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November 20, 2017      

As the holiday shopping season begins, consumer expectations are higher than ever for rapid, accurate order fulfillment. Warehouse operations must contend with labor shortages and growing demand, so logistics robots are key to meeting this demand.

Mobile robot provider Locus Robotics said today that it has raised $25 million in Series B funding. Scale Venture Partners (ScaleVP) led the funding round.

“Locus Robotics’ collaborative robots allow warehouse operators to significantly increase worker productivity while economically closing the growing labor gap,” said Rick Faulk, CEO of Wilmington, Mass.-based Locus Robotics. “In an economy largely dominated by Amazon, Locus arms independent operators with the means to compete effectively.”

Industry analysts agree that e-commerce demand is likely to make supply chain automation one of the fastest-growing segments for robotics in the next few years. The global market for logistics robots will experience a compound annual growth rate (CAGR) of 33% from 2016 to 2020, according to Technavio.

Tractica predicts logistics robots demand and adoption to continue to grow.

Tractica forecasts strong growth in logistics robots. (Click here to enlarge.)

Annual shipments of logistics robots will increase from 40,000 units in 2016 to 620,000 units worth $2.15 billion by 2021, predicts Tractica. The logistics market will grow from $1.9 billion in 2016 to $22.4 billion in 2021, forecasts Research and Markets. Nielsen predicts a 20% CAGR and a $4 trillion global market by 2020.

“Many companies realize that e-commerce is the fastest-growing part of their business,” said Bruce Welty, president of Locus Robotics. “Last year was the crossover — for every dollar lost in their stores, they’re gaining a dollar in e-commerce. It’s still early days, though.”

“A week ago, I was in Indianapolis, where there are a lot of warehouses. In driving to lunch — probably three-quarters of a mile — I must have seen 40 ‘Help Wanted’ signs,” Faulk told Robotics Business Review. “Getting enough labor is such a massive problem, which we address head-on. We’re seeing a lot of traction.”

Business Takeaways:

  • As the market for logistics robots continues strong growth over the next few years, investors and end users are looking to companies such as Locus Robotics to satisfy their needs.
  • Locus provides its LocusBots through a RaaS model, enabling customers to tailor their implementations to demand.
  • This holiday season will see more companies looking to emulate Amazon’s adoption of mobile robots.

Building the market

“Robotics in fulfillment is one particular area where robotic technology maturity and market readiness have come together in a perfect storm,” said John Santagate, research director for service robotics at IDC. “The acquisition of Kiva [Systems] by Amazon and the subsequent privatization of the technology left a gap in the market which several robotics vendors have been working to capture.”

“We feel a little bit responsible for the market being competitive,” Welty said. “After Kiva got acquired, I jumped on a plane to see who had robots for fulfillment.”

Logistics robots are in high demand.

Warehouse automation is one of the strongest areas for mobile robot growth.

“Four or five [companies] entered the market after my conversations with them,” he said. “A lot of them don’t know what they’re doing; they’re looking for a problem to solve.”

By contrast, Locus Robotics grew out of an effort by Quiet Logistics to improve its warehouse operations, not just to develop an interesting technology.

“With 1 million square feet, we know the problems, we have all the software,” Welty said. “Our own employees are using the robots, so there’s nothing between us and the users in terms of solving problems.”

“Our potential customers are everybody who has to ship items ordered online — large and small companies, it’s a crazy big opportunity,” he added. “Alibaba is bigger than Amazon.”

“We try to invest just when that innovative technology is ready to jump from an interesting idea that might happen, to a core business imperative that is happening right now. For collaborative robotics, the time is right now,” said Rory O’Driscoll, general partner at ScaleVP. “We anticipate an explosion of this trend in the next few years, and Locus will be at the heart of that trend.”

“The warehouse is really Ground Zero for Industry 4.0, which is really discussed within the context of manufacturing,” said Karen Leavitt, chief marketing officer at Locus. “If you look at all the components — big data, IoT [Internet of Things], cloud computing, and autonomous robots — these are helping warehouses.”

“New warehouses can have an appropriate balance of people and robots,” she noted. “For competitive advantage, they could hire even more labor. In the not-too-distant future, we’ll see consumers become employees — there’s a win-win scenario.”

“We’re also finding it’s a worldwide market,” said Faulk. “There’s a lot of interest from Europe and Asia, where some folks might think that the lower wage rates would dampen the market. The real problem is finding enough workers. We’ll expand overseas next year.”

DHL uses logistics robots

“Integrating LocusBots into one of our sites has increased productivity twofold, and the associate feedback is positive,” said Adrian Kumar, vice president of Solutions Design North America at DHL Supply Chain. “Locus has been agile with their ability to adapt and change as we learn from these innovations.”

“Our first public deployments are with DHL and a surgical device provider,” said Welty. “They must be accurate and timely; there’s no room for error.”

“One of the biggest problems is that every 3PL [third-party logistics] operation is somewhat unique,” said Leavitt. “We want to be measuring the right things at the right place at the right time.”

“Pickers and stockers at Quiet Logistics love our robots,” she said. “They almost fought to operate them, so we had to put them on a schedule. We’ve saved about 80% of labor from pre-Kiva, and 50% from Kiva.”

“The nice thing about our solution is that it’s plug-and-play,” said Faulk. “We do some integration with the warehouse management system [WMS], and then it’s a fairly easy rollout.”

“Unlike Amazon, you don’t have to go down to bare concrete,” he said. “You just need five-foot aisles, with very few infrastructure changes. We can deploy in almost any facility worldwide.”

“The key to Industry 4.0 isn’t just interaction among machines, but interactions between humans and machines,” Leavitt said. “The rise of collaborative robots takes machines from being out of bounds to assisting humans in the real world on a regular basis.”

Scaling up with logistics robot software, services

Locus Robotics said it plans to use its Series B funding to invest in product development and marketing activities and to expand into international markets.

The company also plans to build up its fleet of mobile logistics robots, which are offered in a robots-as-a-service (RaaS) model. Locus said this “subscription business model allows customers to solve this challenge without a large-scale capital investment.”

“We know in a building where the humans and robots are and where the inventory is,” said Faulk. “Fusing that information, along with the order stream coming in, we’re saying that at minimum, we can double the rate or more from manual work.”

“With RaaS, there’s no million-dollar capital outlay, and customers can see these benefits of 35% in three to six weeks from deployment,” he added. “Another nice thing is that a company can start small — with 25,000 square feet — prove the economics, and then roll it out in a very modular fashion.”

Locus Robotics offers robots as a service.

Locus Robotics is ready to help warehouse operators meet holiday demand.

“Locus has nine deployments, and we recently hit the milestone of 1.3 million units picked — it took three years, but it will take three months to do the next million,” Welty said. “There are 2,500 warehouses in strategic accounts.”

“We’re constantly iterating,” Welty said. “We’re looking at our robots from a component basis — we’ve architected the hardware and software from the ground up, using off-the-shelf hardware where possible. The designed elements we build are proprietary and patented.”

He explained that Locus’ systems include mapping capabilities, autonomous motion, and obstacle avoidance and localization thanks to a combination of lidar cameras, software in the logistics robots’ base, and server-based software that connects to warehouse management systems.

“We came up with a cool algorithm for clustering — which six orders do you want to put together?” Welty recalled. “By putting picks in vicinity to reduce travel time, it turned out to have huge implications for productivity, which bumped up by 40%.”

“We have a number of technology improvements on the drawing board that we’d like to develop with our new investment,” said Faulk. “It’s all about optimization, utilization, and the value proposition. We’re finding ways to use big data to help humans be more productive — the dark warehouse is some time away. We’re also looking at different use cases for robots within the warehouse such as put away and cycle time.”

More on Logistics Robots:

Gearing up for the holiday rush

“We’re part of a whole wave of trying to figure out how to keep costs down,” Welty said. “Everyone has seen what Amazon is doing, but you didn’t miss the boat with Kiva. There are now better options, and the next generation is here.”

“This coming holiday season will hit bigger and harder than last year,” he observed. “People’s expectations are still very high and getting higher in terms of placing orders and getting shipments in a couple of days. It’s very hard to do when the order volume goes up by a factor of 10.”

“Scaling up is a good problem to have,” Welty acknowledged. “There’s a very big market opportunity, we have a huge technological lead, and products are already out today. We have a big wave of orders coming in 2018.”