The warehouse automation market has been growing steadily for decades, but the pandemic year of 2021 saw some foundational shifts in the sector. Beset by labor shortages amid the e-commerce boom, desperate DC operators hit the fast-forward button on plans to roll out technologies like robotic fulfillment systems.
In the early days of warehouse robots, new customers would typically test the unfamiliar systems with limited pilot trials, installing a small number of robots in a corner of the building. If the pilot proved a success, customers would then buy a few more units, slowly building a fleet of autonomous mobile robots (AMRs), automated guided vehicles (AGVs), robotic picking arms, and other devices.
That approach was effective at controlling the risk—and expense—associated with deploying what was then a bleeding-edge technology, but it often left robotic vendors stuck in “pilot purgatory,” a dreaded state of limbo where users seemed to forever test the systems but never commit to large-scale rollouts.
Jump ahead to 2022, and no one’s complaining about pilot purgatory any more. The number of robots sold in North America set a new record in 2021, with 39,708 units sold at a value of $2 billion, a 14% increase over the previous high in 2017, according to the Association for Advancing Automation (A3).
A3 President Jeff Burnstein says the numbers reflect a surge of purchases for applications outside the automotive sector, which has historically led other users in adopting robotic technologies. “More industries recognized that robotics could help reverse productivity declines and fill repetitive jobs human workers don’t want,” Burnstein said in a release. Users are finding that it’s “no longer a choice whether to deploy robots and automation. It’s now an absolute imperative.”
At the same time that tough business conditions created that imperative, companies were becoming less wary of the technology and more comfortable with the concept, industry sources say. Even if they hadn’t yet purchased robots for their own DCs, they saw companies all around them solving productivity problems with the devices and realizing a relatively speedy return on their investment.
Thanks to that growing confidence, customers are now buying logistics robots on a far larger scale than they were just a few years ago, says Paul Ambruso, head of product and strategy for mobile robotics at Berkshire Grey. “Pilot programs are still sort of the norm, but now it is done not as a small portion of the facility, but in the entire facility,” he says. “So there’s a tendency toward whole-facility installs and then replicating that.”
And it’s not just happening in DCs. Customers are also buying robots for use in the back of a retail store or in a “dark store”—that is, a store that’s dedicated strictly to online order fulfillment. And if they’re satisfied with the results, they add additional sites throughout the company’s network.
Buyers have shifted to the new approach because of the same labor and e-commerce pressures that are afflicting so many sectors throughout the economy, says Jim Lawton, vice president and general manager for robotics automation at Zebra Technologies, which in 2021 acquired the AMR vendor Fetch Robotics.
Those pressures are having a particular impact on fulfillment operations run by large third-party logistics service providers (3PLs), he adds. “They have a lot less patience now than what I’ve seen in the past. We haven’t seen as much urgency for this before,” Lawton says. “There’s no proof of concept, no kick the tires. I don’t want to say they’re not being deliberate; they are being deliberate, but they’re being deliberately fast.”
Another change that’s driving the accelerated adoption of robots by fulfillment operations is that vendors have made them easier to configure, deploy, and maintain, Lawton says.
In Zebra’s case, the company can visit a new customer location and drive one of its robots around the site with a videogame-type controller to familiarize it with the building’s floor plan. That robot then shares its mapping data with the rest of the fleet, and the system is soon installed. “So it’s up and running in a single-digit number of days or weeks, and that’s really appealing [to customers],” Lawton says.
When it comes to large-scale warehouse robotic installations, the prospect of a speedy startup has been a major selling point, Ambruso agrees. “We used to tell people it would take eight months to [complete] a 50,000- or 60,000-square-foot installation, and some customers would say ‘I can’t wait eight months, so just do a part of the facility and we’ll call it a pilot,” Ambruso says. “But now, we’re installing the system in weeks, so we can [complete] large [projects] quickly.”
To speed up installations, Berkshire Grey runs software simulations of each site with “digital twin” models, he adds. It further streamlines the process by making use of modular designs, staging spare parts nearby to expedite necessary repairs, and handling maintenance on a “managed service” basis so clients don’t have to hire their own engineers.
With access to all that customer support, companies are increasingly willing to jump into the automation pool with both feet instead of just dipping a toe in the water, according to A.K. Schultz, co-founder and CEO of SVT Robotics. And as more of them dive in, he adds, robots are fast becoming the ante to play the game.
“In the general market, you’re no longer treated like the Illuminati for suggesting robots. It’s now assumed that if you’re not doing it, you’re on the back side of the curve,” Schultz says. “So there’s a shift in risk; from the risk of burning your capital to the risk of doing nothing and going out of business.”
As they come under increasing pressure to automate, many companies are concluding it would take nearly as much corporate effort to conduct a pilot as to put a full-blown project in motion, he says. “So instead of spending $100,000 or $500,000, we’re seeing people going straight for the $1 million project, then upgrade to $10 million, so everyone’s sliding up the scale.”
As the trend toward larger robotic deployments sweeps through the logistics industry, vendors say they’re only scratching the surface of the total market opportunity. Just a small portion of warehouses currently have automated systems in place, and with e-commerce growth expected to maintain its frenetic pace, robot providers can expect demand for their products to continue to soar.
“This market is huge; there’s more than enough room here for all of us that are currently playing,” Zebra’s Lawson says. “We’re collectively educating the market, and a rising tide lifts all boats.”