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Amazon Acquires Kiva Systems - Robotic Distribution Systems

Filed under: Technology

Amazon.com announced recently (Mar. 19, 2012) that it has made an agreement to purchase Kiva Systems, Inc. a manufacturer of a robotic distribution system.  The agreement was approved by Kiva’s stockholders, allowing Amazon to purchase Kiva for approximately $775 Million (USD).

“Amazon has long used automation in its fulfillment centres, and Kiva’s technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow”, said Dave Clark, vice president, global customer fulfilment, Amazon.com. “Kiva shares our passion for invention, and we look forward to supporting their continued growth.”

Robotic distribution system

This move looks like they are attempting to stop this technology reaching their competitors such as ebay.com. It will be interesting to see if their $775 Million investment pays off. CNNMoney reported that Kiva Systems is “seeing more than $100 million in annual revenue”.  However, these figures don’t seem to justify the overall investment.

Amazon will be expecting to gain competitive advantage through this large investment by significantly reducing order picking times and improving overall productivity, and it’s likely they will also be able to reduced their require warehousing staff, leading to significant cost savings.

The announcement of the acquisition made Kiva Systems shares jump 3.9% from last Friday’s closing price according to Nasdaq.

What is Kiva Robotic Systems?

“Kiva Systems, Inc. uses material handling technology and sophisticated control software to simplify operations, reduce costs and increase flexibility.”

 

Basically Kiva systems have developed a robotic order picking or distribution system. The system is made up of robotic drive units (bots), mobile inventory shelves (pods), and software.

The system removes the need for static shelving, flow racks or carousels. Instead products are able to be stored in mobile inventory pods.  While workers stand in designated inventory stations, this means the shelving comes to them cutting down order picking times that would normally be required to find correct shelving aisles.

They offer configurations for different types of order picking: Picking from Cartons, Totes, Pallets. 

kiva systems cartons totes pallets

This system is ideal for online business such as Amazon.com because it allows for highly efficient handling for warehouses with extremely high variety of Stock Keeping Units (SKUs).

We can expect to see this type of technology in the near future being used in Australia by major online retailers and even postal services if online demand continues at its current growth.

Kiva claims that their systems allow for “extremely fast cycle times, from receiving to order picking to shipping all in a single solution. The result is a building that is quick and low-cost to set up, inexpensive to operate, and easy to change.”


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4 comments

Wow! I think it’s a huge chance for the owner of robotic distribution system to be connected with Amazon.com by the deal of ‘Kiva Systems’!! Thanks for the information. 

Jarret
April 11, 2012 - 8:46 pm

Amazon did really good job by acquiring Kiva systems. I think because of the ownership change Kiva technology will get great benefits of improvement. Thanks

Andry English
May 31, 2012 - 9:31 pm

With the level of sophistication of systems like this, why would you need humans at all?   

Nick
June 26, 2012 - 4:21 pm

Super video, Thanks.

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