Impact of AutoStore

It’s good to keep the environmental changes in mind when you’re focussed on a new technology to improve your company’s service. What is the product-market-context and what is the impact of this new technology on your costs, delivery and quality? In this blog we will focus on giving insight in these matters. 

Product-Market-Context
To understand the market AutoStore is focussed on, we dive into the Product-Markets-Context (PMC). Not every market is the same, so it is important to understand the right targeted group. Product marketing is a process of promoting and selling products to a customer. Based on the markets and the products and services, it is possible to see which market AutoStore is in. The marketing must then be aligned to this specific market.

Based on the Ansoff Matrix the technology Autostore can be classified in ‘Product Development’. AutoStore in a technology that focusses on existing markets: warehousing. AutoStore is especially there for making improvement in responsiveness and total utilization of available space. The technology itself is new. There hasn’t been a product like AutoStore that is working the same way. There are more automated and autonomously working warehouses, but they don’t use the same technology as AutoStore. On that account AutoStore can be classified in the ‘Product Development’ category.

The three key points of AutoStore are improving on responsiveness, utilization of space and safety.  By bringing the goods to the picker instead of bringing the picker to the goods, the speed will improve drastically. Through the grid-bin construction the maximum space will be utilized, compared to the traditional way of warehousing. By making the goods move and keeping the system closed, the safety will improve as well. These three factors are the unique selling points of AutoStore, on which AutoStore can differentiate itself compared to the competitors. They claim to have the best technology regarding to those three indicators in warehousing. Lastly, the expandability of AutoStore with zero downtime is also a strong selling point.
On the other hand, AutoStore is also limited in some occasions. All the bins have a limited size and so on, the products must fit in the bins to make the system work. For warehouse that are based on large products, AutoStock won’t be the solution. AutoStore is designed for warehouses with smaller products and is mostly focussed on responsiveness.

Compared to other warehousing solutions there are a lot of options possible. It differs per warehouse and per company which solutions fits the best, depending on the core values and KPI’s of the company’s strategy. If AutoStore focusses on only their key point, they can be the best in the market for whom are interested in those key points. For different wishes and applications AutoStore won’t be the solution and a competitor is more likely to meet with their requirements. For example, competitors who focus on Automated Guided Vehicles (AGV) have different solutions to offer and may fulfil the company’s requirements better than AutoStore. For every alternative of AutoStore it is possible to name pros and cons, depending on the company’s strategy and processes.

Impact on Context
In this section of the blog we will give some insight in the impact of AutoStore in responsive warehousing. To define impact we will be using the Quality, Costs and Delivery (QCD) analysis. QCD analysis is used to assess different components of the main process. Quality can be describing the product quality and the quality of the process.

Delivery
Delivery is the ability of an organization to both hit their promise dates, as well as to get their products in customer’s hands in a timely manner. Different aspects come to mind when giving insight of delivery such as: speed, volume, variability, batching and reliability. 

Speed
There is a clear difference between the regular warehousing methods and AutoStore. In regular warehouses, where products are contained in shelves, the picker first needs to search for the product. In some companies this is completely automated where the picker knows exactly where a product is, but in many companies this is not the case. Overall in regular warehousing a lot of time is spent on searching for products, transporting them and most of the time the shelves are unorganized. In terms of speed AutoStore will always win. This is because no picker is needed to search for any product since this is fully automated and taken care off by robots: good-to-man instead of man-to-good. Furthermore, the system will also tell you when a bin is empty and bins are never overcrowded nor will there be a wrong product in the wrong place. 

Volume
Now in terms of volume AutoStore is hands down the number one in warehousing. The reason is simple: AutoStore was invented by its manufacturer Hatteland, because they had their own warehousing issue concerning volume. AutoStore uses 60% less volume since it’s unimaginably compact. Therefor it utilizes the same amount of products in even less space (m²) which makes the system much more efficient and effective. This example can be seen in the picture below.

Variability and reliability
Variability and reliability can be interpreted in a lot of ways. We will be mostly discussing the difference in deviations and reliability between the regular way of warehousing and AutoStore. By this we mean the difference in an order getting late to the customer when it’s being picked by a regular warehousing and when an order has to be picked which is stored in AutoStore. As for regular warehousing, a lot of things can happen that can cause the order for the customer to be delayed. For example the product can be not in the designated area which means the picker has to search for it. This will affect the company’s reliability towards the customer. This eventually will result in the company either losing the client and/or losing money. The deviation in AutoStore is less likely to cause any delays to the customers since the variability is limited by AI (artificial intelligence). The only thing that has to be done is for the robots to take the bin with the specific product and the employee will take out a product. Therefor an order processed by AutoStore will less likely cause issues with the reliability of the company. Of course this doesn’t exclude the fact that we are talking about a machinery and things can always go wrong with the internal software of a system. However as far as we’ve heard from our client that hasn’t been the case so far.

Batching
By batching we mean flexibility. A regular warehouse needs to have an efficient separation of the shelves that the products can be stored in. First products need to be assigned to specific shelves and after that they need to be registered so a picker will know where a product is stored. Now let’s imagine you as a picker need to collect 17 items for an order. This means you need to work your way around 17 different locations to collect these items. Of course some of these may be efficiently stored but still this will take some time. Furthermore, you need to collect them somewhere in a bin or maybe even by truck. This way of warehousing is less flexible than AutoStore. In the case of our client Accell, they have approximately 25.000 bins containing over 35.000 products and 40 robots working on top of the grid to collect. This way small orders will be picked quite fast and larger orders can still be picked quite fast since there are a lot of robots to collect.

Quality
Quality is the ability of a product or process to meet and exceed customer expectations. Customer’s requirements determine the quality goals. It is almost always listed first, presumably because poor quality often results in bad businesses. Quality can be measured by the following aspects: tolerance, accuracy, defects, safety and environment. As stated earlier, we will be looking towards the product side and the process side of quality.  

Tolerance
By tolerance we mean the extent to which a warehouse system can store products. When it comes to regular warehouses the products can be stored as long as there are enough shelves to store them on. Let’s say the demand from customers keeps growing which means you need to have products stocked. At some point there will be not enough space to store all your products in which leads to either an expansion of your warehouse or another way of storing the products. In AutoStore the tolerance is higher since it will hold the same amount of products in less surface. An expansion of AutoStore is also easily done and can be completely decided by the one using the system. You can have 10.000 bins operated by 20 robots or you can have 40.000 bins operated by 60 robots. Of course the manufacturer kept an eye on the optimum amount of bins combined with robots to pick the bins. At some points it’s not efficient anymore to keep building up your bins and robots since everything has its natural limits.

Accuracy & Defects
By accuracy we mean errors and defects that can occur when using AutoStore. The most defects that can occur are mistakes made by humans. Compared to regular warehousing, the human factor has been removed and is automated when by robots. Only the picking itself is still be done by humans. Technically the only errors that can occur are when maintenance is deferred. Also mistakes can be made when an employee is using the system in the wrong way. Therefore, training is important to prevent these possible mistakes.

Environment
The environment will change when using this new technology AutoStore. Since you don’t need as much space as a regular warehouse; everything is much more compact. This means unused space can be used for other purposes such as check-up points for products. In terms of quality the products have less chance of getting damaged or dirty which can result in failures.
In case of working environment, this is way more employee friendly. The products come to the employees and so on the employee can stay at its place. The task of order picking becomes physically less stressful and results in a nicer working environment.

Safety
Safety is an issue nowadays with all warehouses. If you’ve been into a warehouse than you’ve probably noticed all the safety signs telling you what to wear and where to walk etc. Naturally you follow the rules to ensure your own safety. Even when products are stacked there is a safety risk. A lot of companies are not scared to stock products in height. The picking can also be dangerous since products can fall, shelves can break or in worst case scenario’s when safety signs are not being lived by. 

With AutoStore safety is much more guaranteed. When you store your product you just put them in a bin. The system will automatically store them away for you. When you need a product the robot will grab it for you. However, even AutoStore has its limits. Huge products can’t be stored in AutoStore since the bins have a maximum height of 40 or 60 cm’s. Therefor an accurate comparison can’t be made when it comes to bigger products.

Costs
Costs can be interpreted in many ways. However in this context we will discuss the costs of investments, maintenance and usage of this new technology.

Investments
It’s not easy to get the exact amount of investments known publically. According to our sources though, we’ve managed to get an indication of what AutoStore might cost you if you’re looking to buy this technology. For an AutoStore warehouse of around 25.000 bins, the total investment is estimated to be around 3 million euro’s. When buying a normal warehouse the following have to be kept in mind: costs of the building and design, costs of recourses, stock costs, and employee costs. An AutoStore warehouse is more expensive than a traditional warehouse, but will recoup itself rapidly.

Maintenance
AutoStore requires a weekly maintenance if being used the whole week. According to our sources at Accell a monthly bigger maintenance is also required to check the robots, the grid and the overall system. This can be labelled as preventive maintenance. Traditional warehouses require maybe less maintenance since there is not so many technology involved. Once this warehouse is placed, the maintenance is not too bad and not that influential to the process. But, the extra costs of maintenance do not weigh up to the extra savings thanks to AutoStore.

Usage
AutoStore is very efficient en energy saving. The total energy costs will decrease drastically after implementing AutoStore. The system is built so, that is as much energy efficient as possible. According to our source Accell, their total energy costs decreased with approximal 25%.

Strategic Options
Finally we take a look on a strategy level of businesses. The question that comes to mind is: what kind of company strategy is adequate for using a technology like AutoStore?

AutoStore is used for responsive and safe warehousing. Companies that use this technology are focused on responsiveness towards their customers and also value safety as one of their priorities.  This means when orders are being received, a fast reaction is necessary to fulfil the customer’s needs. When a company is not focused on responsiveness or when a company utilizes bigger products, then AutoStore might not be the right technology to use. In a strategy that focuses on responsiveness, spare parts and flexibility, AutoStore will be one of the best options to consider.

This page is summarized in the table below.