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APICS Supply Chain Management Now

APICS Supply Chain Management Now gives exclusive commentary from APICS CEO Abe Eshkenazi, CSCP, CPA, CAE. This weekly e-newsletter offers insights into current events and supply chain, logistics, and operations management topics and how they all relate to the APICS body of knowledge.

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Robots Take Over the World

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE - March 30, 2012

OK, you know I’m not serious with that headline. I admit I used it to get your attention. However, leaders at Amazon, the e-commerce king, believe that robots will play a vital role in keeping the company on top. From Amazon, we might all learn a lesson in the value of automation.

Earlier this month, Amazon paid $775 million for Kiva Systems, a technology firm that pairs mobile robots with automation and fulfillment software. In a recent Forbes article, contributor Mark P. Mills says the Kiva acquisition is logical for Amazon. He adds that Kiva is integral to the cloud computing migration.

“It’s old news that the Internet unleashed a new form of commerce in cyberspace,” Mills writes. “The next evolutionary step for the internet is the cloud that connects the cyber world directly to the physical world. Here, Amazon is on the leading edge precisely because they have from inception successfully straddled these two domains.”
While Amazon had to build huge data centers and tackle the related challenges, its leaders also had to conjure actual warehouses where the stuff being sold could be picked and shipped.

“Amazon’s enormous, automated, and well-organized warehouses are the stuff of legend, as are their path-breaking joint ventures with vendors, repair operations, and UPS shipping. Still, physical order fulfillment reportedly costs nearly 9 percent of their $40 billion in global revenues. Enter Kiva’s robots and their inevitable progeny; the logical connection between the cyber and physical worlds.”

Interestingly, Mills argues that instead of replacing workers, the “cyber-physical revolution”__and the ensuing growth and profits__actually will create jobs.

“What we are witnessing today is the migration of robots out of the sector where we make stuff into the supply chain where we handle and deliver stuff__a much bigger domain,” Mills writes. “It’s also far more challenging, but exactly the next step in the evolution of the cyber-physical paradigm enabled by the cloud.”

Preparing for the revolution

Consider the following definition from the APICS Operations Management Body of Knowledge, third edition: “An automated storage and retrieval system (AS/RS) is a high-density rack inventory storage system that uses vehicles to automatically load and unload the racks. It is best suited in places that machines can put away and retrieve materials and free up workers to perform other (perhaps less-dangerous) tasks. The capital costs required to purchase and maintain automated storage and retrieval systems limit their application solely to high-volume operations.”

Think about this definition in light of the Kiva acquisition by Amazon. Does it signal that AS/RS is moving to a different level altogether? The failing economy necessitated that companies slash inventory. Now, as businesses build inventory to meet demand, is it time to deliberate smarter warehouse solutions that enable faster, more accurate order fulfillment? Should the cloud be considered when making these decisions?

APICS can help you and your company find answers to these questions. The APICS Principles of Operations Management program is a great place to start. It consists of five customizable courses that are classroom-based and instructor-led for individuals new to materials and operations management. The APICS Principles of Operations Management program replaces the APICS Fundamentals program, and it can give you or your team an excellent foundation from which important decisions can be made. To find out more information about this and other APICS programs, visit

Idea exchange

Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.

  • How have automation and robotics transformed your company?
  • Does automation eliminate jobs__or create them?
  • What will tomorrow's smarter warehouses look like?
  • Will Amazon's robots succeed or fail?

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