Between labor shortages, COVID continuing to wreak havoc on the supply chain, and the upcoming holiday season (in which e-commerce is expected to grow up to 15%), retailers, e-commerce, and warehouses will face a challenging few months to meet increased consumer demands. These businesses are already sounding the alarm bells and actively looking for innovative new ways to keep pace while at the same time maintaining and attracting new employees -- and robotic automation is a frontrunner solution.
Enter Berkshire Grey, an AI-enabled robotic supply chain solution provider that supports businesses including Fortune 50 retailers and logistics service providers like Walmart, Target and FedEx. On the heels of a recently announced Robotic Pick and Pack (RPP) and Robotic Shuttle Put Wall (RSPW) solutions that increase order sortation throughput by up to 300%, I caught up with the company's VP of Products, Kishore Boyalakuntla, to talk robots and e-commerce heading into the holidays.
GN: How do you think the current state of e-commerce in 2021 will impact the adoption of robotic solutions? Please cite some specific factors.
Kishore Boyalakuntla: E-commerce is growing at a lightning-fast rate. E-commerce share of retail sales grew to 19% in 2020, the incredible growth of 32% YOY and projected to be 25% of all retail sales in 2025. This skyrocketing growth results from purchases for every facet of our lives -- ordering holiday gifts, getting groceries, ordering furniture for a new apartment -- you name it.
This record growth is nearly impossible to keep pace with without automation. Peak season used to mean upping hiring slightly -- now, large companies are seeking one hundred thousand seasonal employees in the midst of a crippling labor shortage. More companies are turning to robotic solutions not to get ahead of the e-commerce boom but just to keep up with their existing orders and have hope for the holiday season. Automation is a given -- it's just when, what and how that some are still figuring out.
GN: What are the lingering hurdles to the adoption of robotic sorting and throughput for firms of various sizes? Why might a company still be on the fence?
Kishore Boyalakuntla: Some companies might be wary of implementing or expanding their robotics solutions for a few reasons – cost, potential downtime, or lack of facility space among them – though these concerns can be easily mitigated. Robotic automation is the only way to plan for future growth while optimizing the workforce with less than 3 years of ROI. Robots can also be brought on-site in phases while reducing potential downtime. They're also modular and configurable, so managing existing facility space need not be a concern.
GN: What kind of setup time are we seeing for the adoption of robotic solutions for e-commerce? How has that changed in the last few years, and what accounts for that?
Kishore Boyalakuntla: The time to implement robotics solutions is shortening thanks to artificial intelligence quickly. As AI gets smarter, we've trimmed implementation time down to 2.5 weeks in some cases. As recent as last year, this would have taken a month and a half to accomplish. There are a lot of factors that contribute to this -- like how large the facility is, the scale of the deployment, how pliable the upstream and downstream are, etc. Still, we can expect this process to continue to get shorter as AI systems advance.
GN: What's the ROI timeline for logistics providers adopting various kinds of automation into their processes?
Kishore Boyalakuntla: ROI for providers can be a year or up to 3 years - given ROI comes in many forms. Some companies can't fulfill 30% of the orders they receive unless they hire a new workforce, meaning they can't deliver hundreds of thousands of packages. Others have 40% turnover among staff every month. So depending on how many of these issues are compounding on one business, the potential for ROI could be immediate and massive if it means just meeting your existing orders.
GN: What do the next 5 to 10 years hold for e-commerce and logistics where automation is concerned?
Kishore Boyalakuntla: In the next five to ten years, e-commerce will continue growing rapidly with expansion into new segments, forcing automation into the limelight. We'll see some level of robotic automation applied across almost all warehouse and logistics facilities -- it won't just be considered a "nice to have," it'll be "need to have'' for companies of the future to survive.
It is quite possible that the current labor shortage will become even more acute, forcing companies to consider how they can best upskill their workforce to fill more complex and creative jobs. With robots taking on more of the work humans don't want to do, the door will be wide open for careers in fulfillment that allow those same employees to advance long-term. This shift will improve efficiency and create a pathway for people to transition to more fulfilling jobs like managing the robotics and AI solutions in the facilities.