I have an agreement with many individuals who gave me permission to write about the topics we discuss as long as I don’t use their names or provide information that would allow them to be identified. Having such agreements is valuable to me as it allows me to learn about what’s taking place inside many of the largest companies in the world.
I also make it clear to anyone who contacts me and tells me inside information that I reserve the right to use the information in any article I choose if they don’t specifically request I keep the discussion off the record. If I can share information that will help others, I will do so.
I present the following discussions as I believe the information may prove useful to companies exploring fulfillment automation and/or micro-fulfillment solutions.
Why is Amazon, Amazon?
I had an enlightening discussion with an individual who is arguably the smartest man in the field of industrial robotics. During our discussion, he bemoaned the fact that most of the executives he speaks with about the importance of robotics as a strategy struggle to understand and embrace the technology. A common response from executives is, “This is a lot more than we were considering. We’re thinking of adding some new conveyors. This is big stuff.”
What makes the comments from the executives so incredible is that Amazon saw the value of industrial robots to automate their warehouses and fulfillment centers in 2012 when they acquired Kiva, now called Amazon Robotics. (Walmart wanted to acquire Kiva but Amazon beat them to the punch. Walmart made a vow to never allow Amazon beat them again when it comes to acquisitions).
Amazon continues to invest heavily in technology but less than 5% of companies operating in the USA have purchased and installed Autonomous Mobile Robots (AMR) and other industrial robotics. (I recommend the products from OTTO Motors and Geek +. This webinar outlines the business case for AMRs).
A question that must be asked is why did Amazon embrace automation in 2012 yet in 2020, most companies have maintained the status quo?
The reason why is this – Amazon Thinks Big. In fact, Thinking Big is one of Amazon’s Leadership Principles. Amazon isn’t afraid of big ideas and taking risks, it encourages both.
I believe Amazon is Amazon because they hire individuals who have the courage to think big and the backbone to turn their big ideas into reality.
In most corporations, however, risk taking is something executives talk about but few if any risks are actually taken. Case in point, an executive from a company with a global supply chain consisting of many warehouses and fulfillment centers, made the comment during a discussion with a leading robotics company that he wants to “transform our supply chain.” To prove how serious he is, he budgeted $300,000 for a proof of concept (POC) related to automation.
Amazon routinely invests millions in testing new technology and implementing their ideas. You would be fired at Amazon for budgeting $300,000 for a proof of concept because the amount is too low. In addition, the right approach isn’t a POC. The Amazon approach is to identify the best strategy, select the best robotics or other technology, and get moving on a big scale.
Thinking small is a self-fulfilling prophecy. Companies must promote or hire CEOs who think big and who create a culture of risk taking.
I strongly advise all companies with fulfillment centers and warehouses staffed by large numbers of employees to contact Matt Chang of PULSE Integration (email@example.com) and discuss how they can transform their supply chain and logistics with fully autonomous, flexible material handling robots. The future of material handling is robotics, not labor.
Own the Process
I enjoy researching different industries and writing articles about topics that interest me. The topic of micro-fulfillment is growing in popularity and some of my most popular articles are about micro-fulfillment. This is one of the best videos on the topic of micro-fulfillment for those of you unfamiliar with the subject.
I have contacts that work for micro-fulfillment companies and they enjoy speaking to me and others about what their companies are doing, what companies are evaluating their MFC solutions, what RFPs they’ve responded to, and things of interest they see taking place in the retail industry. They have never requested that anything be kept off the record and they gave me permission to use the information they provide me in as many articles as I choose. However, I chose not to use all of the information they provided me in this article to protect their employers.
The information provided by my contacts makes me concerned about the companies who speak with them.
For example, one contact told me about a grocery retailer that has already installed several micro-fulfillment systems but they’re interested in selecting an alternative solution. The retailer is evaluating the MFC solution offered by my contact’s company along with solutions from three other MFC vendors. The issue I have is that the retailer isn’t being as thorough in their evaluation process as they should be in my opinion. I believe the retailer should evaluate all the leading MFC companies on the market vs. limiting the number of MFC companies they assess. My contact has not recommended to the retailer to expand the number of MFC companies they’re evaluating.
As a rule, I recommend that companies interested in micro-fulfillment should invite all the leading MFC companies on the market to participate in their micro-fulfillment RFPs. I list the leading MFC companies in this article along with recommendations for improving the selection process.
My contact told me that he made the statement to the retailer that, “AutoStore can’t fulfill groceries. It was designed to fulfill electronics, apparel, shoes, sporting goods and auto parts.” The comment is 100% false but it influenced the retailer’s team evaluating the different MFCs.
My contact stated he makes this same comment to every grocery retailer he speaks with. He said he makes the comment because, “I have to do something to put doubt in the minds of the companies evaluating us and AutoStore. I can’t tell them that I believe AutoStore is the best MFC on the market even though I think it’s true.”
The challenge of being an analyst who also writes articles is that in order to receive information, you’re not supposed to judge who provides the information. I must not be a very good analyst because I admonished my contact that lying about a competitors MFC solution is simply unacceptable. I also warned him that he works for an MFC company that is working very hard to grow their business, and I know for a fact they would not condone or support his lying.
My contact informed me that the same retailer also has an interest in what I refer to as Micro-fulfillment as a Service (MaaS). The CEO and several executives from the retailer are evaluating a facility owned and operated by my contact’s MFC company that offers a similar service. I have no reason to doubt the ability of the MFC company my contact works for to provide retailers with excellent service.
However, I have written and spoken about MaaS, and I urge all retailers to act with caution when considering MaaS. The grocery business has razor-thin margins and reducing costs through the use of MaaS requires extensive knowledge and experience. Based on my experience, most MFC companies lack the required experience to make MaaS profitable. Hiring a skilled system integrator or a consulting firm to perform all analysis and lead the design and implementation of a profitable MaaS strategy should be considered. I would not rely solely on an MFC company to design a third-party fulfillment strategy.
Another contact informed me about a large third-party grocery fulfillment and delivery company interested in micro-fulfillment that recently contacted his company to discuss micro-fulfillment. Based on what I’ve been told, I’m concerned that the fulfillment company hasn’t spent enough time on identifying their optimal strategy. My contacts goal is to sell MFC solutions, not design MFC strategy. I disagree with this. I always put the focus on identifying the optimal strategy first followed by selecting the optimal MFC, and I recommend all retailers do the same. If an MFC company isn’t talking about strategy, retailers should find another MFC company.
Based on additional information provided to me by my contacts, it appears that several retailers are under the belief that they’re thinking big when in fact, they’re being influenced to rethink their vision for micro-fulfillment not because their vision is wrong, but because the micro-fulfillment company they favor doesn’t have the capabilities they require. Sound familiar? It’s eerily similar to what happens when someone goes to a car lot to buy a car. When they can’t find what they want, a salesperson leads them down a different path to get them to buy something they don’t want or need.
My advice to all retailers (frankly all companies) interested in micro-fulfillment is to identify their exact micro-fulfillment requirements and don’t deviate. If during an RFP process it becomes clear an MFC company doesn’t meet the requirements, inform them they’re no longer part of the process.
My contacts also informed me of what several large retailers and an online e-commerce powerhouse are considering when it comes to micro-fulfillment. Again, I disagree with the approach being used by these retailers. Expand the MFC search process to include all MFC companies; identify the MFC requirements; identify the optimal MFC strategy; conduct a thorough MFC search; score and rank all MFC companies; select the best MFC; hire a system integrator or consulting firm to lead the installation of the MFC and implement the best supply chain strategy. My contacts told me that they don’t make such recommendations, they focus on trying to sell MFC hardware and software.
My warning to all companies is that they must own the process for identifying the optimal MFC strategy and selecting the optimal MFC solution. Do not, under any circumstances, allow any MFC company to dictate the process. Companies must verify everything told to them by salespersons from MFC companies.
Don’t be the retailer who selects an MFC based on a lie from a salesman.