This article first appeared in Digital Edge, The Edge Malaysia Weekly on April 10, 2023 - April 16, 2023

Chuah Di Ken spent most of his time in university researching and planning for his entrepreneurial journey after graduation. Even then, he knew it was going to be a complete pivot from his degree in food science.

“I was kind of bored with food science. After my first year, I wanted to change my course to mechatronics but the university didn’t allow me to. In the end, I just spent most of my time exploring what kind of business I could do after graduating and learnt coding during my spare time,” says Chuah.

He was intrigued by how he could place an order via e-commerce websites and receive the goods the next day in the UK, where he was studying. In Malaysia, it usually takes two to three days. Chuah dreamed of making that happen back home.

He realised that a few things needed to come together to enable faster deliveries. One is smaller warehouses that are closer to where people live, which are called micro-fulfilment centres. Second, robotics and automation are needed to increase the efficiency of the warehouses.

Luckily for Chuah, his father, who is the executive chairman of Pentamaster Corp Bhd, a Penang-based automation and semiconductor equipment vendor, has extensive knowledge of engineering and technology. Chuah brainstormed with his father and looked for solutions.

He eventually settled on using the matrix storage system which he says is ideal for tight spaces and smaller warehouses. Bins filled with goods are stacked vertically and an automated robot moves on top of the vertical columns to fetch the right bins to a packing area.

“We worked with Pentamaster and that gave us a head start in terms of hardware. But from the software side, we started from zero because we had to control hundreds of robots. We took our time to develop the software,” says Chuah.

He set up the company Pingspace Sdn Bhd after graduating from university and dove headfirst into building the hardware and software for the system. “The concept is not novel but we did all the materials engineering and mechanical, electronics and software design by ourselves,” he says.

Now, Pingspace has two deployments in Malaysia — one in Penang and the other in the Klang Valley. The latter was set up last October. It has 10 robots and 5,000 bins in a 2,000 sq ft warehouse, and is capable of fulfilling 4,500 orders a day. This particular warehouse is currently serving five clients and providing them with same-day deliveries. Chuah believes that it is the first of its kind in Malaysia.

“We are deploying another project in Penang this year, and we signed an exclusive distributorship in Thailand, where someone will distribute our product,” says Chuah.

The idea of setting up micro-fulfilment centres that are closer to neighbourhoods is not new. Many e-commerce companies are also dabbling in automation to increase their efficiency. But it is challenging, given the highly competitive market, thin profit margins and relatively small market in Malaysia.

“Malaysia has 36 million people, and maybe only 10% of people are buying things online. That’s not a lot. For a warehouse to be profitable, it needs volume and scale. With such a small market, if you want to have multiple warehouses, it is not economically viable,” explains Chuah.

It would make more sense for Pingspace to partner with e-commerce fulfilment companies such as Shopee and Lazada and provide them with the technology. Chuah says they are currently in talks to do so.

“If they can fulfil orders faster, then people are more likely to go back and buy something online. This is our strategy,” he says.

If e-commerce companies want to build micro-fulfilment centres, he believes their technology would be beneficial. “We can reduce space by up to 60%. Our warehouse in the Klang Valley can manage up to 400 pallets [worth] of goods in a 2,000 sq ft space.”

Automation can increase warehouse efficiency by enabling goods to be picked and packed faster. Many warehouses or delivery hubs are currently installing conveyor belts to achieve that goal. Chuah says his solution would accelerate the process even more.

Conveyor belts move the goods quicker from one stage to another, he says. Pingspace’s solution is managed by one system and the whole process of stocking, picking and packing is done in the same area. This also makes inventory management easier.

“Within the system, we know where the item is at any point in time. When the orders come in, the robot sends the bins out and the [person] just has to pick [the item] up [and pack it],” says Chuah.

“With this, you have a lot of real-time data. All you have to do is change your algorithm to improve your speed or efficiency.”

This data analytics portion is something that Chuah is still working on and hopes to introduce in the future. “For instance, if you’re doing a campaign, you will know what items are going to be sold. Then you can plan where to place your inventories so you can pick them up faster,” he explains.

A major barrier to the adoption of automation in warehouses, however, is the cost. Chuah says their system costs around RM4.5 million for 5,000 bins at the moment. “We plan to lower the cost because the technology is still new. As the volume increases, the cost per unit will be reduced. That’s not the same case for human labour, which increases every year,” he says.

The system is scalable as well. But the deployments that he has right now are ideal for smaller and high-value items. “This could be groceries, apparels or spare parts from the electronics or aviation industries,” he says.

Interestingly, Chuah hopes to bring Pingspace’s solution beyond the e-commerce industry. Its next deployment, for instance, is for a company that wants to use the system for inventory management.

“We are looking for clients in the cosmetics, pharmaceutical, apparel, logistics and electronics sectors. They have a lot of stock, many of which are small,” he says.

Manufacturing companies, for instance, could use their system to sort out small parts before sending them for production. Pharmaceutical companies, meanwhile, can sort out the items that have to be sent to retail pharmacies or hospitals.

Ultimately, Chuah is pitching Pingspace as a solution for companies that want to save space, reduce labour costs, manage high-value goods and increase efficiency.

“We want to further optimise the performance of our robots and reduce the cost of ownership. We want to make our product high quality. Because we are running the warehouse ourselves, we know what the warehouse industry is thinking in terms of the cost of ownership, capex and efficiency,” he concludes.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.