Amazon ponders ninth generation fulfillment center design
Through a special arrangement, presented here for discussion is a summary of a current article from Supply Chain Digest.
You know a company is a little different when it talks about what generation it is on for its distribution center design, like a Boeing aircraft or something.
But that is just what Amazon.com is doing in conjunction with opening up a relatively new DC — or fulfillment center (FC), as Amazon likes to call them — in the Tacoma, WA area not too far from the company’s headquarters in Seattle. Amazon opened the FC for a tour by reporters and other dignitaries a few weeks ago.
The one million square-foot Dupont, WA FC is one of about 10 the company considers "eighth generation" designs, among the 109 or so FCs it currently operates worldwide. What most characterizes the eighth generation FCs is the use of the famous orange Kiva System robots.
The Kiva robots are a form of automated guided vehicle (AGV) that can be said to have ushered in the "goods to picker" movement that is currently very hot in the distribution and materials handling industries.
A thousand or more Kiva robots carrying inventory move across a grid-like path inside the 10 Amazon DCs, arriving at one of dozens of work centers staffed with Amazon associates. The associates work with a "pick-to-light" type display, which informs each picker as to which SKUs that robot is carrying. The associate completes the picks and the robot whisks away to another associate. All this eliminates travel time for the associates, who traditionally of course would have walked the DC floor, going location to location to make the picks.
Thus far, Amazon has declined to make the Kiva System — surprisingly acquired for $775 million in early 2012 — available to others, though there were several companies such as office products retailer Staples that had deployed the technology before the acquisition. Amazon has said Kiva manufacturing and deployment resources are simply consumed with rolling out the robots within Amazon’s own network, and that is probably true.
These new generation of FCs also use a heavy-duty robot capable of lifting pallets up to 3000 pounds from the floor to an overhead conveyor system, likely to move inventory from reserve storage to the area where the Kiva robots are replenished.
Because of the way the Kiva robots store inventory, the Dupont DC can now carry about 50 percent more inventory than a similar DC would have had the capacity for in earlier FC design iterations, Amazon says.
Amazon’s Mike Roth, vice president for North American operations, says that Amazon is now working on its ninth generation FC design, which will somehow use even more robotics and more sophisticated optimization software.
How much of a competitive advantage does Amazon have over other retailers with its aggressive investments in warehouse technologies? Can retailers with lower volumes than Amazon afford to invest in this kind of automation?