Automated Guided Vehicle Systems at Amazon Logistics Operations

The report discusses about the major problems that are currently being affecting the workplace of Amazon. In the present scenario, the major problems that affect the work sector is based on the operations with the impact of manual labour. However, this leads to low productivity within the workplace. Hence, the Amazon fulfillment centres should employ the use of Automated Guided Vehicles to improve the current business functionalities. In this report, the use of AGV within the workplace is discussed for improving the present working conditions and ensuring the products are delivered to the customers within the shortest possible time.

Running head: AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
Automated Guided Vehicle Systems at Amazon Logistics operations
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1AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
Executive Summary
The report discusses about the major problems that are currently being affecting the workplace of
Amazon. In the present scenario, the major problems that affect the work sector is based on the
operations with the impact of manual labour. However, this leads to low productivity within the
workplace. Hence, the Amazon fulfillment centres should employ the use of Automated Guided
Vehicles to improve the current business functionalities. In this report, the use of AGV within
the workplace is discussed for improving the present working conditions and ensuring the
products are delivered to the customers within the shortest possible time.

2AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
Table of Contents
1. Introduction..................................................................................................................................3
2. Current Process Analysis (As_IS Process Analysis)...................................................................4
2.1 Evaluation of Current Business Operations and Processes...................................................4
2.2 Critical Issues and Key Problems in Present Situations........................................................5
3. Propose Solution (To_Be Process Analysis)...............................................................................6
3.1 Proposing Solutions to Identified Problem............................................................................6
3.2 Evaluation of the Problem.....................................................................................................7
4. Critical Appraisal.........................................................................................................................8
5. Conclusion.................................................................................................................................10
References......................................................................................................................................11

3AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
1. Introduction
Amazon Logistics is considered as a shipping and delivery service that is mainly meant
for complementing and assisting existent logistics service providers such as USPS, UPS and
FedEx. The Amazon Logistics department provides same day and 7-day options for delivery. It
utilizes a varied host of third-party logistics partners all over the country.
In 2012, Amazon had acquired Kiva systems, which are Automated Guided Vehicle
(AGV) systems. The acquisition of Kiva had created a spark within the logistics operational
sector of the organisation (Yu et al., 2016). The Kiva systems are considered as a robotic system
that could be implemented within the warehousing department in order to bring in efficiency
among the various processes.
(Fig 1: The Kiva AGV systems used at Amazon Fulfilment Centres)

4AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
(Source: Yu et al., 2016)
This would also improve the logistics efficiency within their vast number of fulfillment
centres. The present situation at Amazon logistics center is based on manual labour or vehicles
that would load the materials onto trucks, which would be further be shipped to the customer (Li
& Liu, 2016). This process takes a lot of time as it requires much effort to match the exact
products, deliver the products to the right vehicle and then ship them to the desired location.
2. Current Process Analysis (As_IS Process Analysis)
2.1 Evaluation of Current Business Operations and Processes
In the present context of Amazon logistics, although the company provides a faster means
to supply the ordered goods within the proper time still there is a range of problems that is
affecting the sector. Amazon has massively grown since their inception stage. The company has
been in the process of expanding their operations in North America, AWS and International
(Ritala, Golnam & Wegmann, 2014). The primary focus of the business strategy focuses on the
investment of technologies, enhancement within their logistics applications, improvement of web
services based on their fulfillment capacity, R&D activities in the logistics sector and also
experimenting the operations in the logistics sector.

5AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
(Fig 2: The Shipping Costs as Percent of Net Sales)
(Source: Ritala, Golnam & Wegmann, 2014)
In the present scenario of shipping of products by the Amazon Fulfillment Centre, it has
been seen that the company is opening small warehouses for supporting their Amazon Fresh and
Prime facilities. These services are mainly meant for grocery delivery service. The inventory is
the main factor of the business of Amazon (Angeleanu, 2015). The critical competency for
logistics and transportation is to identify the needs of the business and provide solutions within
the delivery.
2.2 Critical Issues and Key Problems in Present Situations
From the evaluation of the present business operations, it has been seen that Amazon
faces critical problems in relation to load materials onto trucks. This work is often managed by
manual labours, which incurs a lot of problems in management of time and making the products
to reach to the proper destination within the estimated deadline (Christopher, 2016). In a report

6AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
published in 2016, the company had raised typical concerns based on rapid expansion of
straining management, intense competition and other dangers associated with the business.
In the present condition, it has been reported that Amazon mostly equips their warehouse
workers with handheld scanners. These pickers move within the warehouse on a predefined path
and thus collect items that are assigned to them for loading onto vehicles. The workers are
responsible for scanning each item during retrieving them. The scanners monitor the time that is
taken during each scanning of product. These pickers are also given a particular target to hit a
particular number of scans within a single day (Bell, Bryman & Harley, 2018). This kind of
manual working scenario increase the time of making the product to reach to the assigned
shipping vehicle and further increase the time of delivery of the product to the customer.
3. Propose Solution (To_Be Process Analysis)
3.1 Proposing Solutions to Identified Problem
The Amazon logistics operation has a major reputation in the global market. Hence, they
are in the process of mitigating the current warehouse related problems. In the year 2012,
Amazon had majorly acquired Kiva systems, which were Automated Guided Vehicles (AGV)
(Domingo Galindo, 2016). These were specially designed robots that would providing huge
facilities within the warehouse and logistics services offered within the company (Bechtsis et al.,
2017). These robots are mainly responsible for picking and packing of goods within the
warehouse, scanning the QR codes and thus arranging them onto the trucks that would make
them reach to the specific locations.

7AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
(Fig 3: Estimated size of AGV within the market)
(Source: Bechtsis et al., 2017)
With the inclusion of AGVs within the warehousing operations, the company would fully
aim to automate the processes of handling of materials and packaging of logistics (Keow & Nee,
2018). The robots would autonomously retrieve products from certain shelves and transfer the
goods to a packaging station. After the product is properly packed, the AGV would load the
product in the proper truck within the shortest possible time (Huang, Chen & Pan, 2015). This
would help the customers to receive their products within the shortest possible time.
3.2 Evaluation of the Problem
The impact of AGV for handling of materials within a warehouse includes some typical
usages. With the inclusion of TQM techniques, the Kiva systems would help the company in
transporting of the received materials to the different storage areas (Richards, 2017). The use of
TQM techniques would help the organisation in realising the current problems and then rethink
on solutions that could be provided to improve the working scenario. These systems would also

8AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
be able to support the kitting operations and ensure just-in-time deliveries to the customers
within the expected time (Van Meldert & De Boeck, 2016). The Kiva systems would help in
transporting the finished goods to the particular shipping areas.
Amazon has set trends based on the usage of robotic systems for increasing the
operational efficiency and thus save costs of business operations (Miščević et al., 2018). From
the inclusion of automated systems within the operational functions, it has been evaluated that
the systems based on logistics functions would be improved. The AGV systems that would be
installed within the logistics sector of Amazon, would incorporate real-time tracking facilities
(Nicoletti, 2018). This would help the managerial and operations department to track the vehicles
and thus ensure that there is no lack in the quality of provided services.
Some of the advantages that would be supported within the logistics business after the
inclusion of Kiva AGV systems are:
1. Easy form of integration process and high business scalability
2. Autonomous pick and place ability of materials
3. Component of data analytics and Artificial Intelligence
4. Identifiable ROI and Multiple Pricing Models
4. Critical Appraisal
Based on the evaluation of AGV after the inclusion within the logistics department, some
of the specific recommendations that could be provided for the growth of the business efficiency
are:

9AUTOMATED GUIDED VEHICLE SYSTEMS AT AMAZON LOGISTICS OPERATIONS
1. High amount of needed funding should be supported for the business. The company
should majorly invest for the use of technologies in order to install these services in every
warehouse of Amazon. The inclusion of such kind of services would surely reduce the problem
of pick and place that mostly represents a bigger opportunity for start-ups based on robotics.
2. The AGV should be installed with highly efficient sensors that would provide real-time
data of the movement of AGV vehicles within the warehouse. The sensors would provide live
data and tracking facilities to the concerned logistics team. These sensors should also ensure that
the AGV would stop or slow down whenever they would detect any person or obstacle. These
AGVs should operate at controlled speed, accelerate smoothly and have a predictable behaviour,
which would hence limit accidents. This would also help the logistics department to reach to the
customer about the current status of their order. Hence, this would further lead to bringing in
efficiency of the services.
3. The AGV should also reduce the time taken for transportation of goods the pre-
assigned vehicles. This is also considered as non-value added time in the operations of
manufacturing. The replacement of manual labour by AGV should certainly reduce costs based
on labour and also improve the productivity within the business.
4. The AGV systems should also lead towards a regular material flow. They should clean
the floors of the warehouse within their navigation path and thus ensure a clean workplace. This
would thus incur accuracy in the inventory that is connected with the Warehouse Management
System at Amazon.
5. The impact of AGV within the warehouse should ensure that the impact of manual
labour would be lessened. They should improvise the operational health and safety of workers

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involved within the warehouse department. The inclusion of such kind of intelligent system
would reduce the amount of fatalities and serious injuries that could occur during work purposes.
Hence, it could be discussed that with the inclusion of Kiva systems within the
occupational workplace, it would result in bringing efficiency within the processes of work and
also improve the productivity of the organisation.
5. Conclusion
From the discussion supported, it could be concluded that with the impact of AGV within
the operational procedures of Amazon, it would reduce the impact of manual labour and ensure
business productivity. This report puts emphasis on the use of robotic systems within the
organisational prospects for saving operational costs and increasing efficiency. These end-user
segments should employ automated systems throughout the entire supply chain management of
the organisation. The entire circle of booking a product and making it reach to the customers is a
highly needed service of Amazon. Hence, they should put major focus on the use of efficiency
robotic system that would have the capability of transforming the workplace.
From the various kind of supported decisions, it could be expected that the present
market for AGV would grow faster. The present discussed problems in Amazon lead to low kind
of productivity as it requires manual labour to perform the needed tasks. The use of AGV
technologies would reduce the number of manual labour from the workplace, bring in efficiency
within the processes of work and also increase the supply of materials to the customers within
the proper estimated time.

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References
Angeleanu, A. (2015). New technology trends and their transformative impact on logistics
and supply chain processes. International Journal of Economic Practices and
Theories, 5(5), 413-419.
Bechtsis, D., Tsolakis, N., Vlachos, D., & Iakovou, E. (2017). Sustainable supply chain
management in the digitalisation era: The impact of Automated Guided
Vehicles. Journal of Cleaner Production, 142, 3970-3984.
Bell, E., Bryman, A., & Harley, B. (2018). Business research methods. Oxford university
press.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Huang, G. Q., Chen, M. Z., & Pan, J. (2015). Robotics in ecommerce logistics. HKIE
Transactions, 22(2), 68-77.
Keow, M. A. K. S., & Nee, A. Y. H. (2018). Robotics in Supply Chain. Emerging
Technologies for Supply Chain Management, 25.
Li, J. T., & Liu, H. J. (2016). Design optimization of amazon robotics. Automation, Control
and Intelligent Systems, 4(2), 48-52.
Miščević, G., Tijan, E., Žgaljić, D., & Jardas, M. (2018, January). Emerging trends in e-
logistics. In Proceedings of the MIPRO.
Nicoletti, B. (2018). The future: procurement 4.0. In Agile Procurement (pp. 189-230).
Palgrave Macmillan, Cham.

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Richards, G. (2017). Warehouse management: a complete guide to improving efficiency and
minimizing costs in the modern warehouse. Kogan Page Publishers.
Ritala, P., Golnam, A., & Wegmann, A. (2014). Coopetition-based business models: The
case of Amazon. com. Industrial Marketing Management, 43(2), 236-249.
Van Meldert, B., & De Boeck, L. (2016). Introducing autonomous vehicles in logistics: a
review from a broad perspective. Faculty of Economics and Business, Leuven,
Belgium.
Yu, Y., Wang, X., Zhong, R. Y., & Huang, G. Q. (2016). E-commerce logistics in supply
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