Market Trends June 2019
Robots in the Loading Dock
The biggest challenge to automating loading and unloading trucks is that packages are not uniform. There are unpredictable variations in size, color, weight and material, which makes programming robots to load trucks a much more complicated and challenging proposition than using robotics to unload. To that end, Siemens AG and Honeywell introduced machines that pull packages from the back of a tractor-trailer and put them on conveyor belts at a recent automation conference in Chicago. Reportedly robotics company Dorabot, backed by Chinese ecommerce titan Jack Ma, is testing an automated unloading bot with two customers. The test robots use AI and can load 400 parcels an hour into a trailer and fill 60% of capacity, about in line with what a person can do. Dorabot wants to improve speed by about 50 parcels an hour and fill 80% of a truck’s capacity before going to market. Dorabot hopes to be out of test and widely available within a year and a half.
Amazon says a fully automated warehouse is at least a decade down the road, noting that humans think better than machines and that current technology just does not support full automation. Amazon says that the technology for a robot to pick a single product from a bin without damaging other products or to pick multiple products at the same time in a way that would be beneficial is years away. Amazon is currently under fire from labor groups and critics for increasingly automating jobs and reducing their dependency on human labor. Amazon currently runs 110 warehouses in the US, 45 sorting centers and about 50 delivery stations. They employ 125,000 full-time warehouse workers in the country. The warehouses that use robots typically handle general merchandise, but no fresh food. Amazon also said they are not changing the level of productivity at their warehouses to fulfill their recent promise of one-day shipping for Prime members. They intend to make changes to the transportation and delivery process instead. Amazon’s current target is four hours from the time a product is ordered to the time it leaves the warehouse, and they are sticking with that timetable. Amazon said that applications for seasonal jobs had doubled to 850,000 by the end of October 2018. Amazon raised the minimum wage for US employees to $15 per hour in November 2018.
The Warehouse Fulfillment Game
Amazon is turning warehouse work into a competitive game, running experiments in several warehouses involving thousands of pickers and packers whose labors are incorporated into video games in a process called “gamification,” according to the Washington Post, which is owned by Amazon CEO Jeff Bezos. The employees are racing to fill customer orders, their progress reflected in a video game format, according to Bezos. Some are racing around a virtual track or collaborating to build a castle. Individuals, teams or entire floors can be pitted against each other. The experiment started in one warehouse in 2017 and is now underway at five. The games are a response to worker complaints that Amazon’s push for more automation has made workers feel like cogs in a big machine, as they increasingly work alongside robots. Target has also used games to encourage cashiers to scan products more quickly, and Delta uses them to train reservation agents.
Devices that Recognize Emotions
Amazon is reportedly developing a voice-activated wearable device that can read human emotions and tell whether someone is angry or sad or happy based solely on the tone of their voice. The wrist-worn gadget, code-named Dylan, will feature microphones paired with software. It could even be used to offer counselling to users on how to interact with other people. The device is being billed as a “health and wellness” gadget. Amazon is collaborating with Lab126, the hardware development group that developed Amazon’s phone and the Alexa voice team.
CEO Security Measures
CEOs of large companies are taking some extraordinary measures to keep themselves safe from real and perceived threats. Amazon reportedly has a budget of $1.6 million dedicated to protecting CEO Jeff Bezos. Their latest expenditure was $180,000 on bulletproof and blast-proof windows for Bezos’ office in Seattle. Facebook spent $22 million last year protecting CEO Mark Zuckerberg. Many of the Fortune 100 companies invest heavily in CEO security, and also secure CEOs homes, cars and vacation homes.
Major retailers including Amazon and Walmart plan to begin insourcing more of their transportation needs. Walmart is running a pilot program using its own 53-foot containers; an inside source told the Journal of Commerce they currently have a few thousand containers. Walmart said that they will not completely eliminate the middleman, but acknowledged that they have talked to railroads as direct providers.
Railroads traditionally don’t talk directly with shippers, instead they negotiate contracts with ocean carriers, freight forwarders and intermodal marketing companies.
Amazon has also become a non-vessel-operating common carrier and launched a beta freight brokerage platform last summer. Amazon is offering beta service access to 53-foot full truckload dry van freight in New York, New Jersey, Pennsylvania, Connecticut and Maryland, and currently charging $709 to transport freight from Albany, New York to Washington, DC, a discount of about 33% over typical rates.
In addition, Amazon recently broke ground on its new million-square-foot, $1.5 billion airport in northern Kentucky. The air cargo hub is slated to open in 2021 and is designed to help Amazon “get you your packages faster.” The airport is expected to create 2000 jobs in Kentucky and allow Amazon to fulfill plans to provide one-day delivery service to Amazon Prime members.
Retailing in the Age of Experiences
Retailers are seeking ways to reinvent the in-store experience as online shopping has disrupted the retail landscape and created new expectations for consumers. The Home Depot, Lowe’s, Walmart and Target have hosted kid-friendly events to attract families to their stores. Macy’s launched their Story experience shops in 36 stress nationwide. The concept of a store within a store offers customers a way to purchase $20 to $30 gift items selected around a theme that changes every couple of months. The entire store is completely remodeled when a new theme is introduced. The inaugural theme was “Color,” which grouped products by primary colors.
The concept of experiential retailing has been around for decades; back in 1970 developer Gerald Hines famously added an ice rink to the Galleria mall to drive traffic. Apple’s stores have grown to become the most profitable experience stores nationwide, averaging more than $5,000 revenue per square foot. Apple is now adding Town Squares with meeting spaces where kids can learn how to code and teachers can take classes on how to incorporate technology into the classroom. The Museum of Ice Cream in San Francisco and the Flower Vault in Houston feature Instagram-friendly exhibits that have become the backdrop for countless selfies.
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