STUARATA INC.

DESCRIPTION

The project proposed is one creating a start-up company to make the product available for installation at customer sites in ten months from the start date. The production operation is planned for being in place at the same time so that fifty units per week and one control station per week are produced. This project is a $12 million dollar project involving the design and development of autonomous mobile vehicles for use in warehouses pulling and delivering orders to work stations, which are then processed and packed before they are shipped. Reasons that consumers invest in the Kiva-type system include those stated as follows:

(1) Increased stocking and order picking productivity and rates;

(2) Increased order accuracy, order fulfillment rates and speed of order turnaround time;

(3) Inventory Accuracy and Security:

(4) Flexibility and Scalability;

(5) Electricity Savings;

(6) Quality of Life;

(7) Reduced Training Time

(8) No downtime and built-in redundancy; and (9) The ‘Wow’ Factor. (MWPVL International Inc., 2013)

Involved in this project is a proposal for an acquisition of a company in Tokyo, Japan, and specifically Ryoichi comprised by 13 engineers and the team with the skills and expertise that are needed by Stuarata, Inc. In this proposed project if the project is to reach a high level of success. There are however, concerns associated with acquisition of this company in regards to communication and language differences. Issues identified related to the project include the issues stated as follows:

(1) The product needs to be extensively tested in a live warehouse environment before it can be rolled out or even before performing test installations on potential customer sites.

(2) Safety regulations must be met because the mobile vehicles will work in warehouses together with human workers. These safety regulations are different for different states in the U.S.

(3) The project team needs to be assembled. As the overall project is of significant size and challenging in multiple dimensions, you need to employ staff quickly and the team members you recruit need to start contributing as soon as they are hired. On the other hand, as the project is at the “idea level” at this point in time, it will take some time before work can be assigned. Therefore, employing staff should be done accordingly.

(4) The project consists of two phases, work on which must continue on an on-going basis:

Phase A – Research, Design and Development; and Phase B – Production.

Although production will lag the first phase, the infrastructure needs to be ready before production begins and therefore production planning should start very early during the first phase.

PART II – FINAL PROJECT OUTLINE

i. Project Introduction & Description

ii. Product Price Range by Operations Size iii. Acquisition Process & Methodology

iv. Project Timeline for Design, Development, Simulation, Implementation and Meeting Goals of Production

v. Stuarata Inc. Infrastructure

vi. Project Issues vii. ORGANIZATIONAL DESIGN AND PLAN

VIII. INTERFACE DIAGRAM DEPICTING STAKEHOLDERS AND THEIR INTERACTION

IX. PLAN TO RESOLVE POTENTIAL CONFLICT WITHIN EXECUTIVE TEAM

X. A LIST OF CROSS-CULTURAL BEHAVIORAL ISSUES AND SOLUTIONS IF OFF-SHORE CONTRACTING COMPANY ENGAGED

XI. METHODS OF MANAGING LEADERSHIP AND TEAM MEMBER STRESS

X. CODE OF ETHICS

PRELIMINARY LIST OF REFERENCES

PART THREE — PROJECT DELIVERABLES

I. DESCRIPTION OF PROJECT

The project proposed is to create a start-up company so that the product is available for installation at customer sites in ten (10) months from the start date and that the production operation is additionally in place by that time so that vehicle development will result in 50 units per week being produced and control stations at one per week. This project involves 12 million in business funding and is an innovative system for warehouse and order fulfillment. The autonomous mobile vehicles move throughout the warehouse pulling orders and delivering the picked orders to the workstations to be processed and packed prior to shipping. Stuarata, Inc. is an organization where employees are encouraged, enabled, and expected to work effectively as a team.

II. DESCRIPTION OF PRODUCT

The vehicles to be developed are autonomous mobile vehicles and other technical systems, which are to be designed in-house although an estimated 100 suppliers will supply necessary components during the first phase and throughout other phases. Production is needed to begin with the supply chain in place for production needs by the end of Phase A. The product is similar to the Kiva Systems solution and has several fundamental elements including that the robot in shaped like a foot ottoman and receive their instruction from a central computer to go and fetch inventory pods that are brought to restocking and picking/packing work stations.

Two basic models for handling differing weight capacities. (One handles up to 1,000 lbs and one handles up to 3,000 lbs) The robots have a design conducive to handling shelf bays and/or pallets. There are smaller robots that measures 2 ft x2.5 ft and 1′ high and weigh 250 lbs. The robots are designed with a lifting tool that is somewhat like a corkscrew, which is utilized in moving the pods off the floor before it is transported. The robots are powered by lead-acid batteries that are rechargeable and required to be changed very often during the day. (MWPVL International Inc., 2013, paraphrased)

The robots are designed to travel along a grid that is laid out on the warehouse floor with stickers measuring 2″x2″ with 2D barcodes, which are spaced 4- to 60 inches apart along the grid in the warehouse. The design of the robots includes sensors for detecting obstacles and following the warehouse grid. Pods are transferred in a sequence according to priority to locations for storage within the grid and to restock inventory as well as to queuing lanes for work stations for picking and packing. (MWPVL International Inc., 2013, paraphrased)

Pods are used for merchandise storage and come in two sizes. There is no technology located on the Pod since the Pod comprises the solution’s physical framework and used for ensuring that products do not fall from shelves during transport. It is reported that the robot has to go beneath the pod to lift it before transport, which reduces usable height at the level of the ground of an approximate 24 inches. Work stations are ergonomically designed work areas that operators are positioned to perform replenishment, picking and packing labor functions. Stations can be used either only for inbound restocking or for restocking and picking/packing. (MWPVL International Inc., 2013, paraphrased)

Receiving is reported to place merchandise into high bay reserve locations in the warehouse, which are later pulled for restocking the warehoused products. Transfer of goods from reserve to receiving and to designated restocking stations is reported. Picking/packing stations are set up so that multiple orders by the operator can be conveniently picked. The station is 6’x6′ and supports order picking for 6 to 12 orders simultaneously. A laser pointer lights up the pick location on the pod where the product to be picked is located. The display of the quantity is through put to light technology for each item and line being picked. The operators picks the quantity required and it is placed into one of the 6 cartons or totes being batch picked so that the ‘put’ portion of the pick task can be validated. This process ensures that the item picked is placed into the correct carton or tote. Operators work multiple orders concurrently and order accuracy is ensure through put to light and laser display technology. The station can be designed with a configuration for packing function or there can be two different functions by two separate individuals. This depends on the packing requirement complexity. After the item has been picked up the robot transfers the podback to storage or to where it is next required. Pods can be used in staging outbound orders at work stations. (MWPVL International Inc., 2013, paraphrased)

The most important component of the KIVA solution is the Material Handling Control Software used to manage Kiva robots and inventory flow. The MHE software manger movement of robots. This MHE software is described as “a sub-system that is interfaced to the WMS system (or the ERP system) and manages the work area the Kiva Fulfillment System controls. MHE Is comprised by a complex set of algorithms needed to minimize operator dwell time and to ensure that minimal use of robots is emphasized. Kiva is stated to be one of the few “Material handling companies that guarantees the performance rats that workers will achieve at the work stations.” (MWPVL International Inc., 2013, paraphrased)

The number of robots is determined by the speed at which operators perform their duties. If the operators are slower than the expected rates the system will have too many robots and if the operators work faster than the expected rate, the robots may not be able to keep up. This results in ‘dwell time’ which is the time the operators spends waiting for goods at the work station. This is where a detailed simulation is important to ensure optimal implementation of the system. The MHE software makes an automatic decision where each pod will be moved and stored within the Kiva floor plan. (MWPVL International Inc., 2013, paraphrased)

Not all pods receive equal treatment in that the frequency of ‘hits’, which are reported as “associated to the SKUs store within a pod plays an important role in the determination of where the pod is stored in terms of the plan.” (MWPVL International Inc., 2013) The pods with higher velocity are located nearest to the picking work stations to ensure the time for transit is reduced between the work stations .In addition, the hyper-fast items must be intentionally spread across multiple pods so that they are concurrently available to multiple work stations. The location of the Kiva robots are broadcast on a continuous basis throughout the distribution center and this is accomplished through reading the 2D floor-mounted labels. Additionally, the robots are on the receiving end of directions from the MHE system, which runs via a centralized computer that broadcast instructions across the wireless network. (MWPVL International Inc., 2013, paraphrased)

The communications to the server are brokered through the conventional Wi-Fi routers and mounted in the rafters of the warehouse. The Kiva solution has as its final component that of professional services which serve to ensure the operation’s success. This implementation generally takes about six months for software setup, warehouse grid system, simulation modeling, testing, and training. It is important that a simulation of the operating environment be conducted to make sure that the right number of robots is specified. The simulation considers the following factors:

The number of pods;

Work stations;

Operator task requirements;

Operator performance rates;

Need for robots to have battery charging breaks;

Need to handle peak volumes and Need for redundancy. (MWPVL International Inc., 2013)

An efficient floor plan and highway grid must be designed upon the basis of the number of pods requires to support the variety of the SKY within the distribution operation. The typical floor plan is for 10 pods, which are located in 5 adjacent pods back to back so that all pods are facing a street. The system involves a high degree of human interface and automation therefore all human processes are required to be defined with clarity so that the robotic system will be enabled and designed appropriately. Process flow questions for the picking/packing function that must be identified up front include such as the following:

Does the picker simply perform picking or does the operation also perform a packing function?

Does the picker need to scan the Sky being picked to verify pick accuracy?

Does the picker need to create a packing carton with a label or is the order picked into a tote that is then passed on to a packer?

How many orders does the picker select concurrently?

Are there any value added functions that the picker must perform as part of the pick and pack process? (MWPVL International Inc., 2013)

Customized software interface must be constructed to integrate the Kiva MHE application to the WMS or ERP software that runs the balance of the distribution center. Customized enhancements are also needed to the Kiva software in some cases for providing support to any specifics of a distribution operation. Training of the operators and support for go-live is required; and on-going support services are needed. (MWPVL International Inc., 2013)

iii. product purchase price by size of operations

The investment to purchase and implement the Kiva system include the following:

(1) Startup kit of robots for small warehouse operations – $2 to $4 million;

(2) Typical warehouse setup with 50 -100 robots – $2 to $4 million;

(3) Large warehouse operation with 500 — 1000 robots – $15 million to $20 million. (MWPVL International Inc., 2013)

This is important because with an investment of $12 million in start-up funding, Stuarata, Inc. has the potential to begin profiting very quickly.

The use of warehouse robots is growing and expanding rapidly with corporations such as Amazon.com and Staples are investing in this useful product for warehouse picking, packing and transport and since this product and its accompanying technology represents high levels of efficiency and productivity, it is likely that many others will soon follow.

Reasons that consumers invest in the Kiva-type system include those stated as follows:

(1) Increase stocking and order picking productivity and rates.

(2) Increased order accuracy, order fulfillment rates, and speed of order turnaround time;

(3) Inventory Accuracy and Security:

(4) Flexibility and Scalability;

(5) Electricity Savings;

(6) Quality of Life;

(7) Reduced Training Time

(8) No downtime and built-in redundancy; and (9) The ‘Wow’ Factor. (MWPVL International Inc., 2013)

IV. ACQUISITION PROPOSAL

Jeff Hoffman located a small company called Ryoichi in Tokyo, Japan, which undertakes contract work. The company is reported to be comprised of 13 closely-knit engineers and the team at Ryoichi has both the skills and expertise that is needed by Sturata, Inc., to design the autonomous mobile vehicles. The primary concerns relating to the use of Ryoichi is potential problems with communication between the two teams since only five of Ryoichi’s team speak English. Also, a concern is the Ryoichi team’s entrepreneurial spirit and the fact that the members of the team are closely knit.

Sturata, Inc. has made a decision to acquire Ryoichi and use it as a design and development center. The formalized offer is being prepared to acquire Ryoichi for U.S.$1.25 million, 30/70 cash/options ratio or ratio of cash to the underwritten value of stock options that a buying company offers to the shareholders of the company being purchased. Since Sturata is a startup company, stock options can only be offered rather than marketable securities with cash or other tangible assets. There is a possibility of a production center being opened in China and the team will be reviewing the viability of this option.

V. RECENT DEVELOPMENTS

The executive team members spent sixty hours the first week in the development of a plan for hiring and in engaging recruiters. The second week of the operation Ryochi stated that it wants a revision to a 50/50 cash/options ration and Hoffman had a mild heart-attack resulting in his hospitalization. Dr. O’Neal was required to take a five day leave to travel to Ireland for his grandmother’s funeral.

The result is that the original start-up project plan is effectively destroyed and there is immense pressure to keep the project on track and on schedule. More than 50% of the project contingency buffer has been absorbed in only one week’s time leaving no room for error.

In a conference call emphasis was placed by the executive team on the high-stress related with start-ups and high-stake undertakings and indicated that a method should be in place to control leadership stress.

VI. B. PROJECT TIMEFRAME INCLUDING DESIGN, DEVELOPMENT, SIMULATION, IMPLEMENTATION AND MEETING PRODUCTION GOALS

The following table shows the timeframe allotted for the project design, development, simulation, implementation and meeting production goals.

Figure 1 — Project Timeline

VII. INFRASTRUCTURE OF STUARATA, INC.

The following illustration depicts the infrastructure of Stuarata, Inc. located in the State of Vermont.

Figure 2

Stuarata Infrastructure: A Collaborative Environment

Executive Leadership

Stuarata, Inc. Team

Ryoibi Team

1000 employees

VII. PROJECT ISSUES

Issues identified related to the project include the issues stated as follows:

(1) The product needs to be extensively tested in a live warehouse environment before it can be rolled out or even before performing test installations on potential customer sites.

(2) Safety regulations must be met because the mobile vehicles will work in warehouses together with human workers. These safety regulations are different for different states in the U.S.

(3) The project team needs to be assembled. As the overall project is of significant size and challenging in multiple dimensions, you need to employ staff quickly and the team members you recruit need to start contributing as soon as they are hired. On the other hand, as the project is at the “idea level” at this point in time, it will take some time before work can be assigned. Therefore, employing staff should be done accordingly.

(4) The project consists of two phases, work on which must continue on an on-going basis:

Phase A – Research, Design and Development; and Phase B – Production.

Although production will lag the first phase, the infrastructure needs to be ready before production begins and therefore production planning should start very early during the first phase.

VIII. Management OF LEADERSHIP STRESS

IX. CODE OF ETHICS FOR STURATA, INC.

References

Guizzo, E. (2008) Three Engineers, Hundreds of Robots, One Warehouse. ANSYS. IEEE Spectrum. Retrieved from: http://spectrum.ieee.org/robotics/robotics-software/three-engineers-hundreds-of-robots-one-warehouse

Is Kiva Systems a Good Fit for Your Distribution Center? An Unbiased Distribution Consultant Explains (2013) MwPV> International Supply Chain Experience. Retrieved from: http://www.mwpvl.com/html/kiva_systems.html

Smith, D. (2012) Kiva Systems Founder Mick Mountz On Starting Up, Problem Solving And Innovating In The Hardware Scene. International Business Times. 18 Dec 2012. Retrieved from: http://www.ibtimes.com/kiva-systems-founder-mick-mountz-starting-problem-solving-innovating-hardware-scene-949136