Using robots to stay relevant
Think Logistics, a Vaughan, Ontario-based third-party provider of supply chain services, has been thinking about its future. Its parent company, Duplium Corp., is a successful optical disk manufacturer that has produced CDs, DVDs and packaged disks for 15 to 20 years. But the handwriting is on the wall for Duplium: The software and entertainment industries have become heavily focused on digital downloads, making it hard to predict how long optical media will remain relevant, says Stuart Pearson, vice president of contract logistics at Think Logistics.
Think Logistics decided to concentrate on logistics—shipping a wide variety of products to consumers on behalf of its clients, which include retail stores and distribution centers, he says, since that is a growth area and a natural fit for the company, which already has experience in shipping and logistics.
But that type of logistics—handling individual units rather than cartons of products—is not very automated, Pearson adds, and the company figured there had to be a way to change that. The way to gain a competitive edge in processing orders, Think Logistics believed, was through robotics. Unlike traditional third-party logistics providers, which typically don't make capital investments in automation technology until they have a contract with a customer and can amortize the investment over the life of the contract, Think Logistics had the "desire, interest and aptitude from a capital perspective" to bring in cutting-edge technology from the very beginning.
The company turned to Kiva Systems. Acquired by Amazon in 2012, Kiva is a provider of automated systems for storing and handling physical goods. Pearson had seen a demo of Kiva's technology at a trade show, and he felt it had the flexibility to handle many different product types—a capability that Think Logistics needed. Kiva "has an inherent flexibility in that its storage system can store anything from a small part to a large item or garment on a hanger," Pearson says.
The Kiva robotic fulfillment system is in use at Think Logistics' 124,000-square-foot warehouse, where 15 bright orange robotic drive units are assigned multiple tasks, such as picking up a shelf unit (known as an "inventory pod") or traveling to another section of the facility to bring an item to a person receiving inventory.
The fulfillment system was deployed in June 2012. Before that, Think Logistics did everything manually and used static shelving and pallet-racking systems for storage. "We would have our associates walking with pick carts or pallet jacks into our storage system to manually pick out product and put product away," Pearson says."If there's a mechanical issue or fault with one of the robots, that task can be reassigned to other units," Pearson says. Unlike traditional carousels that are commonly used by third-party logistics companies, he says, the Kiva units are "massively parallel, meaning you've got multiple, autonomous drive units or robots, so you don't have any single point of failure."
Think Logistics didn't have to lay off any employees when it started using Kiva equipment. Instead, a combination of business growth and improvements in efficiency driven by the new technology made it possible for people to handle more tasks and be more productive, Pearson says. In a typical e-commerce warehouse, workers spend 40 percent to 60 percent of their time walking around picking up goods, counting goods or putting goods away. The Kiva system has eliminated almost all of that walk time, he says.
Now, people are "focused on other aspects of the business—receiving products and packing orders," Pearson says. "And because of growth, they're able to be more efficient in the work activities that add value to the work we do."
Additionally, having the system means Think Logistics can ship more orders than it could have previously with the same number of people, and it can ship those orders more quickly. "We look at it as a force multiplier," he says.
The system has some built-in intelligence, so if there is existing inventory of the same item being received and stored on a mobile shelving unit and the retailer's instructions allow for it, the system will consolidate that inventory before utilizing empty bins. For example, Pearson says, "if I have an iPhone 5 in a location and room for two more, and if business rules permit you to put more there, it will bring you the product and say, 'Here's space for two more.' And conversely, if you tell the system that has to receive 20, it will look for a space for 20. So it's very dynamic that way."
Think Logistics can enhance the configuration options Kiva provides, and it can tailor the way it uses a system to match a retailer's needs.
Pearson estimates that Think Logistics will see a return on its multimillion-dollar investment for the 15 units in approximately two years. He says the company purchased more capacity than it needs "so we can quickly onboard new clients as we grow our business."
Packing funky parts
K'NEX Brands, a maker of toy construction sets based in Hatfield, Pennsylvania, recently started using a $30,000 robot named Baxter to help with quality control for parts packaging for multiple products shipped to more than 30 countries. Developed by Rethink Robotics, Baxter packs parts without scratching or bending them, cutting down on the cost of replacements, according to Michael Araten, K'NEX's president.
"We thought robots would allow us to take jobs that are more complicated and pack parts more efficiently and in the way the customer needs them," Araten says. Technology and robots were the answer to the challenge of trying to make money while doing business in global markets where overseas competitors can take advantage of cheap labor, he says.
At toy maker K'NEX, a robot like this one handles both assembly and quality control functions.
Baxter is not the first robot the third-generation, family-run business has used in its 125,000-square-foot Hatfield manufacturing facility; K'NEX bought its first robot seven years ago to do parts packaging. While Araten says Baxter is slower than other robots the toy maker has used, he notes that it can handle both assembly and quality control functions, "so we're trading speed for flexibility," he explains.
"We'd rather be on the ground floor and then get the benefits of [robots becoming] faster over time and get ahead of the competition," Araten says. "If we're wrong, then we've still got a slower robot that can do cool stuff."
Since February, Baxter has been in use at K'NEX's manufacturing facility, which is operated by sister company The Rodon Group, a maker of injection-molded plastic components that produces 10 million parts per day for customers in up to 50 industries, including consumer products, toys, pharmaceuticals, construction, healthcare, and food and beverage. Baxter is performing so well that it is now being trained to pack more "funky parts" for K'NEX's Nintendo Mario Kart products, says Araten, referring to the company's line of Mario racing toys.
Baxter packs the parts tightly and has eliminated much of the space between them, so "we believe we'll be able to use 20 percent to 40 percent fewer" boxes just for the tracks for Mario, he says.
Baxter is also being taught to pick a random sampling of parts off the belt, check them to make sure they have no defects and then put them in boxes for shipping to customers. If there looks to be something wrong with a part, Baxter sets off an alarm. "It has a vision system embedded in it, so we have a program of what we want it to look for" says Araten, explaining that the system takes a picture of a part and compares it to a picture of what the part should look like. "We make sure to show it a good part ... so it can do the comparisons," he adds.
In the coming months, Baxter will also learn how to assemble parts.
One area that Rodon focuses on is making window parts for the housing construction industry. And Baxter could help out with that by assisting in the assembly of finished products, Araten says, explaining that it could, for example, attach a lock or a tilt latch to a window. "That will help us stay competitive," he says.
Araten says there has been no staff reduction since Baxter's arrival. In fact, he says, K'NEX is committed to hiring people with skills in the so-called STEM fields (science, technology, engineering and math), in part because it has an educational division that makes products tied to STEM school curricula. "We're focused on STEM as an organization," he says, "and the people we hire need these skills more and more." Overall, hiring has increased about 25 percent in the past four years, he adds.