Amazon to Boost Profits By Replacing Human Workforce with Machines

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In a bid to reduce labour and at the same time boost profits, Amazon is planning to replace its human workforce with machines.

The company started adding technology to a handful of warehouses in recent years, which scans goods coming down a conveyor belt and envelopes them seconds later in boxes custom-built for each item, two people who worked on the project told Reuters.

Amazon has considered installing two machines at dozens more warehouses, removing at least 24 roles at each one, these people said. These facilities typically employ more than 2,000 people and that would amount to more than 1,300 cuts across 55 US fulfilment centres for standard-sized inventory. Amazon would expect to recover the costs in less than two years, at $1 million (roughly Rs. 7 crores) per machine plus operational expenses, they said.

The plan, previously unreported, shows how Amazon is pushing to reduce labour and boost profits as automation of the most common warehouse task – picking up an item – is still beyond its reach. The changes are not finalised because vetting technology before a major deployment can take a long time.

Amazon is famous for its drive to automate as many parts of its business as possible, whether pricing goods or transporting items in its warehouses. But the company is in a precarious position as it considers replacing jobs that have won it subsidies and public goodwill.

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“We are piloting this new technology with the goal of increasing safety, speeding up delivery times and adding efficiency across our network,” an Amazon spokeswoman said in a statement. “We expect the efficiency savings will be re-invested in new services for customers, where new jobs will continue to be created.”

Meanwhile, according to reports coming from the UK media, the need to deliver packages faster had compelled Amazon to ask its employees to quit their job and start their own individual businesses of delivering Amazon packages.

Amazon announced on Monday that it had decided to assist its workers to set up their own businesses so as to speed up its shipping time from two days to one for its Prime members. The company sees the new incentive as a way to get more packages delivered to shoppers’ doorsteps faster.

Amazon says it will cover up to $10,000 (roughly Rs. 7 lakhs) in start-up costs for employees who are accepted into the program and leave their jobs. The company says it will also pay them three months’ worth of their salary. The offer is open to most part-time and full-time Amazon employees, including warehouse workers who pack and ship orders. Whole Foods employees are not eligible to receive the new incentives.

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Seattle-based Amazon.com declined to say how many employees it expects to take up on the offer. The new employee incentive is part of a program the company started a year ago that lets anyone apply to launch an independent Amazon delivery business. It is part of the company’s plan to control more of its deliveries on its own, rather than rely on UPS, the post office and other carriers. Startup costs start at $10,000 and contractors that participate are able to lease blue vans with the Amazon smile logo stamped on the side.

Overall, more than 200 Amazon delivery businesses have been created since it launched the program last June, said John Felton, Amazon’s vice president of global delivery services.

One of them is run Milton Collier, a freight broker who started his business in Atlanta about eight months ago. Since then, it has grown to 120 employees with a fleet of 50 vans that can handle up to 200 delivery stops in a day. It has already been preparing for the one-day shipping switch by hiring more people.

 

Samson Oyedeyi