Automation Only Way to Survive in On-Line Grocery, Company Says, as It Markets System to Others

More than a decade ago, Boston-based Kiva Systems really ushered in the "goods-to-picker" concept, in which its little orange robots – really a form of automated guided vehicle – would carry inventory to stationary order pickers, who would place items into a cart of totes or cartons before the robot would move on and another would soon arrive with more SKUs needed for orders.

Supply Chain Digest Says... Ocado is already looking to automate other parts of the fulfillment process. It's experimenting with autonomous vehicles to make curbside drop-offs. Drones are another possibility. What do you say? Click here to send us your comments Click here to see reader feedback

That success, which was very much in tune with the rapidly growing ecommerce era, led Amazon to acquire Kiva for an amazing $750 million in 2012, after which Amazon has deployed some 45,000 Kiva robots in its fulfillment centers. In parallel, that success spurred others to develop goods-to-picker technologies, such as various shuttle systems that similarly deliver SKUs to pickers from mini-load storage structures without the mobile robots.

Now, a UK on-line grocer has deployed a totally new take on the goods-to-picker concept, technology it says is essential to cost efficiently process on-line grocery orders – and which it hopes to eventually sell to other grocery chains.

As first reported on Bloomberg.com, Ocado – which is the UK's largest on-line grocer – reached a target earlier this year, processing an order of 50 items, including produce, meat and dairy, in just five minutes using its new robotic system. Fulfilling a similar order at one of the company's older, mostly manual facilities takes an average of about two hours.

As shown in the video below, the Ocado system works like this: robots, developed with manufacturer Tharsus, sit atop a rectangular grid, with containers beneath the grid holding the 50,000-plus SKUs Ocado sells. The robots move at 4 meters a second (about 9 miles an hour), controlled by software that knows what items are needed for orders at any given time.

Each robot lowers a hook and the grabs and pulls in a container, then moves across the grid to a location where a stationary human associate stands below. After the robot lowers the container, the work either replenishes the container if it is empty, or selects items from the container for customer orders, before the robot moves on.

Ocado's New Approach to Goods-to-Picker Automation

The current system can't operate in sub-zero environments, so freezer items are still picked and packed manually, but Ocado is working on ones that can handle freezer conditions.

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Ocado, founded 17 years ago near London, says automation is the only way to handle individualized grocery orders in large volumes.

While working in its own facility for about one year now, Ocado has not yet sold the system to any other on-line grocers.

However, chief technology officer Paul Clarke says the Amazon-Whole Foods deal "definitely increased the sense of urgency in the discussions with prospective customers. It's underscored for them that this world is changing and that they need to move online as quickly as they can. They're interested in having some of that business without taking 17 years to innovate themselves."

The automated Ocado DC (it has others) has about 200 total workers. Once at full capacity, the new facility will be just as productive as an earlier, larger distribution center that needs three times as many employees.

Ocado is already looking to automate other parts of the fulfillment process. It's experimenting with autonomous vehicles to make curbside drop-offs. Drones are another possibility.

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