Saks Doing The Robotic Web

This column was written by Evan Schuman, the editor of StorefrontBacktalk, a site that tracks retail technology, e-commerce and security issues. Retail Realities appears every Friday. Evan can be reached at E-mail and on Twitter.

No, this isn't some IT apparel version of Revenge of the Sith (although that would be cool, in a sort of geeky wool-blend kind of way). It's merely the unexpected path taken by the 53-store chain's IT leader, who wanted to see how much of a Butterfly Effect he could cause in E-Commerce customer satisfaction by making small improvements in fulfillment operations.

Those improvements are needed and needed quickly. Smaller e-tailers are sniffing up their operations and are able to deliver much faster response, better customer service and an overall more responsive environment. If the major chains are going to remain dominant, they need to at least match the smaller and faster players. Getting packages out one day faster may not seem a lot, but it could make the difference.

The computers in question are not of the Cyborg type, and they look less like C3PO and more like a cross between R2D2 and what Rodgers calls a "giant Roomba"-you know, those robotic self-running vacuum cleaners. They're orange and made by a robotics startup called Kiva Systems, which has placed these squat robots in the warehouses of retailers including Gap, Crate & Barrel, Walgreens and Staples.

Officially, the robots are just another form of warehouse automation. The twist is that rather than retrieving an individual product, the robot picks up and brings a full mobile shelving unit to the human packer. That's why its ability to lift a half-ton is vital. This option allows human workers to stay in one place. But it also allows for much greater efficiency, because the robots can remember precisely where products are supposed to be. Translation: Instead of declaring that one particular shelf will have only white shirts-even if enough white shirts have been moved that there's a lot of empty space on that shelf-it's possible to mix and match products in whatever is the best form to cram in as much as possible.

"I can co-mingle merchandise. These fixtures can be packed very close together," Rodgers said. No human-friendly organization is necessary.

"The robots, they bring the fixture and they then put it away," he said. "It's a huge productivity increase compared with people running around" the chain's 70,000 square-foot warehouse in Aberdeen, MD.

This approach also decreases theft, because humans are banned from the area where the robots are working and the entire robot-a-thon is watched via closed-circuit cameras. If someone did try and sneak in to steal, they would be detected almost immediately. (The alarm probably does not shriek, "Danger, Will Robinson! Danger," although that wouldn't be the worst idea I've heard recently.)

Here's where we get to the faster shipping part. "We're projecting about a 50 percent improvement in productivity," Rodgers said, which will allow product "to get out the door much more quickly. And we then expect to make a lot more FedEx cutoffs," he said.

In other words, if that productivity boost allows Saks to deliver most products in one day rather than two, that could be a huge customer-perceived benefit. "We're investing a lot of money in this. We've made a big bet," Rodgers said, declining to specify an investment amount.

He also expects sharp reductions in headcount, especially a reduction in temporary staff needed during the holidays and other busy periods. But Rodgers said he's less focused on headcount reductions than he is on real estate. Saks is projecting significant growth, and the chain wants to stay in its current warehouse as long as possible. These 700 robots could help with that-and they also don't take coffee breaks.

By Evan Schuman
Special to CBSNews.com