Autostore is a provider of automated storage and retrieval systems (AS/RS), from the robotics to the software to the needed components to run the system on. The whole system is modular so that it can be installed in any warehouse or fulfilment center, with the possibility to scale the system up or down over time. Their biggest end-market is e-commerce at 70% of revenues and some of their most notable clients include Puma, Ikea, Gucci, Siemens, Texas Instruments, UPS, DHL, Asda, Continental and Bosch.
The group pioneered an automated cubic storage system which scores best on product density while providing high throughput. Puma mentioned the payback of their investment in the system was achieved within one year, whereas originally they were forecasting five years’ time. After Texas Instruments installed the system in one of their warehouses in Singapore, they were able to consolidate three warehouses into one as the inventory capacity of the warehouse went up fourfold. Autostore has installed their system so far with 800 clients.
Rather than organizing products in aisles inside a warehouse, with Autostore’s system all products are placed in bins which are stacked within one dense cube. Robots drive on top of the cube, which is made from an aluminium frame, to pick bins and bring them to the ports where a human selects the right product and packages it for shipment. Multiple SKUs (stock keeping units) can be stored inside one bin as the bins can be compartmentalized. This is what the whole system looks like:
For comparison, below is what a traditional warehouse looks like – quite inefficient as 63% of costs are labor related with the storage and picking of the items.
With Autostore’s system more than 90% of the space in a warehouse can be utilized. You basically need some room at the top for the robots to move with the bins and then at the far end where the humans package the products for shipment. The system has an accuracy rate of 99.9%.
The company’s latest robots automatically swap batteries at battery stations spread around the grid when they’re starting to run on low power. This will bring the uptime of the system to 100%. With the old system the robots still had to take the occasional break to fast recharge batteries.
Each robot is controlled by the company’s software which is continuously improving with the use of AI. This means improving the algorithms to position the robots and products inside the warehouse in order to optimize retrieval times. The software runs a specialized hardware called the controller which communicates wirelessly with the robots. The controller has a two hour back-up power supply so that the whole system can shutdown gracefully should there be a power failure. Every site also has a back-up controller so the system can always keep running.
Robots spend their time driving on top of the cube to retrieve bins. When accessing lower bins in a stack, the robot will dig out bins and place them on top of nearby stacks, using the space as a temporary placeholder. Another robot will put these bins back in the stack. The latest version of the robot can stack these bins temporarily on itself so that no bins block the tracks, allowing for higher robot speeds.
After the bin is presented at the ports to the packagers, it will be placed back to the top of a stack of bins. This natural slotting ensures that highly requested products are near the top of the stacks whereas bins which aren’t frequently requested will naturally sink to the bottom of a stack. This simple algorithm results in fast retrieval times.
Each robot has a monitoring system that continuously diagnoses the robot's performance with the company’s software logging the data. If a robot needs maintenance, it can be taken out of production before any stoppages happen with another robot quickly taking over its tasks. The projected lifetime of a robot is 10 to 15 years although to date, Autostore hasn’t needed to replace any robot. This isn’t necessarily great from a business perspective, but at this stage where growth should remain strong, we don’t need to worry about a lack of aftermarket revenues.
Autostore is using their strong position in robotics to move further into software, which generates annual recurring revenues. Their recently introduced warehouse management software provides order consolidation, inventory management and labor management tools. The software is cloud-based and can connect over API (basically a programming interface which communicates in JSON-like code) with other enterprise management software such as SAP. The first large client of this system is H-Mart.
The company also introduced a cloud-based design software so that potential clients can visualize how the system will be implemented at their site.
Autostore’s aftermarket revenues consists of system extensions (clients expanding their installed systems), recurring software fees, spare parts and royalties. However, at the time of IPO, recurring revenues were still a small part of the business.
Clearly what we need to focus on in the coming years is whether they can drive the growth in robotics sales. Although over the long-term software will grow in the mix as more clients and more software capabilities are added. Software is an attractive business as you can do regular price increases as the client base tends to be very sticky. This is because people don’t like to learn and install new software, especially in an enterprise environment where the software cooperates with other systems.
Autostore’s system can be reasonably quickly set-up, it takes around 3 to 9 months for an initial installation and any extension after can be done in 1 week to a half year. The typical payback on the investment for the client is within one to three years.
There are currently three other types of solutions to automate warehouses, besides the cubic system which Autostore provides. Autostore believes their cubic system has a market share of around 11% of the installed base and expects further share gains due to the mentioned advantages of storage density, extensibility and throughput. There are two other small competitors offering a cubic solution, Ocado and Attabotics, but they have only around 2% of the number of installations compared to Autostore.
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