I interviewed Richard Sherman who discussed Automation and Robotics.
Rich, this is another follow-up interview on our previous interviews where we last time were going deeper into the digital forces of change that are driving new competitive strategies and business models. Today we're going to explore robotics and automation. So can you introduce this topic and share your views on this topic?
We have been talking about the digital forces. We've been talking about analytics and big data. We've been talking about the changes to ecosystems thinking. You almost don't even have to talk about mobility or the cloud anymore because it's become so pervasive that people are recognizing the value of mobility. I don't think anybody goes to bed at night without having their mobile phone within arm’s reach.
So we're seeing the impact of digitalization and the digital forces of change. At TCS, we like to refer to them as the digital [inaudible 00:01:12] forces, but the reality is that the advances in digital technology combined with cloud computing, combined basically with pervasive computing, are creating what I called in my book “aconnected age.”It's the fourth wave of change, if you will, from Alvin Toffler. So we're moving out of the information age and information workers and into the connected age and connected collaborative workers. And driving a lot of that change is advances in robotics and automation technologies. And it's not like Robby the Robot anymore. And it's not like a lot of the highly automated, automotive assembly lines where we had these big cranes and spot-welding tools and painting tools that had to be caged and kept in secure areas because they were insensitive to human presence.
And we're moving into an era of autonomous collaborative robots, robots that have, first of all, they've got heavy artificial intelligence capabilities that are leveraging cognitive analytics and machine learning. And we're combining that with sensors that enable us to sense the surroundings, sense vibrations, sense people. And a lot of those sensors, what's really kind of cool out there today is the rise in optical recognition sensors. And so that combined with the pervasiveness of the internet with the pervasiveness of the wireless communications gives us the capability now to untether those robots. It used to be I had to lay a lot of wire in the floors of a warehouse in order to implement automated guided vehicles. Now those vehicles are guided by vision technology. We have an emergence of autonomous robots that are coming out of places like Rethink Robotics and Locus Robotics. And of course, we know about the Amazon robotics with their acquisition of Kiva a few years ago.
These robots basically have the freedom to move around the warehouse and intermingle with the human beings. So what I think is going to be an interesting change is it's going to change the whole network design and location of facilities across the network because now, low-cost labor is nice, but I can get low-cost labor anywhere through the deployment of robots. And now transportation and logistics costs, supply chain costs, come into play. So I think we're going to see a lot more nearshoring, a lot more reshoring of manufacturing facilities based on the fact that I no longer need the number of high-cost labor people that I've had in the past. I can basically replace low-cost labor that I'm getting overseas with lower-cost robots, and I can begin to improve and enhance the productivity of my more skilled worker in my assembly plants, my warehouses, my facilities.
So we don't see robots necessarily replacing jobs. The jobs that a robot would replace have already been lost. They're already being sourced in low-labor areas and geographies. What we're going to see now is that we're going to have low-cost labor available to us and now to leverage transportation and logistics cost factors for manufacturing closer to the customer and, by the way, in also to meet the proximity needs that are required by last-mile delivery and significantly reduce lead times in the marketplace.
We'll see robots coming into play to supplement the worker. And so in the warehouse, for example, we'll see robots like Baxter from Rethink, like Locus Robotics, we'll see them going to pick locations where, in the past, a picker would have to go and either do a pick wave or pick orders, but then they would have walk time. They would have travel time through the facility to take those orders to the packing stations.
Today, we can bring the bin to the picker, have them pick the order very rapidly, drop it back into the robot. The robot then takes it to the packing station, and the picker goes on to the next order. So it changes. We may not need to do as much wave picking. We may be able to do more order picking that is human order picking supplemented by robotic transport time throughout the warehouse. Does that make sense to you?
Yeah. This makes sense. I'm thinking about supply chain professionals.What would they need to do to prepare for this change?
I think the key is — and I think the new term that's being bantered about is robotics process automation. So what we have to look at is, once again, it goes all the way back to Michael Hammer. Re-engineer your process. Don't automate, obliterate. So we have to rethink all of our processes. And we have to do it within the context of what tasks within those processes are routine. Which are high volume? Which are monotonous?Which can easily be accommodated by an automation, whether it's conveyance, whether it's guided vehicle, whether it's an autonomous robot?But we have to rethink, again, all of those obliterated processes from the '80s and '90s and now go into more how do we automate those processes again. It's going to cause, I think, kind of a resurgence in automation.
Of course, today, we've got agile technologies. So we're going to see a lot more scrums. We're going to see a lot more failure to succeed. But the supply chain professional has to look at their work, at their operations, and say, "What things are being done that could be better done by autonomous robot versus a person?"
The other thing is, just like we had to make the change from unskilled manual labor in the past, what we've emerged is the information worker, we're going to see more knowledge and decision workers. We're going to see more orchestration workers and more collaboration workers. We're going to see more workers that are collaborating with robots to enhance the customer experience and lower the cost of retail. So think of a retail store. Retail staffing is an issue. It's hard to find labor at that cost. It's often undependable labor. The constant turnover brings inexperienced people into the staffing.
Now think about the fact that now I have robots deployed throughout the store that are capable of doing item checks, price checks, helping customers find product through location management, helping a shopper with an automated, robotic cart so that they can load their products into the cart, and as they load their products in the cart, they're scanned and facilitate automatic check out.Delivering more personalized services.So robots can serve as shopping assistants.
We're seeing robots being deployed and sourced today to observe consumer behavior to support data analytics for better planogramming, placement of product, and selection and assortment of product. Those same robots that are sensing and processing this consumer behavior can also recognize, maybe based on color schemes that the person is wearing, color of hair, facial expressions as this grow, so they can more personalize the shopping experience by basically suggesting purchases. They can offer more value-added services. So they can be used to provide gift-wrapping, price comparison, dispensing loyalty coupons. They can help in faster deployment and restocking of shelves. They can help in minimizing out-of-shelf scenarios by constantly cruising the store to identify an out-of-shelf opportunity. They can mitigate shrinkage and theft by surveillance techniques.
So again, the robots can reduce the number of humans in the store without eliminating the need for humans because there will obviously be exceptions. There will obviously have to be decisions to be made. There will have to sales to be made and managed and schedules to be adhered to. But we'll see an increase of robotic supplements to retail labor to offset some of the issues that retailers are facing with labor costs and labor staffing in their stores. And we'll see the same thing in warehouses. We'll see the same thing in manufacturing facilities because as we move to more and more robots that have more flexibility, more machine-learning capabilities, more capability to do machine tending, kitting operations, assembly operations and things of those nature, again, the skill requirements and work within the manufacturing facility begins to change and we start seeing a mix of robots and humans in the factory.
So companies have really got to take a look at their processes and say, "What can I automate? What can I obliterate? What can I digitize? How can I change my operating model to accommodate the new business models that we're seeing emerge in this digital economy?" Make sense?
Do you see any changes that we will see within this year?
You know what?Certainly, I think we're obviously going to see more and more robotic deployment and more and more robotic automation. I'll give a plug to my good friends at the material handling industry or MHI. Bi-annually, every other year, they have a large material handling show called ProMag. This year it's going to be April 3rd through the 6th in Chicago at McCormick Place. And it is robotics-material-handling-automation Disney World. In conjunction with it is also a manufacturing show where you can also see all the robotics and automation and technologies that are being introduced from a factory of the future and manufacturing Disney World.
So for people in the supply chain that are really looking at the new technologies that are available today, that are available right now, ProMag is the place to be. And it's free to attend. So you just have to take care of your travel.
The other key thing that I think people have to keep in mind is competitively, we're going to see the leaders moving very rapidly in this spacebecause the cost of robots has come down dramatically. We're seeing autonomous robots in warehouses, retail stores, in facilities that are in that $20- to $30,000 range. So that puts them right at that $9, $10/hour retail labor rate range, and they never take coffee breaks. They never miss work. They only require four to six hours every 24 hours to recharge their batteries. So it is going to happen more rapidly than a lot of people think. And I think we're also going to see, for once, I think we're going to see a lot of 3PLs leading the way from a warehousing automation and robotics perspective because they stand probably the most to gain in this environment.
Thanks for sharing today, Rich.
Hey, thank you, Dustin. It's a real pleasure, and I look forward to speaking with you on all of this again in the future.
About Richard Sherman
Senior Fellow, Supply Chain Centre of Excellence at Tata Consultancy Services