Changing the Face of Supply Chain
At a giant Amazon fulfillment facility, the best practices include both people and robots.
Many industries are dominated by a giant competitor — the proverbial “800-pound gorilla” that most others in the sector watch warily and benchmark against.
In the e-commerce jungle, Amazon plays the dual roles of alpha competitor and technology visionary, and it might be the company most likely to come to mind when the topic is supply chain management. To maintain its leadership position, Amazon continues to innovate in the areas of logistics, fulfillment and more.
“Amazon has changed the face of retail through its use of bold supply chain strategies and its deployment of innovative technologies,” says Mike Griswold, vice president and analyst of the retail supply chain for Gartner, a Stamford, Conn.-based research and advisory company. “The combination of sophisticated information technology, an extensive network of warehouses, multi-tier inventory management and excellent transportation competencies makes Amazon’s supply chain one of the most efficient in the world.”
Griswold says Amazon’s relentless focus on delivering products to customers in the fastest possible time is “causing intense pressure for other giant players in the retail industry across the globe, changing the way organizations think about supply chain speed and service.”
Amazon, in fact, has been a member of an elite group since 2017, when Gartner named it one of only a handful of “Supply Chain Masters.” At the time, Gartner lauded the company’s “out-sized influence” on the retail sector, noting that “hardly a day goes by without another announcement of Amazon’s foray into a new market, ownership of its own logistics capabilities or filing of patents to improve customer experience.”
Those observations continue to hold true, with Amazon making significant inroads into manufacturing, media and entertainment, and even groceries. “With businesses as diverse as retail, technology platforms, devices and media, it’s easy to forget that it started as an online bookseller,” Griswold says. “Its ability to focus on the customer, a culture of innovation where every day is ‘day one,’ make it a formidable competitor across all retail segments.”
Of course, any entity as big as Amazon will draw its share of scrutiny and speculation — “Is This the Beginning of Amazon’s Meltdown?” was the provocative headline on a recent Forbes article about the growing e-tail competition arrayed against Amazon.
But, the fact remains that Amazon continues to define the modern supply chain, both in technological and human terms. With this in mind, we recently visited one of its largest fulfillment centers — the massive “JFK8” on Staten Island, N.Y. — to get a first-hand look at how Amazon is able to deliver so many products so quickly.
Inside Amazon’s ’JFK8’
Stepping inside JFK8 might require visitors to rethink their idea of “big.” Opened in 2018, the fulfillment center covers 855,000 square feet, making it one of the largest buildings in the world dedicated to supply chain. It’s supported by more than 3,500 full-time employees.
During the winter holiday season, up to 1 million packages will ship from the facility in a typical day. But don’t let its 13 miles of conveyance systems and hundreds of choreographed robots distract you: What happens at JFK8 and the approximately 50 other Amazon robotics fulfillment centers in the Amazon network depends on the daily interaction of AI tools and real people.
“This is one of our more technologically advanced buildings,” notes Lindsay Campbell, a public relations principal for the company with a specialization in robotics technology. “It’s one of the newer ones in the network.
“Technology allows the network to be extremely flexible,” Campbell says, “because we know there are three things that don’t change: Customers want more selection, lower prices and faster delivery. The technology here powers all of that.”
Campbell walked us through a variety of technology systems that keep things moving, including its quiet but startlingly efficient robotic drive units. But she and JFK8 General Manager Chris Colvin are quick to acknowledge that silicon chips and algorithms are only half the story.
“Yes, the robotics are very cool, and that makes things safer and more efficient and cost-effective,” Colvin says. “But the true magic is the people on the team. And there’s no way all of this would work at this level or this scale, or work as well as it does if we weren’t all working together as a team.”
Colvin is a six-year veteran of Amazon, as well as a veteran of the Army, where he attained the rank of captain. He brings many of the best practices he learned in those experiences to captain JFK8’s workforce, which he says is the second largest on Staten Island.
“I often get asked what it’s like working with robotics and technology compared to my time in the Army, and sure there are certain differences,” he says. “But in many aspects, it’s very similar because we are in the people business, and there’s not a whole lot that’s different in that regard.” The professional development of his people “is probably a way bigger part of my job than people would expect,” Colvin adds.
Being one of Amazon’s largest and most visible fulfillment hubs, JFK8 needs to remain on its “A game and think one step ahead,” Colvin says. His facility follows several best practices meant to keep employees engaged in their work and feeling valued. These include:
• Committees meet regularly to get employees’ feedback and exchange ideas. Colvin noted that at least 130 improvement projects were underway at JFK8 that had begun with an associate ’s feedback. “We’ve wanted to put a lot of the decision-making and ideas on our entire team,” he says, “and that’s getting feedback from these people who are actually doing the job every day.”
• The facility regularly hosts guest speakers and educators from local colleges to provide continuing education credits for workers. Amazon pre-pays up to 95 percent of tuition for many courses.
“Effectively communicating 24/7 in a large organization is challenging,” Colvin acknowledges. “Everyone works on different segments of the operation, so if one particular team solves something or wants to roll out a new project, how do you figure that out?”
Amazon has found several ways to do that. For instance, employees have opportunities to share their ideas on large feedback boards stationed throughout the facility or in interviews conducted on the work floor, videos of which are shared with their co-workers.
Importantly, those observations are not ignored. “We started meetings every day and every night where we have leadership, and support teams and representatives from all departments come and answer all the comments,” Colvin says.
Dance of the Robots
Amazon employees receive ongoing training to make the most of their interactions with the technologies and supply chain techniques in use at JFK8. Here are several that caught our attention on our visit.
Hercules Robots — These AI-enabled robotic drive units use machine learning to chart their way safely and efficiently around the work floor. “We call them ‘Hercules,’” Campbell explains, as some of the nearly 1,000 robotic units quietly glide and pirouette around the workspace. “We acquired Kiva Systems, an Boston-based robotics company in 2012, and throughout the past year we have evolved the robotics to become this newest H Drive here.”
The orange robots carry yellow multi-level “pods” on their backs that hold anything from socks to books. “Since implementing these robotics, we’ve been able to store 40 percent more inventory in our building because we’ve been able to go a little higher with the storage pods,” Campbell says.
Although some of the robotic units appear to be in constant motion, she notes that they know exactly where they are by reading QR codes on the floor. They also know the exact locations of their human associates, who wear special vests that broadcast their whereabouts at all times. The human co-workers get extensive training in how to operate safely in “the field,” but the Hercules unit will stop and chart a new path should one of them get in the way. “We’ve gotten better and better at how robots interact with each other and how they travel,” Colvin says. “The vests are a safety measure so that wherever you go, they go away from you.”
Random Stow and Visual Bin Inspection — “Random stow” is Amazon’s counterintuitive approach to organizing and tracking the hundreds of thousands of products traveling through its fulfillment centers. At first, it might make you think of a teenager’s disorganized bedroom — only, in this case, there’s a method behind what at first glance might seem like messy madness.
“We don’t have one storage area dedicated only to DVDs or books or LEGOs,” Campbell explains. “We have items scattered throughout storage pods randomly so we can move processes along faster. This system allows us to put inventory where we have room.”
How does Amazon keep track of all those seemingly randomly placed items? JFK8 uses machine learning to review a pod’s contents and determine whether or not everything is in the correct place. “We’re constantly evolving our operations with machine learning and things like that,” Colvin notes, “even the way we prioritize customer shipments to improve quality downstream because people are ordering things at all different times of the day.”
In addition to sparing humans from carrying heavy loads, technology also helps fulfillment center employees more efficiently stow and remove products from the pods of their Hercules partners. “Visual bin inspection” helps keep things straight in a random-stow environment, where the organization of products might not be readily apparent to human eyes.
A light above a bin will turn on to signal to the picker where they need to add or remove an item. “This is one of our newer technologies,” Campbell says, pointing to a human-AI interaction taking place in front of us. “That light is saying, “This is already full, don’t store here.
“The other thing that this will say is because we’re random stow, we don’t want to put the same Harry Potter book in [slots] 1a and 1b, because on the other end [of the fulfillment center] that could be easily confused. The system will even say, ‘Don’t store here because right next door is the same item.’”
Colvin notes that all of the processes at work at JFK8 — whether they concern flesh-and-blood employees, technology or both — are constantly being reviewed and improved upon. Colvin recalls he first saw that ongoing evolution in progress when he joined Amazon in 2014 as a department manager at another facility. “I have been able to witness the progression throughout [the company],” he says. “We are always looking for ways to improve quality, safety, efficiency and things like that.”
Sidebar: Best Practices from a Leader
Amazon has landed in the top five of Gartner’s Supply Chain Top 25 for nine consecutive years. Mike Griswold, vice president and analyst of the retail supply chain for Gartner, a Stamford, Conn.-based research and advisory company, lists some best practices other organizations can learn from Amazon’s approach to supply chain:
• Build a culture that embraces trial and error and understands how to quickly operationalize successes.
• Recognize that the current currency of a customer is speed. Figure out how to create a fast and reliable supply chain.
• Embrace visibility. Create an environment where customers can see all elements of their transactions.
• Take a pragmatic look at automation. Determine where automation creates a competitive advantage.