IndustrialSage

– Well hello and welcome to today’s IndustrialSage Executive Series. I am joined by Bruce Buscher. He is the vice president of sales of the Smart Handling Group of Jervis Webb. Bruce, thank you so much for joining me today on the Executive Series.

– Thanks for the invitation. Glad to be here.

– Well I’m excited about this for multiple reasons. We met at the assembly show in Chicago; this was in October-ish. I’m blanking on my time.

– Yeah, the 26th through the 28th.

– Oh, perfect, yes. And we had a great conversation, and we got to talking. I was like, man, Bruce, you need to come on the show. And it just so happened that it worked out for our filming that you were going to be here. And so I’m super excited to have you in person. I think you are the first person that we’ve had in person since the pandemic and all that, so it’s nice to have people back in the office. Now granted, we were doing a lot of this before too, and remote’s way easier. So we were accustomed to it beforehand. But nonetheless, always love it when somebody can come in, in person. Thank you for coming in. So first thing is, for those who aren’t familiar with Jervis Webb, if you can just tell us who you guys are, what you do. I know you’ve got Daifuku on your shirt. Maybe you could explain a little bit about just the company and the division specifically that you work in.

– Sure. Yeah, the company is Daifuku Corporation. They’re a Japanese-based company headquartered in Osaka, Japan. Jervis Webb is a division, airport technologies division of Daifuku Corporation. Here in North America the Jervis Webb group is made up of two pieces: airport material handling equipment as well as automatic guided vehicles. My responsibility for Daifuku is the automatic guided vehicles for North America, and we cross over in the markets. We cross over in the automotive market. We also sell AGV systems for parts of airport baggage handling systems and things. The acquisition between the two, there’s a lot of history between Daifuku Corporation and Jervis Webb going back actually to 1952.

Daifuku Corporation became a licensee of the Jervis Webb company for our chain conveyor products to sell in the Japanese market to Toyota, Honda, Nissan, Subaru, and the other Japanese auto manufacturers. Then about 15 years ago the Webb family had decided that they wanted to exit the material handling business, family-owned, and at the time Susan Webb was the only family member of the Webb family that was active within the company, but there were 31 or 32 shareholders, Susan being one of them. She got outvoted by the rest of her cousins, nieces, and nephews, so the company was sold in December, 2007. And Daifuku Corporation actually purchased the company after a long-standing relationship going back to, like I said, 1952. It was a very good fit for Daifuku and a way for them to expand their business and footprint here in North America.

– Yeah, that makes sense. Sounds like you got quite the storied history there with the company. So before we jump in a little bit more about specifically what you guys do and some of the challenges you’re seeing, I want to get to know you. I want to get to know Bruce a little bit more. This is one of my favorite parts on the Executive Series. So how did you get into this space? Take me back.

– Out of college my first job was with Honeywell Corporation in Minneapolis. Was working as an engineer: industrial engineer, production engineer, manufacturing engineer. It was kind of turbulent times back in the early 80s because of where interest rates and things were. There was a lot of shuffling around, and certain markets were booming. Other markets were going in the tank, so I was jumping around within the engineering ranks. And then one day I got a phone call from somebody in the marketing group with Honeywell, a guy by the name of Jim Woolford. He asked me to prepare for giving a site tour to some executives coming in from Whirlpool, from Lennox, and Rheem. They wanted to take a look at the manufacturing facilities where we built a lot of the product that we sell to them. And so I did that, and a couple days had passed by after the tour. Jim had called me and said, “You really are more of a salesperson than an engineer than anybody I’ve ever met before. You really ought to think about changing your career strategy.”

I was at the time going back and getting my masters in business, and I was always interested in getting into and learning other parts of the business other than the technical side down on the plant floor. That was the door that opened up and said, okay, now is the time to make a change. I moved out of engineering within Honeywell and moved into their marketing group. Things just evolved after that, getting into sales and stuff. I found it was a good environment to use my technical background and technical knowledge but to use it in a fashion where I can work with customers and help solve their problems. That’s what got me into the sales end of it, and then on the automation side, that part with the technology and the way everything is changing. I’m a guy that I like to do things with my hands. This was a great way to use those skills in the sales side and, like I say, help customers solve their problems on the automation part of the equation.

– Well it sounds like definitely a great fit. Obviously in this space there’s a lot of technical challenges. It’s a very technical sales process, so having that experience was obviously super critical. You said engineering background, so I’m assuming you went to college, got an engineering degree. Is that…

– Yeah, so my actual degree is industrial technology studies from what was at that time Mankato State University. Now it’s called Minnesota State University at Mankato, but it’s part of the University of Minnesota. When I was there and actually working for Honeywell, I got involved with Mankato State to actually help them become an accredited engineering school. At the time when I was there and going to school in Minnesota, University of Minnesota was the only accredited engineering program in the entire state. So a lot of engineering people, once the University of Minnesota program was filled up, they were leaving the state, going to North Dakota, South Dakota, Iowa, Wisconsin, Nebraska, wherever they could get in for an engineering program. For the state of Minnesota, they were losing a lot of revenue and things. And so we worked with the state, and because of my position within such a great company, Honeywell, and the fact that I was part of their engineering organization, I was invited to help Mankato State put together this program for the state of Minnesota and get them to be an accredited school.

We did that, and of course now you can get any engineering degree, anything from chemical to electrical, computer science at Mankato right now. So that played a big part, and then with that I continued and picked up some of the other classes and things that I needed from a mechanical perspective because that was really what I enjoyed the most part on the engineering was on the mechanical side. I picked up the extra classes, and then I continued in and moved into the MBA programs.

– That’s really interesting that you were saying that the University of Minnesota or Mankato—did I get that right—that that was the only accredited university in the whole, entire state of Minnesota. That’s very interesting.

– Yeah, and this was in the 1980, 1981 timeframe, so it’s not like this was back in the 60s or 70s.

– Right, yeah.

– Yeah, it was really surprising that there was really only one place in the entire state where you could get a full engineering degree, and now all the other state schools within the state of Minnesota there are a number of them that you can get the engineering degrees there now. It’s a field that really just took off in the 1980s, not only in Minnesota but probably in a whole bunch of the other states as well.

– Absolutely. I’ve got several in-laws, family members that are in Minnesota. That’s where my wife is from. And lot of brothers-in-law, sisters-in-law that have gone into the engineering space and production operations management and all of that. That’s why I was kind of shocked to hear that. It’s like, wow, that’s interesting. Good, glad they made that change. It sounds like you were instrumental in that.

– I helped out a little bit.

– So one of the things that I wanted to get into—I really love asking this question. You touched on it a little bit, and I’m not sure if this was part of the answer there. Throughout your journey, who is somebody that really had a measurable impact in your career and your life? I know most of the time everyone says, oh, there’s so many. You mentioned somebody. Was that who you were thinking, or is there somebody else?

– Well Jim, of course, got me started to look outside the box and get outside of engineering because he—

– That’s definitely outside the box.

– He clearly felt, he was along in that interview or factory tour. He saw more of a salesperson giving the tour, and how he explained it to me was when he called me to offer me a job was that I explained everything in more simplistic form, and I didn’t get into the technical details because these were executives, and they didn’t really want to hear or go down into the dirt and learn all the details.

– “I don’t want to know how this thing works. What does it do?”

– So he was clearly a big influence for me to get me started. But the person that I would say really gave me a big foundation when it comes to factory automation type stuff is a very good friend of mine and a guy that I went to work for back in 1986, a guy by the name of Dennis Wisnosky. Dennis is a former executive himself through the GCA Corp. They made large robots, gantries and things. He did a lot of work with the technical people in the Air Force and Wright-Patterson Air Force Base. He started up a company, Wizdom Systems, Incorporated, in 1986 time frame.

And it’s kind of a crazy story, but I got to know his wife because his wife was our real estate agent when we moved from Minneapolis to Chicago. She was the real estate person that Johnson Controls was using, and so she helped my wife and I get settled in Chicago. Shortly after that there was some announcements that were made within Johnson Controls, and my wife and I talked, and we really didn’t want to be a part of where the company was going which was going to require us to make another move to Milwaukee. We had just moved to Chicago and getting ourselves settled, so we decided, okay, we’re going to try to find a place, a way to settle down here. Rosemary, Dennis’s wife, actually introduced the two of us. She had mentioned that Dennis is starting this company. He really is looking for somebody with some sales and marketing background, things with background and knowledge of factory automation and so forth and controls. And that was a very good fit for where I was coming from and the background that I had. She got the two of us together, and we had what was supposed to be a short breakfast at Denny’s restaurant. Ended up turning into about a four or five hour meeting and developing a business plan.

I went to work with Dennis, and one of the visions that we had—and again, this is in the mid-80s, so 1986, 1987 time frame— Wizdom Systems was an engineering consulting firm, and Dennis wanted to get into the controls business. There was a company that he found called Engineering Tools. It was a group of three or four ex-Intel people that realized that computers are starting to become a big thing in the 1980s here. For that reason he wanted to leverage the technologies of a computer and everything that Intel was doing and put it into the controls world which was at that time pretty much a proprietary, black box-type, whether it was an Allen-Bradley or a Modicon or somebody’s PLC. Everything was black box-oriented, and nothing was being networked together and things at the time. All that technology was just coming out and just getting started. We took this software, and we put it into a PC platform, and we launched Wizdom Controls which was a PC-based controls environment programmed, looked like, and felt like a programmable logic controller from an Allen-Bradley world. But you were doing everything on an IBM keyboard and using the technology that IBM and Microsoft and Dell and everybody else was coming out with in the PC world.

That launched us, and that’s what really got me, more than anything, into the industrial automation side of it. I was with that company; we ended up—Emerson Electric purchased Wizdom Controls in 1996, October of 1996. I was with them for a while until the transitional period was over with, and then I migrated onto a couple other businesses that were also part of the industrial automation. I just actually celebrated my 15 years with the Webb company and Daifuku on December 6th.

– Oh, congratulations.

– It’s been a lot of fun, a big journey.

– Well it sounds like a lot of fun and a big journey, and I can only imagine really all of the change that you’ve seen in your career. You’re talking about it was ’86, controls, and using an IBM—I can only imagine now just that exponential curve of technology that continues to happen.

– Yeah, and in August of 1994, GM, Ford, and Chrysler had formed an organization which still exists today, but their charter has changed now, OMAC, Open Modular Architecture Control. There was a publication, a Connors publication called Control Engineering Magazine. That was like the Cadillac of all magazines in the 1970s and 1980s that all automation engineers would look at and read about. What’s the next generation of PLC? Who’s got what for sensors and things out there for your automation projects? The OMAC organization pretty much came out with—in fact they did come out in that article in Control Engineering magazine, and they said that they believe that PC-based technology will take over the proprietariness of programmable logic controllers and things in the future.

OMAC was the big three from Detroit. It was their way of joining a team to promote this environment. For the most part it did happen the way they anticipated, but it took some different curves. Today you can, whether it’s from Schneider Electric or Siemens or Allen-Bradley or Omron, Mitsubishi, you can still buy their boxes that look like a programmable controller, but for the most part it’s an industrial computer inside of their rack so it doesn’t look like the Dell computer sitting on your desk. But it’s an industrial computer. Some of them are running operating systems like Microsoft. Some of them are running Linux. Some of them are running something else. Everything is operating exactly the way we envisioned it from a technology perspective. It’s more open architecture. Now you’re using 802.11 ethernet versus proprietary Allen-Bradley data highway and things like that.

So that whole technology did evolve. Different details came into play throughout the process, but PC-based control is the basis of where everything is at. And today I don’t think there’s any type of sensor or control device that somehow doesn’t tie back into PC technology, making it much, much easier for customers that are building equipment and selling it to different companies or selling their services. It’s just a much more open environment than it was back then.

– Oh, absolutely. And so many more capabilities, interoperability is huge. Let’s talk about—we talked a little bit about the past and this growth curve with technology. Where do you see things going? What does the future look like for you?

– We saw this back in 2008, 2009 when the economy took a serious dive because of the financial crisis. We saw a lot of manufacturing companies pick themselves up and made decisions right away; hey, we’re going to get lean. We’re going to go through our processes in our factories, and we’re going to find where we’re not efficient. We’re going to find where we’ve got waste, non-value added labor and things. We’re going to automate our way into the future and position ourselves so that we don’t have to go through the financial problems we went through when the markets crashed. Well when the pandemic came along, essentially the same thing happened, only now it’s not so much about the financial part of it. It’s about the workforce part of it. A lot of companies, they still don’t have their full workforces back yet. A lot of people have dropped out of the workforce. There’s supply chain issues and things going on right now, and so a lot of our clients today are looking at, okay, we’re going to spend this automation because of what Covid and the pandemic has exposed to us that we had this weak link in the workforce. And that gap is not closing fast enough.

The number of our customers that normally were three-shift operations are still two shifts, and some of them are only one shift because their volume isn’t back yet, and in a lot of cases, they can’t get enough of their workforce to come back to work for them on a regular basis. Then of course the supply chain issues with not having enough parts, that’s not helping things either. You have two shifts of operation, and you’ve got enough parts to last for one and a half shifts. So everybody is looking for ways that they can automate to, again, try and avoid these issues in the future. Two to three years ago safety and ergonomics were probably the two biggest return on investment calculations for implementing robotic applications, implementing automatic guided vehicles, AMRs. Today probably the single most important value that everyone is looking at is, what does it do for my workforce? Because I have all these issues where I can’t get the people to come to work. Fine, let’s put in some automation to solve that problem for us.

– Labor has always been an issue with manufacturing, attracting new people into the space, and there’s varying levels of it. I think this was a problem before the pandemic, but certainly afterwards for a whole host of reasons. You mentioned supply chain. Depending on what industry, too, you are in you had drops in demand. You had acceleration in demand. From a forecasting standpoint, who the heck knows what’s coming down the pike? We were talking earlier about some companies that we worked with that, they were seeing orders go through the roof just because of the way that the economics have shifted. But how much of this, in your perspective, how much of this did you see from February of 2020 to April of 2020? What did that shift look like in the need for what you guys have?

– For my group with the automatic guided vehicles, the increase that we saw clearly was due to the labor shortages. There’s no question about it. Our clients were even telling us right up front, “This project wasn’t planned for maybe another, until 2023 or 2024, but we can’t wait that long anymore because we can’t get enough of our employees back to fill the jobs.” And a lot of the positions that were open for some of the companies that are trying to expand their business because their markets are expanding—before the session started we were talking about the off-road vehicle industry.

That industry has taken off to the point where they are planning the next generation of vehicles for 2023, 2024, much like whether a GM or a Ford plans for their next generation of cars and trucks because people want these toys. They want to play with them. And the manufacturers are saying, okay, if we’re going to expand the business, but it’s very difficult to find even new employees to come in because there’s—the manufacturing jobs have got a stigma about them. Well, I’m in a manufacturing plant. It might not be the greatest work environment, a lot of stereotypical type comments that I think a lot of people hang onto. So maybe for those reasons they’re not afraid of it. Maybe they just don’t feel that they’re around the technology that they like to be around that they get with their mobile phones and that type of thing.

I’m not sure exactly what the reason is, but what I do know is that the manufacturing companies here in the US, they are planning that we are going to continue expanding our operations in North America. We’re going to continue expanding and bringing out new products. But we are going to do it based on automation, automated assembly lines, whether it’s through AMRs, AGVs, or some other level of automation. And we’re going to find again anything that is non-value added done by a person, we are going to try and figure out a way to automate that so that we can take that person that likes to work for us and redeploy them in another part of the operation where they get satisfaction and the value both for the company and for the employee.

– Absolutely. Obviously when the pandemic happened, too, there was a lot of conversations around when we were off-shoring and moving a lot of manufacturing for the last several years—for the last decades—moving things to the Asian markets and Mexico, all kinds of other areas because of cheaper labor. Now that the labor bubble, if you will, has been popped and we say wait a minute; we’re really struggling with this, are you seeing some of your customers, are you seeing the industry bringing that back and saying, you know what? If we deploy technology and some automation, we could actually have some more domestic production here. And we’re seeing where the economics actually make sense.

– Absolutely. A lot of our biggest clients have brought product and projects that were targeted for maybe China or India or some other places in low labor rate areas. They have brought them back to the US and implemented them in the US factories with automation. One of probably the biggest things that we’ve seen with several of our large clients is to help in the cost-reduction efforts. They’re not so much setting up new plants outside of the US to take away business and jobs from the US. They’re setting up plants in other parts of the world to sell to those parts of the world. So yeah, you’re not exporting it from the US, but they become much more cost-effective by having a factory in Poland or having a factory in India or China or wherever it might be in Southeast Asia to serve that part of the market. We even do that ourselves.

Daifuku China is a license from the Jervis Webb company to build some of our automatic guided vehicles. Those automatic guided vehicles are built for the Chinese market. We had to do it because the customers really were demanding it from us when we did this. We liked the idea of exporting them from the US, but we were going to start losing the business because the amount of time that it took to export it over to China, get it through customs, it could be anywhere from one to three months. Our customers, especially in the automotive space, they couldn’t afford to take those kind of hits on their big programs. And so they asked us, “Is there a way that we can get these vehicles, the exact design, but get them manufactured in China?” And so Daifuku said, “Yeah. We’ll get our Chinese factories to build the same, exact product that we’re building for you in Michigan. We’ll build it for you in China, but it has to stay in China. What’s built in China for automatic guided vehicles stays there. It cannot be exported to any other part of the world. Everything else still has to come through our Michigan plants.”

And we’ve seen a lot of our customers doing the same thing: buying factories in other parts of the world to duplicate what they’re doing here in the US for that part of the market because by the time you export, especially with all the tax issues and import/export duties and tariffs and things that have taken place over the last few years, it really makes it difficult for a lot of companies to try to send product into other parts of the world where the dollar is much stronger than their local currency, so it destroys the market and the whole benefit of that.

– Absolutely, it makes a lot of sense. And to be honest with you, I get excited about more US-based operations coming back here and growing here in the US just from an independence standpoint. And I think if anything that we’ve learned when you look at the supply chain and the resiliency, one of the big things is flexibility and being able to respond. And so when you have massive lead times because of transportation or logistical challenges, when you’re able to localize that production, that, like you mentioned, takes a lot of that off the table so you can really help to serve your customers better and faster and respond in a much more flexible manner. I think that’s a really interesting result, if you will, and I think that’s something that we’ve seen with the pandemic. You always hear, too, with technology, specifically with robotics, AGVs, and AMRs oh, my gosh, they’re taking away people’s jobs and all this stuff. You’re like, okay well the reality of it is, especially now, we got tons of jobs. Where are all these people? They don’t want it, and yet everybody still wants their really cheap items on Amazon. Something’s got to give.

 – It’s a Catch 22 situation. There’s no questioning. I’ve been asked that question multiple times by customers, by friends just having casual conversations, even family members around the dinner table. What about all the people that are getting laid off? A lot of companies aren’t necessarily laying people off. They’re trying to redeploy their workforce and getting them to do value-added jobs. If you build cars, and your job in that plant is moving boxes around or moving parts around in totes, how is that helping build that car and making that car better and safer and less expensive so that the consumer can afford to buy them? And that’s the way you have to look at it.

It’s not necessarily about all the people that you’re going to put out of work. I can also say without hesitation that the way our business has grown since 2008, 2009 time frame, in our factory alone, we’ve added a lot of people to our factory to help build these AGVs that we’re selling to customers. For a lot of our clients, again, their main focus isn’t, well, we want to get rid of bodies. What they want to do is they want to get rid of the jobs that nobody really likes to do. There’s not a lot of self-satisfaction in those jobs. And they add no value to whatever product it is that’s coming out of that factory. What the companies want to do is they want to take their employees and they want to give them a purpose. And by redeploying them in the factory with a job that actually has a purpose, that is actually building a car or building a motorcycle or refrigerator or whatever it is, they’re going to feel better about getting up every morning and going to work knowing that, “Hey, I’m going to be building refrigerators today,” instead of, “Hey, I’m going to be moving boxes around.” There’s just not a lot of self-satisfaction in that type of a job.

– Right, absolutely. That makes a lot of sense. As we’re winding down on our conversation—this has been fascinating. I’ve really enjoyed it. Right now what does your organization do, what does Daifuku do or the Jervis Webb division—sorry, I had to write it down—the Smart Handling Group of Jervis Webb, what are you guys doing right now to stay ahead of your peers? The hard-hitting question.

– The hard-hitting question. We have ourselves, we’re really a very conservative company. We’re probably not going to be the company that’s going to be the first on the market with new technology. We acknowledge that the technology is changing, and it’s changing very rapidly right now. Automatic guided vehicles, AMRs, if you just look at in the last five years, I’ll go back to probably four to five years ago. There were maybe 20 to 23 companies total in North America selling mainly automatic guided vehicles, but there were a few selling AMR products and things at the time. Today when you look at the number of companies—and the companies are still coming in from China and other parts of the world because they want to get a piece of this growing AGV market, AMR market. It’s now targeted to be close to $18 billion by the end of 2025, 2026. There’s almost 60 companies and growing here in North America.

And so the big thing was that AMRs brought to the table is the LiDAR technology, not having to put in an infrastructure that automatic guided vehicles use and so forth. There is really a lot of misinformation out there between the two different products, an automatic guided vehicle and an AMR. What makes what what? Everybody’s got their own opinion. In my opinion—again, this is my own personal perspective. I try to run my group this way, and we educate our customers this way. An AMR and an AGV basically do the same thing. We pick something up from point A, and we take it to point B. The application itself drives how often you need to do it, how many jobs per hour, whatever the customer is looking for. That all comes out in the end. But the technology literally is a complete crossover.

Just like AMRs, we support the LiDAR technology. We call it natural feature navigation where the vehicle will look, and it will find building columns, walls, pieces of equipment, and it will guide off of those things instead of using laser targets or inertial plugs or magnetic tape on the floor. But we still support all those other technologies. And so where we’re going as a company, our philosophy is we want to one, learn from the customer. What is the problem you’re trying to solve? Two, with that, we’re going to try and find and identify one of our standard AGV products that would best fit your application, Mr. Customer. Then on top of that, and the last part of it is with all the different technologies that we have available to us that are our own technologies that we’ve developed, we are going to recommend—being the experts, because we’ve been doing this since 1962—we’re going to recommend. I know you say you want this technology on your vehicles, but we can provide that, but we really believe that this is the better technology, and for these reasons we believe it’s the better technology. Sometimes the customers listen to us, and sometimes they don’t. But that’s where we’re at, and we’re staying on top of where LiDAR is going and the next generation.

It was less than 10 years ago. The fastest that you could get automatic guided vehicles to move in a plant was 200, 250 feet a minute. Now the average for most of us is running around 360 feet a minute. When the next generation of sensors start to react and respond faster, you’ll probably start seeing automatic guided vehicles, AMRs that might be running at 500 feet a minute and so forth. We’ve got to wait for the safety devices to get caught up with where the actual speed of these devices can operate because again being a very conservative company, we’re never going to put anything in front of safety. It stops right there. I don’t care how cool the technology is, whether the customer wants it or not. If we don’t believe that it’s safe, there’s no way that we’re going to deploy it on our vehicles and start to advertise it for that. We see a lot of growth in the marketplace, several billion dollars going from I think it was in 2022 the markets were supposed to be about four billion worldwide, and now they’re projected 18 billion worldwide between AMRS and AGVs.

– Wow.

– The battery technology is going gangbusters right now. Lithium ion batteries, the cost per dollar amp hour is really getting almost equal to that of what lead acid batteries are. Just updating, and the technology that we already have is probably the position we’re going to be taking, at least for the next couple of years until some of these safety devices and things get caught up to where we can start running the vehicles faster. And then the integration with the rest of the systems, whether it’s MES system or MRP system, WMS systems that are in the factories, more integration at that level is going to be a big part of where this technology is going.

– Absolutely, it makes a lot of sense, and I know, especially with the stat you mentioned. The market has just grown from 4 billion to 18, obviously it’s introducing a lot of new players in the space. One interesting little tidbit that one of our previous guests that we recorded just before this, we were talking about what I thought was interesting, is that from a startup perspective, they gave a stat saying that 25% of GDP is from manufacturing. Yet from a startup perspective, 0.7% are actually from startups in the manufacturing space. A big part of it, I think, is from not understanding. It’s a very complex; manufacturing is very complex. There is a lot of things going on there. I think what we’re seeing, which is interesting, and we were talking about this a little bit before, is that there’s a lot of new players on the space. There’s a lot of money pouring in from Silicon Valley. There’s a lot of VC and PE money being dumped in because we’ve got, there’s robotics in there, but implementing that into processes, there’s a lot of technical know-how. There’s a lot of things going on. So it’s going to be interesting to see how things shake out as we continue to go because obviously this is a space that is just blowing up.

– That’s probably one of our biggest challenges today when we’re talking with a customer that reaches out to us and wants to automate part of their operation. They read all of this stuff in, whether it’s on YouTube or different publications. They’re reading about all this technology. They’re reading about all these companies that have come out with this new product, new AGV or new AMR. One of the things that we have been talking to customers about a lot the last couple years is, look guys. You really need to better investigate this technology or this company to make sure that they are on solid ground for what you’re looking for. The fact that there’s so many new startup companies in the AGV business, some of them don’t even own their own technology. Some of them are buying and licensing bits and pieces from other companies, putting something together, and here. Here’s my AMR, or here’s my AGV. There’s nothing wrong with that provided that they have the financial means and background to be stable 10 years from now when you still need spare parts. When it comes to the installation and implementation of this automation in the factory, what kind of experience do they have?

Within our group, it’s kind of ironic, but again being one of the oldest AGV companies in North America and being in this business since 1962, we’ve got engineers in our software and our electrical group that have literally been with the company 30, 35, 38 years, some of them going on 40 years. And they’ve been doing automatic guided vehicles that entire time. They’ve been there, done that, and there are so many things that some of these new startup companies, they don’t know how to design a system especially in a manufacturing environment, and even in warehouse and distribution. They haven’t seen enough experience themselves to where they don’t even know what questions to ask all the time.

When you were talking about integration with some of the other equipment, some of the other software that the customer has, what safety issues you should be concerned about, and the safety standards themselves. It used to be ANSI B56.5 safety standard. Well now there’s some new safety standards that are coming out because the AMR community and the AGV community came together to develop a next generation of standards because there really were no safety standards guiding the AMR products. Although that was good because we really didn’t have to comply to anything if I’m an AMR company, the safety advisors and safety supervisors of the clients, that’s not what they want to hear. They want to know, how are you going to protect my employees from being hurt in their own work environment? How are you going to protect our equipment so that you’re not running into our building and some of our machines and all of that type of stuff.

There’s a lot of that that’s being addressed now, slow and behind schedule from where it really needs to be. They admit they’re just now catching up with the technology and with the players in the business. But there’s a lot of things where I think we’re at the point in the industry and the market where we’ve got to slow down just a little bit, let everything else get caught up, the safety standards as well as the technology from where the companies are at before we start exploring in the new areas. The big thing is making sure you’ve got the right people designing a system that will work safely in your environment and yet accomplish what you’re looking for it to do from an automation perspective.

– Absolutely, makes a lot of sense. Bruce, thank you so much for your time today on the Executive Series. From the first moment that we met and we had a great conversation at the assembly show—I wish we could’ve recorded that, and we got into some of it here, but it was great. It was very natural, very organic, and I really enjoyed talking about it and how you view things and hearing your insights. Thanks for coming in.

– You’re very welcome.

– It was awesome. So for those who’d like to learn more about you guys, our audience can go to daifuku.com and come and check you guys out there.

– Right.

– Alright, well so thanks so much. I really appreciate it, and I’ll wrap us out here. Alright, okay, well there you go. Thank you so much for watching or listening if you’re listening on any of the podcasting stations that we’re on. Fascinating episode. I really enjoyed it. Super excited that Bruce is able to come into the studio here.

But thanks for watching. Hey listen, if you are not subscribed, you need to go make sure you get on that list because you’re missing out on great content like this great episode where you’re hearing from leaders and experts in the industry about what they’re doing and how the industry’s changing for them. Sometimes you guys are in the same space; some you are in tangential. There is a lot to learn, so get on the subscription list. It’s really easy; go to IndustrialSage.com and you can subscribe. You’ll get this; we send this out every week. So that’s it. That’s all I’ve got for you today. Thanks for watching. I’ll be back next week with another episode on IndustrialSage.

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– Well hello and welcome to today’s IndustrialSage Executive Series interview. I am joined all the way from France. I have the CEO of OSS Ventures, Renan Devillieres. Did I get that right, Renan?

– Excellent.

– We practiced that many times. Sorry, my French is not that great. Thank you so much for joining me today on the Executive Series.

– Thank you for having me.

– I’m super excited about it. Again, I hope I didn’t butcher things too badly. But hey, before we get into the episode, I want to know a little bit about OSS Ventures. What do you guys do?

– Sure. So we are a venture builder. A venture builder is a special kind of investment fund. Instead of investing funds in companies, start-ups, technological start-ups that already exist, we invest a meaningful amount of money, time, and resources in companies that do not exist yet. We provide the ideas. We provide with the partners, and we create companies out of nothing. And we are specialized in manufacturing.

– Interesting. That sounds really interesting, and we’re going to get more into that here in a little bit about, specifically, some of the challenges that you’re solving and maybe how you’re doing this because it sounds very intriguing like a different business model. But before we get into that, I want to learn a little bit about Renan. So tell me. How did you get into the manufacturing space? How did your career start?

– At the start of my career—I was a nerd, so I was good at math. I did a school in France where they pay for your studies which is really good but then you have to give back up to two years in public service. I was an economist at the OECD, and I was studying industry at 20-year timeframe, the whole world. After two years doing that I told myself, I cannot go on not dealing with reality anymore because it was all so virtual and so long timeframes. And so I told myself, I like the subject. I like the topic of industry. I’ll try to go work in a factory. And so they got a very young guy with a mathematics degree, a theoretical mathematics degree trying to go work in a factory. And I think I sent something like 50 letters, got 50 no’s from factories. But I got one yes from the McKinsey & Company consulting arm specializing in factories. They were saying that I was good enough to give some advice to factories. So I did just that, and that is how I started my career in manufacturing. After four or five years working for McKinsey & Company, I went on to lead planning and then quality and then be a site director. And so the eight first years of my career, I was deep down in manufacturing, and I loved it.

– That’s awesome. That is fantastic. That’s pretty cool. That’s a great story. Sometimes you hear people that come in; they didn’t start from day one. What’s kind of interesting, it sounds like you jumped into it, and you found a love for it. I think what’s interesting is the–– and I shared that a little bit with you in a different light, that I never thought that we would be working in this space. This was several years ago. Having come into it, it’s awesome. It’s pretty amazing. But what I think is interesting in your story, you said you sent out, you said 50 letters?

– Yeah.

– And you got the one response.

– Yeah.

– And then that opened the door.

– Because basically—yeah, and basically factories were seeing a youngster with a theoretical mathematics degree like a coder—I was a coder at the time—just saying basically, hey, got any room? That’s not the right way to get hired by a factory.

– No, that’s awesome. That’s fantastic. So what were some of those particular challenges that you had to face coming in? Obviously a big challenge of getting in right out the gate was getting your foot in the door. As you progressed in your career what did some of those other challenges look like?

– One of them, one of the things that I think a lot of people who are not dealing with manufacturing work do not realize is that the factory or supply chain is one of the most complex objects in the world. In a factory you have 100 people, 200 different types of machines, tens of thousands of different products that you can make, and you need to organize all of that. All those physical flows, all those quality criteria, all the automation And so the factory or supply chain is fundamentally one of the most complex objects in organization we ever created as humans. And so as with all complex objects, there are a lot of rules, a lot of things to understand, a lot of things to organize. And I think getting to understand that as a big picture and then getting to try to innovate in that space is mighty hard because the cost of complexity to enter the subject is so high.

– Yeah, absolutely, it’s super complex. I know that there’s a stat that comes out saying that—what is it—the manufacturing space, supply chain is one of the most data-prolific industries out there because of the complex processes and how layered it is. It’s pretty crazy. I totally understand coming in and having to really learn all of that. It’s a big challenge. Let’s talk about influencers in your career. Who was somebody that stands out that has had a major impact in your career or in your life–– it could be your personal life–– that has an impact on your career?

– Obviously there are too many to mention but if I had to pick one, it would be after manufacturing I created a tech company. And I got lucky enough to get invested by a San Francisco-based fund linked to Google. And so the guy who taught me product management was a guy who worked at [unclear]. And so he showed to me the way that you think of a product that is immensely complex that has CALs as inputs and constraints and parameters. And you try to go from chaos to something relatively simple that does the job. What I fundamentally, that’s re-wired my mind from, “Complexity has to be dealt with by complexity,” to, “Complexity can be dealt with by simplicity.” He showed me that naturally and over and over and over again in the tech company that I started the end product after one year was 50% smaller than the first product that I shipped. And it was way better, like way better. And so he showed me that and that again, and when I first showed my product to him, I wanted to show everything. And I say, hey, get a load of this also and this and that because it’s that X case. And he looked at me and he said, this is way too complex for a very simple thing. That was, oh, oh, okay, right, yes. That was the best influence.

– Yeah, that’s a great story, and that’s something that we hear about a lot and so a lot of companies still struggle with. It’s just when it comes to product development and design, a big challenge is developing something that there’s not necessarily an addressable market for because we think this is really cool. And we can design it, and then—so that’s one thing. I love that, from the design element, pieces that, it’s exciting, and we can get into the weeds about, oh, we can do it this way, all these different things. But the reality of it is, it’s simplicity is the big piece. And then selling that, it’s like understanding your audience and your markets. Really at the end of the day most—this may sound really bad—but most don’t care how it happens or what’s the inner workings. It’s just, let’s look at the result. It does that? Cool, I’m good with that. Now obviously some people—you’re going to be selling more to engineers, whatever, they’re going to want to get into the weeds and look at that. But I think that’s really, really interesting, just really the simplicity of design. What a great story. Super great lesson. What products were you making?

– I was in the luxury industry in the first part of my career. Worked on complex watch-making. Among the things the most complicated you can do with engineers everywhere, complexity being the root of everything else. That was my first part of my career, and at some point I went out of my trajectory, and I created a tech company that I ended up selling. What really strikes me in those two worlds, there are so many similarities between the tech world and the manufacturing world because when you look at any application at scale, it’s a very complex web of constraints and what needs to be done, and blah, blah, blah. It’s a very complex web of engineers to be organized and to lead. And so it’s basically the same thing. A lot of methodology, product development methodology, lean method, are the same in the two worlds, but they don’t mix. And so that’s why also we created OSS Ventures.

– That’s interesting. That’s great. I can only imagine. You said just the complexity, and you said initially you were making watches? Did I get that right? That’s pretty cool, very cool, actually. Let’s pivot now to today, what you’re doing. You mentioned earlier on the value prop of what you’re doing at OSS Ventures and that you’re basically creating companies out of nothing. Explain that to me.

– In the grand scheme of things, we think, and we are not the only ones, a lot of the industry thinks that the era where basically digital and IT in manufacturing was just ERP and SAP, this era is gone. And so what we think is that in 5 to 10 years any factory will have between 50 and 100 dedicated vertical software that deal with one thing. For example, let’s take a very simple example, stock management. Stock management at scale is, you have tens of thousands of products. What is the right level of stock? Well today people are trying to do some things where we think that with the software that deals with this subject that will not be ERP and so our software will deal with that, with artificial intelligence and blah, blah, blah. We think that in any given factory there will be those sorts of softwares. And so we create those softwares. That’s our job. We create companies out of nothing.

And so we have a very unique methodology which is we have a web, like a network of what we call pre-fab partners. Pre-fab partners are industries or companies, and they share pain points. So they say for example, I want to manage my stock, but it’s a mess. And so we find three, four, five companies with the same pain points, and we say to them, look. We are going to build the thing with you and solve the issue, and it’s going to cost you zero because OSS takes the risks. But when it works, you are going to say to all your friends, in all the factories of the world, that it works like a charm. And so we are going to sell as a software as a service what we created with you. We are going to sell it to the other 55,000 factories in the United States or Europe. And so that’s how we do.

So it’s free for people who co-build with us, and then it’s paying for the rest of the world. And so far it works good. We went to 140 people in less than three years, so we are in hyper scaling mode. What we understood is: industry or manufacturing organizations, they have an issue which is that they cannot pay coders and manage coders like tech companies do. They don’t have the culture. They don’t have the time. They don’t have the processes. It’s very hard for them to retain those. And at the other end of the spectrum, the tech people, they do not know zero about manufacturing. And so they can only imagine what would be needed, but they don’t have access to that market because there is that cost of factoring the subjects. I have a stat for you: operations in manufacturing in the grand scheme of things is 25% of the world GDP. It’s 0.7% of all start-ups.

– Wow, 0.7% of all start-ups.

– For 25% of the world GDP. So okay, there is obviously something that wasn’t working. So that’s what we do. We put those very tech people, tech organizations, that tech know-how of building products at scale, and we take the pain points of manufacturing companies and create companies out of that. That’s what we do.

– That’s a very interesting value proposition. Very interesting stat as well. I have a couple of follow-up questions that’s brought to mind. One is, I guess the most immediate: why do you think that—you said 25% of the GDP is made up of manufacturing, and yet 0.7% of all start-ups—that’s a tiny number—focus on that space. Why do you think that is?

– I think there are quite a lot of reasons, and I think also it’s changing rapidly. First, manufacturing has a bad image. When you tell your kids, you tell them, you better be good at school. Otherwise you end up working at the factory. That’s things that are being said right now, So when you have that mental image, you think okay, I’m not going to work for those people. So that’s first. There is another which is two worlds that really don’t mix. Go to San Francisco. I lived in San Francisco for three years. Go to San Francisco and ask a random tech bro in the streets. Say, okay, how does a factory work? How does it work? You’ll get answers that are so far out of reality that it will be funny. The people who know tech do not know manufacturing, and people who know manufacturing do not know tech.

But—and this is where it’s interesting—it’s changing really rapidly. Time person of the year, our dear friend Elon Musk, puts technology as a core asset to building the most tangible, physical thing in the whole world, a car. He’s now the richest people in the world. And what happened? He created the first factory in California. Now in California—I went to Fremont. In California you enter the Tesla factory. There are all those big machines, and you have young people, t-shirts and sneakers, and they are coding with their laptops in front of the machines. This is the future. This is not some greasy, in the countryside thing going on. That’s not where the future is headed. The future is headed towards mixing the tech and physical world in a totally new way of organizing physical production.

– Absolutely. No, I love it. I love those. I love that you brought in Elon Musk, very topical, Time of the year, Elon Musk. I agree 100% with you on what the future is. You mentioned specifically going into a Tesla factory. You’ve got young people who are engaged in it. It’s coding; it’s the nexus between technology—and I think there is a big shift. I think the digital transformation that’s happening in manufacturing—I agree with you. I do believe it’s rapidly accelerating. I think it was accelerating pre-Covid. I think now, post-Covid or whatever, during Covid, it is now exponential. It’s clearly the way. But it also addresses the big labor challenges as well to be able to solve some of that. You mentioned attracting people to this greasy, this old, this mental image that everybody has. It’s a bad brand, a bad rap that it has. But I think we show a good light. We show what is actually happening. We show true innovation, and there’s a reason why people light up when they say, I want to go work for Tesla like you mentioned. I think that’s a—that kind of gets me excited a lot.

– It does, it does. It’s very exciting.

– That’s awesome. Okay, another question I want to ask about the value prop. You mentioned earlier on that you think that the future, the vision that you have is instead of managing, you’ve got an SAP, or you’ve got one big ERP, and it’s managing all the processes that it would be a little bit more micro-focused and saying maybe there was going to be 50 to 100 that’ll be I guess instead of generalizing the whole process, it’s going to be very specific to a certain process. Do you think that those would roll up under a larger ERP? Would they be more, I would say, just independent? What are your thoughts on that?

– If you look at tech cycles in any industry, it’s a game of bundling and unbundling. There is that joke in San Francisco that there are only two ways of making money in enterprise software, either bundling or de-bundling. If you look at it from the big picture, the bundling phase is ending. SAP, the new version, SAP S/4HANA, the functional parameter is down 30%. So it’s 30% less feature than the previous version. The SAP CEO shared with us—the new one because the old one got fired—the new SAP CEO said in 10 years, 30% of all my income will come from third-party apps being distributed on top of the SAP platform. The best minds and the people who are leading in that area say the same thing. There is a question which is, will we see a kind of situation a la Apple/Android where someone will tax everyone? Or will we see a situation a la marketing apps where no one takes a tax? There is no question about, there will be innovation coming from verticalized software, way more easy to install, a lot of AGU machine learning, EURIX, everything. This will happen. Will it happen with an SAP tax or without the SAP tax is the interesting question.

– Yeah, I think that’s very interesting as well that you bring up. I don’t see how that happens without that, to be honest. You look at Salesforce for example, and they’re across multiple industries, obviously. They’re growing in the manufacturing space. It’s the idea of creating a platform, and then you can plug into—Infor is doing that right now. And so I do see that happening. But to really boil it down, it’s creating an app store. It’s an app store on a platform.

– That’s what they are trying to do. And at the same time, there is something called the common data model. The common data model is pushed by SAP, Microsoft, Salesforce, Infor, all the big guys. It’s an open-source data model, and if you share the same data model then you can be interoperable, and so there is not tax in the app store. And so the reason why this has been pushed as an open-source project is because the late entrance to the party such as Microsoft or people like that, they say we are going to go the open-source route so there is no single app store done by SAP or anything. But that’s very interesting to see.

– Yeah, that is super interesting. I think it’s fascinating. I like the idea, the vision that you have going forward saying that we’re going to focus on micro processes, having the technology software to focus on that. One of the things that we’re seeing that’s very interesting, let’s say, in the robotics space right now, that is in supply chain and manufacturing, is the whole question of interoperability where you’ve got so many different platforms and different use cases with different AMRs or AGVs. But they all, essentially (boiling it down) they all need to talk to each other somehow.

If you have proprietary system on top of proprietary system, from a scale standpoint it’s very difficult. It’s certainly not lean, and it creates challenges there. But I think that it does, from an efficiency standpoint, really help to solve some challenges in a much more meaningful way. It’s exciting, I think, to see where technology is going to take the manufacturing space and supply chain because I think there’s a lot of really complex problems that are way above my head; I’ll be honest with you. Going to your thing saying how these are complex processes, and you go to San Francisco, and who understands manufacturing and how a plant works. It’s like, what? It’s interesting. What would you say right now is the biggest challenge in the industry?

– To me, I work closely with car manufacturers. I work closely with other verticals. Every single company is going to become a Tesla, a SpaceX or some form of it which is a company that leveraged technology as part of the operations and is able to operate at a pace, at a speed that is 5X the speed that is normal. It started with cars. It is coming with space. It will come in other vertical construction, pharma, pharma with the new R&D, and blah, blah.

Today all the big CEOs in manufacturing are faced with one question which is adapt the culture at scale or fade into irrelevance. The car manufacturers, they took too long to do that, and so you have the Volkswagen CEO says, we are five years behind and it takes me 10 hours to assemble my cheapest car when it takes 1.5 hours to assemble a Tesla. And so they are all faced with that cultural organizational challenge. So what I say to them each time is the same. Nobody remembers, but 25 years ago a little-known Japanese car company called Toyota came and invented lean manufacturing, and it was radically different from everything everyone was doing at the time. And it took the whole manufacturing industry ten to fifteen years to implement some form of lean at one level. They have deep inside that muscle to change. They just need to grow it back.

– That makes a lot of sense. It’s funny; it’s interesting that you bring in lean manufacturing because one of the questions that I’ve been posing to some people and there’s different facets of it, but relative to, let’s look at supply chain, and you look at lean. Have we taken it too far? Certainly we need to look at—the stat that you bring in you’re saying that Tesla in 1.5 hours, they can go from fully assembling a car on the line to 10 hours for others. I think that’s what I wrote down here. Obviously there’s some big things that need to happen there. With the Toyota example, I think one of the big areas for that was empowerment, I believe, on the line for people to be able to say hey, there’s a problem; we need to do—versus saying, hey, I’m a cog in a wheel, and I’m just gonna whatever. I see a problem, and there’s an issue, quality, whatever, I’m going to take ownership, and we’re going to be able to do that. It’s interesting when we look at production efficiency. I’m curious from a lean standpoint, have we pushed the envelope too far, specifically when you look at the broken supply chain right now that has forced some more globalization, outsourcing. I’m curious on your thoughts about that. I know we took a left turn here.

– Something I am deeply convinced of is that innovation happens by layers. It’s not this or that; it’s this and that. Usually what I tend to see in companies, in industries, is that when they take an innovation, an organization innovation layer, if there is not another one to be created on top of that, then you go too far in the first layer, and you over-optimize for work that doesn’t exist anymore. And so one thing I say to all the people I work with is, I went to Tesla Fremont. I went to Amazon warehouses that are top of the pop. I went to the BYD (Build Your Dreams) car maker in China. The big difference between those lighthouse and a regular factory is that they are doing lean, and they are doing tech. So they are doing lean at certain points which is not to the extremes that we saw, especially in terms of reducing stocks and everything that we see in some companies. They are applying the first layer of innovation and the next one. And so what I see in organization is that organizations create reasons for existing. You have people. They are in charge of organizing the company. They know lean. They do lean, and they do lean for 30 years if left to themselves. And so you have to take those and say, now you do tech also. That is a mighty change.

– That is a big change. That’s a big organizational shift, and that’s not an easy change.

– No, that is not.

– Well this has been just a fascinating conversation. I know we could literally go on for hours because I have—I probably have about 20 more questions I’d love to ask you, but I don’t have the time unfortunately. But for those who would like to learn more about you, they can check you guys out; they can go to oss.ventures. Is that correct?

– Yep, excellent.

– But yeah, like I said, this has been fantastic. I have a bunch of notes here, you can see here, that I wrote. It’s a fascinating conversation, Renan. Thank you so much for your time.

– Thank you.

– Alright, well and that wraps up today’s IndustrialSage Executive Series interview This is with CEO Renan Devillieres who is the CEO of OSS Ventures. If you’d like to learn more about them, it looks like they have some fascinating technology, and I really love Renan’s vision of the future. There’s so many great insights that I pulled away from here. One in particular, talking about how 25% of all GDP is in the manufacturing space, yet from an innovation standpoint from tech start-ups, that it’s 0.7%. I think that was fascinating. A lot of other things as well, just in terms of their vision on how they want to break down the processes and looking at maybe ERP isn’t one, big global behemoth that’s managing all the processes, but it’s more specialization. I’m kind of boiling that down. Anyways, as you can tell, I really enjoyed this episode, enjoyed talking with Renan. So check them out.

Listen, if you’re not subscribed onto the IndustrialSage email list, you need to go to IndustrialSage.com. Get on there because you’re missing out on great insights like this where we’re talking with great leaders like Renan and others about innovation and changes happening in the manufacturing space. So that’s all I got for you today. Thank you so much for watching or listening if you’re listening to the podcast. I’ll be back next week with another episode on IndustrialSage.

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– Hello and welcome to today’s IndustrialSage Executive Series interview. I am joined by Joe Yanoska, who is the chief information officer at TRG Solutions. Joe, thank you so much for joining me today on the Executive Series.

– Thank you very much. Happy to be here.

– I am very excited to jump into today’s episode and learn a little bit more about you and about TRG Solutions. First off, tell me a little about TRG. Who are you guys? What do you guys do?

– Well, we’re a managed service provider in the enterprise mobility and payment space. Really the easiest way to think about us is if it scans a barcode, we can help you figure out what devices are right for you. We can help you source them and deploy them out to all of your locations. And then while they’re in the field, if they experience a need for repair, you can ship them back. We can repair them, and then certainly at the end of that life cycle, if they need to be securely destroyed or whatever, we can help you with that as well. And then certainly, if you want to replace them, we will help you do the whole cycle all over again. So really being experts in that space and trying to help our customers use these however they need to, whether it be warehouse management, point of sale, whatever, we’re there to show you what devices work best in your environment and then can help you manage that entire lifecycle.

– Great, awesome. So before we get more into the business and challenges and all that stuff, this is a special segment where I like to go in and learn about my victim—I mean my guest on the show. Joe, tell me a little bit about: how did you get into the industry?

– Well for me, I started from the technology standpoint. I went to college to be a developer, an engineer, software engineer, and spent some time at Key Bank out of the gate. Then my second stop was at American Greetings where we spent a lot of time trying to save the world one greeting card at a time. One of the interesting things we got into there was personalized greeting cards. We really started to figure out the logistics of, obviously, taking something online, personalizing the card.

But once you’ve taken that order, you’ve got to print it. You’ve got to kit it. You’ve got to ship it, and hopefully that it’s all right. If you think about Christmastime, you might be shipping out hundreds of cards to somebody or shipping them to everybody on their list on their behalf. There was an operation there to figure out how all that worked. And then that dovetailed into my time here at TRG Solutions where we really help people in those areas, especially around any of the mobile devices that are required to help any of their supply chain needs from, again, warehouse management to shipping to retail. You have all these touch points that need to happen along that way, and really these are the devices that are helping you collect that information, get it into your ERP systems so companies can manage their data, their inventory, all that stuff, as seamlessly as possible.

– So you’re specifically, maybe some sort of RFID scanning. You said anything that basically has a barcode, essentially.

– Barcode, RFID, anything that you’re able, helps you figure out where–– whether it’s a product, whether it’s luggage from an airline, whether it’s whatever, it’s got a barcode on it. And usually you want to know where that is all along the way. It’s these handheld mobile devices that people, their employees have in their hands scanning these barcoding. It’s usually updating an ERP system to let them know, hey, this is where it is in its process. And that’s where we’re really helping companies with that technology to make it as seamless and as easy as possible.

– Excellent, well—but kind of going back a little bit, I’m going to take you back again. You said you wanted to be—program engineering, is that what you were studying?

– Yeah, software developer, software engineer.

– It sounds like you’re kind of still very much in that space.

– Yeah, I’m the CIO here which means I handle all of the technology needs of our company. I call myself the head nerd, and I say that very proudly because it’s the systems that we put in place that help run our business, that help us help our customers run their businesses much more effectively.

– Yeah, so in your career—one of my favorite questions to ask executives is hey, tell me about somebody who really had a big impact in your life, professionally primarily, but it could be personally as well. Who was that for you, and why?

– Yeah, for me it certainly was a former CIO who I reported in to. It was actually in my time at American Greetings. One of the things that I really prided myself early in my career on was being a really good software engineer. Not only was I doing that, but I was also starting to lead software engineering teams. But that was my silo, so that’s what I was getting really good at. I remember I would—I always remember this day where I walked into his office and he’s like, “Joe, I want you to take over QA.” Now QA in software development is, you write the code, you send it over to the QA team, they test it. There’s always a little contention in that world because they’re finding stuff that’s wrong with your code. I certainly didn’t want to do that because I was a developer. I was on this side of the wall. What he did is, he saw something in me where I could come in and maybe make something better. Maybe something I didn’t see in myself.

And so I ended up taking the challenge on, and that’s when I really saw my management career take off in that I could take on things that weren’t what I went to school for. The phrase he always used to use with me was, you need to get comfortable being uncomfortable. I still use that phrase today. I teach it to all the people that report in to me because I think there’s something to be said there where when you’re given a new opportunity there’s a confidence over time that you may develop to say, I can go into that situation. I can learn about what it is that I need to learn about. And I can start to manage that in a way that is maybe better than before. It may not be in an area that you were absolutely trained on. Now, that doesn’t mean you don’t need to go get training or you don’t need to go get a lot of books and start to study in the area. But what you do is, you develop a confidence that you can go into that situation. You can educate yourself enough, and then you can start to manage and operate that function in the business in a very effective way. And he was the guy that introduced me to that term and then started giving me other opportunities. QA was one of the first ones. Then I got the call center which was really outside my area of expertise, but you had to learn about that. That’s where it really helped me grow as a manager. And then it really set me up for higher jobs up the chain. I sit here today with a CIO title. I would never have been able to have that if it wasn’t for him.

– That’s awesome. I absolutely love that mantra of being comfortable being uncomfortable. I love that. Actually it’s the third time it’s come up in this very short week already. It came up on Sunday. It came up yesterday. It came up now again.

– It’s catching on.

– It’s super catchy, but it’s also not just catchy, the meaning of it. It’s that everybody has fear, and it’s about what do you do with that fear? Because the opposite is being complacent. If you’re complacent, you don’t grow.

– Absolutely. When I’m coaching some of my staff up, sometimes you can see some of those nonverbal cues where they’re uncomfortable, and I’ll ask them. Are you uncomfortable? And they’ll say, “Yeah.” I’m like, good. You’re growing. You’re now going to go learn a skill set that you didn’t have last week, and it’s going to help you in your career. And so those are things to be embraced and not be feared.

– That’s awesome. I absolutely love it. That is 100%—love it. So today you got the title, the CIO title. What energizes you? You wake up in the morning, hey, here’s what I want to go tackle. What’s that thing for you?

– For us it’s just constant improvement. One of the things that I absolutely love about where we are today is that we’re a mid-size company growing into a bigger company every day. And so what you’re constantly looking at, especially in the CIO seat, is do the systems, do the processes, do the people scale the way you need them to scale?

A lot of cases where you go from startup, there’s a certain mentality in a startup company to a mid-size company, and oftentimes the things that got you where you were don’t get you where you need to be. You’ve got to think about things more strategically. You’ve got to think about systematizing some of your processes and procedures, things that you could do on a spreadsheet now are too big for a spreadsheet, and you need a system to manage it. It’s really coming in and working with our operations team, one, on how do we make our operations much more efficient and scalable— those are the two key words—and also throw secure in there as well because we would be remiss if we didn’t because those come with growth.

Then the other side is, how do you work with your sales and product teams to make sure that the things that we’re putting into the system are things that maybe we could take to market and sell and show that we’re doing this and it’s a differentiator for us? When we’re in that sales cycle and we’re up against competition, we shine in that area and people want to bring their enterprise mobility business to us as opposed to one of our competitors.

– That’s awesome. No, I love it. That’s great. Looking now with everything that’s going on in the industry, pandemic and all that fun stuff, how has the industry changed for you guys?

– I think for us, and this is in helping our customers, our customers need to be much more transparent with their data than they ever have before, whether that is forecasting, whether that’s inventory management, whether that is putting in digital displays at retail. All of that requires systems. It requires people to help them service some of those things. Sometimes they’re putting new systems in, and it requires us to come in and help with some expertise, what systems they should buy or what kind of devices they should buy.

A lot of it depends. Are you working in a warehouse that is basically a big freezer and is minus 20 all the time? Well, there’s a different type of device that will help you there. Are you working in an airport, like we talked about where the weather is going to be changing on a dime, and in some cases the device you might send to Minneapolis might be different than the device you send to Arizona because it’s different weather conditions all the time. Those are the things that our customers are constantly dealing with. We’re able to come in and help them figure out what’s the best way that they can service their customers or implement new devices or technology that helps them be more efficient and helps us bring value to their organization when we do that.

– Absolutely. It was interesting; that’s probably the first answer that I’ve heard about transparency relative to—that’s a great answer. And it sounds like it’s across the board relative to suppliers, stakeholders, obviously end customers, just across the whole playing field.

– Absolutely. When you look at retail now, think of all the things that they have to know inventory-wise. You expect to open up an app and know, in this store that is three miles from you, what they have on the shelf because you want to know they have it before you make that trip. That takes a lot of systems, a lot of inventory to make all of that work seamlessly, and that’s not going to change.

That’s one of the things the pandemic really accelerated because now all of a sudden you went from a scenario where yeah, you were doing stuff on Amazon, and you were going to buy stuff in a store. But now all of a sudden the pick and go stuff is now big. And all of that requires that you know what your inventory is. You know what the prices are. And you’re making that available to your consumer base which you never really did before. Or maybe it’s not at the store, and it’s at the warehouse, and you want to give that customer a chance to say, okay, I can’t get it at the store, but we’ll send it to you in two or three days. You’re also starting to see that happen actually in retail. I was in a local sporting goods store not too long ago, and I was buying a new pair of running shoes, and they didn’t have my size. Literally the guy was able to say, with his mobile device right there, says, yeah, I don’t have it here, but I can have it shipped to your house in three days. Do you still want them?

– That’s great.

– And so he might have saved a sale by doing that.

– Absolutely.

– Again, required having that device, being able to locate it to your inventory, having somebody at the other end checking in that device and knowing what you had on the shelf. And all of that requires all of this enterprise mobility technology to make that work really well.

– Yeah, absolutely. That’s a great story there. Actually I had a similar story, opposite; I won’t name who. Went in, bought something online, got in there, they didn’t have it. Big spike; it was Atlanta Braves World Series gear, so I’ll give them a pass. Everybody was rushing to the stores immediately. They tell me, they’re printing these shirts as fast as they can. They’re coming by the truckload. Very exciting time. Where do you see things going—obviously there’s a lot of learnings that, I’m sure, that you’ve taken from the pandemic. Where do you see things as things start to settle and going forward a little bit? Where do you see areas maybe coming back or staying? What are your thoughts?

– I certainly don’t think any of the things we introduced in the pandemic are going to go away. They’ll certainly probably level because you’re going to have some people who like going back to the store because they like that browsing experience where they’re seeing physical things. But your curbside pickup is going to stay. If you’re a restaurant and you’re not doing curbside pickup, or you’re not doing—think of DoorDash and Uber Eats and all that stuff—you’re not doing those things, you’re losing revenue. All of our businesses are going to be more connected than they ever have before. They’re all relying on mobile devices to help us, whether it is, we’re checking out at retail, whether it is, we’re doing, again, inventory or warehouse management. All of that has to work more seamlessly than it ever has before, and if your company’s going to succeed, you have to be doing that really well.

– Absolutely.

– I see that only increasing and not decreasing and going back to pre-pandemic scenarios.

– Totally, I agree. I think people have just—from a consumer standpoint, I can tell you it’s been fantastic. When you ask my wife, she’s like, oh, this is awesome. I don’t want to go into the grocery store. I can just go run, people bring stuff, put it into my trunk, and it’s great. Or it’s being shipped to the house or what have you. I think one thing that we’ve learned as well is just the value of time. Not that we didn’t know that before, but when you think of the traditional experience of just going grocery shopping and how much time it takes to do all these different things, you’re like wait a minute, I could just quickly on my app—and even if there’s stuff that I repurchase that maybe I wouldn’t get through an Amazon or wherever else, I could quickly just boop, that’s it. Here’s my list, go. I just carved out 45 minutes out of my day.

– Yeah, it happens. My wife and I–– we got Instacart. When we joined, we were driving back. We were on a trip, and we realized we hadn’t done any grocery shopping for the week. We were driving back from where we were at on a Sunday, and we had an hour and a half ahead. She pulled open the app, and within a half hour, we had our grocery shopping done. It was going to be delivered right around the same time that we showed up. We get there; the bags are on the door, and away we go.

– That has revolutionized our family vacations. It’s like, you go somewhere; we went to the beach, boom, same thing. We’re like hey, this is awesome. We don’t have to worry about all this other stuff. Yeah, that’s not going back. At least I hope it isn’t. I’ll be mad. What is your organization doing right now to really stay ahead of your peers?

– I think for us, and this is constant, it’s an investment in our people, our services, and our systems to stay ahead. People to make sure that we have the right people to help our customers come in and have those good technical conversations and help, hopefully not be a vendor when we come in and hopefully be a trusted advisor when we come in to help them think about what technology they should be implementing and how it can help them and drive the business outcomes that they want to have. We then also internally need to invest in our own systems, so when we give services like repairs and all that stuff, we’re doing that as efficiently as possible and transparently as possible for our customers so they can see where their devices under management are because that’s part of the services that we offer. It’s people, it’s systems, and then services, so we’re also constantly thinking about where our customers need new services that can help them.

One of the things that we have launched this year is actually a security service to be able to monitor your networks because we can certainly come in and help you set up networks, set up mobile devices and all that stuff, but now somebody needs to monitor them for security purposes. Certainly if the company has any sort of SOC or requirements that they have to meet, that’s an important thing so we can now throw that service on top. We can really become a one-stop shop as much as we can for our consumers. We have a tagline here where we try to make technology simple. I’m sure a lot of companies say that, but in this space what we want to be able to do is come in, help your decision-making, and then once you’ve made the decision, hopefully we can then provide the services to manage the devices that you’re buying, to manage the networks maybe that you’re putting in and do that in a secure manner. And if we do that well, you’re going to do more business with us. Again, we constantly strive to be that trusted advisor as opposed to just a vendor.

– Well it sounds like it. I like how you’re thinking in the different dimensions and certainly bringing that consultative solution standpoint and bringing in those—you mentioned security being—that’s actually a huge topic right now with cyber, especially as we move into more digital transformation, and you’re seeing all of these issues. It’s an important thing.

– Without a doubt. If you’re not looking at security, you’re behind the curve because that activity is only increasing and will continue to increase. The things and solutions we have to put in place need to have that. And if you’re a CIO and you have security rolling up to you, that’s certainly something that’s going to keep you up at night. Hopefully we can provide some services to help you sleep better.

– Yeah, that’s a good benefit, good tagline there for sure. Talking about really staying—we talked about how your organization is staying ahead of your peers—I want to pivot to you a little bit. A lot of leaders like reading books, whether it’s fiction or nonfiction. Are you a book reader? Read any good books?

– I used to be a really good book reader until Audible came out. Now I’m a big book listener. Yeah, there are two books that I’ve just gotten through, and I thought they were both really good. One is the more classic, and it’s called The Ride of a Lifetime by Robert Iger. He was the CEO of Disney, so it basically looks at his career, but there is a lot of interesting stuff in there in terms of how do you navigate company politics in a big company? It took you through some of the deals that he made with Marvel and Lucasfilm and Pixar which were absolutely fascinating to read because I think everybody knows of those deals. It’s really nice to see a little behind-the-scenes. Obviously somebody who was operating at a really high level, had a really good run.

That’s one. And then one sort of off the beaten one is called Captain’s Class. It’s a guy who looked at—and he did a lot of math to figure this out—the 10 best teams, dynasty teams in the history of sports. He looked at basketball, rugby, he had all sorts of things. Really what he was trying to figure out is what made those teams great. Was it a good coach? Was it an elite player? What he found out is, really the factor was it was a team captain or a guy on the team who maybe wasn’t the superstar but kept that team together. He tells stories on all the teams. I found that book really fascinating because if you’re doing anything in corporate America, you have to be doing it with teams. I think it’s always good to know what makes teams tick and then what kind of people you need to put on those teams to really not just make them tick but perform really, really well because that’s what you’re going for.

– That’s fantastic.

– I found that to be a really interesting read.

– Wow, that’s great. I’m going to write those down. What are those again, the Bob Iger one?

– The first one is The Ride of a Lifetime.

– The Ride of a Lifetime, okay.

– Yeah, and the second one is Captain’s Class.

– Alright, cool. That sounds fantastic. I’ve done—I actually haven’t finished it, but Be Our Guest about Disney, about all the customer service and just the systems and what they’ve got. Fantastic, but that sounds super fascinating.

– It was, especially if you’re a higher-level executive, you’ll relate to a lot of the situations in the first book because you’re like, yeah, I definitely encountered that situation, and it was interesting to see how he navigated it. Certainly like when he—there was a point where he was the chief operating officer and went to be CEO. How did he make that transition? He did it in a weird way where the guy who was leaving maybe wasn’t so popular. He had to detach himself a little bit from that but not insult it in the same way. He had a very fine line to walk, and it’s really interesting to see how, from his perspective, he walked it and how he really threaded the needle there and then went on to be a very successful CEO of that company for over 10 years.

– Yeah, it was a very good run. That’s super fascinating. We’re going to need to—we haven’t done this in the past, but we totally should. I think we’re going to have to put Amazon links in the show notes. People can go get these books because I’m certainly going to have to go get that. Joe, listen, I’ve really appreciated you spending some time with me and with our audience, and just a lot of great, valuable insights. I’ve got a lot of notes here I took.

– That’s great.

– Thank you for that.

– Well thank you. I really appreciate the time to come and talk to you. I hope this interview gets shown to a lot of people.

– Oh, it will be. And so for those that are interested, who want to learn more about you guys, they can go to trgsolutions.com.

– That is correct.

– I got that correct? Alright, great. Joe, again, thank you.

– Thank you.

– Alright, and that wraps up today’s IndustrialSage Executive Series with Joe Yanoska. He is the CIO, chief information officer, at TRG Solutions. The website is trgsolutions.com. Go check them out. They’ve got some great technology. I love hearing about just how they’re really tackling a lot of these challenges. I love how they’re talking about, they’re solving this transparency challenge that their customers are having all across the entire life cycle there, whether it’s end user customer to operationally. I think it’s fascinating, so go check them out. And if you are not on our email list, I highly recommend it. If you like listening on a podcast or if you’re maybe on social, go to IndustrialSage.com. Get on our email list because you’re missing out on great content like this great episode. So go do that. That’s it. That’s all I’ve got for you today. Thank you so much for watching, and I’ll be back next week with another episode on IndustrialSage.

Thanks for reading. Don’t forget to subscribe to our weekly newsletter to get every new episode, blog article, and content offer sent directly to your inbox. You can also subscribe wherever you download podcasts so you can listen on the go!

– Well hello, and welcome to today’s IndustrialSage Executive Series interview. I am joined by a familiar face, Mr. Guy Courtin who is back in the studio no less for another episode here. I’m super excited about this. If you aren’t familiar with Guy, he came on before. It was a couple years ago. I think we’ve interviewed you a few times.

– A few times, yes.

– But Guy is the VP of industry and advanced technology at a company called Tecsys. Not to be confused with the state, I’m sorry we have to say that.

– We’re in Canada.

– Okay, so polar opposite. So anyways, Guy, thank you so much for coming on the show again and also to be in person. I’m excited about that.

– Danny, thanks for having me on the show. I guess the first few times I didn’t screw up, and you’ve brought me back. But I’m really happy to be back, and to be back in person is fantastic.

– Well it’s super—yeah, I’m super excited about this. I’m excited to unpack, get into some of these things that we were talking about a little bit in the preshow. I think there’s no lack of great content here. First and foremost, for me and for our audience who maybe is not familiar with Tecsys, what do you guys do?

– Sure. First and foremost, we’re a Canadian-based company. We are a supply chain company. We solve supply chain problems. We focus on a couple of big areas, healthcare, retail distribution. And when it comes to the solutions we provide, think of us as really helping solve a whole host of supply chain problems, so warehouse management, transportation, order management, things of that nature. Really exciting from that perspective of being able to provide solutions to customers’ supply chain needs. We are, again, based in Montreal, Canada, but have global presence in Europe and elsewhere. I’ve been there now for almost a year. It’s really exciting. I think we are continuing to grow, even during the pandemic. I look at the solutions that we have are really addressing today’s needs for tomorrow’s desires by our prospects and customers but also from their customers. That’s who we are in a nutshell, and like you said, yes we’re T-E-C-S-Y-S out of Montreal, not the great state of Texas.

– Alright, perfect. Well good to know. Well it’s supply chain. I keep hearing things about this. I don’t know.

– Yeah, it’s funny. It’s come up a lot recently in the past two years.

– I don’t know why, but I guess there’s things. So let’s talk about how things have changed a little bit since the last time you and I spoke, which I’m a little gray on when we—I think I ran into you at MODEX in 2020.

– 2020, correct.

– You came on in 2019, I think.

– Correct.

– What’s changed?

– A different world, right? Entirely different world. From my perspective, I think we all have lived it, so I’m not going to rehash it. But I think what has changed—maybe not necessarily what has changed, but what has been exposed by the pandemic is, I think, what we should focus on. You mentioned supply chain, and it’s like, “oh, well, it’s coming up more and more.” I see my local news; they say supply chain. My mom knows what supply chain is. My mom knows what I do now. So I think what’s happened is not necessarily the shortages and things of that nature because I think those of us who’ve worked in supply chain know these things happen on a regular basis. Not at this scale, but what I think has really happened coming through the pandemic is an awareness of what happens in the supply chain, what the supply chain is about, the sensitivity our supply chains have to disruption, and the impact it has on us as a consumer, both in the B2B and the B2C world. So if there’s one change I think that’s really happened since the last time we spoke is really that awareness of what this means. Have we solved it all? Of course not. We’re already still seeing there’s shortages. We still don’t have enough material for cars, just like the strike going on right now in Ottawa by the drivers has brought that automotive manufacturing cross-border.

– Yeah, they shut down Ford, right?

– Yeah, they shut down Ford. They shut down GM because there’s no parts coming through. But I think we’re more aware of that now. Maybe two, three years ago, that’s maybe a small story in the back of the newspaper or in the business section where people would not pay any attention to it. Today it’s top of the news, and then people understand, well wait. Why am I not getting a car at the car lot? Why does it cost me more? Why are used cars now priced higher than when they were new cars? Oh, now I understand why. So I think that’s the big one I would focus on is this awareness that the general public has or should have about the complexity of the supply chain to get their products, again whether it’s B2B or B2C.

– Yeah, absolutely. It’s interesting. I’m seeing a lot of memes and different things talking about Thanksgiving and Christmas or whatever, that it’s going to be, everyone’s a supply chain expert. We’re going to talk, oh, we know why things are going on, or whatever. But it has been interesting. Even as late as this morning, I had some eggs, and we’re getting low on our Valentina. I was talking to my wife; it’s this Mexican salsa, great stuff, hot sauce. Staple for any Mexican household. I was like yeah, we need to get some. My wife’s like, I can’t find any. I’m like, again? Okay, well it’s not a surprise. We got all these spikes and all kinds of issues and things that are going on. Obviously we’ve had massive changes now. There’s some things that have, I think, we’ve had some short-term disruptions, short-term issues, but there’s also some longer-term changes that I think are happening. What are some of those short-term things that you’ve seen? And what are some of those things that you think, hey, these things are here to stay for the long term?

– Yeah, I think some of the short-term things is, unfortunately, consumer behavior in terms of hoarding, in terms of—we’ve taken the whole notion of safety stock, from the consumer perspective—

– Yeah, I’m buying a case of Valentina hot sauce the next time I see it.

– Goodness, you can’t run out.

– I cannot.

– You cannot run out. Talking to my mom again, I love my mom to death, but during the pandemic I’d open one of her closets. I’m like, mom, how many wipes do you have in here? How many Lysol wipes? She was like, every time I go I get as many as I can. Mom, you and dad just stay at home. What, do you clean the house every two hours? So I think that’s a short-term reaction. And I think we’ve seen this on a smaller scale. I live in Boston, and we always joke whenever the meteorologist says there’s a snow storm coming, we all run to the supermarket and buy bread and milk. Don’t ask me why.

– That happens up there, too.

– It happens up here, too.

– It happens down—okay.

– Why bread and milk? I don’t know, we’re all making French toast. Who knows? There’s this innate reaction that we just go, and we start hoarding stuff. It’s a snow storm. We’re not going to be stuck in the ice age for 20 years. But we’ve seen this in the pandemic where in the short term, this has taken a scale we’ve never seen before. This consumer notion of having to run out and just hoard things. And I think we’re seeing at some level in some companies as well. They’re trying to figure out; oh goodness, we have to rethink some of our policies and hoard some raw materials, hoard some finished goods, hold back some material. I think it’s a knee-jerk reaction, especially from the consumer. So I think that’s going to go away. Or I hope it goes away.

The long-term, and I’ve seen more and more articles about this and discussions. I’ll be interested to see how this changes, and I hope it does, is re-thinking of our whole measurement of our supply chain. What I mean by that is the whole notion of lean, Six Sigma and all this, super efficient, just in time. Why am I holding inventory? Why do I have buffer stock? Why do I have safety stock? Everything will come to me just when I need it. I think we’re starting to see a shift where people are starting to question not necessarily going away from it, but maybe easing up on the stringentness that we came to saying, hey, I don’t need any safety stock. Everything’s just in time. I don’t even need that factory or that warehouse. Everything will come to my factory right away, and I’ll send it to the consumer. So I’m starting to see more and more of this. I spoke, I had a meeting with one of our clients in the healthcare side, and we had that conversation. It was a great conversation. He said, we cannot continue to proceed this way with the same notion of minimizing inventory, cutting down to bare bone, expecting things to come when they’re supposed to because this pandemic has shown us that it can’t happen that way. And yes, people might argue, well that’s a global pandemic. Hopefully we don’t get one of those again in our lifetime. But if you look at it from a company perspective, companies know that just a small disruption somewhere in the supply chain can have massive effects on the rest of the supply chain, a lot of it because of their sensitivity with their inventory.

So what I hope—and this is a hope, and a hope’s not a strategy. I know that. But my belief is that we’re starting to see some discussions around rethinking how do we look at inventory in the supply chain in other aspects and how do we start thinking about it from a perspective of, maybe I carry a little bit more on my balance sheet, and maybe that doesn’t make my financials look as good as they could. But you know what? It guarantees me that I can keep the factory moving if there’s a disruption at the border. It could keep me moving if there’s a fire in my warehouse and I lose inventory. It could keep me moving if there’s a spike in demand somewhere. And I think that, for me, is a good thing. I think we need to, as an industry, move away from the financial people telling us, hey, trim, trim, trim. Make everything look good, to the reality which is the supply chain’s about people. It’s about getting products out. It’s about addressing needs and demands, and we need to be more sensitive to that.

– So many good things in there. A couple things that I think were interesting, one, you were talking about just in time inventory, lean manufacturing. I went to the assembly show, a lot of automation, pretty heavy in automotive. But there’s a lot of other industries as well. I started posing the question: as far as lean manufacturing goes, have we gone too far? Have we pushed the envelope too far? You’re talking about globalization, and now people are, all this talk of—not talk, it’s happening. Repositioning their supply chains, more in-shoring and looking at solutions on how, okay, gosh, maybe we could get things cheaper going out to China or wherever. There’s a whole host of issues now. Massive range, right? I think it’s a very interesting discussion to think, okay.

And to your point, I think companies are, they’re saying—and I brought this up, and I can’t remember who it was, an episode probably a year and a half ago, very early on. And I thought, you know what? We’re going to see an increase in warehouse production, and I think you’re just going to have to do this because—and I think what we’re seeing now, which you brought up the convoy which I think is fascinating. I think there’s a lot of interesting social implications to that, but I think you’re seeing some of the same responses, disruptions. Okay, trucking with infrastructure. It was also interesting, in the same notion, we get into the meme stocks. It’s some of the same, and it’s like another force now that seems to be—that has an impact and can have an impact on supply chain in certain areas. I’m not saying that game stock and those had an impact, but I’m saying just in the sense of the mobility, and there’s other forces now that are impacting it and can create, maybe not global, but certainly a little bit more disruptive in local areas.

– Right, right. And I think part of it too, Danny, is it has to come back to, how do we measure? How do we look at our supply chains and say, this is a good or a bad supply chain? Is it because financially it makes our books look good, our balance sheet look good, our inventory levels look good, our efficiency? Or is it that we’re getting product to our end customer, whomever she or he is, in the most efficient, cost-effective, timely way for that business? I think those are, in a way, two different ways of looking at things. And I believe, at some level, we’ve gone too far by just measuring everything on the financial side and saying, oh, well the balance sheet looks great. Cash flow looks great. We’re doing fantastic. Not looking at, are we servicing our customer the best way possible? Well they’re paying us money, so we must be doing a good job. Eh, I don’t know if that’s necessarily the best, the only measure. I’m not saying it’s not a component, but it’s not the only measure.

So I think that’s something else we need to think about. And to your point, I’m glad to hear from your perspective too, you’re seeing it. I think it has to change a bit. We have to start rethinking about this moving forward from our supply chains, and then I mentioned the healthcare client I was talking to. Look at the healthcare space. Well, if I need to get material to a surgery, I need to get it there. It doesn’t matter how much it costs—I mean, it does, but the most important thing is getting it there when it needs to be there because there are literally lives at stake on this. So I think we need to start looking at it from that perspective and being more sensitive to that, if you will.

– Yeah, it was interesting on that point, in healthcare from a goods standpoint. I thought it was very interesting. There were a lot of stories talking about PPE and there was a huge—and then ventilators and all that stuff. You were seeing this response from manufacturers. There are actually some pretty incredible stories on how companies were able to completely go through new R&D. I remember, was it—Flex Manufacturing in particular, in six weeks was able to completely redeploy lines, and they were cranking out—I’m trying to remember. I think it was ventilators. It was incredible. You were able to go through all the red tape and what not. It kind of goes to that demand shift and the focus piece saying, hey, let’s put all of our efforts into this because this is priority.

I remember talking with Fastenal, and this was probably in May of 2020. And I remember they were telling me, PPE, the masks and all this stuff, the next big thing, surgical gloves. That’s going to be, we’re going to have issues with that. Sure enough, a couple of weeks later, there it is. We even looked at the—I discovered this—the top rubber glove manufacturer is a Malaysian company called Top Glove. Their stock went from—because I was looking at this—it went from two bucks a share to 14. Now it’s back down to five-ish, something like that. I’m not giving out any—

– No financial advice on the show.

– I’m just reporting what I discovered and I thought it was interesting. Yeah, to your point, certainly a lot of these industries are going to be a little bit more important than others as far as—

– Absolutely, and I think those industries also need to think about it from that perspective, but then also the people measuring it, the financial analysts, the stock and all, give them a break at some level. Or measure them differently. I don’t know if that’s going to happen. I hope it does, but we’ll see. A year from now we’re sitting back in these chairs in the studio, and it’ll be interesting to see what happens. Hopefully we’re completely out of the pandemic and things are becoming its own new normal. What does that look like?

– I hate that word, by the way, that phrase.

– Don’t get me started on that because there’s no such thing as a new normal. I’ll talk about this from a retail perspective when I hear that all the time, people saying the new normal. Well what was the old normal? Because before the pandemic there was this thing called Amazon that was killing all these merchants. Before Amazon there was this company called Walmart that was coming out crushing people. Before that there were malls. There’s never been a normal. It’s always just been constant change and evolution, which is a good thing. Now the pace has increased, but there’s no new normal. There’s just now.

– Exactly. And the pace, I think, like you mentioned, for sure. Alright, we were talking about, before we started recording, the idea of the iceberg. Let’s get into that a little bit. Explain to me—let’s talk about what’s going on. You were saying at the top we’ve got demand and customer influences, this is what we want. And there’s a ton of things affecting that. Shifts in how people are buying, why they’re buying, how they’re buying, what they’re buying.

– Who they’re buying from.

– Exactly, but then there’s also this subset, underlying issues, big, big, big issues underneath. Let’s get into that a little bit.

– Yeah. So I know it’s a very easy analogy because we see the posters and all that, but I do think it’s—to your point, I think the top, what we see above the water line is what you and I and all of us here are doing which is expectation-setting. We expect certain things. We demand both from our professional lives and our personal lives. We are demanding and demanding more and more. Like you said, speed and efficiency and selection and all this. But I think from a supply chain perspective, all the things under the water line such as labor issues, logistics, planning, execution, distribution, digital orchestration of orders, all those things that hold up the ability to meet those customer demands.

What I do think is interesting–– and we touched upon it–– is, I feel as if during the pandemic that waterline dropped a bit. People got exposed to what was under there and saw the massiveness of what’s underneath. And I don’t even think they’ve seen—they haven’t—the entirety of it. So I think under the waterline I think it’s really interesting as supply chain professionals, we need to constantly wrestle with making sure that people are aware of those things, not just the customer, but more importantly our bosses, our bosses’ bosses, other people in our businesses because I think at some level, and we’ve been on—we, I say we, those in my circle, so to speak—we’ve been on this sort of mini-crusade for the past few years which is, supply chain needs a seat at the C-level table. We can no longer be a cost center within the organization. I don’t care if you’re a candy manufacturer, pharmaceutical company, a toy distributor, clothing distributor, you make widgets, you make whatever. Supply chain has to have a seat at the table at the executive level because the supply chain, at the end of the day, is what gets the products even if it’s a digital product—because oh, well we’re a digital company. We just do digital. No, there’s a supply chain behind that. Let’s figure out how we make it more efficient, make it work better, make it address the customer’s needs.

And I think that’s what, when I look at the iceberg analogy, that’s what I feel we’re starting to see more of and be exposed to. But I think the complexity of it is still something that we need to constantly educate, not just the market and our customers, but even more importantly at times internally our own businesses to say, no, no, guys. We need to pay attention to this. We need to pay heed to this. We need to invest in it. We need to make sure that it does what it’s supposed to or else all the other stuff can fall short regardless of how well they’re doing. And I think that’s the part that I hate to say excited because of Covid, but that’s the part that, if there’s a silver lining it’s that that aspect below the waterline has sort of bubbled up, and I think more people are aware of it. Now it’s up to us to not just stomp around and say yeah, it’s important, but now to show why it’s important and how to turn it into a competitive advantage, not just a cost center.

– Sure, absolutely. And I think—the silver lining piece is that there’s been so many learnings that we’ve had from this, and they’re going to continue to learn as things still evolve, I guess. But I think that there’s absolutely some great takeaways, and that was something that as far as specifically saying having a seat at the table, the C-suite role creation, that some of that doesn’t necessarily—yes, it falls under ops, but something that, especially I would say if you’ve got some of these manufacturing companies that you’ve got—you look at automotive for example. You’ve got how many components and pieces? And obviously they’re getting just destroyed right now. I was hearing, was it GE fridge, because of supply chain and labor issues, I think they’re down to one and a half or one and a quarter shifts or something like that. I mean, it’s crazy. Hopefully we don’t, obviously, run into something like this again, but I think as things are going to change, and I think that we’ve definitely seen that things can and do and will change and shift, it’s going to be critical to manage that. And the things that are being manufactured and created, certainly there’s levels of what’s important or not.

There was an interesting story. I don’t know if you heard about this. One of our clients over at Optimum, they are a healthcare recruiting agency. They ended up buying a US manufacturer, an antibiotics manufacturer, in Bristol, Tennessee. What happened was during the pandemic, they are the only domestically-produced antibiotics—they do, I think, penicillin, amoxicillin, and a few other things. They’re the only one that’s produced domestically. They’re a foreign-owned entity, I believe, even though it’s called US Antibiotics. They went bankrupt. They went bankrupt during the pandemic. Employees went and continued to help to work there because they realized how critical all of that was. So the company’s Jackson Healthcare. They came in, and they bought up the company saying, we feel like this is so—this is critical. This is national infrastructure.

You want to talk about supply chain issues and not having critical things, talk about hey, you know, I can’t get penicillin or amoxicillin which is used—it’s one of the most widely-used medicines. I think it’s a super interesting story, and why they went bankrupt. I think there are some supply chain issues and some things going on there. So when you look into that, you’re like, that actually really should be a national conversation as we get into—that’s critical infrastructure, and do we want to rely on foreign partners? We can get deeper into all this. But when we have specific domestically-produced battery manufacturers for those supply chain issues, issues with conflicts with other countries, what have you.

– You’re absolutely right. I think it’s a great example, and that little piece is a critical part of a bigger supply chain, the healthcare supply chain and everything. So how do we shine a light on those important components and then have the right discussion about yes, we want to be competitive? We believe in the capitalist system. All things I agree with. But at some level we also need to understand there’s certain things that we need to be more conscientious of from that perspective. And I think that’s—I hope that conversation continues because I do think it’s—our supply chains are so global. They’re so sensitive to disruption. Massive or even minor, they’re very sensitive. And they’re all, you and I and the rest of us in our daily lives rely upon these supply chains not just to get our toilet paper, but in the medical space especially, to get the right drugs and pharmaceuticals, to be able to have access to hospitals to get the right procedures, et cetera.

And I think it’s a conversation that has to be had. We haven’t gotten into roads and bridges and rail and all this and ports. You’re seeing at the Port of Long Beach we can’t continue to go about business as usual when we see what’s happening at those ports. That’s just an issue, not just nationally but globally. And I think as we do more, as things are accelerating and they probably will continue to do so, and maybe not accelerate for the sake of speed but just for the sake of being more sensitive and responsive to the supply chain, is our infrastructure ready for that? That’s the part that’s going to have to continue. It’s not going to be an every two or four year-type discussion. This is long-term. This is the infinite game that we must continuously work on. And I think that’s the part that, as a supply chain nerd, I get somewhat excited because I think it’s finally time that we’re having these conversations. Is there an easy solution? Of course not. If there were, I would have it, and—anyways.

– You’d have an island by now.

– I’d have an island by now, yeah. I’d have an island with all kinds of cool stuff on it. You’d be invited. You could come out.

– Oh, I appreciate that.

– Of course. But I think it’s across the board, across industries. And I think what we need to realize too is, I think your example, Danny, was fantastic, if you look at, well they have supply chain issues. Well what was it? Or the GE example. There’s labor. Well the labor in the warehouse, that’s a supply chain issue. That’s a supply chain issue. And I know that, near and dear to my heart, people, well, let’s put automation in it. Okay, well automation is great, but there are other things that go around automation we need to think about. We can’t just slap in this—automation solves. No, it doesn’t solve it because there’s other issues around it that might pop up. If we’re not aware of the macro supply chain issue, then the solutions we provide at a micro level we don’t understand or at least are sensitive to the long-term repercussions or the wider repercussions. And again, back to the question, when you talked about what’s coming post-Covid, I think it’s a greater awareness of this. I think more discussion. And what I do hope is that we see more supply chain at the executive level getting the attention it needs because then that will continue to push the conversation and to find solutions for it.

– It’s kind of funny—not funny, but I remember hearing stories initially when this stuff happened, to your point on this. C-suite executives were pressing everyone. Why is this—why are we delayed on this? What is going on? What do you mean? Which was fascinating to me to be honest with you because I felt like doesn’t everybody—

– We’ve said this for the past 20 years, yeah.

– Isn’t this a—oh, I guess not. I guess it’s the, what is it? The squeaky wheel gets the oil. I guess maybe there were some squeaks, but—

– Not enough.

– Not enough, right?

– But now all of a sudden when you’re going to the grocery store and there’s no toilet paper, people are flipping out. Or there’s no Lysol wipes, or there’s no—I got a funny message from one of my good friends who basically, jokingly, yelled at me because I guess during the pandemic we all became bread-makers. So he was making bread, and he got very cross with me because there was no yeast at his local grocery store. Supply chain issues. What’s wrong with the supply chain? There’s no yeast. I’m like—so I had to explain to him, well we model a certain amount of demand. This demand has gone through the roof, and manufacturing is basically planning for that kind of demand, so they can’t just ramp up when there’s no labor, there’s no raw materials. He didn’t care. He was like, well why isn’t it on my store shelf? Every time before the pandemic, there’d be the yeast at the store shelf. Now it’s not there anymore. And to your point it’s like, well why not? Back to the iceberg, because there’s a ton of stuff under that waterline, and not just one disruption but multiple under the waterline creates this tsunami of issues, and then you don’t get your yeast at the grocery store.

– Tsunami of issues, that’s—dominoes. A domino effect of tsunamis. Demand, and then we got labor issues.

– No raw material, factories are closed.

– Somebody crashes a boat in the Suez Canal.

– Which is again—not to laugh about it, but you’re absolutely right. It’s another reminder. You get some guy who’s never driven the ship who gets control who’s been told to do it, and he makes a mistake and crashes a boat into the side of the Suez. What happens? Yeah, it’s only there for a couple of days, but look at the long-term repercussions that has.

– Oh, exactly. I remember talking with—I do not proclaim myself as a supply chain expert at all. I know enough to be very dangerous. But I remember talking with people for years. Supply chain’s very fragile, and you don’t understand how many intricacies and nuances there are. Infrastructure’s so important. Do you realize that when we have hurricanes, a hurricane comes through that can cause disruption for weeks to months. And, whoa, really? I had no idea. Because it takes time to unload the boats and move them and process them through. Things stack up.

– Well just look at what’s happening now. There’s about 103 boats sitting outside the Port of Long Beach. That’s not just a static number. There are boats that keep coming in. There’s just a physical constraint of, there’s nowhere to offload the TEUs at the port. There’s then not enough trucks to then move those to a rail head or inland. So as you said, you can see how—wait a minute. This is going to take a while to clear up. This is not weeks or months. I’ve been told a year plus before that it gets somewhat close to “normal.” And you realize very quickly, yeah. And you think about this. How much inventory is sitting on those ships that is perishable or is getting damaged by sitting out in the ocean water for this long? It’s not just sitting in a pristine environment. It’s sitting out in the saltwater ocean. It’s not in the water; I know. But it’s not meant to be sitting out there that long. And how much of the inventory do we really know is perishable or is going to be bad? Or even if you look at a retail perspective, how much of that is going to get offloaded, and it’s oh, it’s the style for the winter. It got offloaded next fall. Oops, too late. Right to the discount rack.

That long-term effect of some of these delays, you and I and I think others, we get it now when it’s finally hitting the average consumer—again, B2B or B2C—all of a sudden it’s like, oh, my goodness. What’s going on? Why is this happening? Well guess what? That ship that’s supposed to take two hours to be offloaded is now taking weeks. And then, therefore, it’s going to take another week to get on a truck. And it’s going to take another week, and oh by the way your warehouse, it’s already got inventory in there, and it’s just going to sit in the loading dock. So I can’t put it on the shelf or move it. You can see now the, like you said, the domino tsunamis that keep stacking up. All of a sudden you realize, well that’s why you’re not getting your product. That’s why you can’t run your factory. That’s why you can’t get your product to your customer.

– And then consumer demand says, well that’s stocked. Hey, we like this new product over here. We like this. We don’t care about that anymore.

– Right.

– And the demand goes through the roof.

– Yeah, and it is also a massive bulb effect across all this, too. I think, again, the silver lining is what I’m seeing, which I hope continues—and I keep saying hope—is the awareness of that. We’re starting to have more conversations about it. We’re starting to rethink how we look at these things from a lean perspective, from how we manage the supply chains. How do we measure them financially and otherwise? The belief I have is that as we continue to have these conversations, we’ll start thinking differently and therefore acting differently. And therefore, at some level also setting different expectations for our end customer. And all that I think is a good thing because if you look at supply chains in the past, man, we were running so lean. And if everything is perfect, it looks great.

– This is awesome.

– It’s awesome.

– Until it’s not.

– Until it’s not, right? Until there’s a tsunami that happens in the Pacific, and half my cars are underwater, and now what do I do? Or my chip plant is by a nuclear power plant that now has to shut down because there’s radiation. Oops. And I think that’s the part that we as an industry have to continue to work on ourselves, but also the general marketplace has to continue to have an awareness of it and be more sensitive to it. Give us a break sometimes.

– Yeah, well I think, which is nice, I think the general public consumers have hopefully—hopefully your friend has calmed down.

– That’s a good question. That’s a really good question.

– But I think it’s—I’m not going to throw out the term, but it’s been ‘more normalized’. It’s more commonplace, and consumers, I think the awareness—it would’ve been nice if it had happened a different way, but it happened nonetheless. It’s happening. We’re seeing these adjustments, and we’ll continue moving forward. I want to pivot and move on to another area, unless there was anything else you’d like to add on.

– No, oh, we could talk about this for hours, but let’s pivot.

– I’m not going to bring in inflation, CPI, shifting consumer behavior habits. We’ll save that for another day because this is a lot of fun. I could go on, although I could do some bourbon. Well, it’s a little early.

– It’s 5:00 somewhere, and it’s Friday.

– Oh, that’s right. I have some WhistlePig—alright, well we’ll keep going. You went to NRF recently. This was December.

– January.

– January, early, mid-January.

– During the pandemic I forgot what day it is. Now I’m forgetting what month it is. But anyways, yeah.

– Everyone’s done the same exact thing.

– Maybe you did put bourbon in this one.

– I have vodka in mine. Alright, so you went there, and it sounds like a similar experience that we’ve seen with CES. We went to IPPE about a week or two ago. Just quick, your experiences, what was that? What do you think things are looking like?

– So yes, we went to NRF, the big show, end of January in New York City, which I always half-joke, tongue-in-cheek that in normal years, the year truly hasn’t started until I’ve braved the New York winters and gone to NRF and hung out with 20,000 of my closest friends at the Javits Center and eaten Clif Bars for lunch as an acceptable form of sustenance.

– That’s a good idea.

– Yeah, but this year of course—last year they didn’t have it. It was virtual, and quite honestly, I don’t think it was very good. So this year it was back at Javits. When they started talking about it last summer I think we all got excited because obviously the vaccines had started rolling out. We had seen a little bit of a decrease. It felt like things were kind of turning a corner. Then unfortunately Omicron happened. Honestly, the event was good for me and the folks I went with from Tecsys. Why, because we were able to speak with a number of companies from a partner perspective who we otherwise probably would not have gotten that much time with. Why, because we’d have customers there we’d have to talk to. So from that perspective it was well worth the time.

However, I think what I saw is sort of a rigidity by NRF with regards to, hey, this is not normal times still. Let’s be a little more flexible. We’re all in this together. Those of us who did come to New York are spending money to be here. We bought the passes. We paid for travel and hotels, et cetera. And oh, by the way, there is this Omicron going around, so technically we are still in a pandemic. We are willing to take the risk ourselves and to be there. I will say this, NRF did a very good job. They were very upfront about having vax cards and how to get in. They were very good about getting us home test kits on a regular basis that we could take back and use. People at the show were very respectful. I think I maybe saw one person without a mask on, maybe because they were eating, but I couldn’t tell. Let’s just give them the benefit of the doubt. Otherwise 99.99% of the people were all wearing their masks, and properly too. I’ll give them credit for that.

So from that perspective, NRF did a great job. I think where I hold them a little bit accountable is, again, it’s not normal times. Let’s think about this together collaboratively. For example, my colleague and I–– we bought just a regular floor pass. So we got on the floor; we were able to walk around and interact. The general sessions we couldn’t get into. Why, because we didn’t pay for that pass. But we went up and asked, well can we go in? There’s no one here. We were told no, you didn’t pay for that pass. I was thinking to myself, wait a minute. You’ve got great speakers speaking to a half-empty, if not a quarter-empty, if not an empty room because no one’s going in because no one’s here. Why don’t you let the rest of us, because we want to listen, and we’re going to support the person that’s speaking.

So I think a lesson to folks today who are running these physical events is think about, be situationally aware. We’re still in a pandemic. People are still wondering whether they should travel. People are pulling out. When I was at NRF, I was telling you guys backstage this. You walked on the main floor, and the whole front row was empty.

– That’s crazy.

– Where usually you have the big SAPs and Oracles with massive booths, gone. And it’s jarring to see that. So my advice is, again, just generally, I do hope we continue to have physical, in-person events. I encourage people who feel comfortable to go to them. I still think they’re incredibly valuable, but I would push on the folks organizing them today to think a little bit, to be aware of the situation. Read the room. You know what? Maybe I didn’t pay for the full pass. But you know what? I’ve got the CEO of big retailer X speaking. Maybe she would like to have more people in the audience.

– Maybe.

– Maybe. Maybe not.

– But that’s the new normal so—

– So that was my experience, and again, from my perspective it was very valuable. Now we did not have a booth, so I didn’t spend—

– Oh, so you were walking the show.

– So we were walking the show. We didn’t spend the hundreds of thousands of dollars from that perspective. So that’s the other part that I can’t speak to that. If I had spent the money for a booth and was not able to get out of it, I would have a much different opinion, I think, of the show because frustration is only the beginning of the description of what I would feel from that perspective. And again, I appreciate NRF having an in-person event. I think that was fantastic. But again, have a little more situational awareness. We’re all adults. Next year when things are back to normal I’m not going to show up and be like, oh, last year you only let me into the main session, and I only paid for this.

– It’s understandable.

– It’s understandable. I get it. Again, that’s my one advice to NRF and others having events: have that flexibility at the show to think about what is actually happening.

– No, that makes a lot of sense. Have some flexibility, empathy, not even just for the attendees but also empathy maybe for your speakers.

– Well and that’s the thing.

– You’d think you’d want to pack it. Come on; come on, let’s get in here. Let’s go.

– Get everybody in there.

– I know you guys aren’t part of it. Come on in.

– Come on in. Just sit. I’ll give you something I found funny about that, the empathy side. When I worked at Forrester a long time ago, I remember when Forrester had our first few big user conferences. We were a 300-person company. People didn’t really know what we were doing, so we would have these user conferences. And to your point, Danny, we’d have a speaker up there doing the keynote. And we would be like, get all the research associates, get everyone in the office to come because we’ve got the back row empty. We’ve got to get it—

– Pack it.

– Pack it. Make it visually—because you have a speaker taking time out of their day and their calendar. They’re coming to speak.

– Is this worth it?

– Yeah, are they going to come back next year or the year after? Pack it. Now, the good problem was as we went through better times, then we’d have to turn people away. That’s a good problem, but again, situational awareness.

– Right, yeah, demand. So I’m curious. Are you guys planning on this year attending other—not just walking the shows, but are you going to actually have booths at any? Are you planning on—okay.

– Yes, so we will, and a shameless plug, so we will be at MODEX back here in Atlanta in a few weeks, or in six weeks.

– It’s not long, end of March.

– End of March. We’re very excited about it. We are all in from that perspective. We will have a booth. I should have the booth number, but I don’t. I apologize, but anyone can look up our website and see it. We’ll have a booth. We are actually going to have a couple of speaking sessions as well, so we’re excited about that. So that’s the next big show for us, and then we will be starting to go to other events, not just walking, but putting more time and investment into it both in the healthcare side, the supply chain retail side, distribution side.

We certainly will start seeing Tecsys more at these events as we go through this year. I can’t believe we’ve just started 2022, and I’m going to talk about 2023. We are in the midst of trying to think about, alright, for 2023, where do we start investing more in some of these because if we’re still like we were in January of this year next year, then you know what? I’m going to retire to a log cabin in Canada. You’ll never see me again. I’m off the grid. I’m out. But no, we certainly recognize the importance of that and are looking forward to it. I’m personally looking forward to it as well because I think it’s one of those that we don’t have it, we realize how much we miss it, how much business we drive from it. So I’m really excited about getting back and having that type of presence and the conversations that it creates and the buzz it creates.

– I’m curious, just from right now, it’s like we’re back—I was just telling somebody, it almost feels like we’re trying to learn how to drive a stick shift. We’re in first; then we’re second. Then we’ve got to downshift back to first or whatever.

– And we fry the clutch, and we start over again.

– And then there’s a speedbump. We’ve got to go—I had to learn—this is coming from real experience here. I had to learn in Mexico with a guy who—my Spanish was okay. The guy that I was with didn’t speak any English, and I had—and where we were driving to was very hilly. It was in the mountains. And they have these things called topes, speedbumps, in the middle of the dang interstate. You could be doing 80, and then tope! You’ve got to—and then boom! boom! Then there would be a suspension shop right next to—Now that’s called creating demand. That’s a great—one day, as an aside—I’m getting very ADD. I’m going to write a business book. “Everything I Learned About Business, I Learned In Mexico.”

– That’s a great use case right there. Create a demand and have the supply right next to it.

– Perfect.

– There you go.

– That’s business right there.

– That’s business right there. Done.

– Yeah, exactly. That’s kind of what it feels like right now. Shows are happening. They’re not happening. We’re doing this, or—as we’re going through that, how are you guys, whether that’s you or Tecsys in general, handling that, just in terms of customer reach? I’m imagining that your business, like others, it’s very relationship-driven. I would imagine, too, that you need to get boots on the ground to be able to see things, how things are going. How have you guys been managing that? I’ll do a second part on that. I won’t. I’ll do the second part afterwards.

– You know Danny, it’s the million-dollar question. I think we’ve been managing it as well as anybody can and is expected to these days. I think for us, it really has to be a combination. Again, back to the situational awareness. We have to be sensitive to our customers and our prospects and how they want to interact and where they are. I think it’s a combination of being at events, so walking the floor, getting face-to-face, a combination of course of a lot of digital marketing, and that has a lot of different flavors. I think it’s a combination of old-fashioned email reach out, things like that.

But what we have found and what has been really good for us is early spring last year when things started to creak open a little bit more, and then really in the summer, it was really a dedication to—people are going to laugh at me in this, but old-school stuff. Getting on an airplane, going to meet customers and prospects, going to visit people for face-to-face meetings. Taking the time out to do this. I met with a customer at the beginning of the year, and had a great meeting, in person. When we were leaving, he said it a few times. Said hey, the fact that you guys came out to visit, that’s big. That’s really important because we could do this over Zoom. We could do this over—but the fact that you’re coming out, and you’re taking the time out in these conditions to come visit and spend time and sit down face-to-face, that goes a long way.

I think that’s what, from our standpoint, that we’re certainly very reticent of is that this has to be a combination of a lot of different tools. Part of it is, again, it’s going to sound super cliché, but people buy from people. It’s still the way it works. And I think what we have found is during the pandemic and going to a lot of digital activities, those only go so far. Now it doesn’t mean that we stop. It doesn’t mean that they’re not useful. But it is a tool in the toolkit, and I think that’s what we’re seeing is that—and to your point, I think you’re absolutely right. It’s a great analogy.

We’re relearning everything. I think we’re in this process of relearning, what events do we go to? Do we sponsor? Do we do a webinar? Do we go to IndustrialSage and have a session? What do we do? We forgot how to do this because the last year and a half it was, well we’re going to do a webinar, or we’re going to do a Zoom chat. Or we’re going to do another webinar. It’s like, okay, we’re all going to be sitting in our offices at home, and we’re all going to wear sweatpants on the bottom and look professional on top. And we’re going to smile and try to relate to our customers that way. We were able to get to a certain point with that, but I think what we’re rediscovering is if we can get 20, 30, 40% of the way with this, how do we get to 100%? Okay, we have to mix it up, and we have to again go back to old-school, traditional stuff. Get in front of people. Meet face-to-face. Shake people’s hands. Look people in the eye across the table. And I’ll tell you; it was interesting.

I was with another customer of ours last summer, and great meeting and everything. But I remember we finished the meeting, we were walking out to our cars, and we were just chit-chatting, small chit-chat. And in that five-minute small conversation, I was like, Oh, we just discovered something about what one of the projects is that we can help him with. This is why this is so valuable.

– Exactly.

– It was just this hallway conversation. We were saying goodbye. She mentioned something and talked us through it, and afterwards I was like wow, that’s it. We can’t do that over Zoom or email or anything. I’m going to throw one of my friends under the bus. Love him to death, one of my—

– You’re throwing all kinds of friends.

– I’m throwing everybody under the bus. One of my best friends from college, brother of mine, love him to death, best friend. But he and I have a small difference in this where he’s an accountant, and he looks at everything as black and white. His vision is, well, you made it through the pandemic without traveling, so why do you need to go travel again? His feeling is, just send them an email and an invoice, and just get stuff done this way. I’m always like, no. People buy from people. These face-to-face conversations are how things progress and move. And don’t look at the dollars and cents of the cost of travel. Look at what it’s opening up down the road. And I think that’s where we’re relearning that skill. We’re rebuilding that muscle.

Now does it mean that we’re going to just travel like crazy? No, I think we need to constantly reassess. But I think from a marketing and a sales perspective, we at Tecsys, and I think others are doing the same, is we’re taking this opportunity to relearn and to figure out which muscle we have to work on. Which muscle has atrophied a bit? What are the new muscles we can leverage with the old-fashioned muscles, so to speak? In a way I think we should look at it as an opportunity, and I think we are at Tecsys to really start rethinking about this and see, what can we do moving forward to take the lessons we’ve learned and then relearn the ones that we forgot?

– Oh, totally. And I think it’s—definitely heard that from other people as well where it’s—I wouldn’t say it’s an old-school tactic at all. We’re human beings, even a B2B product, there is a level of emotion, even though there’s a lot more scrutiny that goes into it. But there still is a lot of emotion because it could come down to—unless if you’re the only provider of something. But when you’ve got a whole host of competition, people that can do something that’s similar or whatever, it’s going to come down to several things. The money certainly is one piece, but the other piece is the relationship and the team that we’re going to be working with on this. Do we really feel that they have our back? There’s a lot more at play. My background’s in accounting, believe it or not, so I totally get it. But the money, the black and white, it will show in the bottom line and the top line. Well probably more top line—we’ll see. Hopefully it’ll show in the bottom line, too. But from a top-line perspective, yeah sure, it may not change dramatically, but it will.

I think to your point okay, maybe not everything you need to go jump on a plane and go whatever. There’s some stuff that yes, we can do Zoom meetings, and they’re totally appropriate for that. But it’s these interactions like you mentioned. I feel like business really happens, this stuff really happens not in the office. Like you said, you’re in the hallway. You’re walking out. You’re at dinner. And it’s these side conversations, these little things that you pick up on. Like you said, there’s no way you’re going to pick that up in the awkward five-minute pre-chat with Zoom while we’re waiting for Billy to jump on.

– Right, well and what’s interesting, too what I’ve seen too, Danny, and I don’t know if you’ve seen this in some of your conversations. This is something I’m a little nervous about. I feel like sometimes on the flipside people are using Zoom as a crutch now where it’s like, oh, you know what? I’ll be in Atlanta. Let’s—happy to come by. No, no, no, no, let’s just start with a Zoom meeting, or let’s meet on Teams first, and then we’ll figure it out. So I think that’s the new muscle that we have to constantly work and harness, which is how do we get, if we’re going to be pushed to a first virtual meeting, how do we make the most out of that to earn the right to get that in-person meeting?

Old-school before all this it was like, hey, I’m in town. Let me stop by. Yeah, okay, sure. Here’s my address; come by. Sit in my office. Maybe I’m not paying attention, but at least I’m forced to some degree to be there physically. Now I’ve seen this where people are like, let’s do a Zoom meeting first. I think that’s something that, as a vendor selling or anybody selling we have to keep that in mind, that our customer might use that as a crutch. That’s okay. Let’s figure out how to again maximize that opportunity with the goal intent of the next meeting and hopefully drive it to in-personal-type things. But that’s interesting. I’ve seen that coming out of the heavy part of the pandemic where we’re like, we’d be happy to come down, or we’ll be down wherever on this date. No, let’s just do a Teams meeting first. And it’s like—

– It makes sense. I could see a couple of reasons for that, and maybe you got some insights on this as well, too, I’m sure. I could see that maybe, are they working from home, and it’s like, that’s going to require me to go into the office? I don’t necessarily want to do that. The other piece that I’m seeing is, especially I would think in your space, that there’s a lot of other, a lot of competition out there. And they are probably being hammered from multiple areas, so it’s like, before I really want to commit time, I really want to make sure this is worth it because I don’t want to go—

– With 17 meetings for, yeah. You’re absolutely right.

– And I think that’s, on the marketing side and the sales side, we’ve seen a massive uptick in terms of ad spend, email campaigns. You were mentioning webinars. Everyone’s doing the same thing, and they’re not doing them well. Present company included. We try to really make sure to provide value in our interactions, but sometimes, you know—

– It’s a tough—you get it; we get it on our side. It’s tough. Personally, I know you do the same, we get so much email, personal email, work email. I’m like, why? I will say there’s been one or two that I’ve actually clicked and looked at because I’m like, oh, that’s kind of interesting, just to more learn what they’re doing, not to talk about their service.

– Why have you clicked? What intrigued you?

– There’s one that I clicked because this woman did a great job where she—I forget where, but she sent me a quick video where I was like, oh, that’s interesting. Then she followed up, and I didn’t take this meeting, but she followed up which I thought was good. She was like, happy to send you a $5 Starbucks gift card, get coffee, and you and I can just chat over coffee, virtually. I was like, eh, okay. I’m intrigued. I didn’t take the meeting, but I clicked. I opened up—

– Enough to where you remembered it.

– And I remembered it. I’ve gotten plenty of other ones I remembered for the wrong reasons. It was like, did you get my email? Why aren’t you responding? I’m like, oh, my God. Are we back in high school, and you’re like a jilted ex-girlfriend?

– Can you just circle yes or no?

– It’s like, read the room. If I’m not clicking—but again, I didn’t take her meeting. But I got past stage one. We have this conversation internally a lot. I just had this call recently about this, and again, I feel as if too what we, the challenge we have is with digital technology. It’s too easy to send messages to everybody. It’s too easy to say, oh, let’s craft this fantastic email, and then blast it to 10,000 people. As opposed to saying no, like in the old days where I’m sending a mailer or something. It’s like, well this costs money, so I can’t do 10,000 of these mailings. So let’s get that 10,000 list down to 2,000, and then 2,000 down to 200 and then down to 20 that we really think. Let’s really work it and figure out, Danny likes this, and Guy likes this, and we’re going to craft it. I think we’ve lost some of that discipline because now it’s just so easy to hit send, and we have all these great automations.

– Doesn’t that solve it?

– It solves everything.

– Just like in a facility.

– Absolutely, and I think that’s where we’ve missed out. And the problem is everybody’s doing it, so then we get lost in the sea of everything else.

– Exactly.

– And one of the things I talk to our team all the time about always is old-fashioned stuff. Go to their LinkedIn profile. Read about them. Go to their Twitter profile. I know some of it’s kind of creepy, but figure out—

– It’s not creepy; it’s all public.

– It’s all public.

– I go to people’s houses—oh, no, I’m just playing. That’s creepy.

– As long as you’re on the street, which is a public domain, you’re fine.

– I’ve never done that. I’m just going to say that for the record.

– But I think we as an industry, speaking as marketing folks, as an industry too I think we need to go back to—again, use all of the tools that are at our disposal, but go back to the old-fashioned way of, all right, get your list; work it. Figure out what makes people tick. And it’s not one-size-fits-all.

– Exactly.

– Danny might like emails. Guy might like snail mail. Figure that out as opposed to just saying let’s just click the button. Let’s canvass everybody. I’ll give you a story. When I worked at a company called Progress Software, we actually had a campaign that was really interesting. We had a lot of hospitality businesses: airlines, hotels, cruise ships. And we came up with this really targeted campaign where we, snail mail, got out and printed out on very high-gauge paper, looked like a menu you would get at a high-end restaurant, nicely printed, nice font and everything. And it was basically just a, here’s who we are. Here are some of the things that we can do, like a menu. Like if you need this, we’ve got these three things. For your entrée, it’s this. And we sent it out with, I forget the verbiage. We got a pretty good conversion on that. Why, because A, it was real mail. It was a nice envelope, heavy gauge, hand-written type stuff. And it wasn’t to 10,000 people. This was a very curated list, but the beauty of it was people got attention, and it was like, this is different. Let me go to the website and see.

We did the same thing when I was at Infor which was, I thought was really cool as well. Same thing, we curated the list. There were 20 people in North America we wanted to go after. We were going after the French-speaking market, 10 in the French-speaking market. They literally brought myself in and Kurt who was our founder. And we said, alright, you’re going to read a 20-minute blurb for each one, but with their name at the beginning. So it’s not read a blurb and then we’re going to insert the name later. No, no, you read it each time. And it takes time, but you know what? On our side I remember, so they had me come in and do the French one. We sent out 10; we got one that got put in the pipe.

– Hey, that’s great.

– That’s fantastic. We used a digital tool, but we personalized it. And we did our homework beforehand to figure out this list we need to curate down to a size that makes the most sense. And I think that’s a lesson we at times forget is that we buy these lists. We say oh, yeah, there’s—

– Blast them.

– Yeah, 6000 people in North America that want supply chain solutions. Great, let’s blast them. And we do the usual problem with 6000, if we get 1% conversion, then that’s this many, and then of that it—oh, great, we’re going to make two million bucks out of this. It’s not—just put a spreadsheet and run the numbers like that. So I think we as a market, from a marketing perspective, I think we need to go back again to old-school of do your research, understand what people are looking for, just like we as consumers. Understand what makes us tick, and then go out, reach in. To your questions to start this is, we’ve got to learn or leverage the muscles we developed during Covid and relearn the ones that we forgot. And then figure out what the mix is moving forward because I think it’s exciting because we’ve learned these new techniques. It’s also daunting because we’ve forgotten some of them. And what I fear sometimes is that the pendulum swings too much. Oh, let’s do everything digital. Eh, I don’t know.

– Right, right, totally makes sense. Love it. This is great. Personalization has always been a huge—I’ve just loved it. And there is some great technology out there now where you can still automate it a little bit, but you can still personalize it a little bit more. Great example. I absolutely love that. You’re seeing these a lot in account-based marketing campaigns, ABM, targeting, just being really targeted. Instead of 2000 people, we’re going to focus on these 20 and go real deep and provide real value. I love it. Thanks for sharing that, by the way. That was great. I’m going to check our time here. You’ve got a plane to catch. I want to make sure—oh, we’re doing real good. I’m going to ask you one last question. And this only going to go 45 minutes. No, I’m just playing.

– The question or the answer?

– Both. No, if you had a magic wand that you could change anything in the industry, what would that be?

– I think for me the magic wand is, and this is for B2B or B2C is, and going back to our iceberg analogy, the magic wand is to have the consumer, and I don’t just mean us as consumers of retail, but consumers of any good or product is to reset or to create more reasonable expectations around fulfillment and things of that nature. Now I’m not saying that we should accept subpar service or we should accept bad fulfillment. I’m not saying that at all. What I’m saying is, the magic wand would be to make us more aware of what is it that it takes to get a product, this mug, from design to sourcing to manufacturing to shipping to storing to getting here to getting to this table. What is that journey, and the complexities of it that go into it so that if Danny orders 10 of these and they’re supposed to come next week, but they come two weeks later, you don’t flip out. Now, again, I’m not saying you accept poor service. But understand why, and that magic wand is not only the expectation, but also from the supply chain to be as open as we can be to our end customer so that they can have better expectations as well.

That’s the magic wand I want because I feel as if supply chain at some level, which we’ve all played the beer game. I don’t mean the one, how many shots can you do? But the old beer game of operations. We’ve all realized, when we play that game at times, that supply chain sometimes is just this cloud of mystery. So you said you wanted 10 cases, but I really think you want 12, so I’m going to manufacture 15 because I want some safety stock. And then I’m going to tell my supplier, but my supplier knows that I always lie to her, so she’s actually going to under—think about it. It’s all expectations that are shrouded in mystery and that we are trying to game the system. I know we talk about digital and all this. Yes, that adds a level of transparency, but there’s still that underlying notion of, do I really trust you? Am I going to hedge? And I think the magic wand is to continue to have better discussions but more importantly is the customer’s expectations to be more in line with the reality.

And we even touched upon this, but part of it too, and I think we’re going to see more of it, is around things like sustainability. Oh, you really want that product? Well I’m going to have to put it—and you ordered five items in your shopping cart, but you really want that one, so I have to expedite it. So instead of doing a full truckload, I’m going to send you one little item in a corrugated box, and I have to air ship it, and this, and this, and this. Do you really need it then? Can you set your expectation—maybe you do, in which case fine. But you need to understand the repercussions. You need to understand the cost. I think that magic wand is to open our eyes as consumers into what expectations should be and can be. And it’s to open the eyes or to encourage the supply chain to be more forthcoming with us as consumers so that we understand. My mom understands, why is there no toilet paper on the store shelf? My friend understands, why is there no yeast at the store? Now, he will probably still yell at me about it because he thinks I control the supply chain.

– You do, don’t you?

– Well yeah, but let’s not let that out too much. But that would be my magic wand. And again, I don’t want to make it sound like it’s kumbaya stuff because I do think if we had that better expectation, then we could manage in such a way that makes things—it might actually make things more efficient. It might actually make things better in the long run because—my little rant, I’m going to go on it for a quick second here is the notion of we need something in two days or two hours is an artificial need. Do you really need something? In some industries, yes. Healthcare for example, if somebody’s going into surgery and we need blood, there’s a time sensitivity to it.

– They get a pass.

– They get a pass. Certain things, yes, there is more time sensitivity. But honestly, if I order my kid a Christmas present and I ordered it late, that’s my fault. That’s on me. But does my kid really need something on this specific date? Probably not. They could probably wait a day or two or three or a week. Now again, I’m not saying we completely relax expectations and say, oh, if you told me it was going to be here next Thursday and it comes in three months, that’s okay too. No, let’s not go that far. But I think again, this preconceived notion that, well I need everything in two hours. Really? No, you don’t. So I think the expectation level, if we start understanding more about that, I believe that some of us—not all—will then understand better. Okay, yeah, I could wait. I can wait until you assemble all the items I ordered into one box. I can wait until your truck is full, and you can expedite it to me. I can wait until oh, your truck is going to fulfill that item at the store, and I can just go to the store and pick it up. Because now what’s it going to do? It’s going to save one extra truck coming to my house. It’s going to save a corrugated box. It’s going to let me go to the store and pick it up.

So I do believe that if we have some of those changes, it actually might make the whole system better, more efficient because again, we as consumers will have more sensitivity to the intricacies of it and the suppliers or the folks in the supply chain will be able to offer us more ways of fulfillment that we otherwise now are just saying, no, no, no, it’s got to be here in two days. Eh, really? So I think that my magic wand is understanding from both sides. Visibility, understanding, expectation-setting which I think only can happen as we get more visibility, more trust, more understanding of what’s happening within the system because otherwise we’re back to the beer game. Yeah, I don’t really know if you are going to get me the stuff I need, so I’m going to hedge. And they– you’re going to hedge, and then your supplier’s going to hedge. The next thing you know, we got a bloated supply chain. That’s my magic wand.

– I love it. No, it’s great, and it’s interesting. That is very interesting, and I think you’re 100% right. It goes to expectations. There is an expectation, but there’s one company that I think has created that expectation. Which is—I mean, look. I remember as a kid, getting packages was like Christmas. It was amazing. You’d have to wait freaking forever. If you ordered something, if you actually ordered something. Yeah, and then it would come in, and you’d be like, this is amazing. My kids are like, “Oh, another box.”

– “You going to open it?” “Eh, I’ll open it tomorrow.”

– Oh, yeah, you know, it’s some more stuff.

– It’s awful, but it’s true. We live in a condo. We have a door person, and it’s great because they’ll get our packages. There’s not a day that goes by that, oh, you got a package which we’ve grown accustomed to. But again, it’s like, do I need this right away? No, I could probably have waited. This is that same company that’s driven that mentality. I look at them and say, guys, you’ve also messed up in a way because you started to creep a little bit into giving us more flexibility of, I’ll wait because then you’ll put all this stuff—now they’ve backed off on that. But also, the other day I ordered—super sexy order. I ordered a shower door sweep.

– Oh, tell me more.

– Oh yeah, it’s fantastic. It’s a little piece of plastic. It’s about this big; it’s about that wide. You would think the packaging would be small. No, big box. I was like, what is this? Really? You’re wasting all that corrugated. It’s not efficient in your truck because now you’re loading a pallet with all this stuff, all because you’ve got to get it—no, the system, from that point of view, that one company, you can do better. Do better.

– Yeah, that is interesting. And I do know some of the incentives, and to be honest with you I haven’t shopped on there recently—or bought. We talked about the difference between buying and shopping which makes a lot of sense. But I do remember digital credits and stuff you get. Hey look, if you don’t need this thing now, that worked for me. I could see different things. It makes sense. It makes a lot of sense. What could we do to pull some of the pressure off? It also goes into, I feel like, just our society as a whole. From an ecomm perspective and the expectation of two hours or two days or what have you. What about fast food? It’s a cultural and societal thing, and it’s, “I have a need or a problem or a pain, and I want it solved as quickly as possible.”

– We could write a PhD thesis on this.

– Now we’re getting into psychology.

– And you’re absolutely right. I’m an old fuddy duddy, so I’m like, ah, get off my lawn type stuff. But part of that too, I think it’s the expectation being set at that level from a standpoint—on the flip side when I look at things from the retail space, some of the brands I love like Bonobos, like Indochino, if you go to Bonobos when they first started—less so now, but they still have this model where it’s a showroom. You walk in; you go look at a shirt. You look at fabric. You look at this sports coat. You’re going to see what it looks like, see some colors. But then I’m going to ship it to you. Yes, I’m still shipping it to you, but the expectation is such that I can wait for it to come.

– Because otherwise you would want it, get it, and I’m going to walk away with it.

– I’m in the store, yeah. I went to Indochino, and they were purely digitally native. You would measure yourself. They gave you all kinds of ways to measure. You would send the measurements in, and then you, online, you would pick your suit, your patterns, and all this. They’d send it off. It went to China. They manufactured and sent it to you, and it was much cheaper than if you went to Savile Row in England. Funny story; one day I’ll show you pictures of when I first did this. My measurements, obviously, were off because I looked like I was wearing fat guy in a little suit type stuff. But anyways, I digress.

Indochino’s done a great job of now putting in physical stores. Not stores, but basically tailors in malls. And I went to one recently in Las Vegas, and it was a great experience. I didn’t leave with anything. Why, because they’re going to ship it to me. To your point, Danny, I think that yes, culturally, psychologically, we’ve come to this instant everything mentality. But what’s interesting, there’s still some slivers where people are willing to say, you know what? Okay, we’ll wait for this. If I look at high-end luxury items, there’s still an experience, and there’s still a rarity involved with it. I was recently in Paris, before Omicron hit again, so last fall. I went to Maison Goyard, very high-end store. I was buying my girlfriend a present. And again, there was a scarcity. They don’t do any ecommerce. I can’t just go online and go click, click, click, and it’s shipped to me. You have to make the investment, literally both monetarily and physically, to go and stand in line and get in the store, but then it’s part of the experience.

Now again, back to the earlier conversation around marketing, it’s not one-size-fits-all. If I’m buying something, I don’t want that. If I’m shopping, I’m okay with that. I want that, and I don’t need the instantaneous satisfaction. If I’m buying because I need a roll of toilet paper, I want to go and get it. We have to also, from that standpoint, see those expectations. And I think again, back to the magic wand, I think if we started to get more clarity as consumers around both of those activities and what goes behind it, then the players in the supply chain can then tell us or give us more options that are more viable as opposed to just, I need it in two days.

– Right. Yeah, makes a lot of sense. I like the magic wand answer. It was good. Thank you. So Guy, listen. I’ve thoroughly enjoyed our conversation. I’ve thoroughly enjoyed having you in the flesh.

– Hey, thanks for having me in the flesh again. You know I love coming here, so really appreciate you taking the time and having me onstage, in-person.

– Well this has been awesome, and we’re going to do it again.

– Absolutely.

– And we were talking about, maybe we’ll change the set, and we’ll have some bourbons.

– Have some bourbons, some cigars. Read some Chaucer while we’re at it.

– That sounds like a win to me. Alright so, well thanks again for coming on.

– Absolutely.

– I’m going to wrap up today’s episode. This was awesome. I loved it. Listen, if you want to learn more about Tecsys, you can go to the website. It’s T-E-C-S-Y-S dot com. And if I misspelled it, it doesn’t matter because we have a link in the website in the video and on the post right there. But thank you so much for watching this episode. This was awesome, and again, I really enjoyed, always enjoy having Guy come on and sharing his expertise and insights and conversations, always been a joy. So you can check him out. He’s pretty active on LinkedIn. You can find him there.

That’s all I’ve got for you today. Thank you so much for watching. Listen, if you’re not subscribed I implore you to go, if you’re not on the website right now, IndustrialSage.com, and you can subscribe because you’re missing out on great content like this, conversations with leaders in the industry to understand different perspectives and what’s working for them, how they’re seeing what things are going on. Maybe you’re in the same industry; maybe you’re not. A lot of learnings there, so a lot of great content you’re missing out if you’re not subscribed. So that’s all I’ve got for you today. Thank you so much for watching or listening if you’re on the podcast. I’ll be back next week with another episode on IndustrialSage.

Thanks for reading. Don’t forget to subscribe to our weekly newsletter to get every new episode, blog article, and content offer sent directly to your inbox. You can also subscribe wherever you download podcasts so you can listen on the go!

– Well hello and welcome to today’s IndustrialSage Executive Series interview. I am joined by Marin Tchakarov who is the CEO of Kindred, Powered by Ocado. Marin, thank you so much for joining me again on the IndustrialSage Executive Series.

– Pleasure to be here, Danny. It’s been a while. Good to be back.

– It has been a while. A lot has happened since then. Maybe for those who didn’t watch the first episode when you were on—and if they haven’t, they need to go listen or watch it right now—but for those who aren’t familiar with Kindred, tell me a little bit about who you guys are and what you do.

– Sure, we’re a smart robotics company in the ecommerce fulfillment vertical space. We were founded in 2014 by a collection of brilliant artificial intelligence and machine learning engineers and scientists. Fast forward to 2017. We productized what today is known as SORT which is a smart robot solution that automates a manual sortation station, or as they are called, “put walls” in ecomm fulfillment centers across the country. And so the essence of what we do is, we utilize artificial intelligence that powers machine vision to singulate—that is machine-vision speak for seeing—an item set, the items within it distinct and separate from one another. And then we have a patented AutoGrasp technology that identifies where we will pick a particular item to then effect a successful scan and stow. We essentially automate via smart robotics-type, machine vision-type solution, manual put walls in ecomm fulfillment centers.

– Excellent. Well there’s no, I’m sure, lack of challenges or opportunities in the industry right there, specifically as we look at ecomm and what has happened over the last several months. Really another big thing happened and a big change since when we had spoken last. I think it was probably, I think it was February, March, or April of 2020. I’m totally forgetting the time.

– Perhaps a little bit later than that. I want to say July or so, but yeah, sometime in 2020.

– It was definitely—it wasn’t BC, before Covid, it was after.

– That’s right.

– Certainly there are some things that have happened since then. There was an acquisition that happened. Tell us about that.

– Yeah, extremely exciting. We closed the acquisition by Ocado Group in December of last year, of 2020. An extremely exciting endeavor for the company in ways that it affords us the ability to accelerate our product development, our initiatives. And so we were very much on path to do ambitious things prior to the acquisition, but many of those would have been serial in nature. They would have been sequential. We would have chosen one or two to do at the same time, if that, and then sequence them out in our future. Now, with the backing of the powerhouse that Ocado Group is, we can focus on a few things at a time. We have four key focal areas for Kindred in front of us. In no particular order, one is to invest in our technology stack to improve our capabilities, to enhance our capabilities to handle a variety of items. In other words, to enhance and expand our item set capabilities. It’s extremely exciting.

Another one that’s adjacent to that is we are also focused at the same time on expanding into different market segments and verticals that many of our existing and new customers would find extremely appealing. A third one is a very natural one, which the acquisition is a multinational conglomerate now is to look at expanding across the globe, so looking at different geographies. That would’ve been something that we wouldn’t have looked at for years to come on a standalone basis as a startup, as a small smart robotics startup in the space. But today we’re very much actively looking at geographic expansion across the globe.

And last but not least, with the growth that we’ve been experiencing which I think I should probably note has been, we’ve been on a 200-plus% CAGR since inception. We’ve more than doubled every year since inception. We’re tremendously happy and proud of our growth metrics, and so with that growth comes the challenges of scale. And so the fourth aspect, at the same time, as I said, is to build an organization of customer success, account management, and just excellence in customer and client service that is data-driven, that is augmentative in helping our customers in their pride for effectiveness and efficiency in their fulfillment centers.

– Well that’s fantastic. Congratulations, first of all, on that. That sounds amazing. One quick question that I have on that: Was that in the cards, would you say, before Covid? Was that a result of Covid? Was it completely, had nothing to do with it whatsoever?

– No, it had, I would say—nothing to do with it is the short and simple answer. I think the expanded answer is that I am, again, proud of the organization and the brilliance of our team. To share is… We had an extremely successful few years behind us. We’ve been in commercial operations for the last four years, so that’s not a lot in established industries and businesses, but it’s an eternity in the vertical and the nascent space in which we operate as a smart robotics company. And we’ve been crushing it for the last four years doing so. I think 2020 was just yet another year going back in time, pre-acquisition, I guess during Covid. 2020 was an incredibly successful year for Kindred in the face of adversity with respect to Covid and the pandemic and lockdowns and all of that. When many businesses were battening down the hatches and trying to control costs, we adopted an extremely aggressive stance towards the market. We saw an opportunity to really double-down on our technology, our expertise, and customer growth respectively, and we delivered. And so we posted some tremendous growth numbers in 2020, and when that happens, the world notices.

– Yes, they do.

– That’s just, I think, the story. There was nothing contemplative or really as a direct correlation with the pandemic itself. Many of these trends in our persistence and progress have been—that was in existence pre-Covid.

– That makes sense, and I was just curious about that. It’s such a fascinating space, obviously with all the digital transformation and the technology shift that’s happening. Obviously Covid kind of threw gasoline on the fire. Now you’re looking at current challenges right now relative to—you’ve certainly got the supply chain issues, but you also have labor being a very big one, specifically when we’re talking about robotics and smart robotics. As I understand it, the Ocado Group is a very, pretty focused online grocery. When it comes to some of these ecomm solutions, I was hearing stats that in 2020 that ecomm grew by 40% over that year alone, so it put a tremendous stress on micro-fulfillment being a big thing, to… just in general with that. Do you see those challenges continuing on in the foreseeable future?

– Absolutely. Covid’s been—one thing is for certain, to give a nod to and an acknowledgement is that Covid’s been now with the hindsight of what, almost 18 months, 15 months, whatever, something like that, and us living with it, things are clearing up in terms of what a force it has been, and it’s been a massive catalyst in a number of venues. One of those is the shift from traditional brick-and-mortar onto ecommerce. Again, the pandemic’s been a massive accelerant and a catalyst to that shift. That is one aspect that we certainly think and, from what we’ve seen so far and where we are today, we think that’s going to persist into the future as that trend is here to stay. Another one is the trend that we’ve seen pre-Covid which is to do with what many folks call today labor shortages. I’d like to think of as labor inflation, if you will, outpacing general inflation in some ways or other. That trend had been in existence, has been in existence pre-Covid. Again, that’s one thing that got boosted and accelerated, and aspects thereof. Social distancing and health and safety aspects in the workplace are certainly getting a boost from that recent history of ours.

– Yeah, it’s interesting. I was reading a stat from, I guess recently, the conference that A3 put on. It was in Memphis. This was a couple weeks ago, on robotics. And there was a particular stat that came out saying, and I can’t remember the specific timeframe, but I didn’t think it was super long, like five years or so where because of the rapid growth with ecomm—and again, this was happening before Covid, but it just pushed it into more—is that just with the shifting, particularly when we’re looking at micro-fulfillment, that there’s a projection that there’s not enough people really to fulfill the jobs, that that is going to be created, that shift that is being created. Therefore when you start looking at these questions that people will pose when it comes to AI, when it comes to robotics is it, hey, is this taking people’s jobs? When you look at some of this data that’s coming, are you saying, well, there’s going to be a giant gap if we keep going down this road, which it kind of seems like we are. That’s interesting. What are your thoughts on that?

– Yeah, I think by and large I share your sentiments and analysis of that. And the summary that you put forth is fairly accurate from what we observe in our environment. I would add that we focus on introducing a new way of collaboration between human and machine. I think the way that I would want folks to think about this and the way we certainly think about it in introducing our smart robotic solutions into ecommerce fulfillment centers across the country is a new way for humans to collaborate with smart robots or these types of new industry 4.0 machines at wide, and in general.

We therefore make while having the same human at fulfilling basically the same set of responsibilities. We add on a supervisory aspect to their job. In other words, they now are in charge of, typically, three to four robots. It’s important to note for the audience that one human can basically supervise up to four, sometimes even more, robots at a time. Then therefore that triples, quadruples, or more the output in terms of throughput and in terms of therefore efficiency into those operations. And at the same time, that collaboration is, dare we say, more fun. We have many instances in our customer sites where folks supervising robots have friendly competitions. They assign human characteristics and aspects to their fleet, to their mini-fleet of robots that they supervise. They call them names. They name them. They run stats against each other in teams. And so I think it’s a very new, 21st century way of collaborating with machines in a much more involved way than ever before. That’s how we like to think of what we bring in.

– Absolutely. That definitely makes a lot of sense, and I love hearing about that interaction, co-bots, interacting, really assisting people in their jobs. It’s funny; you mentioned that it can be a lot more fun because the reality of it is a lot of these solutions where you’ve got super repetitive tasks from an ergonomic standpoint to safety issues, you’ve got issues. This helps to be able to really solve with that. I think it’s just some great solutions. We’re going to continue to see more innovation that’s coming out that’s going to, I think it’s really going to help solve a lot of these challenges. As we are starting to emerge, hopefully, from Covid and the pandemic, as we settle into the new normal, whatever that is, obviously we have some short-term challenges. Long-term, what are you seeing that is going to, I would say maybe challenges and opportunities. What is here to stay in the long term?

– Yeah, in my view, and again having observed those trends over the last, especially with the catalyst in place and in the face of the pandemic, the trends that are here to stay are the continual shift from brick-and-mortar onto ecommerce. It’s difficult to say where that “equilibrium” would be, but I don’t think we’re there yet. From what we’ve observed, I think that would be something that would continue to trend, perhaps in a more accelerated fashion in our near to mid-term. It’s interesting to put that in perspective because from the advent of 3.0 and the internet and commerce and the internet two decades ago now in the early 2000s, ecomm had only grown pre-Covid, had only grown to teens. Teens, high teens perhaps, depending upon which survey you look at and in terms of overall volume. Teens would probably, in some surveys, be generous with respect to total commerce. Like you pointed out, just in the last year plus, we’ve seen a massive spike in that shift.

And so I think that’s put that shift on a different trajectory and a different vector, and so we think that that’s going to continue. Another aspect that’s going to continue is the desire to automate with respect to addressing issues to do with efficiency and overall effectiveness, therefore, of fulfillment centers. Certain players in the industry set the beat, and consumers like it and follow it. And so we all like to get our goods in 24 hours, 48 hours perhaps, and so it’s a constant race to those KPIs and how do different… How do all the folks in the space get as close as possible to those standards? And so effectiveness and efficiency are paramount. Last but not least, probably social distancing would be with us for some time, dare we say for a long time.

– Sure, yeah, absolutely. It all makes a lot of sense. I was talking with my wife about this, actually, with the changing. What I think was interesting, and I guess maybe this is—I never thought about it this way. What’s interesting is that when you go to… typically in grocery… Ocado is, that’s a big focus there. We essentially are, you go to shop, you are the pickers. You are literally picking the product in a distribution facility. Now that’s all shifting, and people have—it’s interesting to see how the consumer trends are where—even now I was hearing of people, just anecdotally, my wife was talking to one of her friends. She was like, I don’t understand—I never did an Instacart or any of these things until recently, and oh my gosh, this was mind blowing. I’m never going to go back to the grocery store. I’m going to do things this way, or I’m going to get my groceries from Amazon or what have you.

I thought it was kind of interesting that—and maybe this is just my perception. I thought well, I thought everybody was doing this. Is this not—but obviously we’re still kind of—and not everyone has necessarily adopted it. It’s interesting when you look at the different experiences, and I’m curious. In the future, if you pull out a crystal ball, do you think that shoppers—and again, I’m not going to hold you to this—but do you think that it’s going to be 100% online where nobody’s going into stores anymore? Where do you think it gets to, and then it says okay, it’s going to kind of settle?

– It’s a great question, and I wish I had that crystal ball, Danny.

– We all do, right?

– I would say there is an equilibrium. I don’t think that everything migrates over a period of time 100% to online activity. There is an equilibrium there. We still want to corroborate certain aspects of things that we acquire in our lives, whether it’s as basic as groceries or in apparel or bigger ticket items like appliances and cars and whatnot. In any case, what we ultimately want is a way to corroborate certain aspects of our behavior. That corroborative desire, I think, is with us and will persist. The question is what the equilibrium is. And also the question is in a way of perception, I believe what we determine is somewhat generic or has evolved to somewhat generic in the need for the corroboration.

In other words, a common basket of goods and/or services perhaps are going to see a faster migration to online shopping from brick-and-mortar than some of the other pricier/more seldom acquired type of goods and services. Perhaps the shorter answer to this question is that there’s an equilibrium somewhere. I just don’t think that we’ve necessarily reached it yet. I think there’s some growth, probably meaningful growth left for that journey from traditional in-store to brick-and-mortar. It’s interesting because a lot of the brick-and-mortar experiences are also evolving where there is the hybrid model now of checking it out online buying it online and wanting to go see it and pick it up in-store and maybe do more shopping while you’re there and you’re picking up the items that you definitely needed to buy which you did online. So there’s an interesting hybrid evolving between the two, which is fascinating.

– Absolutely, absolutely. And again, trends we were seeing beforehand, but now obviously even more. I remember going into an REI and looking at a bike on my phone, and then later—this was years ago—and ended up getting retargeted for that specific product. I’m like, wow, they’re using my GPS, and they’re retargeting. They knew the exact product that I was looking at. Crazy stuff, but we’re seeing, to your point, some of that hybrid, and we’re going to continue to see more. I think it’s fascinating stuff. I think you have a big challenge. Where are the trends going? Now let’s adjust here in the micro-fulfillment. Are we going to be on-premise, or is it going to be more distribution facilities? Is it all of the above?

– I would just add, if I may, that yes, it’s a challenge, but it’s an incredibly exciting and fun one to have in front of us. We’ve been extremely fortunate to have focused on ecomm fulfillment all along, from the inception of our commercial products, thereafter. That’s been an incredibly fortunate aspect. But on the other hand we chose it strategically, so there’s also that. I think the exciting part here is that we’ve been a witness, and a participating one at that, of this migration from brick-and-mortar to ecomm, and we’ve been with our customers every step of the way helping them realize that growth in their online businesses and efficiencies thereof as well, so that’s been incredibly exciting to see not only obviously to talk about our growth, but our growth really translates into our customers’ growth, or the other way around. Really I should say our customers’ growth translated into ours, and so that’s been incredibly exciting to see.

– I think we just tapped into a little bit of passion there. I think you got a little excited there. That’s great. I love that, and I love having conversations with leaders of different organizations because you can sometimes pinpoint and see where, and obviously I feel like we hit something there. It’s a thrill. It sounds like you really like solving these— I would say instead of looking at them as challenges, here are the opportunities. How can we solve them?

– You’re spot-on. I’m glad that it came through. It is a passion. I am passionate about—I get extremely passionate and excited about helping our customers grow. We… one of our key values is to constantly obsess about customer experiences and how to solve pain points for our customers. This is critical.

– All good, it’s all good. I think that’s super exciting. I get super passionate about it as well. I just love solving these problems. There’s nothing better than when you see a challenge or an opportunity, and you can go help your customer to be able to go and do that and get those results for them. That’s super exciting. That’s just—I love it, especially with—I think what you guys are doing is awesome. I don’t have an engineering bone in me, so I can’t do that. Machine learning and AI and robotics and all that stuff, I love. I have deep appreciation for it, but yeah, you don’t want me on that team. My last question is really targeted more for you. And that is, as the leader of your organization, what are you doing to stay on top of your game?

– More communication. I think it’s been incredibly challenging of a time for everyone the last, let’s call it 15 months. One of the things that I’ve done to try and stay on top of my game as a leader is to therefore accent on different venues of communication, different ways to bring the team together to share information as timely as possible. We live in a very asynchronous, in that way, world today as most of the workforce is remote or a few folks going in and out of offices. Effective, timely communication is paramount, so what I’ve done is instituted different, more frequent check-ins and different types of check-ins with the entire team, whether it’s the executive team, whether it’s the broader team. For example, we have an every Friday all-hands, for 15 minutes standing. If we don’t need to talk for 15 minutes and share experiences from the preceding week we call it short. But there’s always a forum to share what happened during the week, highlights, lowlights, no bias, same light, and open up to Q and A. It’s just an example of one thing that we do that we hadn’t done previous to the pandemic. I try to over-index on communication and timeliness and transparency.

– That’s great, super important, especially now when, like you mentioned, things have changed. Things are changing very quickly and rapidly. Where are we? That’s super important. Marin, I really appreciate your insights. I really appreciate your time that you’ve spent with me here and our audience over at IndustrialSage. For those who would like to check more out about you guys, they can go to kindred.ai; that’s correct?

– That’s correct.

– Alright, perfect. I wish you continued success. It’s been fun following you guys for the last little bit. I really enjoyed our conversation. I will echo, for those who are watching or listening here to go listen to that first episode. We really dove more into Marin. You’ve got such an incredible story from how you immigrated over. I was just relooking some of the notes on how you had to jump in full—I think you said you were doing a PhD course, and you said every third word, you’d have to go in the dictionary to look. What are they saying here?

– No PhD, no, it was my psych 101 in college. It took me three hours to read 20 pages, yeah.

– Okay, that’s what it was. A little fuzzy on that, but—

– No worries.

– Still, I have such a deep appreciation for that, and I think we talked about that. My family has somewhat similar experiences, not maybe to the level that you guys have. I think you have a fascinating story, and we’ll continue to—

– Thank you. I’d also like to use the opportunity to give a shout-out to the team and the company. Yes, I’m very proud of my story. It’s my story. Yes, it’s wonderful. But I would say our team is beyond brilliant, and I am so proud of what we’ve accomplished with this team. We would’ve never gotten to where we are without our team at large. I just want to use the opportunity to say a big thank you to Kindred, our entire team, for working so hard and being as brilliant as you all are. Thank you from the bottom of my heart.

– That is awesome, and obviously what a great, passionate leader. It’s all about the teams, right?

– Yeah.

– Well I’m excited to continue to follow you guys, see what you guys do, all the solutions you come up with. It sounds like the future is very bright.

– Thank you. Thank you for having me. Appreciate your time.

– We’ll do it again. We’ll do a follow-up here in another year or two, so we’ll see you.

– Great, looking forward to it.

– Awesome. Well thanks so much. Alright, well that wraps up today’s IndustrialSage Executive Series interview with Marin Tchakarov. He is from Kindred Solutions, Powered by Ocado. I think I didn’t say that at the beginning, so if you are watching this, Powered by Ocado.

That’s all I’ve got for you today. Thank you so much for watching or listening. Listen, if you are not subscribed, I highly recommend you get on the email list. Why? Because you’re missing out on great content like this to hear from great leaders like Marin who was talking about how his team is awesome and how they’ve helped to solve these challenges and how they are continuing to grow. They’ve got a really, really great story. Get on the list so you can continue to learn from your peers, and you can just get a pulse of what’s going on in the industry. That’s all I’ve got for you today. Thank you so much for watching. I’ll be back next week with another episode on IndustrialSage.

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– Hello and welcome to today’s IndustrialSage Executive Series. I am joined by Patrick Moorhead who is the chief marketing officer at Pricefx. Patrick, thank you so much for joining me again. This is a second—this is a follow-up interview from before, so thank you for joining me again.

– Thank you. It’s my pleasure to be here. I’m glad to be here again.

– Well I’m excited to jump into this because a lot has changed, like a lot a lot, not just Covid and all that good stuff. A lot has changed for you, and I’d love to hear that. But before we completely jump into this episode, for those who aren’t familiar with Pricefx, just tell us, who are you guys? What do you guys do?

– Yeah, we are a cloud-native, SaaS pricing optimization and management platform. We sell to billion-dollar-plus-a-year enterprises as a B2B service. We are designed to drive profitable growth and efficiency within those large organizations by helping them better understand their transaction and customer data in the context of how they price their products helping them then implement those insights into flexible price management strategies that are executed within the software with a high degree of speed, accuracy, and flexibility and ultimately deliver the gains that you can get off of that into their distributed global sales organizations through profitability solutions like CPQ, like rebate management, channel management, et cetera, et cetera.

We’ve built what we believe is the leading SaaS pricing platform. We are one of the only companies that is a pure SaaS cloud offering. A lot of pricing software providers offer hybrid solutions that, at some level, require customers to install hardware in their facility that require custom coded, hard coded software solutions. Ours is completely configurable and 100% delivered online which makes it very flexible and speedy. And apparently the industry likes that because our growth has been significant. In fact, our growth has ranged from 70 to 80% year over year for three years running, even through Covid.

– Wow, that’s fantastic. It sounds like there’s a win. As a follow-up to that real quick before we’ll jump into a little bit more stuff here, but from a very basic, fundamental level, how does that work? Let’s say from a manufacturing standpoint. Is it plugging into, like taking ERP data and customer data and looking at trends and whatnot?

– Yes, yes, that’s exactly right. Another way to think about Pricefx is it’s sort of a middle-office management layer. We’re able to ingest a significant amount and variety of data, so we can ingest and do ingest ERP data. We ingest CRM data. We can ingest data from financial services systems. For some customers we ingest data from web scraping services. In the case of one customer in Europe we even ingest and interface weather data as relates to their lift ticket business. So we’re very data-omnivorous, and then we’re able to transform that data by pooling it into data marts or lakes as the industry would call them to generate insights that then can lead into centralized, flexible price management. You’d be surprised to find out that in our estimation somewhere between 30 and 50% of enterprises above a billion in revenue manage their pricing via spreadsheets. That is obviously not the intention of spreadsheets, and it creates very difficult and complex pricing adjustment and pricing management situations inside those large organizations.

So Pricefx is really designed to sit in the middle of ERP and sales as an ingestion point, but then also deliver prices that are optimized around willingness to pay or cost of goods sold against inflation or index pricing on commodities. There’s a whole range of strategies that can be deployed into the software that give the business the control to understand how to take price adjustment or how to offer promotions to customers without compromising their profitability and margin and then be able to deliver those into the hands of the ground force sales and customer relationship managers in a way that gives them autonomy to action that centralized insight without, again, compromising visibility and transparency into how deals go to customers and ultimately creating win-win situations for sales in the market of keeping customers happy but also maintaining profitability for the organization as a whole.

– Obviously this isn’t exclusive to consumer products from a B2C verse. There’s a real strong play here, B2B if you’re dealing with distributors.

– That’s right. We’re primarily a B2B sales organization. Some of our customers are B2C, and so we work in sort of a B2B2C way in the retail genre or in the case of ticket sales, for example, and customers like that. We also have a good portfolio of customers in distribution which is kind of a hybrid world. We increasingly are building a business in and around food and beverage, not so much in the CPG manufacturer area, but more in the supply chain owners or industrial food suppliers.

– The Syscos of the world.

– Yeah, companies like that who, again, anybody that’s managing a highly complex set of products and product pricing on a massive transactional volume where orders are configured in the multiple millions of dollars per order where you have customer relationships where there’s an ongoing cycle of new ordering but rebate conditions that need to be accounted for, existing inventory at the customer, and those are highly complex estimations to think about managing in the context of a spreadsheet.

So we bring this full automation to that function inside an organization that helps them trim down the amount of time it takes for them to respond to and generate quotes. It can help them really calibrate pricing on a product portfolio level. It can calibrate around regionality rights, so by country or by continent. They can calibrate different pricing schemas based on the business unit and help business units in really large organizations understand the pricing of their partner business units in the context of one universe of logic. What’s new in that is optimization, and that’s probably one of the big changes for us as, in the time that’s passed since I spoke to you last, is the introduction of a next-gen, world class price optimization that’s powered by artificial intelligence as a core component of our product offering.

– That’s fantastic. It sounds like, I would imagine, you said there was a stat, was it 30 to 50% of companies that were a billion or above, that they’re managing their prices based off of a spreadsheet. I totally can see that. I would imagine that there is a lot of margin that is left on the table that is able to be picked up. Say, hey listen, we didn’t realize it over here, looking across these two different departments or even the same department but across multiple territories or whatnot. And there’s lots of complexities.

– Yeah, there’s a lot of, in B2B still to this day around the world, there is a tremendous amount of pricing decision-making that gets made on the ground by the seller and the relationship manager. Well, I know what they like to buy, or I know how they like to buy it or generally try to keep things the same and keep the relationship stable. A lot of that relationship work tends to involve gut pricing, so the instincts of the salesperson pricing a deal which isn’t necessarily bad, although it can quickly get out of whack when you have an organization that is attempting to manage global profitability or maintain global margin targets, et cetera, et cetera.

The advantage the software brings is efficiency to the business from a centralization point of view with a high degree of flexibility so that price changes and price strategy changes can be modeled, can be experimented with, and ultimately deployed pretty quickly, but then delivering all of that directly into the hands of the field sales organization so that as a customer’s order is being configured, and again with that optimization in place, the seller can actually receive guidance in the order itself that says hey, watch out for this discount, or you could be charging more for this based on this which, for any salesperson finding out that they could reliably probably charge more for something means better commissions, and there’s a lot of opportunity there as well.

– Absolutely. No, it sounds like pretty interesting software. And I can imagine why you were having the kind of experience and the kind of growth rates that you have consistently, year over year. I can only imagine that the pandemic has added to that as it’s another massive variable across the board from spikes in demand to supply chain issues to labor issues to all kinds of things that are affecting price. Where do we give up on margin? How much are we going to absorb versus now we’ve got to pass it on? How have some of these challenges that the pandemic has brought altered your business and your customers?

– Yeah, I think each customer is unique, and there’s no one size fits all. I think we’re still overall in business grappling with what the long-term effects of the pandemic are going to be. In the early innings of the pandemic in 2020, I would say the primary pricing challenge that was brought about was speed of adjustment. It forced into the light the idea that a lot of companies philosophically believed it would become necessary someday to develop a rapid and reflexive or flexible approach to how they price and reprice and adjust pricing for their business, but it wasn’t a high priority. And the pandemic created a black swan event where if you weren’t able to rapidly and flexibly adapt your pricing strategy, you probably felt some pain.

In 2020 I think there was a heavy interest from industry around, okay, I’ve got to find a way to get more flexibility in the way that I manage my pricing so that I can be more adaptive to the world because the world is now changing in ways we hadn’t anticipated, and it’s happening really fast. I think as we’ve gone along in 2021 that is still true, but I think now we’re seeing some of the additional pressures from the knock-on effects of the pandemic. The current one is inflation where you’ve got the long-term butterfly effect of supply chain disruption which is affecting commodity goods pricing. It’s affecting distribution and logistics. And all that is having a real tangible impact on, how do products get priced? Not only products that consumers on the shelf, but business to business products. You could look at the global microchip shortage.

You could look at the bicycle industry as another example. While we don’t have any customers in the bicycle industry yet—maybe I will after your show—the bicycle industry is one that we talk about a lot because there is a very self-contained universe of how the pandemic brought on this massive demand spike where everyone’s stuck at home, and so I’m going to get a bike because I need to go out and exercise that the industry was not ready for, and so inventory went down. Meanwhile the ability of the manufacturing of bikes to supply parts that were necessary at the volume to meet demand wasn’t there. It’s still not there. You saw a similar thing in the auto business. Now it’s not only about hey, can we adjust our pricing and pricing strategy to effectively and rapidly respond to the necessities of the market, but also how do we, on an ongoing basis potentially account for these fluctuations in sectors of the market that we haven’t had to account for before like massive shortages in commodities or in the availability of industrial parts?

– Yeah, absolutely. It’s been incredibly complex, and I don’t know that there are any manufacturers right now that have not been affected by this at all.

– That’s right.

– I’m hearing all kinds of stories, hey, I’ve got all these orders. I don’t have any bodies to actually go—any people to help to go do this or obviously automotive is at a big—I’m just hearing this across the board. GE refrigerators in between supply chain and labor, they normally run three shifts. They can’t do it. They’re down to one and a half.

– Yeah, and you look at the container ship situation that’s going on in the west coast of the United States as another symptom of the same problem. You have manufacturers that are succeeding in building and delivering goods, but then the goods can’t make the last mile because of capacity issues in the supply chain. And so then how do you account for spoilage, slippage, or late delivery? Trying to account for all that stuff via cells and tabs in a spreadsheet, it quickly is obvious that it doesn’t make sense. This isn’t to say that pricing software is going to solve the problems of the world. But I think it has drawn a sharp focus around the idea that pricing and price management, pricing optimization in the context of things like ERP and CRM and how orders get configured and delivered to customers needs to become a critical core competency for large enterprise, because now this potentially is the new normal where you’ve got to have this adaptability to say, “We’ve got to make a different decision about pricing or price management in this region of the world than we do in this region,” or “We need to make a different decision about this tranche of our catalog versus this tranche.” How do you find growth?

That’s just a big question overall, and it’s not as obvious as it used to be. That’s where that AI, optimized-enabled technology that’s able to go and ingest your data and really come back and show you and say, hey, you’re doing tons of promotions over here, but you’re consistently losing money on those promotions because of X, Y, and Z. This customer doesn’t follow your MSRP guidelines, for example. Those kinds of insights are a key to unpacking the solution to those large, systemic problems.

– Yeah, absolutely. Of the things that have changed in the pandemic, you mentioned “new normal,” and as we emerge—well, hopefully we emerge. Who knows? We were talking about it before. Who knows where we are? We’re in; we’re out. But as of three years from now—hopefully that’s a safe assessment— three years from now, what of these changes do you think will remain in place?

– Yeah, we talk about the pricing industry in our business as being a great business to be in because pricing is kind of a one-direction trend. It’s not going to get less important, and it’s not going to slow down. We built software that’s designed to help businesses adapt to that reality that pricing, the way that you price your goods and services and the way that that pricing arrives to your customers is only going to become more and more important over time for you to have mastery of. And the speed at which you will need to be able to make decisions about those issues will become shorter and shorter. I think that’s a macro trend that is not going to reverse itself anytime soon, and in three years that will still be true that the companies that are growing successfully are going to be the ones that are able to rapidly action insights off their data to deliver contextually appropriate pricing into their customers and markets in a way that’s going to both make the markets work but also drive their growth and profitability goals.

I think AI is not a fad. It’s not a buzzword in pricing. I think it’s here for real. I think it’s still a buyer beware marketplace. I think there’s a lot of companies talking about AI for pricing optimization, and it’s important for buyers to really ask questions about what that means. Is it, for example, a black box AI where I’m supposed to give you my data and trust that your software plus smart people are going to just—they’re going to spit out an answer, and I just have to believe that?

– That’s it, right?

– There certainly are solutions like that, and one of the things we were able to do in 2020 during the early part of the pandemic was actually acquire a leading AI company. That was one of the changes for us is—that was our first acquisition as a scale-up company. We bought a leading AI company out of France and spent the balance of 2020 integrating that into our core price management and price optimization offering. That AI, I think, is really next-generation in terms of both its power but also its transparency. We have a fully configurable AI solution. The algorithms are not protected. The capability of it is not proprietary to the point where a customer cannot go in and tinker with it and, in partnership with us, can tinker with the AI to meet their needs. That’s a key differentiator, I think, in our AI solution. I think more and more pricing will become a focus, particularly in the senior leadership of enterprise. The C-suite and upper management will begin to pay more and more attention to it because it has a really dramatic effect on the growth of a business when you get it right, and I believe that optimization and AI optimization will loom large in that conversation as well over the next three years.

– Yeah, absolutely. You’re starting to see that across multiple industries, multiple solutions, the idea of how AI is the future, AI, machine learning. As they go through this big digital transformation period, whether it’s in your hardware—from a manufacturing standpoint, your actual machining and your actual physical assets—to the intangibles, the softwares, the data aspect and how that is all, where that’s connecting. I think it’s fascinating. You’re able to uncover trends and optimize and see things in a way that you never could before, or you could, but it would just take you forever. Or it would be too expensive, and it would be a massive lift. That’s a lot of spreadsheets you have to go through. If you had a magic wand, like solve one thing in your industry, what would that be?

– I think I’m probably not alone in my answer to this. I think that my colleagues… that our competitors in the business would say the same thing which is I think I would wish that more executive leaders in more billion plus enterprises were thinking and acting critically around their pricing strategy. That’s not necessarily new, but I would say it’s been that way for some time. And I think it’s slowly changing. But knowing what we know about the type of impact that high-grade enterprise pricing automation can bring to a business, I’m constantly surprised that it’s not a top conversation piece among CEOs and CFOs and CROs. The data point is pretty shocking. I think if you can achieve a 1% move in price can yield an outsized, multiple percentage point growth in profitability. If you have the right tooling, it’s actually a fairly easy way to achieve that kind of result in the context of the other ways that you could go about achieving several basis points of revenue growth in a calendar year. Then it comes to a SaaS cloud solution like Pricefx where the investment to buy the full boat from Pricefx can be ROI’d within 12 months just on efficiency or on some combination of efficiency and revenue gain.

Once you understand it that way, it seems like a very obvious, simple choice to make for business leaders to install industrial-grade pricing management and price optimization into their company, and yet it’s not. It still continues to be considered either a back office function, or it’s relegated down the command chain in organizations into, in the best case, pricing leaders or pricing departments. But in many cases, and in some of our customers, there isn’t even staffing that’s addressing pricing. It’s handled out of finance, or it’s handled in sales. I would use my magic wand to create a lightbulb to go off in the brains of CEOs and CFOs and CROs around the world that pricing is actually the most efficient path to profitability that you have. And it’s actually easier than you thought it was.

– That’s a great bite, a great answer. It’s funny, though, too. We ask that question quite a bit, and it tends to be a very similar answer. I just wish that people would understand that we’ve got… Totally get it, but there’s a lot of reasons for that. There’s a lot of fires, a lot of other things. And I imagine— I’m not super familiar with price optimization software. How new is it relative to everything else?

– That’s another interesting answer. So the answer is, it’s not new. Price management software has been around since the 80s, pre-internet. That’s where, when I mentioned those hybrid solutions or providers that want to install machinery and custom software at the customer, that’s them. Those technologies were invented in the 80s, and some of them were invented on mainframes.

– On-premise.

– Yeah, on premise. So the idea of it and the solutions for it have been around for some time. We came on the scene six or seven years ago, really commercially started selling about five years ago, and we were different because we didn’t have any hardware. We were 100% cloud-delivered and 100% SaaS subscription, commercial terms. That was a big, new change. Now I think if you look around the pricing software industry, everybody that we run up against has some kind of a cloud solution. It’s another, similar to the AI question. It’s like, be asking questions about what that really means. Is it cloud-hosted, meaning it’s the same software that you used to run on premise, except now it’s on AWS. Or is it cloud-native? It’s built for cloud delivery and cloud configuration. We are in the latter category. The genre has been around for a while. I think awareness has been growing, and our business would reflect that. I think we’re in the early innings of cloud and SaaS pricing becoming a dominant staple of the way that middle-office management is conducted in large enterprises.

Optimization is the new, shiny object in that conversation, and I think there’s a lot of learning that needs to happen in the business to grow into what to do with that. Yeah, and I think the thing that’s new—and it’s related back to our previous conversation—is this sort of heightened importance of that capability, that the pandemic black swan event and the knock-on effects that we’re experiencing today I think are drawing a very sharp focus on the idea that you need to have some level of responsive mastery over how you’re pricing your products to your customers and that you can’t do that in outdated technology, and you can’t do it in isolation of all this data about the supply chain or about the relationship with the customer or regionality or seasonality or all these other factors.

– Yeah, makes a lot of sense. Interesting stuff. Big challenge, but also exciting. Obviously you’re doing something right if you guys have the growth rates that you are and the needs are there that companies are realizing that. My last question is a little bit more personal on you. What are you doing to stay at top of your game? What is that?

– I have been really investigating over the last year how to transform this company into a content marketing and inbound sales organization. That, I think, is the general trend among SaaS software providers is to move in that direction. Much like AI, I think people talk about that a lot, but implementing it or actually putting some teeth into it in terms of what does that mean is difficult. For us, I think we are investing, I am investing a lot of time in studying what it really means for the pricing industry to become a content marketer not from the point of view of what content do we make, but how do we create marketing that serves customers in the form of answering their real questions, but also serves our sales organization in terms of helping them not spend all their time on the phone educating but rather letting our marketing efforts educate our buyers so that by the time they meet our sales people, they can have a really precise conversation about how we’re going to work for them. That’s been interesting, so I’ve been making a lot of investments in our content marketing capability.

As I look out into 2022, I’m eager to put some of that thinking to work. We’re going to really ramp up video as a company as both a tool for sellers but also as a primary channel for our marketing efforts. We’re attempting to develop a YouTube channel that will be the first pricing channel on YouTube, which I’m excited about. I’m keeping really close touch with the folks that are in that headspace in the business of marketing and software marketing about what does it mean to evolve from content marketing as having thought leadership to content marketing as marketing as a service to the buyer, educating buyers through marketing. I’ve really been enjoying this book recently by a gentleman named Marcus Sheridan who wrote a book called They Ask You Answer. I think there’s so much that’s right about that book, and I’m stealing shamelessly many ideas from the book as we look at how we’re going to build our content marketing organization at Pricefx.

– That’s perfect. That’s it right there. Just answer your customers’ pressing challenges, their needs. That’s it. It’s easy, right? Boom, one and done.

– It’s easy to say.

– Exactly. Well listen, Patrick, I’ve enjoyed our conversation. I’m sure we could probably go on for hours and hours. I think it’s a really fascinating space. I think the technology that you’re bringing in, certainly with what’s going on in the world, even before that, honestly. There was a reason why you guys were on a growth track before that. Now companies realize—it sounds like they’re realizing more, gosh, what levers do I have to pull? Oh, I never really paid attention to this one over here. Maybe we need to look at that now.

– Thank you for having me on, Danny.

– Good stuff. But yeah, thanks for spending some time with us today sharing so we could learn a little more about you and Pricefx.

– Appreciate it, thank you so much.

– Alright, well that wraps today’s episode, our Executive Series with Patrick Moorhead who is the chief marketing officer at Pricefx. You can learn more about them at pricefx.com. That’s price, foxtrot, x-ray, dot com. It’s the letters. We’ll have the link in the notes so you can go check them out.

So that’s all I’ve got for you today. Thank you so much for watching or listening. If you are not on our email list, I highly recommend: get on that. Get on it today because you’re missing out some valuable insights. You’re going to learn about what other companies, your peers, learn about new technology like Pricefx that’s coming in. Learn about different solutions and what some of your peers are doing to really adjust and pivot with the pandemic and all the great things that life has thrown at us over the last two years. Thank you so much, and I’ll be back next week with another episode on IndustrialSage.

Thanks for reading. Don’t forget to subscribe to our weekly newsletter to get every new episode, blog article, and content offer sent directly to your inbox. You can also subscribe wherever you download podcasts so you can listen on the go!

– Well hello, and welcome to today’s IndustrialSage Executive Series. I am joined by Dean Cohen who is the vice president of Quantum Storage Systems. Dean, thank you so much for joining me today on the Executive Series.

– My pleasure. Glad to be here.

– I’m glad to have you on here. First order of business for those who are not familiar with Quantum, Quantum Storage Systems, tell me and our audience who you guys are and what you do.

– We are a manufacturer of plastic storage bins and storage containers. We marry it up with wire shelving systems and supply to a wide array of customers complete storage systems in any way to organize your space.

– Great, yeah. I imagine you’re in a whole host of different industries and niche segments. Can you give us a little bit of a flavor of that?

– We’re fortunate to cater to a number of different markets. The markets include industrial and material handling, food service, medical, supermarket, food service, electronics, retail. There probably isn’t an industry or a sector that probably is not using or organizing with storage bins.

– Gotcha. You said you’re a manufacturer; you’re manufacturing those as well. Where are those facilities where you manufacture?

– We do all of our manufacturing of all of our bins here in Miami. We’ve been doing that since 1988, so we’ve been doing it a long time and have our own injection molding company here in Miami where we manufacture all the products.

– That’s great. Okay, well cool. I think we’re going to jump into a little bit more some challenges, some things I imagine that just like everybody and all the manufacturers, no one’s been left untouched relative to Covid. I’m sure there’s been some challenges but also some great opportunities. But before we jump into all that, I’d really like to know more about you. I want to learn a little bit more about Dean. This is where we focus on the executives that we have on here. So tell me, how did you get into this space? Take me way back.

– I’m very, very fortunate that my father who was a very, very large influence on me was always involved in plastics and introduced me to the plastics world when I was a teenager. I had an opportunity to come into a custom injection molding business when we were looking to begin our own product line and our own name brand which was the origins of Quantum. That was my original foray or entrée into the business when nobody knew what a Quantum bin was or nobody had any idea that Quantum even manufactured storage bins. Those were my original beginnings, and very lucky to be where I am today.

– Is this a family-owned business?

– It is.

– Okay, alright, and so your father started it; is that what I understand?

– My father and first cousin.

– Oh, excellent. Are they still involved in the business?

– My first cousin is. Yes, he is.

– Okay, excellent. So you got in really, you said you were young. You were a teenager. Was it 16? Was that right?

– That was my original entrée. I came out of college actually having nothing to do in the business world. I was actually a tennis player, and all I wanted to do was play tennis and travel the world playing tennis.

– Oh, well what happened?

– I reached the point where I decided that that was not going to be my final economic or final career move. I had always been intrigued with the business world and had always had a lot of interest in pursuing some of those endeavors. I came in basically in my mid-20s. Been here since then.

– Wow. That’s awesome. I’m sure you’ve seen just a ton of change. I would imagine—and I’ve heard similar stories—that, especially with a family business, that maybe initially, hey, this isn’t the path that I wanted to go, and you come in. In some cases that there is a moment, that there is—I don’t know if, call it a light switch or just a hey, you know what? I really enjoy this. I didn’t think I was going—obviously you said you wanted to go do tennis. Did you have that moment? Was there a moment where you’re like, this actually—I really like this. This is cool.

– You become fully immersed into it from the start. You’re extremely motivated. Coming from a competitive athletic world, I always had the mindset of liking to win and liking to compete, sometimes for better or worse. It was a very humbling beginning, coming out when nobody knew much about us. We had a great opportunity and a great space to get our product line and our products out to market. I loved the challenge. I loved the traveling. I loved the trade shows. I loved meeting people. Those were the origins, and that’s what actually I feel made Quantum a different company than most. We competed against companies that were quite a bit larger than us, had been around for a long period of time, a little bit of the old adage of the David and Goliath, if you will. Nobody knew us very well, but we worked hard. We built a product line today that is amongst the largest in the marketplace. We have a brand name that’s very successfully recognized that we’re very proud of.

– That’s fantastic. Congratulations on that. That is no small feat. Obviously you’ve seen a lot in your career there, so do you have any—for those who are watching or listening, we have a list of questions. Big surprise, right? I want to ask you a question that’s not on the list, and I’m curious. I think you said you’ve been here 26 years. Does anything come to mind in terms of massive challenges that you’ve had to overcome in the business, the organization, or maybe even in your career that was a big, triumphant, big obstacle that you had to clear? Does anything immediately jump out?

– Managing expectations. I would imagine in any business environment you have your ups and downs. You’d love to always think and feel that you’re always going to be successful and everybody wants to be successful. That’s not always the reality of what happens out there. You do win and lose, whether it’s accounts, whether it’s orders. We’ve had our fair share of disappointments, if you will, but as a group and as a team and I’m very proud to say that the people that are at this company, we probably have in excess of 50 to 60 individuals that have been with us from the beginning, 20 years plus, which is amazing. The overall milestones have been sort of managing expectations to reach the next level, whether it’s a dollar threshold, whether it’s a number of bins that we’ve sold, small, little things. Last year we were able to sell—this current year we were able to sell more than a hundred million containers, which is pretty cool. It’s a lot of bins that get sold into the marketplace. That’s not something that I thought we were going to ever be able to accomplish when I think about those sorts of numbers 25 years ago.

– A hundred million last year. Obviously there’s a stat that I’ve heard that ecomm in 2020 grew by 40% I imagine from storage containers, totes being, I imagine, one small part of it. Then just as ecomm is growing almost exponentially, it feels like. From a capacity standpoint, before Covid hit and you said you were delivering a hundred million, were you stretched for capacity? What did that look like?

– The history of the business has always been a little bit bursting at the seams. We’ve had a very aggressive sales force, a very aggressive and successful marketing team that has pushed our product very nicely into the spaces that we sell into today. We have a nice background and history of always being very competitive in the products that we manufacture and how we take it to market. In the early days we had eight injection molding presses. Today we have almost 60. The footprint to hold all of our inventory, we started originally in probably 75,000 square feet. Today we’re close to 1.2 million square feet. Managing the capacity has always been, we’ve always been in a growth mode, but growth within limits. We see many companies or many experiences that grow without bounds, and you don’t take care of orders or business environments that make sense for you as a company. Some of those we’ve learned through the years, and we try to make the right business decisions that have kept us on the right track of growing responsibly, which we feel we have.

– That’s great. How many total employees do you have?

– Today, almost 400.

– Okay, and you said that 50-ish have been there since the beginning.

– Yeah.

– That’s pretty remarkable. Why do you think that’s the case?

– We’re a family. I know that probably gets used over and over. We literally are a family, but it’s an extended family. I’m very proud to say that one of my greatest joys of the business is visiting all parts of the manufacturing portion to the warehouse portion to the office portion and knowing everybody by their first name. I love that. You come to know each other’s spouses and kids and the things that are even as equally important as the business world. I think that as a business unit we’ve grown nicely, but we’ve also protected and taken care of our “family.”

– That’s awesome. That’s fantastic.

– Thank you.

– That’s a great story. Obviously within the last, we’ll call it close to two years at this point now, maybe a year and a half, especially when this episode releases, we’ll go back from March of 2020 when the world kind of stopped, and you’re saying that you guys cranked out a hundred million storage units—I’m saying that correct—containers—there is massive supply chain issues right now, and labor is a big issue. How have you guys managed that?

– It hasn’t been easy. A big portion of our product line is wire shelving. Wire shelving is products, for us, that is manufactured offshore. We deal with a number of factories offshore. Today we’re importing close to 1000 containers a year from offshore, so managing the supply chain is a tremendous understatement of the year. That has been very, very challenging in itself. Fortunately we have a good team that was—I don’t want to say ahead of the curve, but it didn’t come as much of a surprise to us to see some of the challenges that were forthcoming. We had always been a company that believed very strongly in large inventories. The key in our industry that has been successful for us is having availability to ship your products quickly. Again, it’s probably an adage that gets used maybe too often, but if you have product that is well-priced and can ship quickly, you’re going to be successful. That has been Quantum’s “magic sauce” which is not a secret sauce by any means, but one that we’ve invested in. We’ve grown our infrastructure. We’ve grown our footprint from a manufacturing space to a warehouse space. And we’ve made sure to have our products available for our customers. As the supply chain challenges came on board, we were already heavily invested into lots of inventories. Fortunately we have good relationships with our factories and families offshore that we have suffered probably a little bit less than most with respect to not being able to get product or being significantly delayed. And while it is happening, we’re not nearly as affected as many in our space.

– That’s great. It’s interesting; I posed a question—we were at a show a couple weeks ago, and I was curious about this, about people’s thoughts on specifically lean manufacturing. Have we gone too far? Have we gone too lean? You mentioned having a lot of inventory on hand. Obviously if you’ve got finished goods that are ready to go, there’s obviously a distribution component to that. I would say, it seems a lot of manufacturers have—let’s not keep a whole lot of inventory on hand, whether it’s raw goods to finished goods. It seems like you were incredibly well-positioned to be able to absorb some of that shock from the supply chain.

– Our whole executive team felt that the key through all of this as things were going to tighten up was to always invest heavily into our inventory. We knew it was going to be an impact on cash and an impact on holding costs. We felt that it would pay significant dividends, which is has.

– That’s fantastic.

– So we feel it was the right decision.

– Well, it certainly was. I could say 100%, so congratulations on that. Moving on a little bit more, we talked a little bit about challenges in the industry. Obviously the supply chain, labor is big. What are some of the new challenges that you’re seeing on the horizon as Covid’s, we’re kind of coming out, and there’s a lot of different things going on right now? What are you seeing as an industry as a whole are some challenges?

– The nature of our customer base is changing a little bit. I think it’s been a very challenging environment to some of the smaller players that are out there. We continue to see some of the small players, if you will, not being as relevant or having a much tougher time to survive in the current environment. We’ve continued to see consolidation, and some of the age-old, the big are getting bigger, becoming more dominant. What it calls for us to do is just to stay true to our commitment to our distributors in making sure that they’re protected, big or small. You can’t be the masters of all the circumstances of whether other business or other companies survive or don’t survive, but you try and make sure that, as their supplier, you do right by them and you price them right. You ship for them quickly. You make sure that they get prompt answers to availability of product and when their orders are shipping. And if you make good, sound business decisions, you’ll have a good, loyal following, and that’s what we’ve noticed. So while we have probably, like most companies, probably lost some customers in the last 18 months due to the nature of the environment, things for us have remained still robust and busy, and we’re excited about the year ahead.

– Yeah, who would’ve thought? Who knew what was going to happen in March? It was very scary times. We’re starting to wrap up now. What are you doing yourself to stay ahead of your game and to grow as a leader, personally, in your career? What are you doing?

– As a business, we’re making significant investments into the digital space. It’s no secret that some of the old-school of the way things used to get done, you need to change with the times. It’s critically important that we stay up-to-date with technology, with digital content, with enhanced content, that our product is very easily found within search engines when our customers are selling our product in their online platforms that our images are presented well, our application images are shown well, our 3D rotations of the images present well, and that basically customers, when they’re searching for our type of product and looking for storage bins or looking for storage solutions, that they come across Quantum’s range of product which is easy to navigate, easy to find through, easy to click through. And then again, at the end of the day, I’d like to believe my bin is the most beautiful bin on the planet, but it is critical that it’s sold at the right price and that it can ship quickly. We have found that those two things we’ve married nicely. And as long as customers and companies can find our product and represent our product well, and then they know they have a good solution that they’re going to get priced competitively and the product’s going to be available for them and available quickly, and communicated very quickly as far as with tracking, you’ve got a winning solution.

– Absolutely. Well that sounds like you have quite the operation going on down there. Next time I’m in—you said you were in North Miami, Florida, I’ll have to come stop by. I’d love to come check you guys out.

– It’s a nice area. We love it.

– I’ll come in the winter. How about that?

– We have two temperatures: hot, not as hot.

– There you go. That makes a lot of sense. Dean, listen, thank you so much for your time. For those who would like to learn more about you, they can go to quantumstorage.com. Is that accurate?

– It is.

– For all your storage needs, sounds like they’ve got quite a few things going on. Again Dean, thank you for spending some of your valuable time with us.

– My total pleasure. Thank you.

– Alright, well that wraps today’s IndustrialSage Executive Series interview with Dean Cohen who is vice president of Quantum Storage Systems. You can check them out, quantumstorage.com, if you have any needs there. Sounds like they’ve got quite an impressive company. I loved hearing about the culture and the history and their response through the pandemic and how it looks. Things are very bright for them. It’s great.

That’s all I’ve got for you today. Thank you for watching or listening. If you are not subscribed, I highly recommend getting on our email list because you’re missing out on great content like this. I will be back next week with another episode on IndustrialSage.

Thanks for reading. Don’t forget to subscribe to our weekly newsletter to get every new episode, blog article, and content offer sent directly to your inbox. You can also subscribe wherever you download podcasts so you can listen on the go!

– Well hello and welcome to today’s IndustrialSage Executive Series. I am joined by Jack Peck who is the president and CEO of FastFetch Corporation. Jack, thank you so much for joining me today on the Executive Series.

– Well it’s a pleasure to be here.

– Well I’m excited to jump into today’s conversation and learn a little bit more about you and a little bit more about FastFetch. So to start with, for those who aren’t familiar with FastFetch, give us a little snapshot of who you guys are and what you do.

– Okay, well my elevator pitch typically is, you know when you order something online and you hit the enter button, and two days later it shows up at your house? A lot of stuff happens between the time you press that button and it shows up. We’re responsible for part of that stuff. If you wanted to get more specific, FastFetch really produces software and hardware for order fulfillment in distribution centers and warehouses. We take orders. We do a lot of optimization, use a lot of artificial intelligence to get them out of the door quickly and accurately, in a snapshot.

– Excellent. Well it sounds like that thing seems to be kind of important these days, especially as online ecomm is, I was reading a report how last year—because of the pandemic, so in 2020—the increase, it went up by 40% or something like that. I think we’re going to have some great things to be able to unpack here in the rest of this episode. But before we really dive into that, I want to know a little bit more about you. I want to know more about Jack. I want to know—take me back. How did you get into this space? Was it something that you studied in school? Was it as a kid, you were tinkering around with it? What was that?

– Well things happen according to things you didn’t necessarily plan. When I was an undergraduate major, I was a math major. I did a lot of work. My PhD was actually in petroleum engineering and computer science, a combination of those which is a long ways away from distribution.

– Just a little bit, yeah.

– But you learn a lot about computers. You learn a lot about people. You learn a lot about research, innovation, entrepreneurialship, all of those things regardless of what the field is. When I went to Clemson University as an assistant professor, I looked for opportunities to do research. Some of those opportunities were brought to me by other people outside the university, and so I played on that and did a lot of work in social services, did a lot of work really for the governor’s office. I did a lot of work in Medicaid, the health department, did a whole bunch of work in mental health. That was primarily database work. Then around 1987 my kids were getting to the age where I was going to have to put them through college. I said, I better start earning some money outside the university. You do get opportunities like that during the summers in education when you’re looking for things to do.

So I started a company, Foxfire Technologies. Foxfire actually specialized in manufacturing systems, real-time shop floor control primarily for apparel manufacturing. Well when apparel and textile started moving offshore to the islands and to Central American and now of course to Asia, that opportunity started to dry up some, so we transformed the company into really distribution. Distribution still remains in this country because you want it to really get the distribution centers close to the customers. I transformed my sales into that. Now Foxfire continued on, did very, very well. Sold the company in 2007 to pull out the opportunities within Foxfire for doing a lot of research into really order fulfillment. And so pulled that out and formed a new company called FastFetch Corporation which, where we are today, and have concentrated on that. As it works out, about 60 to 70% of the labor in a distribution center is in the area of order fulfillment. So if you want to really help out in terms of getting things out faster and getting more done with the same people, that’s where you concentrate your efforts.

– Yeah, absolutely. I want to go back a little bit with your story when you said you were at Clemson, and I’m not going to hold that against you. Sorry, Georgia fan here. No, I love Clemson.

– You wouldn’t be happy with Clemson nowadays.

– I bet. You said, hey, listen; I need to make this change. Walk me through a little bit of that decision-making process from I’m going to go start my own business. That’s a big jump.

– It is. I had that entrepreneurial spirit—we didn’t call it that back in those days—really when I was a graduate student. When I was a graduate student I started a company. I did a lot of work. That was back in Louisiana, back in Lafayette, Louisiana. I did a lot of work in that area. I did a lot of consulting for Shell Oil, for Dow Chemical Company solving hard problems as an undergraduate and a graduate student. Then when I came to Clemson it was encouraged to do things outside the university in the area of research. Applied research is primarily what I did. I continued to do that. As a matter of fact, I started the computer science department outside the mathematical sciences department at Clemson because mathematics, although I was a mathematics major back as an undergraduate, not everything is mathematics in computers. There’s a lot of opportunity for things that are non-mathematical. And so I broadened my perspective, got into more applied areas as I’m doing today.

– Excellent. What was that moment, though? I’m assuming you were pondering, though, for a while. Hey, maybe I should do this. Maybe I shouldn’t. Should I? Should I not? Then stability and all these different things, these roadblocks. There becomes a moment, I think, when every entrepreneur says, you know what? I’m going to go do it.

– Yeah, well leaving the university was one of the moments, I suppose. But even before that it became really clear that I could not do all of the things I wanted to do on a university salary. At one point in time I had a son at Carnegie Mellon. I had a daughter at Davidson. My wife was at Emory working on an advanced degree, and I had another son at the Naval Academy. Now he paid for himself on the five-year plan after graduation, but the sum of the tuitions exceeded my take-home pay from the university. All of a sudden you say, I’ve got to do something here. I’ve got to make a change and do some things that I’m really not accustomed to doing. And so I made that change at that point. Really when I took early retirement from the university I was able to then devote 100% of my efforts to a new business.

– Yeah, absolutely. Fast forward two, three years, and look at this. I imagine it feels like that. Right?

– Absolutely. And it was a good move.

– That’s awesome. Let’s talk a little bit about over your journey. Obviously there’s a lot of experiences, a lot of ups and downs, a lot of challenges, but also a lot of achievement. Is there something that comes to mind, a particular milestone that you overcame, or maybe a mentor, somebody that’s really helped shape you to help bring you to where you are today? What comes to mind?

– Gee, that’s an interesting question. I guess it really—two people had the most influence, I think, in the early days. One would be my major professor in graduate school who was really a pioneer in the computer field. I got to do some things as an undergraduate that most undergraduates around the country could not do. There were no computer science programs. He had the ability to really inspire others, and I was one of those he inspired, I’m sure. The second was probably a gentleman who was the head of the Appalachian Two District Health Department. When I was in my early days at Clemson, he came to me and said, look, I have an idea where we really ought to link together all of these state agencies with a common system with a database using online terminal access, and there weren’t terminals back in those days. We had to develop a lot of software to make all of that come together and have all the state agencies working together. That was a research project, but he gave me the inspiration to do things that had not been done in fields I had not ever worked in and learn a lot in the process.

– That’s awesome. It sounds like, and I’m beginning to see now. It’s helpful to see the evolution and where now, what you’re doing over at FastFetch. Let’s jump into that a little bit now. What are some of the big challenges that you’re seeing in the industry?

– Okay, that’s a good question. Well ecommerce is the big one, of course. As you pointed out early on, COVID accelerated that whole move toward ecommerce. People couldn’t get out of their houses. They had to order stuff. And they finally figured out, this is a pretty good idea. So all of a sudden it’s booming like it never has. And companies that haven’t gotten into it, well, a lot of them have fallen to the wayside as you know like Sears and a few others of that nature. Amazon, of course, having a leader who actually said we’re going to make this work and we’re going to solve problems that people want solved, well those kinds of things really helped a lot.

We saw this coming early on. We’re taking a different approach. There are a lot of people that are doing advanced robotics, that are doing automated storage and retrieval systems that are very expensive. And those are fine if you have big companies can afford it. But over half of the distribution centers in this company are not big companies. And so what we’ve said is we’re going to make people more efficient. We’re going to get a 3, 4, or 5X increase in productivity out of the people you have. You’ll always have some people. So that’s what our goal is, and we’re going to make it affordable for even the smallest companies that are running vending companies that have a warehouse that might be 600 square feet. We want to make it scalable so that you can go to the largest companies at the same time. Those are the kind of solutions we’re putting together, and of course we’re seeking patents that have been granted several patents in the area which allows us to seek some protection against the larger companies that might want to invade our territory, if you will.

– That never happens.

– Well, we hope it happens.

– What are some of the learnings or some things that have, with the pandemic, for FastFetch as a company and with the industry in general that you’ve learned and you’ve seen?

– Well turnaround is the biggest thing. People get an order in; it has to be picked very, very quickly and accurately which means that you can’t—if I have a warehouse for example that’s 2 million square feet, well it takes over an hour just to walk the perimeter of that warehouse. If I have an order that requires a little of this and a little of that, and it’s all over the place, I can’t be walking around just picking stuff up out of the shelves and putting it in a box. That isn’t going to make it if I have 100,000 orders a day. I can’t have 100,000 people in my warehouse doing that, or 50,000. You have to have very clever techniques and do a lot of optimization, do artificial intelligence in order to guide people through the warehouse in a way that they can pick many orders with one trip through the warehouse so that we will do a lot of optimization. If we’re using a cart, for example, that might have 50 orders on it, I’d like to select those 50 orders out of many, many thousands so that I will minimize the walking through the warehouse to pick them. And so those are the kind of solutions we’re doing. There’s a lot of mathematics behind it, actually.

– I can only imagine.

– And so those are the kind of problems we like to solve. They’re not traditional, go-get-it problems. They’re go, be very clever in how you do it.

– Yeah. Where do you see the industry going from here? Hopefully the pandemic—whether we’re over it, or in the middle, who knows? Where do you see things going now that we’ve gone through COVID?

– One of the things that I see coming are drones. There’s been a little bit of talk about that over the last few years, but people want not two-day delivery; they want same-day delivery. If you’re going to do that, you’re going to have to have something like a drone that in big cities in particular to be able to take the items to the customer. And in order to do that, the distribution centers are going to have to be within about a 50-mile radius of the customer because they have to go out there and come back. If you have to have distribution centers, you’re no longer going to have one on the East Coast, in Chicago, and then on the West Coast. You’re going to no longer have those. You’re going to have micro-fulfillment centers. You’re going to have distribution centers, smaller ones, all over the place within, like I say, a 50-mile radius of the customers.

And if you’re doing that, you can’t afford really expensive technology. You’re going to have to have less expensive technology that can be replicated in these smaller distribution centers. So that’s where I see things as going. And you see a little bit of that even with some of the—we’ve had retail stores which have been doing that for years, so I see retail stores—right now there’s something called omni-channel fulfillment. And with omni-channel, it started out saying we’re going to have the retail stores do a little bit of distribution because the clerks aren’t always busy. They’re going to fill some orders and ship them out. I see it happening just the opposite. I think you’re going to see distribution centers doing a little retail and primarily acting as showrooms for the products. What we’re going to be seeing now is a transformation of retail into distribution. That’s what I believe is happening.

– I think absolutely, and I think it’s interesting too when you’ve got there’s a whole challenge with how— it’s interesting I think how retail has prior, before COVID, there’s been a big shrinking of it. Ecomm has been on the rise. You look at stories like traditional malls, malls across America that are now just abandoned. Here in Atlanta there are several that have been shrinking and shrinking and shrinking. And the question has been, what’s going to happen to that space? Something’s going to happen to revitalize. Do you think maybe that’s an answer from a micro-fulfillment standpoint where that’s the deployment piece? You were talking about drones and being able to deliver those to people if you’re within that 50-mile radius. Possible solution right there.

– Absolutely, and I think that’s what you’re going to see. You’re going to see those big retail stores and malls, as you say, being transformed into distribution centers. They’re already 50 miles apart in major cities, so it’s not going to be that big of a deal to have a drone fly out of there to the customer in the larger metropolitan areas. It’s going to be a long time before you see it in Montana and Idaho, but that’s not where most of the people are.

– That’s super interesting, talking about drones and all that. We’ve had some previous guests have talked about how they’re deploying drones for inventory inside warehousing. They’re outfitting using some computer visioning technology or even outfitting with RFID scanning. I think it’s an interesting application, but certainly as time goes on and the cost of this technology drops, probably the biggest hurdle right now is power from a payload perspective. What can you move? If you’ve got big, heavy things, that’s a little bit of a problem. Weather is also another little bit of a challenge.

– It is.

– Then the FAA is probably the biggest. But anyway, that’s—

– I guess an example of what I’m saying is that many people go to computer stores. Your retail computer store —I won’t name them— but they’ll go to a retail computer store. They’ll see what they want, and they’ll go home and order it online, won’t they?

– Yeah, exactly, or do it while they’re there in the store.

– Absolutely. And so as I say, retail stores are going to have to start doing distribution, and they’re going to have to be competitive. Clerks are not very good order fulfillment people. They’re clerks in the retail stores. I think you’re better to leave the systems and the personnel, they will have skills, really, in distribution more so than clerks or salespeople.

– Yeah, I think that’s cool to think about. Maybe it’s like the Jetsons, but on a smaller scale where you’re going to see packages and things flying around and all that good stuff. Throughout this, you’ve led this organization for a while. What are you doing currently, or a practice maybe that you’ve had since day one to really continue to stay ahead of your peers and to really keep marching forward and keeping yourself, your mission and your vision alive? What are some of those things?

– Well we probably put more than 50% of our time and our resources into research and development. We look at problems that are out there. They may have been solved, but that doesn’t mean they’ve been solved in the best way. We look for new ways of solving problems, new problems, and I think that’s fun, personally. If it weren’t fun, I would be spending more time out on the lake or out on the ocean. It’s fun to do that, and the people that work for me are very talented. We have a really good group of people, and they have fun doing it. That’s why they’re working here. And as a result of having fun, we’re able to pay them pretty well, too.

– That’s awesome. Well it sounds like you’re very passionate about what you do. You know an awful lot about it, and it sounds like you’ve got some great solutions to be able to help companies to be able to solve some of these big challenges that they’re facing. As I’m wrapping up, I want to give you the last word, the last opportunity to say anything you want to share with our audience.

– Well I guess I would say work is important, and putting beans on the table is important, but do take time to smell the roses, a little cliche. Do take time with your family. Do take time on your hobbies. Do take time doing some reading. There will be a time when that will be perhaps all you’re going to be doing, so you better practice that as well.

– All right, I lied. Last question: you mentioned hobbies. I wasn’t going to ask you this, but you brought it up. What are your hobbies?

– Oh, gee, bunch of them. I guess if I were to put one of them up at the top, I’d say traveling. My wife and I have been fortunate to go to China, the Galapagos, Machu Picchu. We went to Antarctica last year. Been to Argentina. Been to Namibia. We took a nice river cruise down the Danube from Prague to Budapest. We took another one from Moscow to St. Petersburg, so I think traveling not only is it fun, but also it wakes you up and makes you aware of what other parts of the world are doing that’s—you may not have been fully aware of.

– Yeah, exactly. I love it. That’s fantastic. Jack, thank you so much for your time. It’s been great getting to know a little bit more about you, about FastFetch, seeing how you view the world and these challenges that the industry is facing and also hearing about what you think, talking about the future. I love that.

– Well I’ve really enjoyed it.

– Thank you again. Alright, well that wraps up today’s episode with FastFetch Corporation. We were talking with Jack Peck here. If you want to learn more about them—they’ve got some really great solutions—you can go to fastfetch.biz, B-I-Z. And you can check them out to learn more about them.

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– Hello and welcome to today’s IndustrialSage Executive Series. I’m joined by Justin Cramer who is the cofounder of ProShip. Justin, thank you so much for joining me today on the Executive Series. How are you doing?

– Excellent. Thank you for having me.

– Well I’m excited to jump into today’s episode and learn a little bit more about you. For those who don’t know about ProShip or have not heard of you, what do you guys do?

– ProShip solves small parcel shipping complexity problems. And a lot of those problems are around speed. So if you’re a high-volume shipper, somebody shipping 1,000, 10,000, 100,000, maybe even a million shipments a day, you know there’s a lot of complexity involved there. There’s a lot of data that has to move, and it has to move very quickly or you’re not going to be able to keep up with your operators, your automated equipment, or maybe your batch processes. So that’s really what we do in a nutshell is we simplify and streamline everything necessary to actually produce the appropriate carrier label to get the package to your customer in the time they expect.

– Yeah, and we all know now that that online and ecomm and when you look at freight with even just B2B from raw goods to manufacturer, just the whole thing with the big demand in ecomm has just created this massive demand for all kinds of technology where we’re seeing the supply chain is really struggling to keep up. And then there’s all kinds of talk about the big thing is, the holiday season comes up, what kind of strain you’re going to have on there. So I’m excited to jump into some more of these topics a little bit later, but right now, this part of the episode is I really want to get to know more about you, more about Justin and hear your story a little bit more. So tell me. Take me back. How did you get into this space? Was it something—did you go to school saying, hey, I want to go into logistics? What’s that story there?

– No, actually I started out in the US Navy as a nuclear machinist mate. I was operating nuclear power plants at sea, had created some very good friends while I was there, and one of them got out of the military before me and ended up in the Chicagoland area doing logistics software and said, hey, I’ve got a job for you on the way out. And so we started. And we realized that well, logistics software is complicated, but not nearly as complicated as nuclear power. So we found what we thought was a pretty good niche: helping to move data, helping to select the appropriate carrier services, and apply a lot of business rules. And customers, they can get to some really complicated business rules, and I think we got lucky in the fact that we were able to simplify what nuclear power was, so we were able to help our customers using some of the same techniques, simplify their business rules, or maybe not simplify but streamline and properly hierarchy their business rules such that back in the early 2000s, they’d actually get significantly more out of the lower-powered processors that were available at the time. And it just grew from there.

At first it was all about the integration. It was all about connecting to the rest of the enterprise software stack, moving that data, streamlining those business rules like I mentioned. But it was really about helping the customer to leverage the resources that they had with computing as well as labor which is a continuous issue that we’ve seen year over year, and of course now we are in the worst of it right now, we hope. Hopefully it will get better from here going forward. But it really came down to that, so we started creating carrier components to provide a higher speed. We started creating more connection components to get to more parts of the enterprise software stack. And it’s just slowly grown from there. And so we’re just a 21-year overnight success.

– That was going to be my next question was, this was basically started, for the most part, coming out of the navy. Is that accurate?

– Exactly, yeah, yeah.

– That’s quite a jump. That, I would say, that’s a very interesting story because normally you hear, you’re going to some other organization, and then—that’s pretty awesome. Obviously you’ve seen a tremendous amount of change in the industry over that time period, I’m assuming.

– Oh, yeah.

– There’s a little thing called technology, and lots—

– Well it’s not just that. When you look at it all the years ago, DHL used to be the fourth carrier in the US. And now they’re an international carrier the way we think of them. However, they’re one of the largest carriers in the world. Airborne is gone. That went with DHL. We’ve seen same-day continue to be the next thing, the next thing, and now we’re starting to see it again come back in the industry as people start to basically move around a little bit more. Maybe not all work from the office, but the more work from the office we’re seeing, the more demand we’re seeing from same-day.

But there’s just a ton of changes that are continuing to go on, and probably one of the largest ones and one of the ones that of course me as a multi-carrier shipping software vendor is most excited about is we finally see the duopoly of UPS and FedEx where people are finally starting to question that and determine, can these regionals who have been around for decades, been providing reliable service for decades, can they help? Should I start introducing different modes? Should I start looking at crowd-source solutions? What type of courier should I be using? All these things. So to me we’re in one of the most exciting parts of the small parcel shipping software since we started. And of course that’s because of all the changes that we’ve seen over the last two decades.

– Yeah, to your point there was a story that came out just a couple weeks ago of Roadie. I’m not sure if you’re familiar with them, but yeah, they’re here in Atlanta. And UPS is acquiring them, and to your point about talking about the crowd-sourcing or taking that Uber or that Lyft model, I think it is a very exciting time because you’re going to start seeing a lot of this, maybe what we call democratization of lots of change for a whole host of reasons. I think it’s super interesting. But I want to go back a little bit on your story. Going from, working on a, you said was it nuclear sub?

– I was a sub volunteer. I ended up being on aircraft carriers.

– Okay, aircraft carriers. I have a friend of mine who… he was on a nuclear sub. He did some of the same stuff. It was like, really? You’re in charge of this—this is crazy. Making that transition over to going into this logistics, I imagine that there was an element that, going through this, you’re kind of like, this is new. I’m not really sure. For you to be in this game that long, I would think that there’s a point where you’re like, man, I really love this. This is super cool. Did you have that moment?

– That moment was basically my first successful install. The reality is, just like anything, when you have a good challenge and you actually complete that challenge, you get that first, in our case, production label out of the system and it goes into the appropriate carrier trailer, I was hooked at that point in time because what it meant was it meant pulling information from various components, ecommerce suites, OMSs, ERPs, WMSs, CRMs. A lot of home-grown systems are available now. All of these things, being able to navigate that complexity, being able to do that and then apply business rules such that the shipping station operators didn’t have to think of everything—we were there to support them, not the other way around. The first time that first production label came out, yeah, I was hooked. I wanted to do more, and I wanted to make it more efficient.

– That’s awesome. That’s super cool. That’s fantastic. I love hearing stories like that. It’s almost like, hey, it worked.

– We always thought it would work, and here it is actually live. And yes, it was a super affirming situation.

– Yeah, absolutely. It’s only gotten a little bit more complex since then, I am sure. Going through your journey through all this, obviously you’re cofounder, and it can be very difficult. There’s a lot of challenges. It can be a little isolating, I think, at times. Is there a particular person or maybe an event in your life in this journey since the majority of it has been really with ProShip, but perhaps it’s even before that. Is there somebody that really comes to mind that you say, wow, they’ve helped me out tremendously. Again, it could be personally; it could be through business, both. Who comes to mind?

– I’m actually a pretty voracious reader, so a lot of—somebody said that you should have multiple mentors, and they don’t actually have to be live people. For me reading Ben Franklin, reading Plato and Aristotle and all the others, reading about the various industrial leaders back during the Industrial Revolution, those things have all kind of come together in order to help give me a good background. But then, I’ve got to say, everybody that I work with brings something to the table. Even if it’s a new engineer, a new salesperson, a new marketing person, they come with information and ideas that I, in my years, haven’t had the luxury of coming across. Even talking with you before we started this broadcast started to learn a little bit, started to add a little bit to it. So there’s no one person. It’s the opportunity that everybody has provided me in order to learn from them and go forward.

– That’s awesome. That’s fantastic. I love how you said just reading books and different things, but even outside of the industry or even business and organizations you mentioned, Ben Franklin, or even looking at—I loved reading about the Vanderbilts and the Rockefellers and looking at, what I think is super interesting is just transportation. It’s this idea of connecting people. That is still, you look at the railroads back in the 1800s or what have you. I think that Cornelius Vanderbilt, his big thing was taking a little boat and basically moving goods across this river, and he was able to help bridge—

– Got to start somewhere, yeah.

– Exactly. And then now you look at the internet, and it’s making these connections.

– Making the world smaller. When you look all the way back into Socrates’s days, his world was 20, 30 miles. We move into Columbus’s day, and the world is measured in hundreds of miles. We get the transcontinental railroad, and all of a sudden for the United States the world becomes nearly 1000 miles. We go through Eisenhower; we get the interstate system. We get airplanes; we get boom. And then finally we get the internet where 8000 miles in a second is no problem. You can reach around the world to touch and communicate with somebody. So yeah, it’s all very fascinating how we got here.

– I think it’s amazing. And fun fact, I think I read that Eisenhower, the reason for the interstates was actually a military thing so they could deploy, they could scramble planes faster. There is a certain amount of interstate that had to be—

– Troops and everything, yeah. So literally, that was one of the things that the Germans did very well was their ability to use the Autobahn to move their light troops around the country to be able to shuffle them faster. It was a massive improvement in mobility and therefore—especially given the size of our country, putting in the interstate system ensured that if we did have to fight the last war again—let’s face it; it was built really for World War II—we could move troops from one side of the country to the other, north to south, and more importantly the logistics trains to follow them. Beans and bullets, you can’t fight a war without them, so having a way to get those to the troops was extremely important. Again, another great historical figure that has a lot to do with the reason why we function the way we do today.

– Yeah, I think we’re going to have to make a new episode that we talk about America’s history of the industrial age. That would be super interesting. Let’s move on to today. There’s obviously a lot of challenges and a lot of things going on. What are you seeing right now are some of the biggest challenges?

– I do not think there is a part of the logistics industry that is not suffering from a labor, materials, and backlog challenge. It’s meant great growth for us, but it’s still to the point where I don’t think there’s anybody in the logistics industry that can say we can do everything at the same speed we did three years ago. So whether it’s the backlog of ships out of the various ports that we see actually allowing us to get goods into stores and warehouses or whether it’s the labor shortage that might be in those stores and warehouses to actually execute all the way down to providing enough engineers that are well-trained in the logistics industry to apply the ever-increasing changes that customers are now realizing that they want. There’s just so much challenge with shortages right now, and it doesn’t just mean the physical labor or the trucks or, in this case now, the goods as well. But it does mean all of the people. It’s IT within our customers. It’s us onboarding engineers. It’s us having enough time to actually get things in place. It’s a huge challenge right now, and it requires some very open communication in order to ensure that frustrations don’t come to a boil.

– Yeah, absolutely. No truer words have been spoken, that’s for sure. It’s been super interesting with all the changes that have happened in the evolution of that. How has the pandemic altered your future over at ProShip?

– During it, like I said, it was a challenge of onboarding and communication. I think we’ve defined it as that which has made this bearable for us. I’m not going to say it’s easy. And it’s not exactly extra difficult. It’s just a lot more. That’s really what it is. On the other hand, I think going forward it has lowered the bar for logistics managers, for CTOs, for anybody in business where shipping is part of what you do to think about the fact that you truly need a comprehensive, multi-carrier solution to provide the appropriate services across the board. That really does come down to, who do you need where? You need to line-haul from one coast to another because that provides the appropriate time in transit at the appropriate cost level. Another thing that we’re seeing is there’s a ton of volatility in the market right now. We’re seeing new players coming onboard all the time. You’re talking about Roadie. Roadie, to me, isn’t new. They were in the business pre-pandemic. How many others of those have started up since 2020?

– Oh, yeah.

– How many of them are no longer in business? There is this new dimension, new challenge that’s going to come out as we go post-the shortage problem that we have right now once we get to the other side of that and we no longer have major capacity constraints from the nationals. Even the regionals and new start-ups have provided extra capacity, and so now we’re going to be able to get choices. With those choices there are going to be some new logistics companies that make it through and some that don’t. And I think that’s going to be the new challenge on the other side of this is actually right-sizing your logistics portfolio, making sure you’re using the right ones in the right area, and at the same time just to add another challenge to that, the consumers’ expectation of same-day, especially for high-value or perishable goods, is going to continue to increase. I’ve already got several very large retailers that, they’re looking ahead to that. They’re seeing it, and so it’s continuing to reinforce my thought process at the end of 2019 that same-day was going to be the next big thing. Little did I think any of us know what was going to happen over the last two years which, again, has accelerated different parts.

– Yeah, it certainly has. It was definitely going that way, for sure, and then the gasoline just got dumped on there.

– Yeah, exactly.

– A lot of interesting challenges, for sure, ahead. You mentioned something. You said that with this, it allowed the ability to lower the bar a little bit. I’m curious; are you thinking of it from a sense of maybe a reduction of fear to be able to try those new things and to be able to say hey, we know we’ve been needing to do this, but we’re concerned about status quo? Now the band-aid got ripped off, and now it’s like—elaborate.

– I think going from the two national carriers and the post office—the post office has never really been out of it, but let’s face it, they’re not competitive, and they’ve always been the low-cost winner. If you’re looking to rate shop, post office is always going to win. I think, to go back to your question, it is the fact that a decades-old thought process that I want to put all my eggs in one basket because that basket will provide me with the lowest cost and provide me with good enough service. I think that that has been shattered in the C-suite. I think that’s something that’s—it’s slowly been coming.

At a certain size, companies diversify anyway. But I think the reality is where that might have been 100 million in logistics spend where they start to diversify, now that number will drop, and it might be as low as 20 million in logistics spend that companies start to look to diversify. I think that movement down is really one of the things that is going to be the major thing that we see. When we reflect back five years from now, we’ll see that as probably the primary change. But then there’s going to be some—like any pendulum, it’s going to swing back and forth. Right now it’s swinging to the direction of, I’ve got 20, 30 carriers. It’s going to swing back. Do I think it’s going to get back to where customers have less than five carriers? No, I don’t think so, especially with the fact that we’re not seeing a ton of same-day services come from the national carriers.

You talked about Roadie and UPS. Well they’re going to keep that pretty separate. I think the biggest thing about that is going to be the next challenge that a lot of C-suites have to look at is, do I leverage a crowd-sourced solution? How are the crowd-sourced solutions going to differentiate themselves? Do I want somebody on their way home from work in jeans and a t-shirt delivering that package? I think each of the crowd-sourced solutions are going to come up with their own. Roadie has a lot more requirements to join, whereas a Postmates or a DoorDash may not. These are ones we’re actively seeing being used right now. Shipt is a whole other one. Are companies going to want to give their packages to a carrier that’s owned by Target? Do they want to give their packages to Amazon and actually have Amazon do the last-mile delivery? There is a tremendous amount of choice that didn’t exist even five years ago, so that means there is a tremendous amount of opportunity for what have been traditional logistics-execution methodologies to be changed for the better, I guess is what I’m trying to get at overall.

– Yeah, absolutely. It makes a lot of sense what you’re talking about. What was the old adage? You’re only as good as your last load. Obviously with the whole resiliency piece, it’s just like we need to get stuff. Any which way, however we can, we need to get our stuff or send our stuff. I agree with you; I do see that pendulum shifting back, but it’s not going to drop, I think, too low just because everyone feels like, yeah, we’ve been burned. We’re not going to go back to that.

– Let’s face it, the national carriers have the opportunity now to set their prices, to ensure that they hit the profit margins that they want. I’m sure that’s going to allow them to be able to accelerate growth, but there are thoughts out there that some of them are going to try to maintain really high quality and therefore really a less than value price.

– That’s interesting. There’s been a lot of conversation about that not just in the logistics and freight space, but also even in let’s say commodities like steel. I’ve heard in a lot of other raw goods some very, very similar things. So I think it’s very interesting right now where we’re at. Cattle was another one with meat processing and particularly with beef. They’ve got some very interesting things with supply and demand. Supply is there, but the demand has been restricted for various reasons. Everyone’s talking about inflation and where things are going. I think it’s going to be very, very interesting to see what’s going to happen over the next several months, next year or two. Where are prices going to go relative to this? I don’t know. I hope that things are going to settle back down a little bit, but you’ve got to wonder. If the demand is there and things are—what’s that going to look like? I guess we will see. And kind of wrapping, Justin, this has been a really interesting conversation. I’ve really enjoyed. We’ve covered a lot of ground. My last question I want to ask is, you mentioned how you’re an avid reader. Right now, what are you reading?

– Oh geesh. I am training a team, so I’m reading To Sell Is Human. Also, I always read a fiction book because it helps you sleep. I’m rereading Stephen King’s The Dead Zone. I am reading the 1950s manual on officer leadership from the US Army. Oh, there’s one more in there that I am forgetting. Oh, Getting To Yes, which is a negotiation book. Those are the books I’m reading right now in some various shape, way, or form.

– That is fantastic. That is great. As we wrap up, thank you for your time. I’ll give you the last word. Do you have anything else you want to leave with our audience before we wrap?

– I just want to have them all think about the fact that we are in an area of great change for the logistics world. I think that they should not only look at what’s necessary to get their packages out the door today, but make sure that they are starting to think about the plan after some of these capacity constraints go away. How are they going to simplify? Or are they going to stay very complicated? Just make sure that you look at that five-year plan, and it’s not the one you created in 2019 because if you created it in 2019, it’s not going to serve you very well. Take some time. Think about it. Be prepared for some of the changes that are going to happen as capacity catches up.

– Awesome, this is great. I love it. Justin, thank you so much for spending some time with us today on the Executive Series. I really, really enjoyed our conversation.

– Thank you.

– All right, well that wraps up today’s IndustrialSage Executive Series with Justin Cramer from ProShip. If you’d like to learn more about their solutions—it sounds like they’ve got a lot of great ones that you might want to be looking at, especially with all the changes that have been happening and things that are going to come—go to proshipinc.com, and you can learn more about them.

Hey listen, if you are not subscribed to IndustrialSage, you’re missing out on a lot of great content like this episode that we just had here with Justin Cramer from ProShip. Go ahead and get on that list, and go to IndustrialSage.com, and you can subscribe. There’s a lot of places to do that. You may be watching this from LinkedIn or maybe listening on the podcast. But go do that because there’s a lot of great content. You can learn from other leaders, learn from other organizations, what they’re doing so you can really implement some of these things or just have an idea of what’s going on in the rest of the industry. That’s all I’ve got for you today. Thank you for watching or listening. I’ll be back next week with another episode on IndustrialSage.

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– Hello and thank you for joining me today on the IndustrialSage Executive Series. I am joined today by Jason Walker who is the CEO and co-founder of Waypoint Robotics. Jason, thank you so much for joining me today.

– Yeah, great to be here. Thanks for having me.

– Well I’m excited to chat with you again. I know we spoke, I don’t know, probably two years ago maybe under our—we’ve spoken many times at ProMat and then at MODEX. This is what, 2019, 2020, maybe even in 2018 as well. I can’t remember. So it’s been a minute. And then you’ve been on the show as well, but under the sales and marketing banner. But we’ve never had you on the Executive Series, so I’m excited to ask you some questions we’ve never asked before. So this will be fun and exciting.

– I’m looking forward to it. I did zero preparation, so I always do best in such.

– Perfect. No, we like that, honestly because you get real answers. I don’t want scripted, canned stuff. Yeah, we want the real deal. So we’re just having a conversation. For those who are unfamiliar with Waypoint, tell me a little bit about, what do you guys do?

– We make autonomous mobile robots primarily for manufacturers, so small to mid-size enterprise which is, in the USA, about 90% of the economy. And the thing that’s—well there’s a bunch of unique things about Waypoint robots. But the thing that I think is the most interesting, overarching, unique thing is that we have intensely focused on ease of use. Our vision is that we can ship a robot to a customer, and the shipping and receiving clerk who unpacks that box can be the person who sets it up and gets it going and uses it on a day-to-day basis without any training. Kind of like when you buy an iPhone, it doesn’t come with an instruction book. It’s just so intuitive to set up that it guides you through it. That’s our vision, and that’s what we shoot for, and it’s what guides us through our process. That is something that I think is a big differentiator because of the accessibility it creates.

– Yeah, absolutely. You’re definitely seeing—AMRs are huge right now, obviously. Moving into automation is a really big piece. And we’re going to talk a little bit more about that, but before we get there, what I want to do, this is the part of the show where I like to learn more about my guests. I want to learn more about Jason. So tell me, how did you start your career? Obviously CEO and co-founder of Waypoint Robotics, but take me back. Where and how did that start, even before the idea?

– Well it’s kind of hysterical in hindsight. I got into robotics as a fallback. My Twitter handle is @iamrobotmechanic. And I’ve been some kind of mechanic my whole life, it seems. Right before I went back to college I was a racecar mechanic, and I figured I would go right back into racing as soon as I got out. And I was cherry-picking classes throughout college that would be relevant in racing. There’s no degree in racing, and it turned out that most of these classes fell under the robotics umbrella. But along the way I started building autonomous mobile robots, and I really got bit by that bug. When you bring a robot to life and teach it how to think and see it make decisions, that is something that you want more of. In my naivete, I thought, well if this racing thing doesn’t work out, I can always fall back on robotics. I’ve been fortunate to be at the right place at the right time for this nascent new industry that’s coming our way. So yeah, I had a really cool job that didn’t have anything to do with robotics right out of college and learned some incredibly valuable lessons that I’ve been able to apply to building companies and brands. Yeah, started working at iRobot, met my co-founder of Waypoint at iRobot. Co-founded a drone company with Helen Greiner after we both left iRobot and then was able to get reconnected with Patrick, my co-founder here at Waypoint to start this company. Yeah, now we’re here.

– That’s really cool. That’s pretty interesting. Okay, so you wanted to go be a racecar mechanic, not a driver. So you wanted to work on engines and build them and all that good stuff. Is that correct?

– Well I always wanted to be a driver, but the next best thing–– if you can’t gather up the millions and millions of dollars you need to be a driver–– is to be a mechanic. I was a mechanic before college, and I kept asking all the gurus around the shop and track, how do you know how to set the car up? How do you know this and that, And the answer was always, go back to college. Eventually that’s—I was always going to go back to college anyway. I just never got around to it for a few years. But then once I had a purpose and a reason, a specific thing I wanted, it was a lot easier to go back. My intention was that, once I got out of college, I’d be able to be a racecar engineer instead of a mechanic. Difference is probably inconsequential. You’re still turning wrenches and getting dirty and hanging out at the track.

– It’s true. It’s a different kind of race, right?

– Yeah.

– I think that’s super interesting.

– Maybe you get to sit in the trailer in the air conditioning for a few hours.

– Yeah, exactly. So what type of racing did you want to—I’m just fascinated by this. I think it’s pretty cool.

– Well I always have loved open-wheel racing, which is IndyCars, Formula 1. Yeah, so all the cars without fenders, basically. When I was a kid a friend of the family was a racecar driver, and he started out racing MGs and Austin-Healey Sprite, all these little, tiny racecars. Over time he graduated and ended up racing Formula Atlantic which is the very top end of the amateur class. When I was a teenager, I had the opportunity to learn how to be a racecar mechanic from Scott. That was a really lucky break. Most people never get to stand next to a Formula Atlantic, let alone have somebody teach you how to work on it.

– Yeah, no kidding. From a racecar mechanic to a robotics tycoon, we’ll just say that. That’s very, very interesting. Obviously it’s a big influence. I was very curious about, it’s got to be something in your childhood that made you—we found that. So you go through, you said you went in to go to college. You wanted to learn more about this, and then you stumbled, I guess, across robotics. You’re like, wow, this is kind of interesting. This is kind of cool. What was the thing that really made you say, hmm, I think I’m going to stick with this a little bit more? What was that?

– Well let’s see. At the university I went to, at Kansas State University, there’s this robotics competition that they have that coincides with open house in the spring. And there’s usually two or three different types of competitions within the overall competition. My partner Russ and I, it was just the two of us. You design, build from scratch, autonomous mobile robot, program it, et cetera. This was—dating myself severely, which is fine; who cares? Now you can go buy everything for tens of dollars that took us a semester to build from scratch. Building the sensors—and the rest of the teams had at least four, up to eight people that we were competing against. And it was just the two of us, and we ended up sweeping the whole competition, and so that was a huge victory. And the reason we were successful was because we did everything differently. We didn’t follow any guidance. There was a sumo wrestling portion of the competition, and part of the sumo competition is that each robot has a beacon, and then the other robot has a sensor to be able to look for the other robot. That’s how the robots find each other. I thought to myself, well that’s dumb. Why do I have to wait around to see that beacon if I can see the robot? And so my strategy was to look for the robot and attack the robot irrespective of where the beacon was. And so while other competitors were trying to find the beacon, scanning around for it, I was actually looking for the physical robot and attacking it immediately, and I was pushing them out of the ring before they even got turned around. That was an example where, if you read the guidance for how to approach this competition and how to set up your sensors—

– That was not the right approach.

– Well, I mean, it was the approach, and it was one where—

– I mean, it was—

– Yeah, because everybody was led in that direction, everything became very homogenized. And that left room for some rebels to come in and blow them all away.

– That’s super interesting.

– Yeah, and sensors—so the guidance told you how to build a whole bunch of sensors. And I give a lot of credit to my buddy Russ who found this different way of using the same sensors. There was a way to crack open the case of one of the receivers and modify the circuit board and cut traces. And you could turn a digital sensor into an analog sensor, and that was a game-changer because everybody else was using analog sensors that didn’t have any encoding in them, and they would get blinded by sunlight. Because ours was an encoded digital sensor that we had converted to analog, we could get the analog capability but the robustness of an encoded signal. That superior sensing capability made all the difference in all factors of the competition because when the sun went through the sky, it came through the windows differently, and if you were trying to navigate a maze, all the robots got blinded. They couldn’t see where they were, and we didn’t have that problem.

– That’s fantastic. A whole new meaning to “blinded by the light”. I get it.

– It’s a very real, current problem.

– Interesting. Stupid question, but did you ever compete in Battle Bots?

– No. I don’t think Battle Bots existed at the time. I’m not sure.

– We need to bring Battle Bots back.

– I think it’s back. Yeah, it’s back with a vengeance. The robots are getting more and more awesome.

– I’m going to have to check that out. I just remember from years ago, and then—yeah. I don’t know.

– Well, and I haven’t had cable for, like, a decade, so I’m not up on it either.

– That’s the thing. I don’t think I’ve ever had cable. It’s all YouTube TV or whatever, which even that hasn’t been around that long. That’s pretty cool. Let’s talk about this then. I’m curious. At what point did you decide, hey, let’s go start Waypoint Robotics? And why did you make that decision, and a third question in that one question is, just explain to me the moment when you crystallized it in your head and you said, I’m going to do this, and you took that action.

– Let’s see. For the last 25 years or so, there’s only been two robots that anybody had ever said, I want you to make this robot. One was a lawnmower, and the other one was a pooper scooper robot. I’m only admitting that second one now because somebody’s finally attempted it. By the time 2015 rolled around, Waypoint was a great company with a great team and money in the bank. I had just closed a deal with Motorola Solutions that included funding, and I was getting antsy. I had a great job with a great company, and it wasn’t so much of a startup anymore. That, combined with the fact that the FAA was taking forever to open up the skies, and I just felt like there was no end in sight. I got frustrated waiting around for maybe the government to—

– This is with the drone company. You were saying you were working with drones or UAVs or whatever, yeah.

– Exactly. So yeah, it was just—I wanted the exhilaration and the growth and the expansion of a startup again. The nothing-to-something part of the journey is gigantic. It kind of tapers off until you get into the hockey stick at which point it is a different kind of explosion. I was at a point where what I was doing, it was a cool product. It was a great team, great technology, great company. And I just felt like we didn’t have the freedom to operate because of regulations. And still at that point nobody had tried to make the pooper scooper robot, so I thought, well I’ll go start doing my homework on that and seeing if there is any interest from investors. As I was going through that process, just by dumb luck I crossed paths with my co-founder Patrick. When we started CyPhy Works, I tried to hire Patrick immediately. He wanted to live and work in New Hampshire, so I wasn’t able to lure him to our startup. But always wanted to work together again.

So by dumb luck we crossed paths via email in 2015 while I was researching this other project. And long story short, he was like, I got a proposition for you. He had spun out of Segway to create a company called Stanley Innovation to build fully autonomous, fully integrated bespoke mobile robots and was doing it for—these are one-off robots for the elite labs on earth. Through that work, the vector really fell out of the, as a concept. People wanted to have a small, omnidirectional, industrial-grade mobile robot that was fully autonomous, fully integrated. As a lab robot, it was—I always said it was a Ferrari with no door handle and no steering wheel. It was a good product. It was a great team. As much as anything, just working with Patrick and the team was a huge part of why I went that way. But it was an opportunity to do another start-up with interesting technology, with a killer team, and without having to go gather up all of those resources from zero because there was a lot of things already in place. It was a great opportunity.

I don’t know if this is part two or three of your question, but the next step was, how do we go to market with this technology? One of the things that I think a lot of folks in the robotics community wrestle with is, how do you reconcile your personal concerns, beliefs, social conscience with the work you do? I think that if you build weapons for the government or if you build robots, I was spending a lot of time asking myself and I always have throughout my life. Is the thing I’m doing something I feel like I should be doing? Am I proud of this? Will I regret it, et cetera? I was really trying to figure out, are robots going to be good for the world or not? I can’t stop myself. There’s easier ways to make a living. Robotics is really hard. But for those of us who do it, we’re just compelled to do it, and we can’t stop ourselves because it’s fulfilling in a really weird and wonderful way. I really needed to reconcile my philosophical questions about it. And at the same time I was looking at the market, and I was looking at the products that were out there and their capabilities. I was trying to figure out what was missing.

It all suddenly came together when I realized that the robots we have are, there’s a handful of tasks that are valuable enough where you can make a robot that can do those tasks for a price that, the lines intersect. You can have an ROI as a user of the robot. Those tasks, it means there’s a very limited number of applications that they have to be set up by experts—this is in 2015. So it’s like the robots were barely good enough. They needed a lot of help from people to do a limited number of tasks. The people who could use automation the most, the small to mid-size manufacturers, the mom-and-pop machine shops, the technology was least accessible to those people because it was so expensive to set up and because their work changes constantly. They had to be able to change the setup of the robot constantly. You have a robot that needs a lot of hand-holding from an expert. Then it’s cost-prohibitive to hire an expert on staff or a contract for them to come in. And so you really need to do it yourself. Putting it all together, the thing that made sense was, if the robots need people to make them work, and if the people need robots—because this was, I think, kind of the beginning of the labor crisis. I think this is something people still don’t get in the mainstream world. It’s all we talk about in manufacturing, distribution robotics. Our customers, as long as we’ve been running Waypoint, have come to us and said, we cannot hire enough people. It doesn’t matter how much we pay. It doesn’t matter what we do. We can’t even get them to show up.

– Especially now, that’s been a huge challenge over the last several months, for sure. But even before the pandemic.

– Yeah, and it’s even worse now. So the labor shortage, the people who are doing that work, they really need automation to help them do it. The companies that they’re working for or within, those companies are losing a ton of critical opportunities because they can’t meet demand. They’re saying no to customers, and you can’t do that when you’re a small business. You’ve got to get that opportunity while it’s there. And so the people need robots. The small to mid-size enterprises need robots to be competitive with, if you’re an independent 3PL you need robots to be competitive with Amazon and Shopify. There was a need for the robots, and the robots needed people. There was also a need to have those two things be able to go together with the people you already have, not with an expert or taking your people and sending them to community college for two years. And so it all came together, and that’s where the ease-of-use thing came from. It’s like, okay, we’ve got this robot that, from a technological point of view, is a Ferrari, but it’s completely inaccessible to anybody but a paid team.

– It’s got to be deployable, easily deployable.

– Deployable by the people you have. Then it all made sense. If my robots are not displacing people, if they’re not taking work from people but instead they’re a tool that those people use to secure their own place in the future of the industry and the company and help their employer become more fiscally sound because they can capture more opportunity and growth then ultimately that creates more jobs. So you need people to fill them. It all worked together, and if instead of displacing workers, we’re in a position to engage with those workers and say, okay, you were pushing a cart for the last two years. Now you can use this robot to do that for you, and you can focus on the other 50 things that your company needs done that’s more interesting and more valuable. That was how I was able to, by considering the workforce and what’s in it for them in terms of them being a user of robot, in terms of them being a human being with value and skills and dignity and understanding their part of a bigger economy, they’re a part of a company that’s part of an industry that’s part of an economy, all of that came together when we decided to make our robots as easy and intuitive to use as an iPod or an iPhone.

– That makes a lot of sense. I like the value prop. Hey, make it easy, like you said deployable by the people that you have versus, you said having to have this huge, arduous setup and training and all kinds of things. It’s interesting when you were talking about, in 2015 or 2016 when you were looking at the UAVs and drones, I remember we were looking to deploy those, that’s when you can start getting stuff on the market fairly cheaply. Before that it was really expensive, and then you were mentioning the FAA was just like, they didn’t know what to do. I remember hearing in Europe, a lot of the regulations were, they were actually doing stuff versus saying, no, you have to—whatever. I remember they had some ridiculous stuff where you actually had to have a real pilot’s license for a while before they had what was the triple three exemption and all this stuff. I remember a real big concern about Europe being, they’re going to outpace us on this because they’re already innovating. They’re going into ag. They’re going into all these different industries. Anyways, I think it was a very interesting time period with that.

– Yeah, and for us it was even weirder because we were making a tethered drone that could stay in the air indefinitely.

– Tethered, interesting, okay, yeah. So you have power.

– There again, the ease of use. The use case here was that literally anybody could open this thing up and the user experience was so straightforward that you didn’t have to be an expert. You just set the altitude and hit go, and it would climb up and stay there. There is no piloting, and the technology it takes, whether you’re talking about Waypoint AMRs or CyPhy Works tethered drones, the technology it takes to abstract all of that highly technical controls and autopilot in the case of the UAVs or navigating and localizing in the AMRs. To make it simple is really complicated, and it’s really tough. That’s where all the value is. That’s where the gold is buried. But yeah, when you’re talking about frustration, it’s like okay, you can launch this with one button. It stays up there forever. It’s on a string, so it can’t fly away.

– Safety.

– We literally have it on a leash, and you’re still going to make us get a sport pilot license? Come on.

– That’s really crazy.

– On the other hand, everybody on the team including myself, we were all extremely appreciative of the intent of the FAA. We have very safe skies in the USA and always have. None of us want to risk that. The FAA was given a huge task and no resources. It’s like, figure out how to make this new technology just as safe as everything else has always been, and here’s zero dollars to go get it done. By the way, two years. They were between a rock and a hard place.

– No, I certainly get it. As an actual pilot myself, I totally get that. There was a lot of stuff going on, a lot of concerns about, you got yahoos who—it’s great technology, but you’re taking this thing, and you’re going 2000 feet up in the air or 5000 feet up, and you have something that gets sucked up in a jet engine. Good thing they have two. Or go into a windshield or something. You have some serious problems. I know the probability is low, but still, a little scary. Anyways, but we were talking about some industry challenges where I want to get into a little bit. You mentioned a big thing, a big, huge challenge that is going on right now. It was pre-Covid as well, and it’s labor. I like how you talked about some of the concerns you were wrestling with in terms of, with what I’m doing here, what is that going to do to labor? I like how you answered that and addressed that. We hear that a good bit, they’re here to assist. It’s not like Terminator coming in, and they’re going to take all of our jobs and start killing us or whatever. Maybe down the road once we start getting some more technology.

– A long way.

– A long way away from that. What other challenges beyond that are you seeing for your customers right now in the industry that could be specific to Covid and just other things maybe going forward?

– I think the top three are just labor. There’s this positive feedback of, there’s reduced labor to get done the work they already had to do, and then there’s increased demand for a lot of the industries that are using AMRs. Fulfillment, logistics, and manufacturing have all just seen this massive uptick at a time, it’s like more demand, less labor. And so it’s just been intense to try to figure out how to navigate that. I think that there were many, many companies. Certainly we were talking to a bunch of them who, their plans got so disrupted by the pandemic that, they knew they needed to be looking at AMRs and various types of automation. For a lot of them, their plans just got decimated. As they’ve been coming back from the pandemic, then they’ve been wanting to accelerate that.

So it’s been good for the industry, but for the customers the need and the compressed timeline, they don’t have the luxury of figuring it out on their own time because they can’t function without getting enough people in. If you look at what Amazon did, if you start now and go backwards and think about, they were incredibly lucky to have made all those smart decisions. They saw very early on that automation was how that was going to go and bought a company to address that need. Even they are struggling to find enough people to get things delivered, and I can’t imagine what it would’ve looked like if they didn’t already have their own robotics company working on their behalf. For anybody who wasn’t lucky enough to have it in motion before the pandemic, I think that it’s even harder now to try to get it.

– That’s a really interesting point that you bring up, how Amazon had that in place already before. I guess if we phrase it and we look at it this way, what if whenever they started, and I don’t know when they started pushing into that, but it was certainly eight years ago, six, maybe somewhere around there. Imagine if the pandemic had happened 20 years ago, 10 years ago. It was interesting seeing the whole shift and the whole pivot. With another interview we did, I think they gave us some numbers saying that they saw, their last year alone, there was a 40% increase in online sales and ecomm with fulfillment. That is a massive increase, and when you look at all the supply chain involved for that, all the way from raw goods to finished goods and everything that happens in between there, we’re talking about a massive, massive, massive lift. And oh, by the way, with labor, we were talking about this whole thing. What would’ve happened? And I have never thought about that until you brought that point up, and I thought, we would’ve been—things would’ve looked a whole lot different.

– Well think about how freaked out people were about toilet paper and canned goods. Yeah, I think it would’ve looked a lot more like the movie Contagion where everything just went off the rails. We were able, most of the USA, most of the world, were able to get the things they needed to stay alive, and they didn’t have to go fight in the street for toilet paper. They could order it and have somebody else fight on their behalf which doesn’t happen. It just goes through a huge warehouse. But if we didn’t have access to all of these on-demand fulfillment, whether you’re talking about Grubhub or DoorDash or Amazon or FedEx, all of these services, these businesses, these resources that make it possible for people to live their whole life and not really have to leave the house if they don’t want to and have everything come to them, other than some post-apocalypse movie, I can’t imagine what it would’ve looked like because you really would’ve had to go out into the streets and try to find this stuff.

– Yeah, that is super interesting. I haven’t thought about that at all. Imagine if this was 20 years, 15 years, whatever, beforehand—it’s interesting and kind of scary. Good point; we had these systems, and I guess the ability to be able to absorb this massive demand and this increase otherwise. It’s interesting; I remember the first time going into a warehouse that was automated. This was a long time ago, and they were picking, got the shopping carts out there. Literally it looked like a giant Walmart or whatever. Somebody’s picking a part, and the fulfillment was super slow. When they brought in an automated solution, just the speed at which they were able to fulfill was crazy. It’s interesting thinking, man, there’s no way. That would’ve been crazy. And so I guess to the flip of that is just seeing—I think demand now, the forecast of demand is that it’s just going—It’s like a hockey stick. Right now a lot of the conversations are hey, for this upcoming holiday, make sure you have all of your orders and everything in a good bit ahead of time because you got boats that are sitting out in port that can’t get in. Goods can’t get off.

– Stuck sideways in a canal.

– Anyways, so Jason, one of the things I wanted to ask you about is, recently—this was back in I believe July—we released a story on IndustrialSage talking about the interoperability standards that Mass Robotics was involved in. You were one of the organizations involved with it. Could you maybe tell us a little bit about what that is and why that’s such a big deal to the industry?

– Yeah, the AMR interoperability standard that Mass Robotics pulled together with the collaboration of almost every robotics company out there, it was an amazing community collaborative effort. I think it’s going to be incredibly important and incredibly valuable to the customers. The things I’ve talked about before about how difficult it is to do a task with a robot and the technology, the cost of it to accomplish that task, that means that now and for a long time you’re going to have a bunch of single-ish use robots meaning that they’re a robot that’s really good at one thing or two things. Waypoint robots are amazing, but they don’t have forks. We’re not going to go scoop up a pallet. Likewise, the tuggers aren’t going to slide sideways and go up next to a piece of equipment like we are.

Everybody’s tackling a different piece of the market which means there’s going to be heterogeneous fleet in facilities. To solve all the problems you’re going to need a lot of different robots from a lot of different companies, and this interoperability standard is, I think, a critical, key thing to be able to pave that way for all the robotics companies and all the customers because I think it’s really hard to—there’s a natural inclination to pull back on making a decision to see who the big winners are going to be. There’s not going to be one big winner. There’s going to be a bunch of companies solving a bunch of different problems. In this interoperability standard, everybody has to contribute to moving the entire industry forward, and it gives customers a chance to buy robots and know that they’re going to be able to work with each other and work with other systems going forward. So we’re excited about it. We’re really glad to be a part of it. Our robots will have that standard included in them. I’m just really proud of the community for doing it, and I think it’s going to be so good for the industry.

– Well I was super excited to hear about that. I was waiting for somebody to release or do something there because it certainly is a big challenge in the industry when you have so many different technologies, different robotics companies, and I think sometimes people tend to think, oh, well I already have this robot or that one or whatever. The reality of it is, as great as they are, you have a very specific use case or set of use cases for it. It’s not uncommon to have a whole fleet of different AMRs from different companies. The ability just for them to be able to—it kind of goes back to the core of what you were talking about is being able to help to deploy this easily and quickly with people that you have there if everyone’s building this on a standard platform, then you can have a little bit more of that plug-and-play capability. I know it’s a little bit more complicated than that, but in general terms, it’s a lot easier than trying to connect all of these disparate systems.

– Yeah, absolutely right.

– My last question, I like to ask people on this, and that is obviously with all the changes going on with Covid, and even before that, what are you doing as a leader of your organization to really stay at the top of your game?

– The top of my game?

– Top of your game.

– Let’s see. I think—man, I don’t know. We were talking about it earlier; it’s been a weird summer so far. I’m kind of knocked out of my natural rhythm in a bunch of ways. I think that trying to find a way to connect with friends and family after having not been able to for a year, I think that’s been something that has just been really good for everybody to reconnect with humanity. We hosted an engagement party for family friends who are getting married soon. All of the timing of that happened so that we could have a nice, outdoor party and it was just like an explosion of joy that nobody had been able to experience for a year. That was great. I don’t know; balance for me is, I have a very, very, very long duty cycle on balance. I’ll work really hard for many years and then take a year off, kind of get recentered. I don’t know if I’m in robotics because I’m like that or if I’m like that because I’m in robotics, but it is such a long haul.

It takes a special kind of crazy to do robotics because it takes so long. It takes so many resources. You have to have a capacity for delayed gratification that is unlike probably basic scientists are the—and not basic in the teenage terms—the scientists who do basic research, that’s probably the best thing I can think of that’s comparable where you just keep grinding. You have a vision, and you know it’s way out there. You know it’s going to take years to get to it, not months. You have to learn to celebrate the small accomplishments, and then you have to remember to celebrate the huge accomplishments. Sometimes we have a product or a feature, a capability that’s been on our roadmap forever, and then all of a sudden we get it done; we get it deployed. We get great feedback from customers. Maybe we’re talking about it in our team meeting. It hit me. It’s like, wait a minute guys. Do you realize the first time we talked about this was 2017, and we’ve been either working on it a little bit or waiting to do it, and now we’ve done it? And it’s as amazing as we thought it was. It’s like, let’s take a moment and high-five each other. That lasts about 10 seconds, and then you’re back to the next goal.

– You’re moving onto the next thing. You’re playing the long game, I think is what you’re saying. You’ve got to be in the long game. It’s funny that you mention about the celebrating piece. This is the second time I’ve heard that today. Talking with another executive, they talked about that being a big part of imparting some wisdom on other leaders and leadership is really celebrating those small victories, but making sure that you do that. I think a lot of people are guilty, present company included, in doing that. Hey, we did this. This was amazing. Okay, great, alright, boom. Now we’ve got to go to the next thing. It’s important to do that. And I love your answer about the whole, even now, especially after the last year being able to reconnect, just having that face-to-face, real in-person interaction. Unfortunately Zoom can’t do it for you as well as in person, and it’s important.

– Yeah, and I’ve got to tell you. One of the things that, when you’re at a startup, especially a robotics startup where everything is so challenging, you work so hard, and you toil in silence. Nobody sees what you’re doing, and then one of the things that has always been really valuable about trade shows is that it’s an opportunity for your team to go out and see the look on customers’ faces when you tell them what you’ve done. For those of us who are on the phone with customers all the time, you realize how important that feature, that function, that capability is, and you know what it means to them, and you can anticipate the value of it. But for the rest of the team who are just grinding and they don’t get that constant feedback from customers about the importance in the work they’re doing, when you go to a tradeshow and you work so hard to do your day job, and then you work so hard to get to the show and really put on—you want to share your latest, best news. You want to have everything look as good as it can. You want to put on a good show. And that takes so much energy. And then the show starts, and you’re exhausted from all the prep. And you’ve got to have more energy to give to the people who show up to your booth. The thing that’s amazing is after all of that, you end up more energized at the end of the day. You might be physically tired, but you can see it on your teammates’ faces that it’s like, wow.

– It’s validating.

– We’re doing something special.

– We’re doing cool stuff.

– Then you bring it home, and it motivates you to keep walking that long walk in developing these products that take forever. I have really noticed the absence of that loop closure, of that ability for our team to directly interact with the market, with the customers, with the people who need this stuff and really first-hand see the look on their face when it lights up and they think, oh, you solved that problem. You did that. I can deploy it how fast? That’s something that—we’re packing up for a tradeshow. We’ll see how good it goes. Yeah, it’s—I don’t know, man. That’s tough. Trying to recreate that is difficult, and I’m sure I don’t do as good a job as I’d like to, but I try to remember that that feedback of enthusiasm is really important and try to communicate it to the team. There’s no substitute for the customers doing it with non-verbal communication. They can’t hide their excitement.

– You’re right. Yeah, well hopefully that will be resolved here shortly. I hope to see you at MODEX 2022.

– We’re planning on it.

– I almost said 2020, but no, 2022 in Atlanta. That would be great. Jason, listen, I just really appreciate the time that you’ve spent with us today really sharing your story and your insights and how you started Waypoint, how it came to be and just your thoughts on the industry and where it’s going and challenges and all this good stuff. I really appreciate it. So for those who might want to learn more about you guys, they can go to waypointrobotics.com; is that correct?

– That’s exactly right. And we are @waypointrobo on all the social stuff.

– Perfect. Alright, well excellent. Well everyone, you can go to the website or go check them out on social. Jason, thank you so much again for your time.

– Thank you. It’s great to be here. Always is.

– Awesome. Alright, well that wraps today’s IndustrialSage Executive Series interview with Jason Walker who is the CEO and co-founder of Waypoint Robotics. If you would like to learn more about them, you can go to waypointrobotics.com or check them out on their social channels. We’ll have the links in the show notes below. Listen, if you’re not subscribed to the Executive Series, I highly recommend you go do that. How can you do that, you ask? Well, you can go to IndustrialSage.com, and you can subscribe there. And you want to do that because if you’re not, you’re missing out on all this great content like this interview that we just did here with Jason Walker with Waypoint and many others. So that’s all I’ve got for you today. Thank you so much for watching or listening. I’ll be back next week with another episode on IndustrialSage.

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