Cover Story: Robots in da (ware)House
by Tan Zhai Yun, The Edge Malaysia | 19 April 2021 | In The News
“In the online business world, we have to fulfil orders within 48 hours. If you don’t have sufficient resources to prepare those orders, it will result in many issues. A robotic warehouse enables us to manage the fluctuations in orders better.” – Chin (Photos by Sam Fong/The Edge)
Andy Chin (Working Professionals MBA Class of ’21), vice president of marketing at MR DIY Group, explains how the surge in online orders led the group to build its newly-launched robotic warehouse – one of the few automated e-commerce warehouses in Malaysia.
Walk into MR DIY’s robotic warehouse in Seri Kembangan, Selangor, and you will see rack upon rack of items moving around the 65,000 sq ft warehouse by themselves. Each rack will eventually park itself in front of a station, where an employee picks items out of the boxes on the rack. When that is done, the rack automatically turns away and returns to its original position.
Compare this to the traditional method of picking orders, where the workers have to drag a trolley around to find the relevant rack and collect the items.
“It’s just like if you are shopping at Tesco and you have to push your shopping cart to take things off the rack, one by one. If you’re strong enough, you can push a few carts at the same time. But with our new system, the racks come to us instead. It’s faster and more accurate,” says Andy Chin, vice-president of marketing at MR DIY Group (M) Bhd.
The robotic warehouse is the first of its kind for the company, and one of the few automated e-commerce warehouses in Malaysia. MR DIY began planning for the warehouse in 2019 and officially launched it in March this year.
When the pandemic hit last year, soaring e-commerce sales more than justified the company’s investment in this robotic warehouse.
“A system like this was needed. At the beginning of the pandemic, we saw a bottleneck in the fulfilment process. Our e-commerce sales actually increased 300% year on year in 2020. That’s a huge spike. Our customers have trusted us with their orders, so we have to make sure that the items are delivered to them on time and in good condition,” says Chin.
The company spent around RM5 million on the warehouse, he says, which includes the cost of building customised software and installing the hardware. Since then, it has seen a 200% increase in efficiency and expanded its product range by 20% to more than 20,000 items.
Prior to this, warehouse staff could pick only nine customer orders at a time; now, they can do 28 and pack up to 2,000 orders in a day. And customers can receive their orders in two to four days.
Installing this technology was crucial for the company to hop onto the e-commerce bandwagon, where speed, accuracy and consistency are important.
The company has to make sure that it has enough manpower to handle the orders when they come in. However, it is difficult to estimate the number of online orders it will get every day.
“If we use manpower to do all the fulfilment, we have to have a large number of staff on standby before big events. With robots to support us, we are more confident that we can have things under control,” says Chin.
For instance, whenever sales are held on platforms such as Lazada, Shopee or even MR DIY’s website, there will be a huge influx of orders. With a robotic warehouse, there is less pressure to find additional manpower to help fulfil these orders.
“In the online business world, we have to fulfil orders within 48 hours. If you don’t have sufficient resources to prepare those orders, it will result in many issues. A robotic warehouse enables us to manage the fluctuations in orders better,” Chin notes.
This investment comes even as MR DIY continues to expand its bricks-and-mortar stores, which are its main focus. Currently, the company has more than 700 stores in Malaysia.
“We started our e-commerce business as a supplementary platform to create a better shopping experience for our customers. As at December last year, our e-commerce revenues were still below 1% of the group’s overall revenue. But we think that investing in automation can improve our customer service,” says Chin.
“It’s not easy to forecast the trends but we expect more e-commerce orders to come in. With this warehouse, we will be ready when the e-commerce trend takes off.”
How does it work?
If you look closely at the warehouse, it’s not the racks that do the moving. A square-shaped robot moves around the floor and attaches itself to the bottom of the relevant racks, lifting them and moving them to the picking station.
When their batteries run low, the robots automatically move to a charging station. The robots are guided by QR codes that are arranged in grids on the floor. In turn, these QR codes are connected to a robotic management system (RMS), which has a pre-set algorithm that optimises the routes these robots will take. The warehouse staff can manage the system via a central dashboard.
“The QR codes basically serve as an address for the robots to move in different directions. The RMS will automatically calculate the fastest and most efficient route for the robots to get to the picking station. It’s like a traffic inspector who will decide which robot gets to come and go,” says Chin.
The RMS will also consider the most efficient sequence for the robots to arrive at the packing station, so the staff can pick more orders at the shortest time.
“For instance, some robots may be attached to racks that have more than one customer’s orders that can be picked at the same time,” Chin says. That rack might be placed further ahead in the queue.
The RMS is currently at the optimisation stage, where it is collecting data to create the most efficient routes and identify the best places to locate the products. For instance, a very popular product may be placed on a rack that is closer to the picking station.
The robots are also fitted with sensors that prevent them from crashing into other robots. Additionally, the staff will scan the boxes on the racks whenever they take an item. This is noted by the inventory database, which will alert the staff whenever a box needs to be replenished.
“With all these small processes being optimised, we can increase the efficiency rate. We are still at the primary stage now,” says Chin.
Currently, the picking and packing processes are done manually. So, while there has been a decrease in manpower required in the robotic warehouse, the difference is not that significant, he observes.
“The more important element is that the process is more accurate and we speed things up. We are looking to build a fully automated warehouse that includes those two processes. But what’s important now is to continue optimising this process and creating an omnichannel retail experience for our customers,” says Chin.
Image: The Edge
How did MR DIY make it happen?
Initially, the robotic warehouse was a project headed by the marketing department, which did not have experience in running a robotic system. But it collaborated with the IT department and other staff. An in-house consultant also reviewed the processes to suggest what could be optimised.
What is of note is that throughout the journey of digitalising its e-commerce warehouse, the company relied heavily on its internal resources and talent.
“Our first e-commerce warehouse was a small storage space above our shop. We had zero knowledge in e-commerce back then but were quite experienced in the retail industry, so we tried to do things our way,” says Chin.
At first, the company had a lot of manual processes to track the flow of goods. Along the way, it upgraded its e-commerce warehouse system to be more automated. Its staff — including those who worked in the warehouses — got the chance to learn new skills as well.
“In the past, picking and packing orders was quite labour-intensive. When the order numbers were too high, we even had to supply our staff with energy drinks or change their shifts. But our system now uses technology to do most of the work, so our staff can focus on other things,” says Chin.
He gives the example of one staff member who has been with the company since 2017. She witnessed the evolution of MR DIY’s e-commerce warehouse from a small, manually managed storage room to what it is now, and currently works as a supervisor in the robotic warehouse.
“When we moved to this robotic system, she had the opportunity to join us in our brainstorming sessions with different departments, vendors, professionals and engineers from overseas. I believe she learnt a lot.
“It’s good exposure. I think this gives them the opportunity to look at logistics and warehousing very differently,” he says.
Starting with an internal team can be more affordable and efficient. A strong vision from the leadership is also required to make this kind of digital transformation successful.
“One good thing that I see in MR DIY is the spirit of innovation. The management is willing to take risks to complete the innovation. It’s in our brand’s DNA. If you look at our billboard campaigns, you’ll see that we change the tagline every six months and we use creative statements to attract attention,” says Chin.
“Our business model is also unique. We created it for the Malaysian community and brought everything under one roof. When the management team has this kind of DNA, things will be easier. We are willing to explore new technologies to continue optimising processes to serve our customers better.”
How are e-commerce orders fulfilled?
According to Andy Chin, vice-president of marketing at MR DIY Group (M) Bhd, there are five types of e-commerce warehouses generally. At the first level, small sellers on marketplaces may use their own homes or offices as warehouses. They print the order slips manually and ship the items to consumers.
At the second level, the sellers work with third-party warehouse providers, which specialise in fulfilling e-commerce orders. Lazada, for instance, offers a fulfilment service for its merchants.
At level three, the merchants integrate an e-commerce warehouse into their traditional warehouses, while at level four, they have an independent warehouse just for e-commerce orders.
The last level is an automated warehouse that uses technology to cut down on human labour. Oftentimes, robots work alongside humans to increase the efficiency of processes.
“In the e-commerce business, speed is everything. When orders come in, you have 48 hours to clear them. That’s why it’s important to have a dedicated warehouse to support the business,” says Chin.
There are many ways e-commerce warehouses globally use robots for e-commerce fulfilment.
For instance, autonomous mobile robots are deployed to pick up orders, clean facilities and function like a forklift in warehouses, according to DHL. Japan-based robotics company Fanuc has artificial intelligence-powered robotic arms that can sort through, identify and put items on conveyor belts, as well as mobile robots that pick up items from racks for order fulfilment.
Meanwhile, Amazon had more than 200,000 mobile robots in its warehouse network in 2019, according to an article by the Associated Press. These robots transport items from one location to another.
In Malaysia, automated guided vehicles (AGVs) were introduced at the Digital Free Trade Zone’s eFulfilment Hub in 2017. The hub is operated by Pos Malaysia to serve Lazada and other e-commerce players.
This article was originally published on The Edge