1. Research examines the economic impact of robotic solutions in logistics
2. Total cost of robotic solutions is falling sharply and expected to drop below 100,000 euros by 2020
3. Robotization increases productivity in warehouses significantly – handling costs to be reduced by 20 to 40%

Munich, June 2, 2016

The robotization of logistics will lead to the disappearance of several hundred thousand unskilled jobs over the next ten years. Unless preparations are made for the transition, up to 1.5 million jobs in the Eurozone will be lost. The most heavily affected sectors will be commerce and the manufacturing industry and their logistics service providers. These are some of the major findings of the new Roland Berger study "Of Robots and Men – in logistics: Towards a confident vision of logistics in 2025".

"While a decision in favor of robotization seems inevitable from a microeconomic point of view, its macroeconomic significance is uncertain. The offsetting of the lost jobs through increased added value or exports is not as evident as it has been in other industries such as manufacturing," commented Mehdi El Alami, Principal at Roland Berger.

Total cost of robotic solutions is falling sharply

The return on investment of logistics automation solutions will soon drop below three years thanks to flexible and collaborative robotic solutions. These new solutions, which are now helping human operators and machines to work side by side in the same warehouse without the need for any major transformation, are causing companies to rethink the way work has been organized over the last few decades. Their operational scope includes the moving of pallets, stacking/unstacking, order preparation or palletizing and, before long, loading. "Robotic logistics solutions have developed at great pace since the giants of the internet made them the spearheads of their expansion plans. The cost reductions and the maturity of the solutions are such that we are now approaching a tipping point before the widespread presence of robots in warehouses," commented El Alami.

The cost threshold at which robotic solutions become viable in most of Western Europe is now between 100,000 and 110,000 euros per unit. As such, the total hourly cost of a robot is around 18 to 20 euros per hour when the average cost of a human operator is 14 to 15 euros per hour in the Eurozone. "In the long run, the increase in productivity, the lengthening of the lifespan of robotic solutions and the drop in equipment prices will all be factors in favor of robotization, while the cost of human labor will continue to rise structurally," explained Didier Bréchemier, Partner at Roland Berger. The Roland Berger experts predict a large number of solutions costing less than 100,000 euros to appear on the market by 2020. This is attributed to the emergence of low-cost solutions developed by research institutes or start-up spin-offs, which are more agile than established industrial robotics giants and more likely to go for market disruption.

Productivity gains expected through increased robotization

Manufacturers promise significant picking productivity gains since robots, assuming they are in continuous use, are four to six times more efficient than human operators. In practice, such productivity rates are significant only if they speed up the sales cycle. Even the most advanced robotic solutions are rarely fully automated, with human operators invariably managing complex formats or items with the lowest rotations. "With these configurations, initial feedback indicates a drop in handling costs of 20-40%," said El Alami. "These figures depend on various factors such as the complexity of order preparation operations, the order range and the warehouse layout among others. In general terms this level of productivity gain is enough to finance the investment."

How to prepare for the mass arrival of robots in logistics

According to the authors of the study the most credible solution for European countries is to improve their competitiveness and become the most attractive logistics hub in larger clusters. Toughening of labor regulations would only encourage the rollout of robotic solutions by increasing their return on investment. Roland Berger experts recommend decision makers to:

• Subtly oversee the transition by creating an ecosystem around a flexible and evenly spread robotization process
• Simplify regulations to compensate for the forecast "additional cost" of arduous logistics work
• Encourage logisticians to revamp their business model on the basis of this new reality

"Robotization should be seen as the solution that improves the attractiveness and the competitive situation of a logistic hub, rather than the problem," said Olivier de Panafieu, Partner at Roland Berger, in summary.