(NECN: Peter Howe, North Reading, Mass.,) Have you ever wondered: What happens between the time I click to buy something from an online retailer, and when it arrives in a package at your home or office?
That's what a giant new four-acre building just opening for business in a business park off Interstate 93 is all about. Kiva Systems has just opened a new headquarters, five times as big as its old space in nearby Woburn, where it's developing, building, and testing systems that deploy software-controlled robotic sleds to carry hundreds of pounds of goods around the warehouses where your dot-com order gets fulfilled. They're having a big grand-opening ceremony Tuesday after four months of completing the process of fixing up and moving into the old Teradyne and IBM Lotus Notes warehouse and testing facility.
While buying products online may feel to many like the apotheosis of automation, the reality is, it means outside of completely automated systems someone somewhere in a warehouse has to find your product, put it in a box, and mail or ship it to you. That has meant in many cases workers walk miles a day around giant order centers, basically putting your order in a shopping cart and rolling it over to a shipping center.
Kiva Systems founder and CEO Mick Mountz says he got thinking a few years back: "These warehouses would be much more dynamic and efficient if you would just, if the products would just come to the operator instead of the other way around?'' As a founder of the short-lived 1990s online grocer Webvan, which collapsed under unexpectedly heavy costs of fulfilling online orders, Mountz wondered: How could robots make this better? That led to the creation of Kiva in 2003.
"Instead of walking around the warehouse, which used to take 60 or 70 percent of an operator's day, they now get to stand still, and all the products come to them, so that workforce is doing anywhere between two and four times as many orders per hour.''
"Kiva is all about a new concept in order fulfillment where all the products in the building can walk and talk on their own and come to the picker,'' Mountz added, instead of the picker having to walk to find the product.
The technology is already being used by online giants like Staples.com, Gilt Groupe, drugstore.com, diapers.com, Saks and Zappos. And Kiva's growth has been explosive -- doubling in just the last year to 205 employees, with plans to add 100 more by the end of this year.
Kiva's George Diep gave me a demonstration of the technology, taking down on an iPad maybe the world's most bizarre order of groceries -- vermicelli, Gatorade, Wheat Thins and Spam. Once entered into the computer, robotic sleds showed up within a minute at our work station, where a laser light pointed at exactly the right spot in each rolling bin for me to pull out the right product. We then scanned it on a bar-code scanner, put it in a box, and pressed a "done" button to get the next product. From there, we would put a filled box on a conveyor belt or on another Kiva robotic sled to be rolled over to a shipping
What's driving demand for technology like this is how much money we're all spending online. Experts like Forrester Research and Wells Fargo Securities estimate that about 7 to 8 percent of all retail purchases are now made through a website, and that's been growing 15 to 20 percent for years. (If you back out the dollar value of gasoline, perishable groceries, and other products people can't or usually don't buy online, it's far more than $1 in $12 we spend buying stuff online.)
An obvious question is why Kiva didn't decide to go a few more miles up Interstate 93 to New Hampshire, or to North Carolina or Texas or some state where the cost of doing business is much lower than it is in Massachusetts.
Mountz said the reason is the most important thing for Kiva at this stage of its growth is the unique combination of talent and suppliers he can find here -- everything from skilled manufacturing staff to software and mechanical and electrical engineers, algorithm designers, and nearby suppliers of precision-machined equipment.
"The Boston market turns out to be a great intersection of all that kind of talent,'' Mountz said. Over the next year, "We have plans and budget to hire over 100 people going forward.''
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