Amazon is just beginning to use robots in its warehouses

Saturday, July 8th, 2017

Amazon is just beginning to use robots in its warehouses and they’re already making a huge difference:

Amazon acquired Kiva for $775 million in 2012 but only started using the orange robots in its warehouses in late 2014. The deal was expected to make inventory management more efficient. It’s now beginning to become clear by how much.

The “click to ship” cycle used to be around 60-75 minutes when employees had manually to sift through the stacks, pick the product, pack it, and ship it. Now, robots handle the same job in 15 minutes, according to a Deutsche Bank note published Tuesday (June 14) based on Amazon’s metrics.

These robots are not only more efficient but they also take up less space than their human counterparts. That means warehouse design can eventually be modified to have more shelf space and less wide aisles. At the end of the third quarter of 2015, Amazon was using 30,000 Kiva robots across 13 warehouses. Each Kiva-equipped warehouse can hold 50% more inventory per square foot than centers without robots. In turn, the company’s operating costs have been sliced by 20% — or almost $22 million — per warehouse.

If Kiva robots are dispatched to the rest of the 110 Amazon warehouses, the tech giant could save almost $2.5 billion, according to Deutsche Bank. However, since it takes $15-$20 million to install robots in each warehouse, the one-time savings is expected to be closer to $800 million.

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