Robots as a Service: Automate the Warehouse While Preserving Capital

In 1903 when Henry Ford introduced the Model A, he was convinced his invention would replace the horse and buggy in no time. But horses and buggies continued to outsell his cars until he developed the assembly line process to mass produce his Model T, making automobiles affordable to the average family.

Robots are amazing. They’re what ecommerce fulfillment needs right now to solve the chronic labor shortage in warehouses and bring a host of other benefits in productivity, scalability, accuracy and more. But 80% of warehouses are still manually operated with no supporting automation. All that’s been missing until now – as was the case with Ford’s first cars – is a way to make them affordable and accessible. A Robots as a Service financing model could be the answer.

What is the Robots as a Service Model?

Until very recently, robots were the exclusive realm of big and well-funded ecommerce fulfillment operations. Capital has always been the key because deploying a fleet of robots could cost millions to purchase outright.

Robots as a Service (RaaS) works the same as Software as a Service (SaaS). You don’t have to buy the robot, so no capital is required; you pay as you go. All the maintenance, repairs and software updates are included. In Staci Americas' case, a fleet of Locus robots is paid for monthly.

Robots as a Service Creates New Opportunities

The RaaS model puts robots within reach for many eCommerce fulfillment operations that couldn’t afford the millions of dollars required to purchase a robotic solution. That includes all sizes of in-house fulfillment operations and third-party logistics (3PL) providers.

RaaS is an option for any warehousing and fulfillment company that has the cash flow. The RaaS model treats robots as an expense like labor. All that’s required of companies is the wherewithal to research options, get bids and work with a supplier to tailor a solution for their needs.

Robots as a Service Benefits

• No capital investment. Deploying a fleet of robots in a warehouse is a multi-million-dollar investment. Advanced planning is required, RFPs need to be considered, ROI must be demonstrated, and ownership approval obtained. That takes time and commitment. By the time you get the go-ahead, the needs that spurred the robot-project may have changed or the technology may no longer be leading-edge. As a capital investment, robots are risky.
• Pay-as-you-go. RaaS is a monthly expense tied to the number of robots you need, which is tied to sales volume. If volume decreases, you can decrease your service level and payment. The converse is also true; When volume increases, you can bring more robots online to fulfill the orders without delay. It’s all about flexible fulfillment. RaaS is closely tied to cash flow, so the model promotes a healthy bottom line.
• Frees capital to be applied to other projects. The robots Staci Americas brought on through its RaaS agreement with Locus enabled Staci Americas to forego a $2 million conveyance system. Instead, that capital can help fund other strategic investments.
• No maintenance, no updates. The RaaS model puts the responsibility of implementing, updating, repairing, and fine-tuning robots on the lessor, not the lessee.
• Quick implementation. Implementing any new warehouse technology – even a case erector – is an 18-month process from internal process to procurement. Compare that to 30 days. That’s how long it can take to implement a robotic solution.
• Quick scaling. In a Robots as a Service model, robots can be added to meet an increase in volume as quickly as additional robots can be delivered. These “new workers” can be programmed to do the job immediately. With today’s labor shortage, being able to scale that quickly to meet a need and not have any training delay is a real advantage. And to be able to count on that worker to show up for work with absolute certainty and near-perfect performance is a double bonus.

Why It Makes Sense to Work with a Robot-Enabled 3PL

Robots are great and RaaS is an excellent financing option. But does it make sense to work with a 3PL to access this efficiency-enhancing technology? What are benefits to shippers if a 3PL is the one with the robots, not you?

Cost avoidance. It means you can scale your operations without risk of your costs scaling proportionally. That’s because it doesn’t require more labor. Robotics and automation support higher rates of productivity and accuracy by their nature. They can work 24-7 without requiring overtime pay, taking breaks or experiencing any compromise in work quality.

A second aspect of cost avoidance is that you can get more throughput from the robot-enabled distribution centers in your network. So, you may be able to delay adding distribution centers or new fulfillment partners – both significant expenses.

Insulation from labor disruption is a key upside to working with a robot-enabled 3PL fulfillment partner. Let’s face it, the labor recruitment/retention challenge in fulfillment operations will continue. Counting on your 3PL to find workers to meet a surge in your volume can be risky. Ultimately your 3PL’s challenges in hiring, retaining and training associates are your challenges. A 3PL that is leveraging robots through an agile and cost-effective RaaS model is well-equipped to handle your surge and remain financially healthy, so that they can be there for you over the long haul.

Order accuracy is automatic with robotics and automation. This is true for the machines themselves and because the machines support accuracy in associates who work alongside them. It’s definitely the case with Staci Americas' cobot fleet. The cobots being deployed relieve associates from fatigue. Pickers walk 80% less and that helps them maintain mental sharpness. The cobots also free human workers for value-added services, promoting job satisfaction. Happy workers perform better. Plus, the cobots also have screen-features that help pickers pick faster and more accurately. (Watch the video.)

What’s Next for Robots as a Service?

For ecommerce companies looking for every advantage when it comes to scaling seamlessly and cost effectively, robot-enabled fulfillment 3PLs are a natural. A 3PL’s RaaS program sends a signal to growing brands that the provider is ready to handle any kind of growth trajectory.

As the result of its first successful RaaS-driven robot deployment, Staci Americas is launching cobot fleets across its national fulfillment warehouse network. Ground-based picking cobots will soon be joined by skyborne drones that will be used in inventory management, as well as robotic arms which will be used to sort trailers containing inbound shipments.

Get ready for the robot revolution and all the promising benefits that will come with it. Robots as a Service is how it will come about. Learn how you can employ robots in service of your success by reaching out to our team.