“Never turn-key”: Lessons learned from retailers that have rolled out AMRs

, the use of AMRs is not without potential limitations and risks. According to business futurist, speaker and author Gihan Perera, AMRs will become faster, more reliable, and more sophisticated over time. He believes that retailers can leverage AMRs in a number of different ways, such as cutting costs, reducing workplace risk and injury, and still providing a quality service. Perera added that, in some situations, AMRs can be ‘smarter’ than humans because they have access to more data, so they can provide a superior experience.  This, in turn, might enable brands to offer a more personalised offering for customers, as well as better predictive ability for inventory management and supply chain efficiency. But, he said there might be concerns about how AMRs are integrated in society, and comes with potential risks such as the replacement of staff, undermining of customer privacy and liability concerns. “AMRs will both cost [and] create jobs – but the catch is they aren’t the same jobs,” he said. “[For example] AMRs will create new jobs in design, development, data privacy, security, and hardware maintenance – but these aren’t necessarily the jobs that a frontline worker can do if a ‘robot takes their job’,” he said. “Retailers using AMRs should be aware of the potential backlash from consumers who (rightly or wrongly) worry about the impact on the labour market.” Flexibility in capacity Two retailers who have jumped on board with AMR technology are office supply chain Officeworks, and online fashion retail The Iconic. According to Chief Operation Officer Rostin Javadi, The Iconic installed and utilised AMRs in June 2022 to support increasing customer demand in its fulfilment centre, and to provide optimal order delivery time to its customers. He told Inside Retail that AMRs were introduced to improve its delivery, reduce operational costs and keep its delivery prices at the lowest possible levels. “AMR[s] support our picking team by helping them to streamline their operations and create better efficiency to enable greater output. More specifically, the AMRs are used to receive, store and present products to our pick team based on order sequencing and cutoff times,” Javadi said. Regarding its inventory management, Javadi explained that The Iconic’s AMR solutions scan and identify inventory on its shelves, update inventory data in real time by triggering regular inventory checks, and ensure that the brand’s inventory is accurate and up to date. The AMRs transport products from receiving to storage – and from storage to the picking areas – without staff having to walk and collect items, and can optimise storage by identifying and filling empty spaces. Javadi also explained that, for categories like beauty, which include high volumes of small and fragile packaged SKUs, AMRS have helped to increase the range of products that The Iconic is able to offer. This is because AMRs are well suited to handling fragile goods like perfume, sunglasses and watches, and lead to reduced stock damage as it requires fewer touch points and movements across the store. “We’re excited to have introduced AMRs as a fulfilment solution for THE ICONIC as it helps us create greater flexibility and speed for our team, while ensuring we have a high inventory accuracy rate,” Javadi said. He added that the technology has helped increase its daily fulfilment potential by over 10 per cent, and has enabled The Iconic to pick, pack and ship its orders in under five minutes. New Fulfilment centre Brett Kelly, General Manager, Supply Chains at Officeworks said that the brand started using AMRs in early 2020, after its Victorian customer fulfilment centre – which services Victorian, Tasmanian and South Australian online customers – exceeded its storage and throughput capacity. The environment of surging online sales amid the pandemic – in addition to the shift toward working from home, and customer expectations for ever faster delivery – also contributed to Officeworks’ decision to upgrade its supply chain through investment in new technology. In mid-2020, Officeworks transitioned to its Briggs Drive facility in Derrimut, Victoria. Its new, 15,000 sq m customer fulfilment centre features 116 AMRs and 32 sortation robots, and was the first, solar-powered AMR solution in Australia. According to Kelly, the site, which became fully operational in mid-2021, processes 30,000 SKUs, and will contribute to Officeworks’ net zero ambition of 100 per cent renewable electricity by 2025. It is also part of its roadmap for net zero by 2030. “We are now able to process more than twice the order volume of our old site, which is especially rewarding during our busier retail periods including Back-to-School, EOFY, Black Friday and Christmas,” Kelly said. “At its peak, we expect the operation to be processing over 40,000 lines and 15,000 orders per day, servicing both online delivery and store Click & Collect orders.” To support the expansion of its customer fulfilment centre and the new technology, he said that all team members were upskilled to work with the new warehouse management system, robotics and with automation. He added that construction of its newest, Western Australian based customer fulfilment centre has already commenced, and is set to open at the end of this year. “The success of our first facility has encouraged us to consider further opportunities to ensure we’re keeping up with customer demand, and continuing to create new job opportunities across Australia,” Kelly said. “We are [also] implementing process improvements to increase efficiency and reduce costs in our NSW and QLD warehouses, as we review our future capacity requirements in these locations.” Never turn-key According to Perera, there are a range of ethical considerations that should be scrutinised before brands consider implementing AMRs. These include (but aren’t limited to) potential job losses and reputational damage, inequitable distribution of wealth, liability (for instance, who is responsible if AMRs cause harm or damage), and a reduction in person-to-person interaction. He believes that retailers should be careful about introducing AMRs too quickly and without considering the consequences, as each of these concerns  could lead to backlash. According to Javadi, The Iconic’s use of AMRs doesn’t represent a prioritisation of technology over people. He contended that its team works hand-in-hand with AMRs to increase its efficiency, accuracy and speed, and by reducing the volume of items that need to be manually picked.  “While AMRs have an important role in enhancing operational efficiency, they have not affected THE ICONIC’s staffing levels given the solution works [with] our manual pickers and wider fulfilment centre team members,” Javadi said. He believes that its AMRs have provided staff with upskilling and growth opportunities, and enabled them to review, manage and prioritise customer orders. Javadi added that the health and safety of our people is its highest priority, with the business conducting full risk assessments and controls to minimise the chance of any harm taking place. The Iconic has fenced off AMR movement areas, and has clear guidelines on how staff can safely interact with them. It has sensors and failsafes to detect obstacles and prevent collisions. Meanwhile, Kelly explained that he doesn’t see AMRs as being in competition with Officeworks’ staff. Rather, he said that it is replacing older, fixed and less scalable types of infrastructure, and driving long-term growth across all facets of the business. It is also providing staff with the opportunity to upskill In terms of risk, he believes that AMRs are gaining traction but, as yet, have not widely been adopted in the Australian market. This, he said, poses some risks in terms of the lack of knowledge and capacity. However, he added that these risks can be mitigated by understanding the technology at a detailed level, and applying it to the right setting. “These things are never ‘turn key’. There are always layers of complexity. Risk occurs when there is an expectation that everything will just work as conceived in design,” Kelly said. “These programs are best delivered in phases, as striving for perfection across every element of the operation on day one is not realistic.  “There must be areas of flex and an ability to adjust” “Disruption to the way things used to be” According to Perera, regulation of AMRs is “definitely needed,” in the form of laws, industry standards or voluntary guidelines.  This, he asserted, should cover a variety of areas, including “labour laws, responsibility and liability, privacy and data security, workplace safety and so on.” “As with much technology regulation, regulators and policymakers can’t operate alone, and will need input from industry and other stakeholders,” Perera said. “This is a complex area, and in some cases the implementation will outpace the regulation. So retailers who start implementing AMRs need to be ready for retrospective regulation that might affect them. “They are not just a significant investment, but a disruption to the way things used to be – for the business, their staff, their customers, and other stakeholders.” Kelly stressed that brands should build close working relationships with solution partners, but avoid outsourcing ownership of its solution and outcomes. “It is only together that the knowledge of the business and the solution can be truly harnessed,” he said. Meanwhile, The Iconic is planning to expand its use of AMRs as part of its long term fulfilment strategy, and to meet its growing customer demand. “Automation is an exciting part of our growth and helps our teams become more efficient and effective, while managing our growing volumes,” Javadi said.