of supply chain design and operations is to produce efficiency for organizations; automation and high tech have so far shown to be a great answer for achieving those objectives. So, none should be surprised to see similar efficiency features in other areas of warehouse operations. Ultimately, shareholders and company owners would demand it to see more value creation within organizations. As adoption of these practices increases, and sizable market and demand become available, it would be well worth creating focused warehousing robots to achieve even more efficiency. If such customization is commercially profitable, then offers from robots’ makers would be a great proposition for all parties concerned.

  150. Liang-Chou Wei says:

    High-tech warehouse robots are expected to slice 20% of operating cost for each Amazon warehouse. And I truly believe that with automatic warehouse system and autonomous mobile robots could make the whole dispatching process more efficient – time-saving, safer, accurate, just as what the article mentioned Kiva warehouse robot could leverage the time by roughly 70%.
    However, high-tech warehouse robots might not really benefit the whole supple chain at this moment. For colossal company like Amazon, even though Kiva robots could save around $800 million of money, Amazon should also consider another expenditure – retraining and adjustment for current operation structure. Therefore, commonly using high-tech warehouse robots to replace the labor seems not a wise decision.

  151. Chi Wen Chen says:

    I believe that in warehousing operation, the trend of automation is the key to further decrease the over all operating cost. There are mainly two reasons behind it. One is the the performance of these automatic robots is more predictable and reliable. Therefore, there will be less manual error involved. Another is that though the initial setting cost for these robots are expensive, these costs can be justified during the time and the marginal cost will decline really quick.

  152. Oladapo Olatunde says:

    I strongly doubt if all this efficiency will translate into lower prices for consumers, as we know some of the products sold on Amazon platforms are owned by 3rd party sellers. Amazon is investing a huge amount into using robots and as a business they will want a return on this investment over time with more profit to the company. In years to come they will eventually break even. Although this might position them for better customer service, we should also remember some of this technology have their down sides as well. If it turns out to be a profitable venture, they will extend it to other warehousing operations to save costs. The benefit of creating focused warehousing robots, will be that this robot will perform customized tasks in certain industry and will perform efficiently within specific industry. Such technology capacity will be more utilized.

  153. harishgavva says:

    During the pandemic, there has been a drastic shift in shopping trend with people preferring to shop more online. The efficiency of using KIVA robots when labor cost is increasing is a great investment by Amazon. But whether the saving will benefit the customers remains to be seen. Amazon will use these saving by re-investing more into technology which will increase the efficiency and due to the competitiveness of the market will lower the price for the customer. However, the use of robots in improving the efficiency may depend on the task at hand. Industries were the of instructions required is high customization of robots may not be as economical as hiring people.so, implementing the robots in other various will depend on the industry.

  154. Rajinder Budhiraja says:

    “Robots do not catch covid.” This caught my attention in diving deeper into thinking if robotics and AI are a new way ahead for warehousing operations. Reading the above article was quite a treat as it reflects results that are consistent with intuition.
    Amazon has been successful in decreasing its operating cost while improving its efficiency using Kiva robots. Amazon has been a customer-centric company; I do believe that the benefits would translate to lower prices for its consumers. Furthermore, it better its competitive position over its competitors by reducing pricing and maintaining its profitability levels.
    To the question of whether similar benefits can be expected for other warehousing operations, I have varying opinions based on the kind of activity it entails. I can think of various activities at a fulfillment center are inventory tracking, picking and packing, receiving and stowing, shipping, and reporting. I do believe that robotics has already been used in many of these areas. However, I also think that humans can never be eliminated entirely by robots.
    It would be beneficial to create more focused warehousing robots over general-purpose robots, as different warehouse operations require a differing level of human intervention.

  155. Rajinder Budhiraja says:

    “Robots do not catch covid.” This caught my attention in diving deeper into thinking if robotics and AI are a new way ahead for warehousing operations. Reading the above article was quite a treat as it reflects results that are consistent with intuition.
    Amazon has been successful in decreasing its operating cost while improving its efficiency using Kiva robots. Amazon has been a customer-centric company; I do believe that the benefits would translate to lower prices for its consumers. Furthermore, it better its competitive position over its competitors by reducing pricing and maintaining its profitability levels.
    To the question of whether similar benefits can be expected for other warehousing operations, I have varying opinions based on the kind of activity it entails. I can think of various activities at a fulfillment center are inventory tracking, picking and packing, receiving and stowing, shipping, and reporting. I do believe that robotics has already been used in many of these areas. However, I also think that humans can never be eliminated entirely by robots.
    It would be beneficial to create more focused warehousing robots over general-purpose robots, as different warehouse operations require a differing level of human intervention

  156. Ahmed Hegazy Ali says:

    I believe that warehousing costs will decrease dramatically, primarily due to the lower need to hire more personnel (salaries, benefits, pensions, etc.). Nonetheless, reduction in lead time due to elimination of a packing and shipping bottleneck can further increase customer satisfaction, which can lead to a higher customer retention ratio.

    Having said that, corrective quality control measures need to be put in place proactively to ensure that all customers receive correct orders, and that any mistakes made are rectified prior to scale.

    I do expect that robotics can add more benefit to overall capacity of a warehouse, seeing that robots are consistent with schedules, provided that all inputs are correct.

    I do think that robots can further be used for loading and unloading in the future, which will be a game changer in the logistics industry (check loading and unloading robots from Boston Dynamics)

  157. Vikram Narendra says:

    With the use of Kiva robots, both Amazon and consumers can benefit. With more users will added, Amazon will have a direct cost-benefit due to ecomies of scale, leading to higher profits. In a competitive environment to keep the users within the Amazon ecosystem, the profits will ultimately trickle down to consumers leading to lower prices. I see similar benefits for other warehousing operations like loading and unloading a truck which can eliminate human involvement.

  158. Kristian Komlenic says:

    I think price reduction will not happened for a foreseeable future. If we are talking technology integration in a company that is oriented around it’s efficient use of Kiva robots, it will take time to off set the investment made by Amazon. We cannot predict entrance of new competition, because someone else could potentially have a breakthrough on automation of warehouse where Amazon will have to invest again to stay competitive. Reduction in price could potentially happen for the goods where Amazon can loose some revenue but gain on another one. I think yes, creating a focused solution can bring savings, but also opportunity for a company to focus on other areas where it’s lacking coordination. Investing in a focused solution has to be analyzed from all 4c’s. In order to be able to implement such a solution you have to understand where you’re lacking throughput.

  159. Tianlun Zheng says:

    Warehouse robots are just one form of warehouse automation, but they’re making a big impact. From greater flexibility and scalability to productivity gains, a faster ROI compared to other automation solutions and better resource management, warehouse robots are changing the face of warehousing.

  160. bmyczkow says:

    With the implementation of automated warehouse robots, the initial benefit will be most tangible for the retailer. Because logistical cost typically amount for a small proportion of items which have a high margin, decreasing warehouse cost will not immediately effect prices. However, if warehouse capacity is to increase consumers may notice an improvement in lead times, and in stock probability. There is also increased cost incurred with swapping to a fully automated system, for on the infrastructure cost, purchasing the robots, is more expensive than training human capital. Furthermore, there can be higher maintenance cost associated with upkeep and constant upgrades.

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