The Robot Revolution: Exploring Warehouse Automation Trends
Last month we were delighted to have Bob Trebilcock, Consulting Editor, Supply Chain Management Review, lead a conversation on warehouse automation trends and the robot revolution at our customer conference, Inspire 2024.
Bob presented the results from The Third Annual Intralogistics Survey conducted by the Peerless Research Group in partnership with MHI and The Robotics Group. This research aims to assess how companies are currently utilizing robotics in their operations and their plans for future adoption. The following Q&A covers key findings of the survey as well as some personal observations on recent trends from Bob.
Q: According to the survey results, how has the adoption of robotics in warehouses evolved from 2022 to 2024?
A: In 2022, the survey revealed a 50/50 split among companies: 52% were using or planning to use robots, while 48% had no plans or interest in robotics. By 2024, this shifted significantly. Only 11% of respondents had no plans to use robots or were uncertain, while 46% were actively using them, up from 23% in 2022. Additionally, 33% planned to adopt robots within the next three years, and 10% planned to do so beyond that timeframe. This indicates a clear trend towards increased adoption of robotics and automation in warehouses.
Q: What are the key factors driving companies’ decisions to invest in robotics?
A: The primary factor influencing companies’ decisions to invest in robotics is the cost of labor and labor constraints, cited by 50% of respondents. This is followed by concerns about inflation (36%) and the potential impact of a recession (32%). Rising costs due to inflation and the need to maintain operations with a smaller workforce during economic downturns make robotics and automation attractive options. These technologies enable organizations to maintain or even reduce headcount while continuing to meet production needs, a theme that is consistent throughout the research.
Q: Where are companies that have decided to invest in robotics in their adoption process?
A: Among companies that have decided to invest in robotics, 43% are still in the knowledge-gathering stage. This indicates that, despite a significant interest in robotics, many organizations are in the early stages of understanding and planning their adoption. This aligns with the impression that, while robotics is a growing trend, widespread adoption is still in its initial phases as companies work through the complexities of implementation.
Q: What specific processes are companies focusing on improving with robotics in their facilities?
A: Picking and packing have taken turns as the top priority for process improvement with robotics. The initial focus on picking arose from its high labor intensity and costs, particularly due to the surge in e-commerce orders. Companies optimized their picking processes to such an extent that packing became the next bottleneck, prompting a shift in focus.
Additionally, sorting processes, such as using robots for put walls and parcel induction, have emerged as significant priorities, while order consolidation, trailer unloading, and non-value-added transport (like automated lift trucks or tuggers) are also gaining attention. This fluctuation in priorities illustrates a broader scope in robotic applications as companies aim to streamline various stages of their operations, continuously adapting to changing demands and operational challenges.
Q: Are companies financially prepared to invest in robotics, and how are they planning to cover these costs?
A: Yes, a significant majority of companies looking to invest in warehouse automation and robotics are financially prepared, with 76% reporting that they either have funding or are in the process of securing it. Regarding their preferred payment models, 36% of organizations are considering a hybrid CAPEX-OPEX approach, purchasing the robotic system outright while subscribing to software support. Additionally, 28% are opting for a pure CAPEX model, buying the entire robotic solution and managing support in-house, and another 28% are looking at operating expense models, such as robotics as a service (RaaS). This means that nearly two-thirds of users plan to rely on robotics companies for some level of support. Notably, while time-to-value is currently the most critical factor for these investments, total cost of ownership follows closely, and ROI, although shifted to third place, remains a crucial consideration for decision-makers.
Q: What obstacles do companies face in their pursuit of robotics?
A: Companies encounter several significant obstacles when pursuing robotics and automation, with identifying a clear ROI topping the list. This challenge is followed closely by project lead times and securing funding, although it’s noteworthy that 76% of organizations already have funding in place.
Other critical obstacles include concerns about the maturity of robotic technologies; while established systems like AutoStore and Locus Robotics have proven reliability, companies are wary of adopting emerging technologies that may not yet be fully developed. Additionally, many organizations lack internal expertise in robotics, as the field is still relatively new, making it difficult to navigate the complex landscape of available options. Finally, the overwhelming variety of robotic solutions also adds to the challenge, as companies struggle to familiarize themselves with numerous vendors.
Q: Can you share examples of companies that have successfully rolled out robotics?
A: Two notable examples of successful robotics and automation rollouts come from DHL and Gap. DHL initially deployed fewer than a dozen Locus robots at a single facility in Memphis. After experiencing success, they expanded their use to thousands of Locus robots across their network, reportedly around 4,000 at last count. They didn’t stop with Locus; DHL also adopted other robotic technologies, including AutoStore and autonomous lift trucks, continually seeking ways to enhance their operations with various robotic solutions.
Gap is another excellent example, known for its proactive approach to automation. They started with a small number of robotic put walls from Kindred AI in one Tennessee facility and have since become the largest user of Kindred’s put walls for multi-line orders, operating at least 500 units. Furthermore, Gap has expanded its automation efforts by implementing Exotec systems to manage returns across multiple facilities and introducing Boston Dynamics’ Stretch robot to unload cases from trailers. This ongoing exploration of new robotic technologies demonstrates Gap’s commitment to continually improving their operations. These examples highlight a trend where companies that find success with one type of robot are eager to explore additional applications across their operations.
Q: In general, are users satisfied with their robotic solutions, and how well are these investments meeting their business objectives?
A: Yes, users are generally very satisfied with their robotic solutions. According to our findings, nearly 80% of respondents reported that their robotic investments met or exceeded their business objectives across various categories. Specifically, 91% indicated success in time-to-value, 83% in process performance, and 79% in return on investment (ROI). These high success rates are remarkable compared to other categories of technology and reflect the effectiveness of robotics when applied correctly.
Additionally, when asked if their robotic solutions helped achieve overall business goals, 71% of users confirmed success, showing a slight increase from 69% in the previous year. This consistent positive feedback indicates that companies investing in robotics are experiencing significant value and achieving their objectives effectively.
Q: Are companies using one type of robot, or are they transitioning to multiple types in their warehouses?
A: Many companies are transitioning to using multiple types of robots in their warehouses. In fact, 64% of respondents indicated that they are moving toward a heterogeneous robotic environment, leveraging multiple suppliers. This trend is evident in organizations like Gap, DHL, CJ Logistics, and Chiotis, which initially implemented a single type of robotic solution but have since expanded to utilize various robotic technologies.
Q: In organizations using robots, who is responsible for their management, and what is the current state of robotics ownership?
A: In organizations that use robots, 58% report that the operations team is responsible for managing them, while 33% indicate that engineering handles this role. However, as companies move toward heterogeneous robotics—integrating multiple types from various suppliers—there is a growing need for a dedicated role, such as a key robotics officer, to oversee these systems. Currently, only 17% of organizations have an automation or robotics competency center, and 63% do not have a robotics partner, highlighting the slow progress in establishing clear ownership and support for robotic initiatives.
Q: What key warehouse automation trends should we keep in mind as we move forward in the robotics landscape?
- Consolidation of Vendors: The long-anticipated consolidation within the robotics industry is underway. Many vendors are facing pressure from venture capitalists (VCs) to achieve cash flow positivity or risk losing funding. This consolidation may help streamline the number of providers in the market, which has become overly saturated.
- Mainstream Adoption of AMRs: Autonomous Mobile Robots (AMRs) and good-to-person technologies, such as AutoStore and Attabotics, are becoming mainstream solutions. Companies like DHL are deploying thousands of Locus robots, and the integration of such technologies is becoming routine, akin to installing conveyor systems.
- Challenges for Piece-Picking Robots: Piece-picking robots are struggling to find their niche outside of manufacturing. While they excel in predictable environments, such as pharmaceuticals, the variability in e-commerce distribution poses challenges. As the technology matures, its adoption may increase, but it will take time to find suitable applications across diverse industries.
- Need for Strategic Integration: Traditional systems integrators have yet to fully develop strategies for integrating robotics solutions. Many companies prefer to work directly with robotic vendors, often due to a lack of financial incentive for integrators, especially when the robotics-as-a-service model is in play. However, some integrators are establishing successful partnerships and service models that could serve as a blueprint for others.
