Monday, September 9, 2013

Be Creative About Inventory Warehousing- Kiva System

I used to try hard to imagine how the inventory warehouse and the life of workers working there to fulfill the orders are like for big e-commerce companies like Amazon and Ebay. Amazon now has 52 existing warehouses in the U.S and has plan to opening more. For each warehouse, hundreds of workers are employed. A packing employee “has to walk 10 or more miles a day” just picking and dropping stuffs-tedious, unproductive and constitutes a great non-value adding cost for Amazon.   With the age of information and technology, a solution for this should be out there.

I did some search and then came across this interesting 10 minutes Ted-Talk delivered by Mick Mountz, the founder of Kiva System ( 

Mick, learning from his prior unsuccessful ecommerce startup due to high warehousing costs, revolutionized the way inventories are managed.  He invented autonomous mobile robots and utilized sophisticated algorithm to control them. Using his own words “now the inventory can talk and walk” . Theses robots are like mobile shelves and they can “store, move and sort the inventory and then come to the pieceworker” [1]Kiva System can help big e-commerce companies to fulfill orders in a highly efficient and effective manner. With this system in place, there is no need to hire thousands of people doing unfulfilling work and accuracy of order fulfillment gets improved too. Moreover, this technology and algorithm can be constantly improved. The robots now can even help with gift wrapping.

While I was watching the video, I am so convinced that Kiva is indeed a game-changer and I was thinking if I owned a company that requires intensive distributing and packing work like this, I would definitely get that technology. Unsurprising, Amazon bought the company last year for $775 million in cash, making the deal the second-largest acquisition in Amazon’s acquisition[2] history.  So we can anticipate that Amazon will embrace a higher level of automation in its oder fulfillment process in the future. Let’s wait and see what transformation Kiva System will bring to Amazon.


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