How Kiva Robots Help
Andover, MA, April 16, 2009
Fetching goods and filling orders, little helpers
from Kiva Systems are revolutionizing companies' supply-chain and distribution networks
By Jessie Scanlon
In a warehouse at the headquarters of Kiva Systems in Woburn, Mass., an ottoman-shaped robot
slides beneath a four-shelf storage unit holding an assortment of consumer goods, lifts it,
and navigates back to Mick Mountz,
the startup's founder and chief executive. Mountz grabs a box of Kellogg's
Frosted Mini-Wheats off of the shelf and turns to put it in a shipping
box. By the time he has turned back again, the robot is carrying the
8-ft.-tall shelving unit away, and he is facing another stack of goods
carried by a different robot.
This is Kiva's demo space, where Mountz shows potential customers what
his wireless robotic fulfillment system can do. It's also where Kiva
handles manufacturing, turning out 200 squat, orange robots—one model
can hoist 1,000 lb., while the other is strong enough for 3,000-lb.
pallets—every month. But you don't have to go to this Boston suburb
to see Kiva's bots and pods, as the company calls the shelving
units: They're already fast at work in warehouses run by Staples (SPLS),
Walgreen (WAG), Gap.com (GPS), and online retailer Zappos.
"It's exceeded all of our expectations, doubling the productivity of
our pickers and cutting our energy costs in half," says Craig Adkins,
vice-president for fulfillment operations at Zappos, which began using
Kiva nine months ago. Adkins won't say how much Zappos paid for its little
helpers, but the average Kiva installation costs $5 million, with set-ups
ranging from $1 million to $25 million now in the works.
Mountz, now 43, first grappled with the challenge of efficient fulfillment
as an executive at Webvan, the ill-fated online grocer that went under in
2001. Deciding robotics held the answer, he moved back to Boston, where he
had studied mechanical engineering at Massachusetts Institute of Technology
and earned his MBA at Harvard. To date, after two rounds of funding led
by Bain Capital Ventures, Mountz's six-year-old company has raised more
than $18 million, with annual sales topping $50 million.
Robots have been around a long time, of course. The newness of Kiva, which
has four patents, with another 14 pending, is the way in which Mountz's
team has integrated three technologies: WiFi, digital cameras, and low-cost
servers capable of parallel processing. The servers work in real-time,
receiving orders, immediately dispatching robots to bring the required
pods to the worker fulfilling the order, and then returning the pods to
their storage locations. The robots receive their orders wirelessly, while
using cameras to read navigational barcode stickers on the warehouse floor.
In combining these technologies, the 125-employee company is bringing a
potentially breakthrough innovation to warehousing and distribution, which
supply-chain research firm Armstrong & Associates estimates is $37.5
billion-a-year business. "Kiva represents the first really 'new' technology
in order fulfillment in years," wrote analysts at Aberdeen Group after
touring the Zappos warehouse last year.
With plans for 1,000 bots in its distribution centers by summer, Walgreen
will be Kiva's biggest customer. "I don't need to tell my competitors how
much more productive it makes us," says Randy Lewis, senior vice-president
for supply chain and logistics at the Deerfield (Ill.) drugstore chain. "It's
been a good investment."
Beyond the Conveyor Belt
Most of the 8,000 commercial warehouses in the U.S. depend on humans to
stock the shelves with incoming goods and then retrieve them for outbound
shipments. Those workers might use tow racks and forklifts, but the basic
tasks haven't changed much in decades. Roughly 20% of U.S. warehouses are
automated, meaning that after workers pull goods off of the shelves, they
are put on conveyer belts, carousels, and/or other automatic sorting systems
that move the products through the warehouse more efficiently.
That's the kind of system that Amazon.com (AMZN) employs—its distribution
center in Fernley, Nev., boasts nine miles of conveyer belts. And that's
what Zappos installed in its Shepherdsville (Ky.) distribution center in
2006. "We have static shelves, four stories high, 128 carousels, and
20,000 feet of conveyer belts," says Adkins. This loud, Rube Goldberg-like
set-up, which was state-of-the-art when Zappos bought it, covers 86 acres
and enables workers to fulfill orders in anywhere from 48 minutes to three
and a half hours.
Off to the side in the Shepherdsville warehouse, 72 Kiva bots are in constant,
quiet motion, carrying one of Zappos' 3,000 storage pods to or fro. Every
six seconds, a worker takes an item from its pod and puts it into a shipping
box, packing some 600 items an hour. While the initial cost of a Kiva system
is roughly 10% to 20% more than a conveyer belt system, orders to the Kiva
side of the warehouse are fulfilled within 12 minutes, at least four times
But higher productivity isn't the only advantage, according to Adkins.
Because the bots don't care about air conditioning or lighting, Zappos,
based in Henderson, Nev., has cut in half its utility costs per square
foot. And although the company didn't lay off any workers, Adkins says
that because of Kiva's efficiency, "as we continue to grow, we won't hire
as many as we would have."
Unlike the conveyer belts and 30-ft.-tall shelves that are bolted down
in conventional warehouses, the Kiva system can easily be moved to a
different facility. As companies adjust their fulfillment operations in
response to higher gas prices and soft consumer demand, the ability to
shift capacity inexpensively from one center to another is looking like
an important strategic advantage.
Perhaps even more important in today's environment of limited credit and
unpredictable demand is that Kiva could allow wholesalers and retailers
to delay capital investments and thereby mitigate risk. "With a traditional
automated system, we'd have to build a big section of conveyer belts at
one time," says Adkins, "and it might take us three years to actually grow
into it, so early on you're paying for a lot of capacity that you don't
need." He calls Kiva a "just-in-time" fulfillment system, meaning that
Zappos can expand incrementally as its volumes increase by simply adding
robots or pods. "In the long run," says Adkins, "we'll use Kiva for
As executive vice-president at Pittsburgh's Genco, which operates almost
40 million sq. ft. of warehouse space for companies such as Unilever and
Becton Dickinson (BDX), Pete Rector has seen most every fulfillment system
out there. "What takes the time in picking is the person having to move
from one product to the next," he says. "Kiva eliminates the horizontal
travel, and that's transformational." Genco tested a 12-bot, 100-pod Kiva
system five years ago in a distribution center it runs for Hershey (HSY)
and saw productivity double.
But most of Genco's clients are moving full cases or entire pallets, and
although Kiva has introduced a larger robot capable of carrying 3,000-pounds,
Rector says that new systems from Seegrid, also in Pittsburgh, and Sky-Trax
in Newcastle, Del., are better for those purposes.
The fact that fulfillment is so critical to a company's business makes
some resistant to try a new technology. "No one really likes revolutionary
changes, especially in an industry like warehousing and distribution where
people have been doing things a certain way for years," says Bruce Welty,
CEO of Quiet Logistics in Andover, Mass., a new third-party distribution
and fulfillment service based entirely on the Kiva system. "But once they
understand Kiva, it's a revelation."
About Quiet Logistics
Quiet Logistics, Inc. is the industry's first Third Party Logistics company to deliver a complete outsourced fulfillment solution that leverages the game-changing material handling robotics of Kiva Systems. Quiet Logistics' "One Touch" fulfillment service is an alignment of best-in-class operations experience and a fully integrated technology platform with a simplified business model to improve distribution throughput, accuracy, scalability and flexibility at costs that are 30 to 50 percent lower than the competition. For more information on Quiet Logistics and its services, please visit www.quietlogistics.com
For more information on Quiet Logistics, call 1-877-887-8438 or visit
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