Robotics Do Not Guarantee Success in Warehouse Operations, Warns Augusto Beato

Portland SEO's Augusto Beato warned warehouse operators about the pitfalls of misjudging the kind of warehouse robotics solutions to acquire.

According to Beato, many acquisitions were improperly evaluated and may not conform to the warehouse's existing operations.

"Consequently, the automation solution may be underutilized, leading to a higher handling cost per unit and lower throughput as compared to manual processes," Beato, who is the CEO of Portland SEO, pointed out. "Companies have achieved varying levels of success, and often failure, using automation in their warehouse operations."

Beato was reacting to a report published recently by Market Research Future that the global warehouse robotics market projected to grow at 10 percent CAGR and reach a market value of US $5 billion mainly due to the demands of e-commerce.

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Automated warehouses manned at least partially by robots are likely to become mainstream in the future, as warehouse tenants look for ways to overcome a growing labor shortage.

With e-commerce sales doubling over the last decade, labor costs have escalated rapidly due to strong competition for a limited number of workers.

As a result, warehouse wages have risen dramatically since 2013 and now average $13.75 per hour nationally, but can range from $12.41 to $16.48 per hour, depending on the market. Warehouse labor represents 15 to 25 percent of logistics costs. In high-density urban locations, labor accounts for up to 75 percent of costs.

Furthermore, the e-commerce industry needs better warehouse management solutions for efficient quality and faster delivery.

Online giant Amazon is already using robots made by Kiva—square-shaped, yellow machines—in multiple fulfillment centers. The 16-inch tall wheeled machines, which automate the picking and packing processes, cut merchandise cycle time down from 60-75 minutes to 15, and use space more efficiently, increasing inventory space by 50 percent, reports The Seattle Times. Amazon invested $775 million in the technology, but company executive Dave Clark stated that it reduced operating costs by 20 percent, which translates to $22 million per fulfillment center.

Beato also noted that the inclination towards warehouse robotics would also shift the nature of human work in logistics facilities, requiring workers with a higher skill level.