Kiva Systems: Adopting a ground-breaking approach

Source: Exec Digital USA

Date :8/13/2008 12:56:26 PM

Implementation of robotics and a parallel process dramatically improves warehouse efficiency and drastically reduces shipping time.

Written By Gabe Perna and Produced by James McCann

In any industry, when the same approach to a problem has been in place for many years, there comes a time when it probably requires an upgrade. In 2003, Mick Mountz, founder and CEO of Kiva Systems, gave the warehouse industry that kind of an upgrade and a jolt of the 21st century.

According to the Kiva website, after working at an online grocery home delivery company called Webvan, Mountz realized the high price and limitations of the current distribution center method. It was at this point he came up the groundbreaking idea of Kiva’s “Mobile Fulfillment Center.”

Kiva Systems Vice President of Marketing, Mitch Rosenberg is confident when he says their product is innovative. “This is a revolutionary product. It’s absolutely the first of its kind. There’s no similar product available elsewhere in the world,” says Rosenberg.

Rosenberg, who received his bachelors and masters degrees from MIT, started in engineering until he switched over to marketing. “I worked for startups and mid-stage companies. I found many mid-stage companies were not able to succeed. They never failed because of a technical challenge but usually because of strategy and marketing. I made a decision to go where the problem is. I switched from engineering management to product management/marketing. And I never looked back,” Rosenberg says.

How it works

A distribution center is a warehouse specifically used for the distribution of goods. A distribution fulfillment center performs the distribution of goods as customer orders. In the distribution center industry, the old serial process was a conveyer system with bolted down machinery that worked like an assembly line. Therefore, if something went wrong it effected the entire operation.

Kiva’s Mobile Fulfillment Center system depends on mobile, smart robotics. Fleets of hundreds of robots run the Kiva’s mobile system. A look at the sample video at Kiva’s website shows Kiva’s orange cubic robots moving around different items in a warehouse without help. Even the shelving of the distribution center is mobile.

“Kiva is not a serial process. It is a massively parallel process. In a parallel process, lots of things happen at the same time, so no single thing can be a bottleneck. In a serial process if one part isn’t working right, everything downstream stops. Kiva’s massively parallel process keeps working even in the rare occurrence of a problem — automatically, without human intervention,” Rosenberg explains.

Because everything happens at once, the Kiva process moves much quicker than the old serial process. “An order can be completely filled in 20-30 minutes from the receiving of the order to the shipping dock. Compare that to 3-5 days in traditional warehouse,” says Rosenberg.

According to the Kiva website, Kiva’s complex robotic machinery use optical markers in a grid pattern on the floor to navigate around the warehouse. They are battery-powered and operate for hours at a time. When the battery runs low, a robot automatically runs to a battery charging system to plug in. The whole system is set up over WiFi wireless network with an MFS server that decides which order goes to which operator.

The robots also increase productivity outside the warehouse according to Rosenberg. “The robot system is smart enough to bring orders to shipping docks in reverse sequence of the truck route. What that means is that when the driver goes on a delivery route and makes the first stop, the cartons for the first order ‘happen’ to be right at the door truck - at the second stop, cartons for the second order are all unobstructed at the back of truck, and so on,” says Rosenberg, who adds that this approach saves both fuel and time. The robots can also pack items with store stocking layout in mind.

Flexibility

The Kiva System robot’s strongest quality is flexibility. “The good thing is that it allows for change and adaptation to market conditions. In the conveyer serial process, once you bolt it down, it’s very difficult to adjust. But with Kiva, we like to say you can pay as you grow. An increasing volume of capacity simply means adding more robots and mobile inventory shelving—no complex redesign. That’s important because with Kiva you don’t have to design the dc for future capacity that won’t be used for several years - and is often based on uncertain forecasts,” says Rosenberg.

Fortunately, the need for flexible warehousing is a trend in the distribution center industry. For example, according to Rosenberg Zappos, an online shoe company, needed to add both new capacity to their warehouse and support new merchandise characteristics when they decided sell more attire.

“One of the most important industry trends is the need for flexibility. Businesses are updating their strategy much more frequently. The trend is toward designing warehouses that are able to handle product changes at the drop of a hat. Zappos only sold shoes at first but when they decided to broaden to handbags and apparel, their existing automation was not flexible enough to handle it. That’s one reason they invested in flexible automation like Kiva,” says Rosenberg.

Growing

Zappos is not the only major company investing in automation from Kiva. According to Rosenberg, Staples and Walgreens are two of their major customers. He also says that Kiva wants to expand their operations beyond distribution and fulfillment centers.

“We intend in the near future branch out to manufacturing applications as well as military applications. You can imagine a military when it lands on a foreign shore one of the first things it does is set up a warehouse to distribute ammunition, supplies and foods,” Rosenberg says.

While some consumers are nervous about such a new technology, those who used once always buy it again. “Once someone tries it, they want more of it,” says Rosenberg.

Kiva, currently located in Woburn, MA and with plans to expand to the West Coast and Europe, is uniquely innovative according to Rosenberg. “There are lots of things that make Kiva a unique company. We started with a very old problem, the problem of storing, moving and sorting goods and came up with a completely new solution from the ground up. As a result, the benefits of working with Kiva are radical improvements in productivity and performance,” says Rosenberg.