Getting by with some help from their robots

WOBURN -- At Kiva Systems Inc.'s 20,000-square-foot warehouse, there is a constant hum of activity as books, bottles of shampoo, shoes, and candy are retrieved from shelves and packed into boxes to fill orders.

The major difference between this and other order-fulfillment centers, however, is that most of the work performed during this demonstration is executed by a mobile robotic system. The time and cost savings, Kiva executives say, will stimulate the modernization of an industry traditionally defined by aisles of shelving, hand carts, conveyor belt systems, and long staff hours.

Although robotics isn't new, Kiva Systems founder and chief executive Mick Mountz said this is the first time this technology has been applied to filling orders.

''We're changing the game as far as the manual pick-and-pack system is concerned," said the 40-year-old Mountz, a Cambridge resident. ''Our hardware and software solution uses less labor, time, space, and capital, with a system we can install in a day. It represents a complete mind-shift in the way the distribution and fulfillment industries will operate."

Dave Becker, president and chief investor officer for Clearwater Capital in Sewickley, Pa., said his background in supply-chain management and warehousing helped him immediately recognize the potential of automated material handling. That realization prompted him two years ago to become the lead investor in Kiva Systems' first round of financing of more than $1 million.

''I've seen and fought the problem that Mick is solving," Becker said. ''It's a tremendous industry to attack, with a lot of old-school players content with traditional conveyors or high-speed carousels. Mick is a high-energy CEO with a business model I really believe in."

Those sentiments were echoed by Ajay Agarwal, a venture partner with Boston-based Bain Capital Ventures, which led Kiva Systems' $6.5 million second round of financing last November.

''Three things attracted us to Kiva: the phenomenal team of very talented entrepreneurs, the game-changing nature of the technology, and the global market opportunity for the solution," Agarwal said. ''We have the opportunity to build a leading company in the distribution and material-handling automation space. It was a no-brainer for us to get involved."

A graduate of Massachusetts Institute of Technology and Harvard Business School, Mountz began researching ways to make order fulfillment more efficient while working at the Webvan Group, a now-defunct online grocery shopping service that was based in California.

He filed patent applications and launched Kiva Systems from his apartment in Palo Alto, Calif., in 2002, moving the company to Burlington in January 2004 to be closer to the Boston area's high-tech talent, including his network of MIT and Harvard Business School colleagues and connections. Kiva Systems moved in September to its new demonstration, manufacturing, and office location off Wildwood Avenue in Woburn, after outgrowing the Burlington facility.

''All the existing material-handling solutions were based on fixed storage locations," Mountz said. ''Because of that, there was a lot of wasted time and energy in keeping these buildings organized. And then I thought: 'What if the products could walk and talk on their own? What if they could organize themselves?' "

When items are ordered online, the traditional method of order fulfillment involves employees picking the respective products from shelves, packing them, and placing boxes on a conveyor belt that redirects them to the shipping department.

Kiva Systems' product, on the other hand, sends wireless signals to 2-foot-high-by-2-foot-wide robotic vehicles. Each one finds its assigned inventory stored on a mobile shelving unit, or inventory pod, which it lifts into the air and delivers to a single warehouse operator who never has to leave the packing station. When the order is complete, the robotic vehicle returns its inventory pod to the warehouse floor. Inventory pods with popular items naturally remain at the front, while those summoned less frequently are segregated over time to the back. Because the software tells the robotic vehicles exactly where to move, they don't bump into one another, even though dozens navigate the same spaces at virtually the same time.

The system also adjusts to changes in inventory volume and can be configured to account for differences in employee skill level and specialization.

The cost varies according to the size of the operation, but the typical system will cost $4 million to $6 million, said Robert Stevens, Kiva's vice president of business development. The resulting reduction in labor costs means the payback period is one to two years, he said.

Mountz said that confidentiality agreements prevent him from disclosing the names of customers, but that the system has been successfully deployed in pilot operations at a major retailer and food company.

According to Mountz, the product is appropriate for e-commerce and mail-order businesses, retail store restocking facilities, and markets involving books, music, videos, apparel, office and medical supplies, groceries, electronics, sporting goods, drug store items, and other packaged consumer goods.

Because a warehouse can contain hundreds or thousands of robotic vehicles, Mountz said the 35-employee Kiva Systems is searching for assembly technicians and mechanical, electrical, and software engineers to support its expected growth.

''There's no limit to the number of companies that want to grow, expand, or modernize their distribution centers," Mountz said. ''Now they can look to our technology as a way to do that."

Cynthia Cantrell can be reached at cantrell@globe.com.