Amazon Puts Its Money In Kiva Systems’ Robotics
In the market where Amazon is one of the big boys, innovation has to pertain to all aspects of the business. And that means that apart from quality products, the overall infrastructure of internal processes must be bullet proof, cost-efficient and highly productive. Amazon’s one step closer to that as it puts its money in Kiva Systems’ warehouse robotics.
Amazon 2011 annual report identified several aspects that the company could optimize to better the overall productivity and work flow. As PC World writes, one of these aspects was Amazon’s “ability to optimize its fulfillment centers and warehouses as one of the risk factors affecting its business”.
So, Amazon started brainstorming ideas that would address that particular aspect. By February 2012, Amazon has already added another 100,000 square meters to the 2.45 million square meters of fulfillment centers throughout the United States. To handle such an expansion, Amazon needed brains that would not fail under the work load. They found it in Kiva Systems’ robots and software.
This Monday, Amazon announced it intends to buy Kiva Systems Inc., a company that makes robots and software programs designed to increase productivity and work flow in warehouses. For Amazon’s ever growing warehouses, automation seems to be the right word.
Dave Clark, vice president of Amazon’s global customer fulfillment, explains: “Amazon has long used automation in its fulfillment centers, and Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow”.
The deal looks good for Kiva Systems too. Amazon will buy it for approximately $775 million in cash. Mick Mountz, CEO and founder of Kiva Systems, stated: “For the past ten years, the Kiva team has been focused on creating innovative material handling technologies. I’m delighted that Amazon is supporting our growth”.
Scott Tilghman, analyst at Caris&Company, told Reuters Amazon’s decision is common sense. “This is a way to improve efficiency. Given the sale of Amazon’s operations, it makes sense to have this capability in house”.
Aaron Kessler is an analyst with Raymond James. He feels that Amazon’s fulfillment costs needed to be reduced and that’s been one of the investors’ main focuses recently. “It’s a big cost. They are shipping so much and increasing volume so they need to figure out how to get more leverage out of these fulfillment centers”.