March 18, 2016      

Retailers are looking to robotics and the Internet of Things to facilitate e-commerce and better understand and even anticipate customer needs. A few forward-thinking organizations are already realigning their logistics operations to take advantage of these technologies.

Ocado Group Ltd. and Cambridge Consultants Ltd. recently unveiled a wireless communications system that enables the online grocer to wirelessly control as many as 1,000 warehouse robots from a single base station.

The wireless system works with the Ocado Smart Platform, which is the U.K.-based company’s proprietary approach to order fulfillment. OSP includes an innovative design for warehouse automation, and Ocado is offering it to other retailers worldwide.

Not only has Ocado and Cambridge’s collaboration yielded a new wireless application to solve a business problem, but it also shows how robotics and software can be marketed across industries.

From grocer to table with IoT

Ultimately, Ocado hopes that the Internet of Things will enable to it to “build a grocery delivery pipe to the home.”

“We have this concept of the ‘broadband of grocery’ — our vision is very much that by using better and better data about what our customers want, and smarter and smarter machine learning, we can predict when groceries would run out,” said Paul Clarke, director of technology at Ocado.

“While we don’t know about your unplanned dinner party; from day to day, normal groceries would just turn up, even without having to order them,” he said. “We already have customers with recurring grocery orders, and with smart homes and smart appliances, there’s even more opportunity for communications.”

The typical Ocado order includes 50 items, and the company is working to “reduce friction,” Clarke told Robotics Business Review. “Three orders a week is not atypical for Ocado, and once you own the grocery pipe, you could use it for other goods.”

Disruptive Last-Mile Deliveries

Ocado’s Paul Clarke believes that not only are door-to-door robotic grocery deliveries possible, but they’re also “inevitable.”

“Autonomous delivery vehicles are coming to the last mile — that’s for certain — from a number of different players,” he said, referring to Google and others’ research into self-driving cars and Starship Technologies’ autonomous ground vehicles, which are being tested in England.

“We’re quite interested in autonomous vehicles, and we’re in discussions with a number of companies to trial these technologies,” he said. “There is also talk about aerial drones, but unfortunately, there’s a lot of nonsense. Our typical order can weigh 35 kilograms [77 lb.].”

“Having talked to the people developing the actual infrastructure, it’s unlikely that drones will be allowed to land near people,” Clarke noted. “There are all sorts of challenges with safety regulations.”

“The primary use we can see for drones is in and around our facilities, for surveying, maintenance, perhaps in construction,” he said.

“We already collect a huge amount of clickstream data in our warehouses, from orders, and from our last-mile vans,” Clarke said. “We use a huge data lake, both for normal business insights and forecasting from customer data and for things like performance monitoring, real-time optimization, and feeding machine-learning applications.”

“We’ve been doing machine-to-machine communications in our warehouses for many years now, long before it was called the Industrial Internet of Things,” Clarke said. “Our new data lake is built on top of Google’s platforms, replacing our existing data warehousing and integrating with current B2B customers.”

“The use of data for predictive analytics is a key part of what we do,” Clarke added. “We’re taking the same sorts of skills and experience and applying it to robot data — managing different groups of robots around the world. The populations of robots in these facilities, we’re talking petabytes of data.”

“Robots have a good number of sensors, and there are likely to be other sensors that we could put around the system to collect data about the current state — what’s where, optimizing movement,” said Tim Ensor, head of connected devices at Cambridge Consultants.

“One of the really interesting opportunities is the intersection between the Internet of Things, artificial intelligence, and robotics,” said Clarke. “When those three technological tsunamis collide, you’ll end up with smart, autonomous vehicles or machines that are plugged into the outside world via the Internet of Things.”

Ocado offers to share its warehouse tech

Instead of expanding or reproducing its operations overseas, Ocado is offering OSP as a license and robots as a service.

“Rather than replicate the direct-to-consumer model, we have a better opportunity to support existing grocery retailers with access to a state-of-the-art fulfillment solution to manage warehouses, distribution routes for trucks, and the supply chain,” said Ensor.

Ocado already provides technology for Wm. Morrison Supermarkets PLC — also known as Morrisons’ — online operations in the U.K., helping that grocer to grow by £200 million ($282 million) in one year.

“Grocery is a very local business,” Clarke said. “A lot of our competitors have tried to do groceries in other countries, but it always ended badly. We’re doing a platform play rather than opening Ocado abroad, turning potential rivals into customers.”

“We ourselves run a food and a non-food business,” said Clarke. “If you can use it for groceries, you can use it for nonfood, but not necessarily the other way around.”

Ocado's new automated logistics center

Ocado is building warehouses around its end-to-end fulfillment system.

“Although we’ve built all the software that powers our company, we buy the hardware and partner with suppliers on R&D,” he said. “We don’t sell technology and say, ‘Good luck.’ We’ll operate the hardware and software as a platform, and our engineers can be in their facilities.”

“You can just add more robots, and the stacks can be wider or smaller, depending on the customer need,” he said. “With lots of the same robot, if one breaks, you can take it off the grid and put another one on. There’s not a single point of failure.”

“It’s a lean solution, which is a big advantage,” he said. “This allows facilities in other countries start small but grow easily.”

“As well as logistics, the system could potentially be used to control fleets of semi-autonomous vehicles at sites such as factories, construction sites, and airfields,” the company said. “Ocado is the intellectual property owner and has filed a number of patents for this new technology.”

“We see particular interest in the control system as it is today,” said Ensor. “It’s well-designed at the moment for working with autonomous vehicles. We’re looking forward to move forward to a system where we can miniaturize and reduce power. and more applications such as wearables will open up.”

International interest is high

Ocado recently touted OLC at the Mobile World Congress in Barcelona, and it is still looking for international partners.

“We’ve had a huge amount of interest, and we’ve been talking to large retailers on every continent except for Antarctica,” Clarke said. “The great thing about this technology is that it’s a very generic solution, and we can see applications far beyond online retail.”

Paul Clarke, Ocado's director of technology

Ocado’s logistics automation system has garnered global interest, says Paul Clarke.

After speculation that Amazon.com Inc. was interested in acquiring Ocado, the U.S.-based company this week made a deal with Morrisons’ to deliver food. Amazon already sells thousands of grocery items through its Amazon Pantry short-range service.

Morrisons’ is already an Ocado partner and recently changed leadership, but Duncan Tatton-Brown, chief financial officer of Ocado, said he wasn’t worried.

“I’m sure [Amazon] will bring some new changes and challenges, but we welcome any further competition that grows the market,” he said.

“We’re pleased to be doing this as a U.K. business with U.K. technology,” Clarke said. “There’s lots of talk right now about platform businesses — the economics and network effects around them are interesting.”

“People sometimes ask us if we are a technology company or a retailer, and the answer is both,” he said. “We find a need, build the technology, and use it back in our own business in a cycle of innovation. We’ll keep doing that and doing it on behalf of others.”

The warehouse and logistics industry installed 179,000 robots in 2013, according to a report from Research and Markets, which predicted that industrial automation will continue to grow at 11.3 percent through 2020.