The rapid growth of Amazon's warehouse empire slowed this year as e-commerce demand cooled off. But that hasn't dissuaded the company from advancing automation efforts inside its facilities to improve operational efficiency.

Amazon unveiled several new warehouse technologies and provided updates to ongoing projects this year. Many are prototypes that have yet to be deployed at scale. Still, the intent is for them to make an impact in the company's logistics network one day.

“We don’t develop technology for technology’s sake,” said Siddhartha Srinivasa, director of Amazon Robotics AI, in an article on Amazon Science's website. “We want to develop technology with an end goal in mind of empowering our associates to perform their activities better and safer.”

Here is a rundown of six warehouse robotics innovations Amazon showcased this year as it looks to improve its fulfillment operations.

Cardinal

Cardinal is a prototype "robotic workcell" that selects one package out of a pile, lifts it and reads its label using artificial intelligence and computer vision. The system then places the package into a GoCart, non-automated wheeled transports used to move goods within facilities.

By using Cardinal to handle the lifting and turning of large or heavy packages, Amazon says the risk of employee injuries is reduced. A prototype handling packages up to 50 pounds is in testing, and the company expects the technology in fulfillment centers next year.

Robotic stowing

Stowing is a difficult task to automate, due to the dexterity required to handle a wide range of products in a delicate manner. Amazon has been developing a robotic system that can identify potential space in a storage bin and adjust its contents to create space before placing more items inside, per its Amazon Science website.

The company has prototypes of its robotic stow workstation at a lab in Seattle, Washington, and another system installed and handling live inventory at a Sumner, Washington, fulfillment center. This year, the system successfully stowed 94 of 95 items in a test featuring products with challenging attributes, like items with an offset center of gravity.

Sparrow

Sparrow is a robotic system that can detect, select and handle millions of individual products using computer vision and artificial intelligence. By moving items prior to packaging, it relieves employees of repetitive tasks and makes the fulfillment process more efficient, according to Amazon.

Sparrow is currently in the research and development phase, a spokesperson said in November. It's expected to complement other machines in Amazon's network — after items are handled by Sparrow and packaged, robotic arms like Robin and Cardinal can redirect the items within the warehouse.

Experimental transport robot

Amazon is testing free-roaming robots that handle the transport of oversized and unwieldy items within a fulfillment center. These items are normally transported by employees via pulleys and forklifts. The company aims to have the robots, which use artificial intelligence and computer vision, cover this task instead.

“This is the first instance of AI being used in autonomous mobility at Amazon,” Srinivasa said in the Amazon Science article.

As of October, dozens of these robots have been deployed in a few fulfillment centers for preliminary testing and refinement.

Proteus

The fully autonomous Proteus, unveiled in June, lifts and moves GoCarts throughout fulfillment centers and sort centers, navigating around employees in the process. Amazon aims to automate GoCart handling to pare down the need for employees to manually move heavy objects.

Proteus, Amazon's first fully autonomous mobile robot, will initially be deployed in outbound GoCart handling areas, according to a company blog post.

Pinch-grasping robot

The purpose of the prototype pinch-grasping robot is to move a variety of items quickly and without damage. Vacuum-like suction is the typical technology for robots moving a varied set of items, but there are challenges associated with suction. This includes a vacuum seal breaking prematurely or moving an item that requires contact on more than one surface.

In preliminary tests, the prototype achieved a tenfold reduction in damage on certain items without losing speed versus suction-using robots, according to Amazon Science's website. Amazon is still working to generalize the robot's manipulation capabilities to be viable for all items in its store, including for items weighing less than two pounds.

If the past few years were the age of evolution in the supply chain, 2022 is the year of the supply chain revolution. That was the theme from MHI CEO John Paxton when presenting the findings from this year's survey of materials handling professionals and how likely they are to adopt 11 emerging technologies.

The survey is a keen insight into which technologies are having tangible impacts on how supply chain companies operate, and which tech, including often-lauded breakthroughs like blockchain and digital twins, companies value and are willing to invest in for the future.

What was apparent at the survey unveiling in March was that executives are thinking not only about the technologies themselves, but the people that will build and operate them.

Like industries across the market, supply chains are suffering from labor constraints and a lack of trained workers. Executives said they hope new technologies can help both fill vacant job responsibilities and entice people to work with cutting edge tech.

“I think what we'll see over the next few years is hopefully an increase in the number of professional talent that are at the beginning of their career, really digging into the supply chain space, and they expect the technology,” said Terry Esper, Associate Professor of Logistics at The Ohio State University. “I mean, they've been educated for the last couple of years digitally. So they are truly expecting a more digital work experience.”

There's a lot in this year's report. We've highlighted three key stats for each technology explored in the report, on issues including the rate of adoption now and in the next five years, the potential for the technology to disrupt supply chains or create a competitive advantage, as well as barriers to adoption.

Inventory and network optimization tools

Cloud computing and storage

Sensors and automatic identification

Predictive and prescriptive analytics

Internet of Things

Robotics and automation

Wearable and mobile technology

Artificial intelligence

Blockchain and distributed ledger technologies

3D printing (additive manufacturing)

Autonomous vehicles and drones

Robots are often in the news for sensational reasons: The Boston Dynamics robot dog impersonates Mick Jagger; a Spider-Man "stuntronic" flies over Disneyland visitors.

But in supply chain, robotics and automation have gone from something radical, even fringe, to mainstream.

"It's considered low risk. And, pretty soon, it's going to be table stakes for operations within supply chain, where 10 years ago it was considered either cutting, or bleeding edge, or risky," said Jeff Christensen, vice president of product at Seegrid.

Annual installations of industrial robots will jump from 450,000 a year in 2015 to 600,000 in 2022, according to a McKinsey projection. The firm also predicted that 10% of today's manufacturing processes will be replaced by additive manufacturing by 2030.

A confluence of factors — including the pandemic, labor shortages, and technology maturing at the right time — is pushing robotics ahead in 2021 and beyond.

Robotics mature, along with AI

Like most technologies, robots became more widespread when they improved as a technology, and when they dropped in price.

The introduction of the robots-as-a-service model has allowed enterprises to supplement their operations when they need help, or try adding robots without having to make a major capital investment.

The progression of artificial intelligence has also helped, said Christensen. The sheer amount of data being collected changes what's possible. What people can do on any computing device today is vastly different than 10 or 20 years ago.

Better robots, better sensors and AI "have hit the maturity threshold at the right time, at the time the market demands what it needs to do," Christensen said. "That doesn't always happen. Lots of time there is technology that comes to maturity in a vacuum or in a lab with no real key demand for it."

A pandemic push

Right now, there is demand: increased e-commerce business, labor shortages, truck driver shortages and instability in the supply chain has robots stepping up to the plate, especially when it comes to building resiliency.

In the 2021 MHI Annual Industry Report, 53% of the more than 1,000 supply chain professionals surveyed said they were increasing or substantially increasing their investment in robotics and automation to make the supply chain more resilient. The study also found that 38% have robotics and automation in use today and an additional 38% predict it will be in use within five years.

The need for efficiency and error reduction is pushing robotics and automation in manufacturing, too, especially for companies working on the COVID-19 response.

The pandemic has put a "particular strain" on diagnostics companies, Samantha Betancourt, vice president of supply chain and external operations at Ortho Clinical Diagnostics, said via email.

"We are seeing our volumes increase at the same time we may have to limit the number of people in a facility. That made us realize we need to find more creative ways to ensure we could continue to move our products even when [we're] limited by the ability to physically touch the products," Betancourt wrote.

She said assigning tasks to robots also allows their team members "to be thought leaders," which is critical right now. "Employees can focus on strategic work and leave repetitive activities, whether in a spreadsheet or in a warehouse, to robotics."

Overcoming hurdles to adoption

While robots are becoming more common, they're still new and "with anything new, there needs to be time to build trust," wrote Betancourt.

"Until team members are used to working alongside robots and can truly trust their work product, oversight adds additional tasks," she said.

Not every company has the money to make a capital investment right now, either. That, plus concerns about maintenance and upkeep costs, are keeping companies on the sidelines, said Bill Ferrell, supply chain professor and associate dean of the Graduate School at Clemson University.

Seeing successful applications in other enterprises will help, Ferrell added. He pointed to autonomous forklifts already being used in warehouses and Walmart's roll out of autonomous trucks.

"We're starting to see the beginning of applications and implementation in the real world," he said. "It's not to scale yet but it's not that far in the future."

ATLANTA — Change management isn't what it used to be. 

In the past, managers could start with a well-known process, said Jeremy Davidson, vice president of sales at Fortna. Begin with a future state and work backward to map out the change management process.

"There's a lot that's less known right now in this environment, and it poses some unique challenges with change management," Davidson told Modex attendees in Atlanta Monday. 

Warehouse automation technology has advanced far beyond conveyor belts. Implementation of automated picking or mobile sortation can drastically change what a worker does on a daily, or even hourly, basis. The job function could take a 180-degree turn, from moving around and picking products to working in a large station where product comes to the worker, said John Seidl, partner at GreyOrange. 

"This isn't handing them an RF gun and teaching them how to use it," Seidl told Modex attendees. 

He said new technologies and job functions can result in different KPIs, too. Because of that, today's change management requires a strategic, often individualized approach, especially at a time when low unemployment has shrunk the available pool of workers and made retention a critical issue.

"You have to be thinking about labor from an onboarding, a training and a turnover perspective," said Roger Counihan, vice president of sales at Fortna. "We're seeing 80% turnover with some of our clients." 

Turnover is especially problematic in areas with high concentrations of warehouses, as workers can jump ship for higher pay to a facility down the street.

When Amazon opened a Chicago facility with $15 hourly pay, 80 of the 220 workers at a 3PL in Chicago called in sick, Michael Wohlwend, managing principal at Alpine Supply Chain Solutions, told Supply Chain Dive. Pay is important, but it's only part of workers' calculus. Many eventually returned to the more favorable working conditions at the 3PL, he said.

Counihan said mitigating retention issues and high turnover in warehousing often begins with making worker tasks simpler and easier. Robotics vendors have responded to operations managers' calls for solutions that automate functions while simultaneously improving the work environment.

Some automated tools reduce walking time (a major productivity drain), others remove the need for workers to bend or reach, and others take over repetitive tasks, freeing humans to focus on strategy. No worker wants to stand all day placing items from one tote into another, Vince Martinelli, head of product and marketing at RightHand Robotics, told Supply Chain Dive. 

Regardless of the automation's function or how much it improves the labor environment, warehouses still require a top-down leadership approach to guide workers through the changing nature of their job functions. 

"There are some very creative things being done around how you're going to account for labor performance and change management during the initial deployment," Seidl said.

He described one Chilean retailer's autonomous mobile robot (AMR) implementation and its piecemeal approach to change management. Instead of replacing all forklifts with AMRs, the retailer removed 80% of its forklifts, he said. Then the retailer made several of the top forklift drivers each responsible for four AMRs. Executives modified the labor management system (LMS) to monitor how well the AMRs performed and how well the forklift drivers performed as supervisors. 

Today, the retailer uses forklifts to move product only during peak season. The remainder of the year, the forklifts are not in use. 

The deployment of AMRs and strategy of making forklift drivers into robotic supervisors altered KPIs for the retailer, according to Seidl. Metrics go well beyond picker productivity to instead focus on the value that a picker adds to the overall business, he said.

"The people [who] understand how to leverage human resources to enable that broader value proposition are going to be the real winners," Seidl said.

Prior to the pandemic, micro-fulfillment companies like Fabric, Takeoff Technologies and AutoStore, along with some industry experts, touted scaled-down automation systems as must-have technology for grocers facing a future of escalating e-commerce sales.

That future arrived early — and all at once — in 2020, when the global health crisis hit and pressed grocery e-commerce to its limit. But the expected rapid expansion by grocers of MFC technology, which seems made for the moment with its focus on quickly and efficiently assembling online orders in tight spaces, has not materialized at the level many expected.

Instead of rapid-fire partnership announcements and scale-ups with retailers, rollouts have come in dribs and drabs, with retailers seeming to take a cautious approach to implementing the systems in their stores and in dedicated facilities.

"There's a lot of misinformation out there. And I think for the retailers, it's very difficult to navigate this minefield because they don't really know enough about the technology and the automation to be able to accurately say whether or not they should go one way or another," said Marc Wulfraat, a supply chain expert and president of MWPVL International, who frequently consults with retailers on MFC technology.

There are some exceptions, most notably Walmart, which in January announced it would test micro-fulfillment technology at dozens of stores, covering a range of providers and configurations. Albertsons has enthusiastically endorsed MFCs, having forged a commercial agreement with Takeoff Technologies in 2019. The company opened its third MFC in April and plans to open six more in 2021, for a total of nine, President and CEO Vivek Sankaran said during the company's fourth-quarter earnings call.

Technology firms say the underwhelming expansion so far is partly due to retailers pausing negotiations and implementation plans for several months last year as they contended with strained supply chains and enacting safety measures. Grocers halted negotiations and plans to test facilities for anywhere from six to nine months and are now back on track, said Steve Hornyak, former chief customer officer at Fabric. He said 2021 will be more of a "test and learn" year than a period of dramatic expansion, with larger rollouts more likely to happen in 2022 and 2023.

Activity in the MFC space has indeed picked up in recent months, with H-E-B, The Giant Company and H-Mart all announcing deployments. This summer, SpartanNash plans to open an MFC in Grand Rapids, Michigan, to serve delivery and pickup orders for some of its retail stores, CEO Tony Sarsam said.

And then there’s Instacart, which has sent out requests for proposals to MFC vendors as it explores offering fulfillment as a service for retailers. According to one source with direct knowledge of the company’s plans, Instacart aims to offer fulfillment services for small and mid-size retailers as large chains like Kroger increasingly forge their own fulfillment services.

The need for high volumes

Despite this recent momentum, some analysts say grocers that have started testing MFCs are struggling to wring promised cost savings out of the systems.

Wulfraat said systems require a higher volume of incoming orders than many grocers realize to justify their hefty price tags, which can range from a few million dollars to around $10 million. He also said grocers are struggling to come out ahead financially in the face of ongoing costs, like transaction fees of up to several cents per unit shipped, and system maintenance, he noted.

The systems are also dizzyingly complex, Wulfraat said, with additional processes often cutting into efficiency. Some systems only have 50% of a store’s assortment in automated storage, requiring retailers to operate separate, sizable manual-picking operations and venture into stores to "top off" orders, which adds time and labor costs. If grocers run a hub-and-spoke model where a greenfield MFC fulfills pickup orders for multiple stores, that can add handling costs and complexity.

"The pennies really add up when you look at the journey of an order tote through these systems," Wulfraat said.

What makes more sense at this point, Wulfraat said, are medium-sized automated facilities that handle a high volume of online orders — in the range of 10,000 to 15,000 per week — and can serve incremental demand.

Wulfraat cited the 124,000-square-foot e-commerce facility The Giant Company is building in Philadelphia in conjunction with AutoStore and Swisslog, which is set to open in November, as an example of how micro-fulfillment technology can help a grocer's bottom line. That system is projected to process around 15,000 weekly orders.

"They'll be able to do semi order fulfillment out of that building for this new population of customers that they currently don't necessarily serve," Wulfraat said. "[It] makes total sense to me to go about doing it this way … because you're getting new sales."

Mike Demko, global head of the MFC business line at AutoStore, said the Norwegian automation company has lately been seeing strong interest from retailers in its technology, in large part because of the sharp focus the pandemic has placed on e-commerce. But he acknowledged it's challenging to convince potential clients that the investment needed to automate their fulfillment operations is worthwhile.

"MFCs are really about trying to provide faster service for the consumer … but the flip side of that is it's got to make economic sense," Demko said. "Grocers are scratching their heads to make sure the math works, so that they just don't plow money into something that can [help] meet consumer demand but doesn't help the bottom line."

Bill Bishop, chief architect with Brick Meets Click, who also consults with retailers on fulfillment strategies, said many grocers have landed on less-expensive fulfillment options like manual dark stores, backroom picking and in-store picking using handheld devices. Companies are also watching to see how automation ventures like those at Walmart and Kroger, which recently began delivering from two robot-powered Ocado warehouses, pan out before investing.

Bishop said many grocers struggle to evaluate automated micro-fulfillment along with other leading-edge technologies that come before them against the backdrop of mounting industry disruption.

"I think [grocers] take a deep breath when they're being asked to make the kinds of investments they're being asked to make," he said. "And sadly, I don't think a lot of the C-suite folks are in the best position to evaluate the total economic benefits."

John Lert, founder of Alert Innovation, acknowledged the complexity of MFCs, calling them an "imperfect" solution that retailers have approached cautiously so far.

"Retailers everywhere are looking at this. They're experimenting, they're deploying these systems and investing in them. But so far, there's also been enough dissatisfaction or complexity or lack of economic return that you don't see a large-scale rollout yet," Lert said.

Wulfraat says grocers are increasingly aware of the fact they need to get online picking away from store floors in high-volume areas. He says there is no perfect fulfillment system right now: "All of the options out there have upsides and downsides, including manual dark stores."

Demko said the fact that there are limits to using human workers to fulfilling e-commerce orders represents a big opportunity for MFC companies that can come up with a balance of hardware, software and processes that enables retailers to become more efficient without sagging under the weight of the technology.

"What we're seeing is that technology is getting sold, but what is not going with that technology is helping the retailer understand how their process engineering has to change as well," Demko said.

Making MFC technology more valuable to retailers

MFC vendors are working to hone their offerings and make them more appealing to retailers. One way they're looking to accomplish that is by allying with companies that make technology complementary to their automation systems.

Takeoff, for example, entered a strategic alliance in March with refrigeration company Hussmann that gives the MFC supplier direct access to systems designed to keep food cold while it is being handled. In a press release, Takeoff CEO José Aguerrevere described the partnership as a significant advance in the company's efforts to meet retailers' needs.

"Any e-grocery solution relies on safe product temperature control to ensure food integrity of refrigerated and frozen items. This alliance represents an incredible opportunity to strengthen our solution," Aguerrevere said in a statement.

In January, AutoStore acquired Locai Solutions, a provider of pick-and-pack software to retailers, after concluding that offering MFC technology alone might not be enough to enable some grocers to use it effectively, according to Demko, who co-founded Locai and joined AutoStore as part of the acquisition in January.

Demko added that companies like his that specialize in warehouse automation play an important role in helping smaller retailers compete with larger competitors that have deeper resources. "We make the tools that an Amazon has cost-effective for the small independent retailer" that doesn't have the ability to develop technology on its own, but is looking for new tools to help it compete, Demko said.

Industry sources and officials note that even as the MFC industry continues to mature, it is ripe for consolidation in the years ahead.

"A lot of capital to your point is being thrown at this but I don't think it's something that a small player will be able to survive at," Demko said, adding that he expects two to four players to ultimately remain standing in the MFC sector. "The reality is there will be consolidation through either acquisition and or just companies failing."