Take a moment to think back to a world outside of online retail. You go to the big-box store or grocery store and you do your own picking, packing, and delivering of goods. YOU are essentially your own fulfillment robot. E-commerce changed that. Now, all we’re responsible for in the purchasing journey is clicking a button, leaving someone (or something) else responsible for the very process that shoppers used to do on their own.
COVID spurred a massive spike in order volumes while simultaneously constricting labor. The result is that the past couple of years have brought an entirely new class of consumers online. From here on out, the person lugging that 40-pound sack of dog food to our doorstep won’t be the consumer; it will be a delivery person. The growth of e-commerce has outstripped labor availability, resulting in a burgeoning market for automation in the warehouse. At Plus One Robotics, we had already begun laying the foundation for this inevitable demand, and today, it’s stronger than ever.
THE LOGISTICS SECTOR SWEET SPOT
There are endless opportunities for the deployment of robotics, but when you boil it down, there are two sectors that could truly adopt robots at scale—electronics assembly and supply chain—and only one of those matters in North America.
While working at Yaskawa, I spent time trying to pivot the one-hundred-year-old Japanese industrial company to build products that were going to be relevant in the warehouse. Once we started to dig into the logistics sector, it became readily apparent that the warehouse is not really a robot arm problem; it’s a perception and grasping problem. I determined that by building the vision and grippers required for a robot, we could help warehouse operators optimize their processes. This realization is what ultimately spurred my separation from Yaskawa in 2015, and the establishment of Plus One as a result.
ROBOTS BREAKING OUT OF THE MANUFACTURING BUBBLE
The numbers prove this case. Beginning in 2018, robot orders in the automotive industry have been effectively flat, but non-automotive orders have continued to grow. Automotive orders are for the stereotypical strong and dumb robot that doesn’t require computer vision or AI to spot weld a car body. These robots have been successful in those roles for 40 years now, due in part to the straightforward requirements (strength and repeatability) and the structured environment.
However, outside of auto factories, repeatability goes out the window and there are many more variables to deal with. The category of non-automotive robots can include everything from Flippy making burgers and fries to construction robots, but most of these non-automotive robot orders are happening within logistics. And in the warehouse, repeatability is not the rule. Variability is the rule.
Parcel handling is one such area with high variability. Packaging materials and form factors are changing every day, and to combat this variability of parcels—and to keep up with changes in package and item types—warehouse automation needs sophisticated 3D sensors along with data to drive AI learning.
Despite this demand, today only about 10% of warehouse operations are even partially automated. Given the recent growth, a ton of jobs are left hanging and there is not a warehouse in America that doesn’t have a “help wanted” sign outside. All of them are short-staffed and their churn is the highest out there.
The attrition rates at Amazon last year were nearly 150%. If you have a task that needs doing, you’re going to have to find bodies for that task—not for one shift, not for two shifts, but probably for six shifts because that job will keep churning. So where does that leave you? Looking at automation as your path forward.
ROBOTS WORK, PEOPLE RULE
Because all warehouses today are short-staffed, this is not a zero-sum game of “robot in, person out.” Automation isn’t a worker reduction initiative; it is a leverage play, so that the employees you do have can be even more productive and valuable.
At Plus One, we set out to solve the perception and grasping problem. If I pick up my phone off my desk, I need my eyes, my arm, and my hand in that order. And of the three, the arm is the only one that’s an engineered commodity you can just go buy. That’s what industrial manufacturing companies like Yaskawa, Fanuc, ABB, KUKA, and Universal Robots provide.
What was missing was high-performance software to take advantage of low cost, reliable 3D sensing, and grasping capabilities for warehouse robots. Plus One built the technology stack, and now robots can complete tedious and often dangerous tasks like moving packages from a bin to a conveyor belt 25+ times a minute for six hours straight. People don’t want to do this type of job anymore, so the churn in these roles is very high.
Plus One robots just surpassed half a billion all-time picks. Our solutions bring together robotic arms, sensors, AI, and grasping technology to deliver a seamless solution. Many of those robots incorporate human feedback into the loop to allow for better uptime and quicker machine learning.
INVESTING IN LOGISTICS AUTOMATION
Overall, logistics and warehouse automation companies represent about 13% of the ROBO index portfolio today, making it one of the most important sectors in the ROBO portfolio in terms of exposure. When you look at historical performance, you can see that since its inception, almost 10 years ago now, the returns reached almost 300% at the highs of 2021 and have witnessed a major pullback so far this year. Despite this, the logistics and warehouse automation subsector has outperformed significantly and consistently.
During the pandemic, enthusiasm around the booming e-commerce sector and the companies helping with supply chain issues and order fulfillment was predictable. The spike shouldn’t come as a surprise. We’re now looking at this pullback as a major opportunity for investors looking for exposure to the anticipated growth in logistics automation. The ROBO Global Robotics & Automation Index (ticker: ROBO) provides diversified exposure to the entire universe of robotics, including this sector and many more.
Erik Nieves is co-founder and CEO of Plus One Robotics, a software company developing 3D and AI-powered vision software for robots in logistics automation. Prior to Plus One, Erik was Technology Director for Yaskawa Motoman Robotics where he was responsible for the technology roadmap and emerging applications. Erik serves on the board of directors at Robotics Industries Association (RIA) and is a frequent speaker and contributor to public policy on robotics.