Nordic e-commerce company KitchenTime invested in the highly automated warehousing solution Autostore – and have no regrets. Staff costs have dropped by 50 percent, their storage footprint has reduced by 75 percent, and customers are served better. But is this kind of investment right for you? Not necessarily. We asked KitchenTime for advice.
The Autostore solution impresses both logistics nerds and passionate e-commerce business owners who see it in action. If you haven’t seen this video of KitchenTime’s warehouse yet, take a quick look now:
The grid storage system and its advanced robots – created by Norweigan Autostore Systems – are also used by businesses like Boozt, Puma, XXL, Sportamore and Komplett.
How Autostore works
Instead of the traditional aisles and shelves, this storage solution consists of:
- Bins that store the products.
- An aluminium grid framework that houses the bins.
- Robots that elegantly support the human operators by bringing products to them.
The bins are stacked vertically inside the grid. In the case of KitchenTime, there are 35,000 storage bins, each containing 1 to 16 different product types (depending on the size and popularity of each product, each bin can be divided into sections).
When operators come to work in the morning, or after a coffee break, the robots have been kind enough to line up all the bins needed for the next batch of orders.
The most popular bins stay on the top layer, easily accessible for the robots running on top of the grid. If a bin is buried deep down inside the grid, the robots work together to dig it up.
The way it works is this: First, the bin on top is moved and temporarily placed on top of a nearby stack. That makes the bin one level down accessible. Then that one is pulled up as well, thanks to the robots’ extendable aluminium “arms”. The second bin is temporarily placed on another nearby stack. And so it goes on until the required bin is reached. When finished, the robots tidy up by putting all the bins neatly back in place.
The bins arrive to the operators at exactly the right time and are then returned back to the grid.
The robots can work 24/7 when needed. If they have been inactive for 30 seconds with no new task assigned, they go and charge themselves.
The benefits for KitchenTime
Besides cutting staff costs by 50 percent and reducing their storage footprint by 75 percent, they are also now able to serve customers faster.
“We can deliver 3-4 times as many orders per hour now,” says Anton Malmberg, deputy CEO and co-founder at KitchenTime.
“We have lots of same-day deliveries – birthday gifts, or customers who need something for dinner the same night, for instance. We want to create wow experiences, and now we can. In a manual storage solution of a few thousand square metres, it takes so much longer for someone to go get the products from the shelves, especially if a particular shelf is far away.”
“It’s also way easier to deliver on express orders. When express orders come in, we can get the robots to prioritise them and have the package ready for delivery within a couple of minutes.”
45,000 products are offered in their webstore.
“Before, 50 percent of the product range could be delivered immediately; now it’s 90 percent. We also don’t need to worry about products getting dusty, because the bins are more or less protected from dust within the grid.
Since the new storage solution was put in place in 2017, sales have increased 65 percent – and it’s just a matter of time before KitchenTime needs to expand again.
“At the moment, we use 70 percent of the grid space. In the lead-up to Christmas, we’ll use more of course. This solution is modular, so we can easily expand the grid without hassle when needed.”
He mentions several other benefits as well:
- Strategic control: “Using a third party warehouse solution was right for us for some time, but as we have grown we want to have as much control as possible over our processes. If we make a decision – for example regarding introducing a new kind of packaging – we can implement it right away, without being dependent on others. Now the warehouse staff wear KitchenTime shirts and have more connection to our brand. That’s important to us as well.”
- The uptime: The robots work 24 hours if needed. Even on weekends. “When a robot breaks down, another robot comes along immediately to complete the task.”
- Better precision: “When we had products on shelves, products ended up in the wrong place much more often, due to sliding or human error.”
Is this right for your e-commerce business?
The decision to move from a traditional warehousing solution isn’t an easy one. There are many things you need to consider. We asked Anton Malmberg about the variables:
- The size of your products: “The bins measure 60x40x30 cm and most of our products fit inside them, but if you sell mostly larger products this might not be the right solution. Equally, if you sell mainly smaller products then you won’t get the same benefit on the footprint.”
- The growth of your company: “If your e-commerce business is growing and expanding, like ours, you may like the modular storage solution as much as I do. If you are not growing, the extra flexibility might be unnecessary.”
- Your own focus and competence: “Autostore will build the grid and provide the robot technology and algorithms. But everything else is on you, like planning for electricity cables and integrating with your business system and ordering system – and it’s quite a hefty project to complete. Also, you need to be very involved in the procurement. You need to know the numbers; how long different operational tasks currently take, how much space you’ll need, how many of your products will fit inside the bins, how much each product sells, your capacity needs, and so on.”
Once the decision was made, it took KitchenTime 7 months and about 3 million euro in investment to get everything up and running.
“We looked at other alternatives as well, like the kind of shelf robots Amazon uses. Such a solution wouldn’t demand as much installation work, but wouldn’t solve the floor area problem. And a larger automation solution would be too expensive. We are extremely pleased with how well this investment has turned out,” says Anton Malmberg.
Business idea: To sell kitchen and dining related products to Nordic consumers online. The e-commerce group KitchenTime also includes the brand Confident Living, which focuses on furniture and home decor.
Number of products: 45,000
Number of employees: 50 full-time, 5 part-time
Location: Uppsala, a one-hour drive north of Stockholm, Sweden. Warehouse in Eskilstuna.
Revenue: Sales have increased 65 percent since the automated warehouse began operation in 2017. Revenue was 20 million euro for 2017, 10 million for 2016, 4 million for 2015 and 1 million for 2014.
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