Japan’s robots stepping up to fill worst labor shortage in 40 years -

Japan’s robots stepping up to fill worst labor shortage in 40 years

Credit: japantimes.co.jp

  • Dec 07 2017 09:40About: 7 days ago
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While people fret about robots taking human jobs, machines in Japan are stepping in to fill vacancies amid the worst labor shortage in more than 40 years. That is creating an opportunity for up-and-coming startups focused on automating warehouse tasks.

Nitori Holdings Co., the nation’s biggest furniture maker, last week deployed 79 robots to move around shelves filled with products at its Osaka distribution center. The company, which introduced the country’s first automated furniture warehouse in 1980, is looking to reduce its reliance on human labor.

Japan’s shrinking pool of workers helped push the number of jobs for every applicant to a ratio of 1.55 in October, the highest since 1973, according to the labor ministry. While companies such as Amazon.com Inc. have been investing in warehouse automation for years, many Japanese logistics providers are now scrambling to catch up. To keep up with booming orders from e-commerce companies and customers expecting fast delivery, businesses in the country are turning to startups such as Ground Inc. and Acca International Co.

“Running logistics as a labor-intensive business model is pretty much on its last legs,” said Hiratomo Miyata, the founder of Ground, whose software powers robots in Nitori’s distribution center. “What separates the companies is their ability to fill the gap left by human labor with technology.”

Miyata spent seven years at Rakuten Inc., helming the e-commerce giant’s push to create a logistics business that can compete with Amazon. After a string of overseas acquisitions, Rakuten curtailed its ambitions and Miyata left the company a few years ago. He took a team of core members and founded Ground in 2015.

Ground, based in Tokyo, develops warehouse logistics software, using robots made by India’s GreyOrange, one of its investors. The robots are small motorized platforms that can move around entire shelves, making it easier to pack more goods into a warehouse and saving the time it takes for people to stock and retrieve inventory. Miyata says Ground’s system will let 30 people run a facility that previously required 10 times as many.

In June, Ground raised ¥1 billion from Daiwa House Industry Co., one of Japan’s biggest warehouse operators. Miyata plans to raise more money next year in a funding round that will include overseas investors, and is targeting an initial public offering in Tokyo around 2020.

“No one company can keep up with Amazon, that’s why you need a platform that many players can use,” Miyata said in an interview. “If Amazon is Apple’s iOS, we are building the Android.”

Amazon has been pouring money into its logistics network for years. The Seattle-based web retailer acquired Kiva Systems for $775 million in 2012 and now has more than 100,000 of its orange bots, which work in a similar manner to Ground’s machines. Buy something on Amazon’s website, and a robot in a warehouse somewhere whirs to life and carries a shelf holding your purchase within reach of an assembly line staffed by humans. People still do the picking, checking and packaging, but even their actions are simplified and optimized to increase speed and avoid error: Box sizes are chosen automatically and flashing lights tell you which orders are urgent.

Tapping into an efficient warehouse and logistics system is a no-brainer for many companies selling their wares on the internet. But for brands looking to build their presence online, they face the daunting challenge of building their own logistics back end. That is where startups such as Acca come in.

The company bills itself as an e-commerce factory. Clients such as Birkenstock and Puma ship products to Acca’s warehouse outside of Tokyo, where staff photograph and measure items, uploading images to the respective online stores 24 hours a day.

Hirokazu Kato, a former investment banker at Morgan Stanley, founded Acca in 2006. Daiwa House acquired the company for an undisclosed amount last month. Personnel expenses have grown about as much as 10 percent in the past few years, according to Kato. Warehouse operators also find it even more difficult to attract workers because of their remote locations, he said. Even Amazon has to try harder. Its online recruitment ads offer an hourly wage of ¥1,700, or 67 percent more than the average for Japan’s major cities.

Earlier this year, Tokyo-based Acca introduced 30 robots similar to those used by Amazon but made by China’s Geek. The machines, which cost about ¥5 million apiece, have helped to triple each worker’s package output, and the company plans to increase the fleet to 100 by spring, Kato said.

“You can cut 20 to 30 percent in labor costs with these robots,” Kato said in an interview. “That’s an investment you can recoup in three years.”



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