{"id":36467,"date":"2024-09-01T19:34:53","date_gmt":"2024-09-01T17:34:53","guid":{"rendered":"https:\/\/www.beer-management.de\/?p=36467"},"modified":"2024-09-02T07:16:27","modified_gmt":"2024-09-02T05:16:27","slug":"robotic-piece-picking-anatomy-of-a-broken-business-model","status":"publish","type":"post","link":"https:\/\/www.beer-management.de\/en\/robotic-piece-picking-anatomy-of-a-broken-business-model\/","title":{"rendered":"Robotic Piece Picking: Anatomy of a Broken Business Model"},"content":{"rendered":"\n

This article is about the broken business model of robotic piece picking companies. If you are looking for the broken business model of Q-commerce companies, please read this article<\/a> or this one<\/a>. <\/em><\/p>\n\n\n\n

For a long time, piece picking robotics was a niche segment in warehouse automation, but the general consensus was that it was rapidly gaining in importance. When I entered the industry in 2015, it was already a thing. SSI Sch\u00e4fer<\/a> had launched its first piece picking robot called \u201cRobo Pick\u201d in 2010 [1]<\/a>, which was blazingly fast even by today\u2019s standards. An impressive piece of technology (with some limitations) that unfortunately nobody wanted. It won a few awards, but very few orders. In the years that followed, every other warehouse automation company added piece picking robots to their product range. Several independent robotics companies also entered the market. The best known is probably RightHand Robotics<\/a>, which was to some extent the poster boy of piece picking robotics companies.<\/p>\n\n\n\n

Although robotics companies get a lot of attention and VC money, although they are ubiquitous at warehouse automation trade shows and although every second warehouse operator asks for a robotic solution, the total number of piece picking robots installed in live systems is staggeringly low. You know those surveys where people are asked if they would be willing to pay more for meat to support animal welfare? Most people say yes. Then they go to the store and buy the cheapest meat they can find. These people are the equivalent of all the warehouse operators who say they want robots. None of them buys them. (Well, often you can\u2019t \u201cbuy\u201d them, which may be part of the problem. More on that later).<\/p>\n\n\n\n

In recent weeks, news has emerged that RightHand is having some financial challenges and Covariant has reached \u201csome\u201d agreement with Amazon [2].<\/a> The latter is a bit confusing, but some observers have described it as a sort of stopgap measure<\/a> for Covariant to ensure its survival. I don\u2019t know if that’s true, and I don’t have the details, but it’s not that important to the point I want to make. The point I want to make in this article is that this and quite a bit more is to be expected in the robotics picking domain. Because despite all the glamor and robots being \u201cthe future\u201d, some robotics companies are in a pretty bad position to do business. This has nothing to do with the fact that they are running out of VC money and that the environment for start-ups has generally become more difficult since the end of \u201cfree money\u201d. They are in a bad position because of their strategic position and their business model. <\/p>\n\n\n\n

A Broken Business Model<\/h2>\n\n\n\n

One thing that should be clear from the outset is that no warehouse operator wants a robot. They want cheap, reliable and fast picking, but they don\u2019t care if that is achieved by labor, a robot or a magic fairy.<\/p>\n\n\n\n

As obvious as this point may sound, it has important implications for the business model of robot vendors \u2013 because they sell (well..) robots. And these robots are entirely useless unless integrated into a more comprehensive, and often very expensive system consisting of AS\/RS and plenty of conveyors \u2013 which the robot vendors don\u2019t sell. So, in addition to the robot vendor and the customer, there is another party: the integrator. Integrators usually act as general contractors and are the \u201cone face to the customer\u201d. Most customers like this because it reduces transaction costs and effort for them.<\/p>\n\n\n\n

This means that while piece picking robotics companies got all the attention (and funding) they could wish for, they can’t complete a project on their own. They always need an integrator. And the integrator must be willing to work with them.<\/p>\n\n\n\n

Some integrators have their own robotics solutions (e.g. SSI Sch\u00e4fer, Swisslog). Some have entered into partnerships with robotics providers \u2013 which usually excludes cooperation with other robotics providers. So not only do robotics companies need integrators, but the number of integrators available to them is shrinking and will continue to shrink as more and more robotics providers enter the market and more and more integrators develop in-house solutions.<\/p>\n\n\n\n

And how should an integrator deal with the situation where a potential customer prefers a particular robotics company, \u2013 but the integrator has a contract with another company? Perhaps the customer and the robotics vendor have already conducted picking tests with the customer’s SKUs and these tests were successful. Now the customer and the robotics company want to work together. And the integrator tells them they can\u2019t? What an unpleasant situation for each of the three parties.<\/p>\n\n\n\n

The Integrator Perspective<\/h3>\n\n\n\n

Let\u2019s take a closer look at the integrators’\u2019 perspective. What are the integrators interested in?<\/p>\n\n\n\n