Where’s my ROI?

Many new warehouse robots now cost as little as 10,000 dollars, and can work 22 hours each day (Charging batteries for about 10% of their time). They have a lifetime of 7 years, bringing their hourly “pay” to as low as 18 cents per hour. 

This is 100 times cheaper than a warehouse worker's pay. 

Assuming all businesses are logical (especially logistics businesses!), as the hourly cost is 100x lower, we should have seen many many millions of robots running across the warehousing industry. But this is far from being the case, as only about 10% of warehouses have any robotic system deployed.

Where ROI goes to die

The lack of ROI is a result of deep inefficiencies in the way which even the most advanced companies deploy and manage robotic systems. Let’s name the top 5 ROI-bleeding challenges:

1. Robots show lower-than-expected productivity - working in batch instead of real-time, they are blind to the surrounding operations and so can’t react to new data. Consequently, their motion planning, routing and sequencing logic are very basic and hence, deeply suboptimal.

2. Robots needing too much space to operate - basic control software mean each robot consumes a substantial “safety space” around it from all sides, limiting the maximum collective productivity of a robotic fleet

3. Robots that are only good for some goods - most robotic systems only support a single container format (predominantly standard plastic bins), failing to fit a significant proportion of goods, leaving it to be manually stored and operated.

4. Robot not playing team sports (can’t cooperate with other types of robots) - if deploying a single robotic system from one vendor can be tough, deploying a number of robotic systems together (in the absence of specialized software for this job) can become extremely complicated, and in reality - almost never happens.

5. Too many software “cooks” - currently, a highly fragmented software stack has to be put in place around robotic systems, including WMS, WCS, WES, IMS, OMS, RMS, ERP, CRM and more. This is unnecessarily expensive, and deeply inefficient.

The road from cheaper to better

As stated, warehouse robots in e-commerce fulfillment have a remarkable 100x cost advantage over warehouse workers, but the road to translating it to an overall productivity that matches and surpasses that of a warehouse worker is still ahead of us. As the physical power of robots is already a given, the road ahead will be software and AI led.