you think the same thing when you see an Oracle instance that cost tens of millions and think you could have done it with postgres. what these retailers are really paying for is reliability, redundancy and support - having a big brand co. to call when something goes wrong.

that isn't to say that there isn't a mysql/pgsql style opportunity within warehouse automation and supply chain management - it is just that it isn't likely that Wal-Mart and Amazon would be your customer. Similar development and deployment cycle as with mainframes and servers - what was once the territory of only large companies and governments is now an accessible technology and competitive advantage amongst small and medium businesses as well

The most interesting aspect of supply chain management to me is the concept of a completely outsourced warehouse - where it is cheaper to have a specialized company manage and run your inventory and supply chain as part of their larger infrastructure (and economies of scale etc.) rather than building your own warehouses and system. Amazon became very very good in this field because an outsource style solution didn't exist at the time and they had no choice other than to do it themselves, but you could imagine that an Amazon being started today would not have its own warehouses and would not be writing long letters to shareholders trying to justify hundreds of millions in capital expenses in order to automate warehouses and bring down margins.

Amazon and Diapers could automate end-to-end because they had fixed product sizes and packaging. A lot of other retailers like Wal-Mart are attempting to paletize their goods for this reason. It is very expensive to completely automate end-to-end with retailers who have a broad inventory (which is why the vertical online retailers such as Diapers and Zappos did so well, they could lower margins with an easier to manage supply chain).

I used to follow Amazon stock and filings. They spent hundreds of millions of dollars on automation in their initial warehouses. They spent so much on the servers that run software controllers that the RedHat stock got a big bump when it was announced that they were the partner implementing it (Amazon made up a double-digit percentage of RedHat revenue).

I remember headlines of Amazon investing ~$100M into updating single warehouses. A lot of time was spent analyzing the outlay and returns - it was definitely a long-term investment rather than something you can immediately identify as being more cost-effective in the short term.

So if you have varying inventory and demand cycles it is less cost-effective to automate supply chain. There is also the part where you need to integrate with backend systems - SAP, Oracle, Sage, etc. which again involves consulting time and multi-million dollar projects.

From this story, it sounds like this warehouse as a very broad inventory. For eg. one bin contains batteries mixed with DVD's etc. which isn't suitable for robotic system since all they do is grab the basket, knowing what is inside it, and bring it to the packaging conveyor. It sounds like they already do this for the most popular products, and it is the rarer products where having a dedicated area for its stock just isn't feasible. This is also why Wal-Mart went straight into investing billions into RFID rather than the barcode scanning model used by Kiva.

IIRC, just the automation robot hardware market alone is ~$3B p.a, and online commerce with goods is ~$30B p.a, so already 10% of revenue is being invested back into hardware alone, which gives you an idea of costs and limitations. It may be a market that is ripe for disruption, since the deployment model seems to be similar to how large backend enterprise systems are implemented with Oracle, IBM etc. there doesn't seem to be any solution at the low to medium end of the market, although that is part of Kiva's pitch as well (they have standardized robot and bucket sizes).

The whole area is really interesting, I have tons of bookmarks on another laptop if you want me to send them to you. I looked into it some years ago as part of just analyzing tech companies and their margins (my main takeaway was narrower inventory, vertical market = better margins and better automation, and that it gets very expensive for broader inventories). To find more, a good starting point is the companies that sell the hardware and implement the systems such as Kiva: http://en.wikipedia.org/wiki/Kiva_Systems. They must have a good PR department because their customers and implementations have been written about a lot in Wired, the WSJ, NYTimes etc. as the future of warehouse automation, for eg.

http://www.wired.com/magazine/2010/12/ff_ai_essay_airevoluti...