Automation is essential to modern-day e-commerce, but humans remain in the picture. Art Eldred, client executive, systems engineering with Vargo, discusses the challenges involved in striking the perfect balance between the two.

SCB: How are companies facing the challenges of e-commerce from a labor perspective?

Eldred: We've done a couple of studies and gone back and done some research with the Census Bureau and statistics on labor. One of the things we've seen in the last six years is unemployment going down, and warehouse labor requirements going up. That presents a heck of a challenge where people are competing more and more for the same warehouse labor. When you couple that with the transition from retail stores to fulfillment centers, we're just trading labor that was working in the back rooms of stores. They're now in the fulfillment centers. And it requires an awful lot of effort to process e-commerce orders.

The days of filling a trailer with pallets and cartons still exist, but they’re diminishing along with the retail footprint. The need to get e-commerce orders out the door is increasing drastically, in line with the growth of the e-commerce marketplace.

SCB: What challenges are involved on the technology side of implementing artificial intelligence into this whole environment?

Eldred: One of the biggest things we're seeing is the explosion of automation. Cloud computing has enabled AI to happen across technologies. AI was really birthed out of the cloud, in my opinion. What’s lacking is the applied side. We don't see the knowledge and the expertise of figuring out how to use automation inside of the fulfillment center and replacing the labor needs that are out there. We're starting simple, with picking place-type units, and robots are beginning to come into that area. But as we grow, more of them will be needed to supplement the labor force that isn't there.

SCB: We really are just at the beginning of using AI, aren't we? It has a long way to go before it realizes its promise.

Eldred: Absolutely. We can apply AI to so many things — to data, to flowing a building. We can take the effort of the human brain and put it into an automated intelligence system, which is gaining great benefits.

SCB: Looking five to 15 years into the future, with the continuing growth of e-commerce, how do you see the fulfillment landscape looking then?

Eldred: It's extremely exciting for everyone who’s in the fulfillment business. This area is just going to continue to grow. But it does go back again to the applied side. Robots, in my opinion, are probably five to 10 years away from being able to provide huge value. Putting them into pick and place-type units, where I identify an object and move it from position A to position B, hasn't been very difficult. However, it's not everything. The one thing we do know is that there will always be an automation element and a human element. It's going to be very difficult for a robot to pick up a couch — much easier to pick an item out of a box.

SCB: Is there a continuing challenge in ensuring that the technology is both flexible and scalable? You don't want a number of specialized units doing individual tasks.

Eldred: That’s an interesting point. How much automation do I put into facilities? E-commerce can have a wide range of demand. If I’m doing 10,000 orders today, that might go up to 140,000 orders during peak season, and that's an extremely difficult challenge for anybody to attack. But putting capital into that is even worse, because you're only going to be utilizing it for two weeks. That's where I come back to the blend of automation and the human element, which will never go away.

Let’s face it, robots are awesome. They're going to be a great tool and weapon for combating the competition in the future. However, they're going to come at a cost, and they're going to be expensive. The other thing to consider is that you’ll have a whole other level of employee needed to operate and maintain the robots. So the average warehouse worker we're using today will probably change in intelligence themselves, because they're working with a highly intelligent device.