Amazon Goes Robotic, Acquires Kiva Systems, Makers Of The Warehouse Robot

42 9 Loading

Where did all the humans go? The new look of Amazon.com warehouses.

In a move that makes so much sense one wonders why it didn’t happen sooner, Amazon has acquired Kiva Systems, makers of the warehouse robot. The acquisition, which took place on Monday, cost $775 million making it the second largest in Amazon’s history.

It makes so much sense because Amazon’s fulfillment centers are enormous warehouses where human “pickers” literally walk miles every day, retrieving books and t-shirts and coffee mugs. With more than 50 fulfillment centers around the world having about 20 million square feet, there’s a lot of room for improving efficiency and increasing profit margins.

When I attended the grand opening of their new headquarters in Reading, Massachusetts last year I got a chance to see the robots in action. Their demonstration floor was a veritable dance of scooting robots and merchandise pods that continually zipped within inches past each other. It was extremely impressive – and fun – to watch.

The Kiva robots do the walking – or rolling – instead of the pickers. They are low-riding, squarish robots that bring stacks of merchandise, or pods, to picker stations where their human coworkers grab the relevant items and transfer them to a rack where shippers then pick them up. Not only for order fulfillment, the robots do the heavy lifting for product replenishment as well. When inventory comes in a worker scans the product and immediately the proper pod is on its way to receive the goods. And the robots know that “to err is human.” So to minimize the errors a laser pointer system shows the pickers which box has the merchandise and which box it’s to be placed into. Keepin’ it simple for those easily fatigued humans.

Kiva's standard F-series robot can carry loads up to 1,000 lbs

The acquisition also makes sense because, in a way, Amazon was already using them. Two companies previously acquired by Amazon, shoe-retailer Zappos.com and baby products supplier Diapers.com, were already using the Kiva robots to fill their orders. At $894.6 million, the Zappos.com acquisition remains Amazon’s largest.

Other companies are also enjoying the efficiencies of robot run warehouses. Gap, Crate & Barrel, Staples, Saks 5th Avenue, and Walgreens are just some e-commerce giants that fill their orders with the sporty orange robots.

The cost of Kiva robots can range from a few million dollars up to around $20 million. The fleet of robots is versatile. Their standard F-series robot can lift 1,000 lbs, Larger models can carry up to 3,000 lbs.

Aside from making their ginormous warehouses even more efficient, Amazon’s acquisition makes sense for another reason. Not only will the robots tote around pretty much any product that fits in a box, the robots themselves are for sale. Other companies that want to bring the Kiva robots to their warehouses will now approach Amazon.

So what does this mean for the more than 51,300 Amazon employees around the world? Although I find it hard to believe, the company has stated that it will not be eliminating any jobs as a result of the acquisition.

Tuesday afternoon the company’s shares were up $7.69 to $193.21.

Kiva was founded in 2003 by Mick Mountz, who was trained at MIT in mechanical engineering. Later he received his MBA from Harvard. For a time he worked for Apple as a Product Marketing Manager, then for Webvan, an Internet-based company that delivered groceries to a customer’s front door. Begun during the dot com bubble, the company quickly went bust. They couldn’t solve the problem of how to fill orders efficiently. It was his experience with Webvan that prompted Mountz to think of the robots. “We decided products that could walk and talk on their own would be the best way to solve the problem,” he said in an interview with MIT.

It seems as though Jeff Bezos and Amazon would agree.

[image credits: Boston.com and Kiva Systems]
image 1: Kiva
image 2: Kiva
image 3: Kiva

Discussion — 9 Responses

  • externalmonologue March 21, 2012 on 8:41 am

    Profit margins for who? If you’ve been picking at Amazon’s distribution center for a few years with no healthcare benefits and your shoulder is so worn out you can’t work, then you just go crawl in a hole and die.

    I am all for robots, but that isn’t to say I am against bigger profit margins.

    But what about the people?

    On bloggingheads.tv, Will Wright talks about a journalist’s experience at an “unnamed” factory, which is probably amazon.

    http://bloggingheads.tv/videos/9165

    It’s not at all true that robots will make the situation better. When it comes to competition and the best price, the only way things will get better for the workers is for other people buying these products to know their “true” cost. So maybe a new article could mention this more explicitly. How much money would it take to not overwork the picker’s? (and others I suppose?). I dunno, and amazon doesn’t want you to care. The winners of corporatism are psychopaths. And one needn’t be a monster to become one. Just hang out with other monsters in the tank.

  • Joe Nickence March 21, 2012 on 9:48 am

    This is a no brainer purchase for Amazon.

  • danbeaulieu March 22, 2012 on 5:34 am

    For those of you who think that automation is bad or that overall gross national jobs are lost, please check out Henry Hazlitt’s chapter on Automation in his book Economics in One Lesson.

    What he essentially breaks down is that when a company automates a portion of their business the chain of events actually leads to the creation of equivalent or more jobs in other sectors.

    This type of automation, I feel, is a net gain to the world of back breaking labor.

    • digitalcole danbeaulieu March 22, 2012 on 5:19 pm

      Try selling that BS to the book industry.

      • danbeaulieu digitalcole March 22, 2012 on 6:37 pm

        Sell what BS? You just proved my point guy.

        “What he essentially breaks down is that when a company automates a portion of their business the chain of events actually leads to the creation of equivalent or more jobs in other sectors. ”

        What happened with the book industry? It’s fading, what replaced it? Tables, Ipads and handheld computers. One sector lost jobs another sector gained many many more jobs.

        Open your mind, remove your dispositions.

        Read Henry Hazlitt

        • digitalcole danbeaulieu March 22, 2012 on 7:35 pm

          Meanwhile 26,000 former employees are jobless. Long ago Corporations figured out that if they can get one person to do the work of ten they don’t need the other nine. In this regard technology has been an unequivocal success.

          Look, I’m all for technology and I think that robots and software should do all of the heavy lifting. Job creation however is a pipe dream. Corporations are proving time and again that the human being is redundant as far as the workforce goes.

          The warehouse people aren’t going to get a relief from back braking work. They’re going to eventually lose their jobs. It’s only a matter time.

          • danbeaulieu digitalcole March 28, 2012 on 3:56 am

            We’ve been replacing people with labor saving devices since the creation of the wheel. Hundreds of thousands of machines have replaced men in the past and probably every time it was met with outcries of job loss.

            If a machine replaces a man then it’s a wonder that, even in this economy, we still have ANY jobs? Machines can out preform a human worker a million fold in some cases.

            Sure, we’ll lose jobs in that industry for a brief period of time but machines have NEVER caused permanent job loss. There’s a trickle down effect.

            I urge you to read this ONE chapter:
            http://www.fee.org/library/books/economics-in-one-lesson/#0.1_L8

  • ejanulis March 27, 2012 on 8:14 am

    I work IT at Amazon and this is a great idea, while I can see how some may see this as threatening to jobs. let me guarantee you that Amazon will not take this as an opportunity to lay off their tier one associates. Amazon will take this and implement it in ways that will create jobs and further specialized tier one associates for job opportunities they wouldn’t have had otherwise.

  • danbeaulieu March 28, 2012 on 3:58 am

    Please educate yourselves on how automation works, where the jobs are lost and how they are recreated.

    Henry Hazlitt ‘Economics in One Lesson’

    Chapter 7 The Curse of Machinery
    http://www.fee.org/library/books/economics-in-one-lesson/#0.1_L8