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Third-party fulfillment warehouses are nothing new, but outfitting those facilities with robots that quietly hum along, picking orders and delivering goods could be a disruptive change to the warehousing business model.
Next week, the first robot-controlled third-party fulfillment warehouse in the country will open in Andover, brought about through a partnership between third-party fulfillment startup Quiet Logistics Inc. in Andover and robotics maker Kiva Systems Inc. of Woburn.
For Kiva, a 125-person, venture capital backed warehouse robotics maker, the new facility is relatively small compared with those of other customers, such as Framingham-based Staples Inc., shoe wholesaler Zappos.com or retail pharmacy Walgreen Co. But according to Mitch Rosenberg, Kiva’s vice president of marketing, both parties expect the new facility to be a model for the future of outsourced fulfillment.
“This project demonstrates a significant business model change that I think is going to ripple through the industry,” he said.
For startup Quiet Logistics, the warehouse — equipped with 10 robots and located about 15 minutes from Kiva’s offices — represents the culmination of the company’s vision and, it hopes, the beginning of a series of similar facilities around the country.
Kiva Systems’ robotic material-handling technology is flexible enough for Quiet Logistics to not have to specialize in specific industries or sectors, a traditional model in the third-party fulfillment industry, according to Al Dekin, vice president of sales of Quiet Logistics. With the robotic system, when different types of clients sign on, there are no conveyor belts or other hardware elements to change to accommodate new product lines. The robots, as well as ordering, inventory control and other supply chain functions, are controlled by software.
“It’s fulfillment as a service, like software has become a service using the Internet,” said Dekin.
Quiet Logistics is in talks with a number of potential customers, according to Dekin, and has announced one in Music Parts Plus, a New York-based company specializing in just what it says: parts for musical instruments. According to Dekin and Music Parts Plus CEO Dominick Moreo, the online retailer grew to a point where the picking, packing and shipping of his products was limiting the company’s growth — “scaling through labor,” Dekin called it.
By outsourcing the process, Moreo has been able to catch up with his company’s demand, and he does not have to invest in training warehouse personnel on his catalog of more than 5,000 products, many of which look similar. This, said Dekin, also cuts back on human error in shipping the wrong product (and subsequent return.
Officials at Quiet Logistics, which is funded by a handful of individual investors, said the company expects to make more expansion announcements soon, and while today the company is a small customer for Kiva Systems, that could change. “One of the things I always tell the folks there (at Kiva) is that we expect to be one of their biggest customers,” he said.
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