You’re Not Immune to Coronavirus, but the Robots Are
Summary
COVID-19 has had an undeniably negative impact on the economy. Small businesses are being forced to shut down and large corporations are being left with no other choice than to lay off thousands of employees. However, this reduction of workforce has had an almost inverse relationship with the adoption of robotic systems. More and more physical robots and automated software systems are being utilized to solve for problems that humans could not. Many of these technologies will be here to stay well after COVID-19 and it will be interesting to see how the human workforce adjusts to this new reality.
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“A survey conducted globally this week by Pulse found that half of roughly 50 businesses in its network are using some form of robotics or automation to help front-line workers cope with the pandemic.” Because of COVID-19’s stealthy contagiousness, using technology to reduce human contact seems like an obvious choice. It has been used across most sectors, from medical diagnosis and cleaning to food preparation to mobile payment. Previously, skeptics of automation’s ability to take over jobs argued for the necessity of a “human” component in the work. However, COVID-19 may have forced them to accept this replacement as a more viable and safe alternative.
Physical Robots
One of the most relevant uses of automation is to aid front line hospital workers. In South Korea and China, robots take patients’ daily temperatures and provide hand sanitizer. They broadcast safety precautions while distributing supplies. Boston Dynamics, a robotics firm, also released a four-legged robot named Spot that facilitates communication between hospital staff and patients suspected of having less severe cases of the COVID-19. Spot looks like a robotic dog with a screen for a head that allows for video conferencing. According to Michael Perry, Vice President for Business Development at Boston Dynamics, the robot was not originally developed for this purpose. However, Spot was quickly adapted to aid frontline workers. Its ambulatory design allows it to navigate bumpy surfaces unlike traditional technology. It also provides patients with medical attention at a faster rate than doctors, as it can respond without putting on protective equipment. The efficiency of innovative developments like Spot allows for hospitals to better fight the virus.
Another popular function of automation is for cleaning spaces. Ultraviolet disinfection robots from companies like UVD Robots and Blue Ocean Robotics have been in extremely high demand. Hospitals in China ordered a shipment of 2,000 from Blue Ocean in March, and this technology now operates in over 40 countries in Asia, Europe, and the US. Similarly, robots are being used to spray disinfectant in public spaces in China. These machines are able to climb stairs and are operated remotely by workers, further eliminating the need for human contact. Due to this surge in popularity, experts at tech market advisory firm ABI Research forecast the worldwide market for autonomous mobile systems to grow to $23 billion by 2021.
In a lesser known use case, robotics are being employed in the recycling process during the COVID-19 crisis. To halt the spread of the pandemic, automated processes that treat waste eliminate worker contact with items from other peoples’ homes. Companies like AMP Robotics utilize AI technology to separate trash from recycling in place of human workers. This development came at an unfortunate time for the recycling industry, which was already struggling with robot “takeover” before the pandemic. The outbreak only accelerated automation of recycling services for fear that the virus would spread through waste collection.
Despite playing an increased role in waste treatment, automation in the recycling industry does have some limitations. Curbside recycling pickup requires sorting by hand, which causes potential exposure to the remaining staff in the waste plants. Due to this risk, many states are considering whether or not the service should be considered essential. Recycling centers in Ohio, Washington, and New Jersey have already suspended collection services last month, and more counties are expected to follow suit. Therefore, robots may not play as large a role in recycling as initially predicted until further technological development.
Software Robots
Outside of physical robots, the application of software robots during COVID-19 is also making an impact. These applications are split into two purposes: software to help combat the virus directly and software to make life during COVID-19 easier and more convenient. The biggest examples of these innovations are contactless payments and contact tracing.
Contactless payments are becoming increasingly important with total transactions through digital payments expected to reach over $4.77 trillion this year. That’s over a 15% YoY increase which can be partially attributed to COVID-19. Historically the U.S. has not embraced contactless payments and instead relied primarily on methods like credit cards and cash. According to Bain, before the virus, “in the U.S., major mobile payments apps had adoption rates of less than 10%”, compared to 80% in China, but that number is set to change as users shift to contactless payment options like Apple Pay, Venmo, and Google Pay.
Even tech giant Google is making its entrance into the fintech space with an anticipated launch of a Google debit card connected to Google Pay. The card is meant to bolster the app’s functionality and enable online and in-store purchases. Yet with physical stores closed and social distancing, the card isn’t set to launch anytime soon.
Software robots are also becoming increasingly useful and necessary in the fight against COVID-19. Apple and Google are partnering to create a contact tracing technology that aims to mitigate the spread of the disease. Developers from the two companies are spearheading a joint effort to enable an opt-in bluetooth technology that would let users know if they’ve come in proximity with someone who has the virus within the last 14 days.
The software is planned to launch in two phases. The first, taking place in May, will allow users to download official apps with the contact tracing technology from public health authorities on the app store. The second phase will occur in the following months where Google and Apple will work to build up the technology’s functionality into the platforms and allow interaction “with a broader ecosystem of apps and government health authorities.”
Since the technology is opt-in, it will not be able to encompass the entire population of users who have contracted COVID-19, especially those who may be uneasy with sharing data. Since the technology stores the location and infection status of a person, both Apple and Google have said “Privacy, transparency, and consent are of utmost importance in this effort”. With the technology set to be rolled out in the coming months, it will be interesting to see the impact it has in America compared to countries like South Korea that have implemented contact tracing months ago.
Using Robots After COVID-19
While technology is currently being implemented to raise awareness surrounding the pandemic, mitigate the spread, and work towards containment, these newfound solutions serve as proof of successful technology integration. The highlighted uses of robots above directly address COVID-19, and have caused a reliance on technology that will continue to enhance human innovation even after the epidemic has passed.
With millions of people now at home, Amazon is facing an unprecedented surge in order volumes. This spike in online ordering paired with supply chain disruptions due to the epidemic have led to delayed deliveries and items running out of stock. Amazon has kept its 110 domestic warehouses open and is hiring 100,000 new workers to fulfill orders. This strategy comes at the expense of workers’ health, as many warehouse employees, both domestic and internationally, have tested positive for COVID-19.
Robotic micro-fulfillment centers might be the way to meet customer needs during this time, as well as in the future as urban populations grow, consumers demand instant gratification, and the variety of products increase. The warehouse automation sector is estimated to be worth $27 billion by 2025. Even retail and grocery giants like Walmart have partnered with robotic fulfillment technology companies to introduce autonomous pickup and transport of most groceries.
Enter Fabric, a robotic micro-fulfillment Israel- and New York-based technology startup. Formerly known as CommonSense Robotics, Fabric is a forerunner in the space. The company has secured $110 billion in Series B funding, led by Corner Ventures - a substantial increase from the $20 million raised in February 2018. Fabric serves to fulfill grocery, general merchandise, B2B, and stock replenishment orders, with two new fulfillment facilities set to open in Manhattan in 2020 and 14 developing sites in the U.S.
Fabric’s move into an urban area like New York suggests that the robotic micro-fulfillment service may allow retailers and other smaller companies to compete with e-commerce giant Amazon. In terms of speed, the localized fulfillment centers will offer the same speed that entices many customers to choose large platforms that offer quick shipping, like Amazon Prime or Target same-day shipping. Implementation of autonomous technology enables Fabric to counter demand spikes in ways that Amazon, with human workers, cannot.
The location-first approach to automation is extremely popular. Fabric’s model maintains profitability while decreasing delivery times, bringing customers closer to the business, and offering businesses flexibility. Robots are within the fulfillment site walls, programmed by AI that breaks down the online orders into tasks that are delegated to the bots, and bring the items to human employees to be packed for shipping. Other robots move the packaged items to the transport stage where they are loaded.
Fabric drives a value proposition between retailers and customers alike. The vision to reinvent the online order fulfillment model by integrating autonomous technologies allows businesses to boost delivery speeds and scale up operations at lower costs. Fabric and other robotic micro-fulfillment center technologies serve as examples of how automation has and will continue to impact business operations.
Implications
The COVID-19 epidemic serves as optimal context for AI powered physical robots and software automation tools to achieve their proof of concept. The marketplace is primed to accept solutions (no matter how out of the box) that remain operable during periods of human workforce immobilization. Social distancing mandates that people should not congregate as much as possible. As a result, many companies and industries as a whole are working remotely, if possible, or are completely shut down. However, human contact is unavoidable in “essential industries”, such as food production, health care, postal services, etc. That being said, according to an Oxford University study, it is approximated that 68% of jobs in essential industries are automatable. Additionally, 57% of jobs in “high-touch industries” - those that require high customer to human employee contact - are actually automatable. These two industry types have high overlap. So, to further mitigate risk, it would make sense to utilize a robotic workforce and minimize human contact as much as possible. Even if an essential industry is not a high-touch industry, it would make monetary sense to automate procedures and avoid internal virus spread among the workforce. Regardless if a business operates in an essential industry, if its employees become infected, the workplace has no option other than to shut down, as shown by recent delivery warehouse and meat processing plant closures. For those industries that may not be essential but are high-touch, investing in automation now could result in avoiding government mandated closures in the event of a future pandemic.
Another key selling point of these robots is their projected return of investment, saving time and money in the long run when compared to their human counterparts. This is an increasingly relevant need when businesses are fearful of an impending (possibly current) global recession. Sectors with a low value-add per unit of labor and a high concentration of unskilled workers pay out nearly $1.5 trillion in annual wages. As discussed before, these jobs are also the ones that are quite automatable. Working capital is highly valued in fiscally weary periods, and, with the Federal Reserve setting interest rates to record lows (0%?!), debt has become significantly cheaper. Therefore, it’s only logical that these companies would invest into robotic capital, retaining current cash flow by avoiding wage payments while laying the foundation for efficient production.
This isn’t a personal prediction. It’s most likely what will happen. In fact, a 2018 study conducted by the National Bureau of Economic Research shows that, during the past three recessions, automatable occupations accounted for 88% of the jobs lost. Additionally, startups that build automation technologies have seen a near exponential increase in capital invested and patents issued in the previous years, indicating a wide variety of potential advanced solutions for businesses. This is the time for corporations to consider integrating robots into their workflow as much as possible.
All of these statistics and historical trends might be painting a dire picture for the current job landscape in your mind. However, job displacement is not inherently a bad thing. Automation generally removes jobs in unskilled areas, but then funnels that labor into higher paid, higher skilled positions. After all, the unemployment rate almost always reaches record lows and the income per capita almost always reaches record highs after economic rebounds.