The robots are gathering to help beat Britain’s supply-chain shortages – The Economist

Dec 9th 2021

Erith and Northampton

SOME 3,000 boxy robots, each the size of a small refrigerator, are scurrying around a metallic chequerboard about seven times the size of a football pitch. Every second or so one halts as a crate of groceries rises up and is deposited inside it. The bot then conveys the crate to a picking station, where a human puts orders into bags. This is the Hive (pictured), a giant fulfilment centre in Erith, south-east London, operated by Ocado, an online grocer. An AI-driven computer system choreographs the bots movements. Each travels some 60km a day, helping to bag around 1m items.

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Brexit and a shortage of lorry drivers mean items are missing from supermarket shelves. But further up supply chains, the picture is cheerier, for a nation of shopkeepers has built some of the worlds most advanced retail logistics. With around 350,000 ($450,000) spent on automation per warehouse in 2020, Britains distribution and fulfilment centres are the worlds most robotised, according to Interact Analysis, a research group. In America, for comparison, the figure is $375,750.

Automation was first motivated by high wage costs, says Ash Sharma, Interacts managing director. Britain spends $18 per square foot on warehouse labour, compared with $16 in America and $4 in China. But now the issue is labour shortages: Firms just cant find workers.

Britain was also an early mover in e-commerce. Amazon set up its virtual British store in 1998, three years after the American original. Its British fulfilment centres use small, squat robots to slide under shelves and shuttle them to people who pick and pack the right goods.

Online shopping has been the main source of demand. From barely 3% in 2006, the share of retail sales in Britain made online has risen to 26%. When Ocado began delivering groceries ordered online in 2002, there was little technology for automating the handling of goods that must be kept chilled or frozen. So it developed its own. Nowadays, Ocado Group provides robotics to other retailers. It is building 50 more Hive-like systems around the world.

To keep up, firms need supply chains to become more efficient, not just for e-commerce but also for bricks-and-mortar stores, as the two have become entwined. Nowhere is this more apparent than in a giant warehouse beside the M1 motorway at Northampton. Cygnia, the logistics firm that owns it, handles warehousing and order fulfilment for some 30 retailers, selling goods ranging from beer to beauty products. Its employees pick and pack from tens of thousands of items, not just for online customers, but also for shops, beauty salons and other businesses.

Things get hectic at this time of year. A recent Black Friday offer by one client resulted in two days worth of off-peak order volume in an hour, says Scott Merrick, Cygnias chief information officer. The firm also has to cope with constant change, in the form of new products and customised packaging such as Christmas gift boxes. All this is a problem for robots, which, unlike humans, struggle with variety.

Nevertheless, they are coming. Cygnia was bought in September by Wincanton, a giant logistics firm that got its start almost a century ago delivering milk in the West Country. It will introduce robots similar to some it uses elsewhere that work like automated trolleys, fetching items to spare workers from pushing things around. Mr Merrick expects a 200% increase in productivity with two-thirds less labour.

Cygnia says workers displaced by robots will be redeployed, as the firm is expected to grow. Indeed, automation can create jobs, not just for technicians and programmers, but also because improved efficiency tends to generate additional business, says Rueben Scriven, a senior analyst with Interact. He already sees signs of a net increase in warehouse employment.

How long that continues will depend on how well engineers succeed in automating jobs that robots find tricky. It takes dexterity and knowledge not to drop a bag of potatoes on a box of eggs. With the help of sensors and AI, one-armed robots at Ocados warehouse in Erith are learning the ropes. They can already pick and pack about 10% of the 50,000 product lines stored in the Hive, says James Gralton, chief engineering officer for Ocados technology division. He thinks that could rise to 60-80% over time.

Vehicles such as forklift trucks and goods transporters will also start to be automated, says Ian Hunt, automation and engineering director for Wincanton. And companies are keen to automate the last milethe bit of the supply chain that ends with the customer. Starship Technologies, an Estonian firm, already offers robotic delivery in Northampton and Milton Keynes. Its six-wheeled pods trundle along footpaths and cycleways to deliver groceries from Co-op stores, using sensors to avoid people and other vehicles. Operators monitor the pods progress through their cameras and can take control if necessary. When the pods arrive, they are unlocked by shoppers using a mobile app.

As technologies improve and regulators allow, bigger autonomous delivery vans using roads will arrive. Wayve, a London-based startup, is running trials, including some with Asda, a supermarket chain, and Ocado. For now vehicles have safety drivers on board as backup. Lorries will also gain automated-driving aids to help with lane-keeping and avoiding other vehicles. But the complexity of their operationstry reversing a big lorry through a busy, narrow high street to drop goods off at a convenience storemeans HGV drivers will be in demand for years to come.

This article appeared in the Britain section of the print edition under the headline "Santas little helpers"

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The robots are gathering to help beat Britain's supply-chain shortages - The Economist