Three companies are making strides in the automated fulfillment landscape, providing a glimpse into the future of retail.
By Ron Friedman, CTech
One of the first things that strike you when you enter eGold’s fulfillment center in the port city of Ashdod is how quiet things are. The 20,000-square-meter facility, that handles thousands of items a day, taking them from the container ship they arrived on and prepping them for delivery to customers’ homes is eerily silent. Where you would expect to hear the grumbling of engines, the whizzing and burring of conveyor belts, the shouting of instructions between workers, and the shrill warning of forklifts backing up, all you can hear is the hum of electric motors working in perfect sync.
The company’s state-of-the-art facility is one of the first of its kind in Israel and it is operated almost entirely by a robot, or rather an algorithm that manages the work of scores of individual robots. The facility, which was launched last February, is primarily used by solopreneurs and small enterprise e-tailers, enabling them to manage their whole logistics operation — import, storage, picking, sorting, and preparing for delivery — in one spot. The advantages: it’s fast, it makes almost no mistakes, and it provides a mix of human and machine quality assurance.
Following the flow of a single item through the entire process, showcases an astounding amount of different technologies at play, from a sorting system in which a mounted light pointer indicates to a human employee in which bin to place a scanned item depending on its weight and size, to the mini-forklift robots that maneuver around the center carrying shelves full of products of every kind to their predetermined destination for picking or longer-term storage, to the mindbogglingly complex Warehouse Management System (WMS) that knows where every item is at every moment, knows how to line up the shelves, bins, and robots so that they arrive where they’re needed at the precise time that they’re needed in the most efficient way possible.
“It’ll blow your mind, even more, when you realize that it is also a self-learning system that as soon as a new client is onboarded or a new type of product is introduced, adjusts itself in order to attain the highest efficiency and can anticipate things like shipment peaks and other fluctuations in activity,” said Yevgeniy Trakhtman, eGold’s business development manager.
Trakhtman said that the volume of items that the new center can handle is seven or eight times that of a traditional human-operated fulfillment center and with a fraction of the manpower and a micro fraction of the errors and mistakes. “Three centers like this could handle all of the e-commerce activity in Israel,” he noted.
Yotam Ben Ari, who manages eGold’s e-commerce operations said that it took the company more than six months to design and build the center, from making sure the storage floor was perfectly level with QR codes positioned on it precisely to help the robots navigate around the facility, to training the human pickers and packers to meet their strict quality control guidelines, to programming the WMS to operate in complete synchronization. “The next center we build won’t take quite as long because we have the expertise already. Nowadays, other companies that want to design similar solutions, come to us in order to learn how we did it,” he said.
Ben Ari stressed that what distinguishes eGold from other fulfillment center operations is that they work in complete unison with its clients. “We share with them in real-time the status of every shipment and parcel, so they can pass the information on to their customers. We even make the lives of the distributors easier, sparing them the process of sorting the delivery into routes. A driver can pull up to our depot and their deliveries will be waiting for them, sorted by location, making last-mile service as efficient as can be.”
“Our goal is to enable every small e-tailer to compete with the giants of the sector. Our next step will be to set up a marketplace. We want to give our customers end-to-end services by helping them connect to producers in China and other places, integrating solutions, connecting them with local marketers, and in short enabling them to focus only on sales,” Ben Ari concluded.
Another Israeli company that is making strides in the fulfillment industry is Caja Robotics. The company, which was founded in 2014, develops advanced cloud-based software which controls the entire operation, two types of robots that work in sync, and two types of picking stations.
Unlike eGold, which offers services to e-commerce clients out of its own facility employing robots and a management system that were developed overseas, Caja Robotics developed its own technology and provides it to its clients, adapting it to their specific needs.
“We offer our clients a very simple solution, even though the technology behind it is extremely complicated,” Ilan Cohen, Caja Robotics’ CEO said in an interview with CTech. “The prevailing sensibility in the market these days is that fulfillment work is no longer suitable for human beings. The work which is physically demanding and mentally tedious is perfectly suited to robots and now that the technology enables it, everyone is searching for automated solutions.“
“Our solutions are integrated into our clients’ existing warehouse. The AI is adaptive enough to adjust to existing infrastructure and doesn’t require the company to remodel its own facilities for our robots to work in them,” noted Hanna Yanovsky Caja’s EVP and Chief Revenue Officer. “Choosing to go fully automated is a big decision for companies. We make it a bit easier by developing a system that is adaptive and scalable. It is flexible enough to handle peaks in demands by stretching the robots to increase their working hours and/or add more robots to the fleet when needed. As our clients’ needs grow or change, so do our solutions. This is attractive to clients because it ensures that our technology works in the most efficient way possible, increasing their ROI.”
Caja Robotics’ target market in the U.S. where it already provides fulfillment services for 3rd party logistics provider Bergen Logistics in New Jersey and just this month signed a partnership agreement with Advanced Handling Solutions (AHS), a full-service systems integrator located in Kentucky. And in August, the company is launching a new local center for a popular Israeli retail chain.
Cohen noted that as markets change and the demand for e-commerce rises, particularly over the past year of lockdowns and the widespread adoption of online shopping, many B2B companies are adopting practices from the online B2C world. “Even a company like Nike doesn’t want to keep a large amount of stock in their stores. They prefer to have a flexible warehouse that can deliver orders to their stores quickly and on-demand.”
Caja Robotics’ primary emphasis nowadays is on advancing its software solutions and it prides itself on being made in Israel. “We are blue-and-white and proud of it. We have shown that it is possible to manufacture in Israel and at prices that are attractive even compared to China or India,” Cohen said.
“Israeli technology is highly respected in our field,” Yanovsky added. “And during the pandemic, we proved that we are capable of remote installations too. Necessity showed us that our solution is nearly plug-and-play.”
One Israeli company that is geared towards meeting the demands of the changing market in a big way is Fabric. Formerly known as CommonSense Robotics, the company changed its name and shifted its headquarters to the U.S. in anticipation of the upcoming revolution in the fulfillment center industry. The company garnered banner headlines with its announcement last year that it was partnering with retail giant Walmart, providing the household brand and industry leader with warehouse automation services as part of a pilot the company is trying out in its effort to compete with the likes of Amazon.
Fabric operates on two fronts. The first is in the grocery sector, where it provides retailers the option to convert part of their stores into micro-fulfillment centers, receiving customer’s online orders, picking and packing their selections in a robot-human collaboration depending on the type of product, scheduling the orders so that they are ready for delivery at the required time, and packaging them in convenient boxes for delivery to clients’ homes, all within minutes and with near-zero mistakes. One of the company’s biggest clients is Fresh Direct, which now enables two-hour on-demand delivery in many of its locations.Its second niche is creating relatively small multi-tenant centers in urban centers that make on-demand fulfillment profitable for ecommerce sellers by locating automation physically close to end customers. Fabric provides the robots, the WMS, and the algorithm that combines the complex services to offer its clients the utmost flexibility and responsiveness.
“The supply chain world used to be dependent on centralization, but the model is changing from economies of scale to economies of demand,” Fabric co-founder CEO Elram Goren said in an interview from New York. “Technology allows us to shift the balance between consolidation and distribution.”
Amazon Makes Up Only 5% of Retail
When asked whether it is still possible for the rest of the market to compete with an industry powerhouse like Amazon, Goren conceded that while Amazon is indeed a monster, there is plenty of room for other players.
“Amazon may control 50% of the ecommerce market, but it still makes up only 5% of retail, so it’s important to keep things in perspective. That leaves ample room both for competition and for uniqueness,” Goren said. “Nowadays most retailers realize that e-commerce is the wave of the future. If you were to speak to them two years ago, they might have considered it as a side business, but today, we’re talking about 50% of business eventually going online. I think that in the grocery space, we will hit 20% over the next five years, but it won’t stop there. Once things reach critical mass, there will be no turning back.
All the people Ctech spoke with are convinced that Covid-19 was a game changer when it comes to the retail industry. The consensus seems to be that while volumes have dropped since their peak at the height of lockdowns last year, the baseline has gone up and that it’s a one way journey.
“On the sellers side there was a huge shift to digital stores. People who own brick and mortar shops, quickly turned to e-commerce and many new entrepreneurs found out that they could rake in profits from importing unique products,” said eGold’s Ben Ari.
“What we experienced over the past year was a defining moment for the industry, it accelerated processes that would have otherwise taken years and offered us a glimpse into the future,” Goren said. “Companies need to decide if they want to compete or give up. We offer them the best tools to remain in the race.”
When it comes to disrupting massive traditional markets, you can be sure that the silent robots made and used by Israeli companies will be there to make a lot of noise.
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