Things Are 'Easy' at Staples ... When Robots do the Work

Imagine a team of employees that works 16 hours a day, seven days a week. They never call in sick or show up late, because they never leave the building. They demand no benefits, require no health insurance, and receive no paychecks. They never complain. They spend every waking moment maximizing productivity, and their interactions with coworkers are a precise, choreographed dance.

Sounds like a bunch of robots, huh?

They are, in fact, robots--and they're dramatically changing the way Staples (SPLS), the largest distributor of office products in the United States, delivers notepads, pens, and paper clips to its customers. For close to a year, Staples' 500,000-square-foot order-fulfillment facility in Chambersburg, Pennsylvania, has been home to a growing workforce of free-roving machines that scurry about the warehouse floor in search of products that eventually end up on desks and conference tables across the Mid-Atlantic states. Staples has had such success with its robot experiment that it's lighting up its new fulfillment center in Denver with the system later this year.

E-commerce is a wonderful thing, if you're a customer. For the warehouse at the other end of that transaction, though, it can be a nightmare. Every day, thousands of customers place orders, and each order might contain products ranging from ink cartridges to hand soap to, of course, staples. Having people run around a warehouse looking for those items, it turns out, is expensive, especially when the company, in an effort to delight that customer, has to honor its promise of having the box delivered the next day.

Staples officials were beginning to suspect that its labor-intensive approach was a weak link in the supply chain. Companywide, Staples' sales grew by 13% from 2005 to 2006, and capacity in the Chambersburg facility was nearly maxed out. The system, says Roger Will, VP of transportation and logistics planning and engineering, "was a significant pinch point in getting orders out every day." To meet projected order increases, the company faced the prospect of expanding its old system, which meant costly outlays for conveyor belts and other equipment as well as staffing increases.

Enter the robots. The system isn't proprietary to Staples but rather the brainchild of Mick Mountz, who left doomed dotcom Webvan in 2000 to found Kiva Systems. His idea, inspired by the logistical failures of the grocery e-tailer, boils down to a simple question: Wouldn't it be better if the folks filling the orders didn't have to run around? Staples was a natural fit as a target customer, and the $18.2 billion company carved out 50,000 square feet of its Chambersburg facility. Neither Staples nor Kiva will reveal the exact cost, but Mountz says a comparable setup would cost approximately $5 million.

On the warehouse floor, the 150 robots probably most resemble a well-trained breed of working dog such as, say, the golden retriever. And as far as robots go, they are, like dogs, also kind of cute. Standing just less than 2 feet high, the 3-foot-long machines are encased in orange plastic shells. Rows of blue lights, situated where one might imagine eyes to be, blink when they receive commands from a centralized computer.

When product orders come in, the computer tells the robots where to find racks with the appropriate items; the robots, following a network of evenly spaced bar-code stickers spread across the floor, locate the racks, slide beneath them, and lift them in the air. The robots then carry them to picking stations and wait patiently as humans pull the correct products and place them in boxes.

When orders are filled, the robots neatly park the racks back among the rest. The central computer, which calculates order volumes in real time, instructs them to leave the racks that hold the most frequently ordered products in easily accessible spaces. The robots also pretty much take care of themselves. When they run low on power, they head to battery-charging terminals, or, as warehouse personnel say, "They get themselves a drink of water."

Before the robots arrived in January 2006 (peak season), the facility processed 13,000 orders daily. This past January, with minimal additional staff, the robots facilitated 8,000 of Chambersburg's 18,000 daily orders. Overall, average daily output is up 60%.

The robots now run 50% of the Chambersburg facility, up from 10% when they first arrived on the scene. Because the new system allows Staples to add robots merely by clearing some extra floor space and setting up more racks, the company can expand it in Chambersburg or any of its 29 other existing fulfillment facilities as order volume requires, rather than incur costs before it needs to do so. For a new center such as the one coming online in Denver, Staples can design the warehouse for the robots. "We looked around, and nothing else has come out that's significant when you have to reach into one box for a product, then put it in another box," Will says. "This has the cool factor."

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