Supply Chain Automation: Debunking the myths & misconceptions (Ft. Steve Simmerman, Locus Robotics)
In this episode, your hosts, Rachael Weber and Wonil Gregg, sit down with the Head of Global Alliances at Locus Robotics, Steve Simmerman, to demystify the common misconceptions surrounding supply chain automation.
Are you resistant to incorporating supply chain automation to support your supply chain? We cut through the noise to uncover the real reasons some businesses hesitate to embrace robotics and automation. Is it the fear of job loss or the complexities of implementation? Find out as we separate fact from fiction in supply chain automation.
But it’s not all about dispelling myths. We also explore the remarkable benefits of automation, including improved efficiency, cost savings, accuracy, and scalability. Learn why automation is a game-changer for your supply chain operations.
Join us on “The DCPerform Podcast” as we uncover the truth about supply chain automation and help you make informed decisions for your business.
EPISODE TRANSCRIPTION:
00:00:05:12 – 00:00:23:21
Speaker
Hello welcome back to the DCPerform podcast. My name is Rachael Webber and I’m Wonil Gregg while really exciting episode for you guys today so you know a lot of misconceptions and myths around automation and robotics so we brought on an expert, Steve Simmerman from Locus Robotics, to help us really debunk those and work through them.
00:00:23:39 – 00:00:43:13
Speaker
I’ve had the pleasure of knowing Steve for decades now come up in the industry with him. He’s going to provide a great perspective on our technology, artificial intelligence, machine learning. All of that is impacting our industry today and where it started. Thanks for tuning into the DCPerform podcast, Steve. Thank you so much for joining us. It’s awesome to be here.
00:00:43:13 – 00:01:04:07
Speaker
Rachael Thank you. So Steve Simmerman, you’re the head of Global Alliances for Locus Robotics and with the company a little over two and a half years now in the industry, my entire career, 35 plus years, the way I look at Locus is sort of there was a need that was created to avoid in the market. Some of our founders have been in the warehouse management system business their entire career.
00:01:04:26 – 00:01:26:26
Speaker
So they knew the industry, they knew the pressures that the industry was facing and a few of the folks, one in particular, Bruce Welty, saw an opportunity. He saw what was happening with the growth of e-com, the stress and demand it was putting on distribution centers. So the long and short of it is Bruce and his partners at the time developed what is today the locus bot.
00:01:26:26 – 00:01:49:22
Speaker
But it was all predicated on the fact that the dynamics in the market with the growth of e-com presented this opportunity. And you know, Bruce was smart enough to jump on it. When you think of it through a macro factor, macro lens of just the whole industry between robotics, manufacturing, A.I.M., what’s your perspective? The phenomena of that globally today?
00:01:50:18 – 00:02:09:26
Speaker
You know, this this is such a seismic shift and change in the industry. And I go back to sort of the growth of e-com. Right. It has changed the world, there’s no doubt about it. Right. My kids don’t shop the way that my wife and I used to. This is not only a generational, but a cultural change because it’s happening everywhere in the world.
00:02:09:43 – 00:02:38:20
Speaker
The demands on the industry are global. We hear the same story, whether we’re talking to folks in South America, Asia Pacific, all regions in Europe, it’s the same same driving factors. So there is a globalism of technology and AI and some of the fears that people have of how do we protect the future of human species. In some ways competing against automation, robotics and with what you’re doing.
00:02:38:20 – 00:02:56:42
Speaker
How are you seeing that being addressed? Yeah, I mean, there’s a lot of fear about robotics, etc., and part of that is just education. If you look at it on a global basis, let’s just talk about the aging population as a driver for trying to find good available labor. I don’t care if you’re in a warehouse, a retail store, a hospital.
00:02:56:42 – 00:03:20:11
Speaker
The available workforce today is much smaller than it was ten years ago. We don’t see that improving until beyond 2030. There’s a great TED talk out there by a guy by the name of Reiner Stracke and he talks about the workforce crisis of 2030. He analyzed the German workforce back in 2015 timeframe and he aged that workforce forward to 2030.
00:03:20:36 – 00:03:38:09
Speaker
And he predicted that based on average GDP growth, that in 2030 Germany would face an Adolf in worker shortfall. We will get through this. But this is a change that that is not going away. And I think we’re going to continue to see it not only at the warehouse level, but at the retail level, etc.. Give us some insights.
00:03:38:17 – 00:04:07:26
Speaker
When you think of U.S. and China on the competitive scale for technology and what’s going on there, are we leading? Are we behind? What’s your perspective? Boy, that’s a great question. I think it’s well, first of all, technology is so pervasive in all regions of the world. You know, clearly there are leaders, there are laggards, etc.. I think that that the U.S. is a leader from a technology perspective, there’s no doubt about it.
00:04:07:44 – 00:04:32:38
Speaker
But that being said, there are leaders in other segments of technology, particularly if you look at the warehouse business. Right, the distribution business, material handling automation. There are pockets of expertize in certain parts of the world, particularly Europe, where they’ve been automating dishes for years and years. So they’ve got a tremendous leg up on a lot of other regions around the world and I think it’s a little bit of a leapfrog, right?
00:04:32:38 – 00:04:48:19
Speaker
So you create a great widget. I see it and I say, Boy, that’s a great widget. If I do this, this and this, with that widget, I can leapfrog. What else? Technology was something that I think is better, faster, cheaper. So we see that all the time when we think about the end consumer, they’re buying experiences. How that’s evolved.
00:04:48:19 – 00:05:09:31
Speaker
I think of where we are now in our careers, in our time, that we’re no longer the ones who are going to be using a lot of our disposable income for those purposes. But with Rachael’s time, we’re coming up. And Rachael, what are you seeing in the marketplace? When you go to a store, you buy? How are you seeing that is helping or hurting them?
00:05:10:01 – 00:05:32:09
Speaker
Yeah. So one that one thing that really comes to mind is actually my shopping experience at Zara, a popular relative retailer. Over the past year, I’ve actually picked up on some of the robotics and things that they’re incorporating inside of their actual stores. So I remember, you know, a huge challenge when you shop at Zara is that the line to checkout is always terribly long.
00:05:32:09 – 00:05:56:06
Speaker
It is. It takes forever. People are always buying like 30 articles of clothing. It’s a disaster. So I remember the last time I went in there, no patients. Yeah, the last time I went in there, there was there was a half of the store was shut down and I was like, what the heck? And then I go back a week later actually, and they had converted the checkout area downstairs into a entirely automated process.
00:05:56:14 – 00:06:15:18
Speaker
So when you drop your clothing into this little bucket, it just automatically scans all of the tags at once and then you’re instantly checked out and then you can hit the road. So I thought that was a really interesting evolution of the checkout process, especially just in a retail store, brick and mortar. I haven’t seen anything like that other than maybe the Amazon store.
00:06:15:19 – 00:06:40:23
Speaker
It just shows you that how it’s making its way into just our everyday shopping experiences. Oh, without a doubt. I mean, and I think your example of Zara with the automated checkout, I’ll probably driven by RFID tags in the clothing. Yep. Yep. So I was reading actually a case study on it and they were utilizing the RFID technology in their actual warehouse to keep track of SKUs, make sure that their packages were being delivered to customers with the correct products in it.
00:06:40:43 – 00:07:04:07
Speaker
Then what I’m thinking is they’re like, Oh wow, this has been working. So efficiently for us. Why don’t we just use that in the checkout process? We’re starting to see an increase in RFID usage, both from the manufacturing side of primarily apparel. Right. But we’re also seeing it in cosmetics and others. In terms of knockoffs, Zara probably can’t find enough people to work in the store to count the inventory the way they’ve always done it.
00:07:04:07 – 00:07:30:19
Speaker
The past, just a decade ago, it was the stores that drove innovation. Now it’s supply chain that’s driving innovation and it’s going to the stores. I mean, we’re starting to see more and more automation at the grocery store level, right? The whole concept of micro fulfillment, you see concepts of two story grocery stores, right? With all the with all the bulk merchandise on the top being driven by robotics, picking, etc..
00:07:30:36 – 00:07:47:06
Speaker
So originally you go to your local grocery store, you go online, create your shopping list. The store knows you’re going to get these items out of the staples, you know, area. They can pick them robotically, deliver them to you as you go through to pick fresh produce, etc. On a lower level, there’s all kinds of stuff happening in the background, these little experiments that are happening.
00:07:47:12 – 00:08:09:36
Speaker
You mentioned the fears people have around automation. I like to get into some of those kind of debunk those misconceptions that exist out there in the marketplace. Maybe some businesses are more resistant to incorporate automation in their process because they have these misconceptions about what automation and adding robotics into their strategy can do. A common misconception is that automation replaces all human workers in jobs, the loss of jobs.
00:08:10:02 – 00:08:31:22
Speaker
What do you have to say about that? Well, you know, I I think actually robotics and automation are creating jobs. If you think about it. If you think about the total supply chain of an automated solution, you know, the providers of that automation need more and different types of workers, technology workers, etc. to build the automation, to deploy it, to support it.
00:08:31:41 – 00:08:49:38
Speaker
And yeah, while it may have an effect on a warehouse floor in terms of headcount, maybe I used to have 100 people in my warehouse, but now, thanks to automation, I really only need 60. Okay, we can redeploy those folks into other areas of the distribution center. We find with the users of our bots is they actually love the bots.
00:08:50:18 – 00:09:25:37
Speaker
And from a human perspective and I have to bring this up, there’s a soft ROI associated with automation and I’ll give you a perfectly good example. We have several customers that traditionally have picked using double pallet jacks with returnable sealable totes on there, and just pulling that pallet jack through 150, 200,000 square foot facility. It’s exhausting. Lots of work force related injuries, absenteeism, etc. The soft side savings of automation are huge, and we’ve heard it from customer after customer after customer that we help improve the work life of their associates.
00:09:26:09 – 00:09:52:19
Speaker
We make it less stressful, we make it easier, fewer accidents. It used to be that people would leave for $0.25 to a $0.50 an hour raise, and now they’ve learned the work environment, the experience of the day to day work itself will trump. That makes a big difference in retention. We actually have customers that use the soft savings, the softer why the improvement of work life and automation as a recruiting tool.
00:09:53:03 – 00:10:18:27
Speaker
The value of a solution is only as good as the workforce that adopts it. Oh, yeah, absolutely. And so when you think of it in that lens, that’s what we’re experiencing, is how do you make the technology simple, easy, and then the workforce adopt it. But there’s this other there’s a flip side to it, too. You’re assuming that you can interface the technology between two different entities.
00:10:18:46 – 00:10:41:44
Speaker
So let’s take, for example, ascend. That’s one of the common questions you ask in receiving in freight is how is our users and data available? Well, they can have it, but if the receiving entity doesn’t have the technology to absorb, it’s useless. Yeah. Locus Solution. How are you helping companies to have the infrastructure to support the solutions that you’re developing?
00:10:42:06 – 00:11:04:16
Speaker
Well, I think a lot of that is really software driven. Our software, all the software we have that optimizes what our bots do in terms of helping associates on the floor is really driven out of decades and decades of warehouse management and automation experience. So when you look at the user interface on an iPad, we specifically chose an iPad as a user interface because show me a two or three year old today that doesn’t know how to navigate that iPad.
00:11:04:31 – 00:11:25:05
Speaker
They learn how to stretch it, everything else, right? So adoption rates are extremely high. We see dramatic reductions in training times. So imagine you’re using a voice headset or traditional green screen RF device and you need to learn all the function keys on that. RF as opposed to walking up to an iPad, see a picture of the item.
00:11:25:05 – 00:11:44:14
Speaker
You have to pick the location and then we tell you which tote to put it on on the boat by color coding that tote. It’s very, very simple. One of the unique aspects of our solution in particular is all an operator needs to interact with. Our box is a low energy Bluetooth tag. There’s no headset, there’s no RF, there’s no cart.
00:11:44:36 – 00:12:01:47
Speaker
I’m walking with my my blue chip, with my low energy Bluetooth tag as I approach abort, the boss says, Oh, this is one ell. His preferred language is Spanish. We will dynamically display the screen in Spanish. Well, capture the work you’ve done for that bot. That bot may travel to another location being serviced by Rachael. Oh, this is Rachael.
00:12:02:06 – 00:12:35:20
Speaker
Her preferred language is German at boom. So those kinds of things, they’re tiny, but they’re massively impactful. No, I love what you said, too, about just having that iPad interface, though, as a wage, because that’s another misconception. People think that it’s very difficult to add automation and implement it and have your workforce adopt it. But with different technology and automation and robotics companies taking those lengths to create an interface that’s approachable and familiar to the workforce, going to the cost side of it all, I think that can also be a huge deterrent to some businesses.
00:12:35:24 – 00:12:54:43
Speaker
What would you say to a customer if they came to you and said, Look, I love what you’re offering me, but it’s just it’s too pricey for me to even consider this. We generally see payback are a Y of 12 months or less. 6 to 8 months is not unusual. And so to answer that, Rachael, part of it is just educating the customer.
00:12:54:49 – 00:13:16:22
Speaker
Mm. Talk to the customer, say give us the data, let’s talk, let’s walk your warehouse, let’s see what the operation looks like. Let’s gather all this data and run it through our ROI models. Now, in some cases it doesn’t work for everybody, but we will tell the customer these are the reasons why we have one customer that has publicly stated they had a 77% reduction in workforce related injuries.
00:13:16:47 – 00:13:40:32
Speaker
Now think about that. Think about the total cost of a workforce related injury and all the groups in your company that have to get involved with that associate with that medical claim, getting back up labor training, that the true cost of a work related injury is astronomical. It’s not just the medical cost and the loss of that worker for a couple of days or a week or whatever, it impacts the entire organization.
00:13:41:09 – 00:14:08:21
Speaker
I also talk about that in terms of hiring and turnover. It is an organizational impact. You think about the poor h.r. Team that just never, ever gets a break. They’re constantly having to recruit to get new workers because it turnover related issues. Supervisors need to train people and hope they show up the next day for work. And the true cost of hiring a replacement worker is just it’s exponential in terms of what people typically think it costs.
00:14:08:24 – 00:14:35:06
Speaker
How do you enable a CFO to understand that and a CEO where they see the value in it? Well, again, I think it comes down to gathering really good, reliable operational data. Benchmark that data with the customer. Here’s where I am today. And then based on our experience across hundreds and hundreds of deployments, we could say, look, our models show that this is possible based on the kind of data you’ve given us.
00:14:35:24 – 00:14:59:39
Speaker
And here’s where we see the improvements in your operation and here’s the ROI tied to that or the lack of our Y, right. What would you say to a business that says, you know, we’re too small for automation, it’s only for large businesses? Well, there are cases where, you know, an enterprise is just too small. Okay. But that being said, we have warehouse operators that are running on 12 bots.
00:15:00:06 – 00:15:26:12
Speaker
On ten bots. It’s not a huge investment from an automation perspective. And the adopters at that level know and understand the real driving forces, as we’ve all talked about, labor, labor cost, labor availability, all of that stuff, because when we see smaller enterprises at that level, they have a strategy to grow. Yep. And they could either try to grow the way we used to do it by just adding people, people and people.
00:15:26:12 – 00:15:45:48
Speaker
But that’s getting harder. So, you know, the really savvy operators are the ones that are turning to technology earlier in their development as an organization. Yeah. And I would say too, it’s also about creating a scalable solution. You know, I think that some of our customers DCPerform have been a little bit resistant towards robotics, automation and evolving their strategies.
00:15:45:48 – 00:16:03:13
Speaker
So it’s like, okay, well why don’t we start small? And then as you continue to grow and you see the return on that certain new thing that you’ve implemented in your process, then we can continue to build off of it as well as take a look at what’s the most painful thing that’s happening in your operation, what you know, what’s driving you crazy day after day after day?
00:16:03:27 – 00:16:30:13
Speaker
And can we address that pain point through a simple controlled ramp up approach, prove the value in that area, and then look for other opportunities outside of that. How are you seeing from the demand planning and forecasting side and the manufacturing of the from the Tier one to providers through that whole value chain? Where does software roll and where does automation take over?
00:16:30:45 – 00:16:50:39
Speaker
Well, I think I’m not a VR expert. I know enough to be dangerous. But I think when you talk about like demand planning and sales forecasting, those are great applications where AI and machine learning can really help advance that, where they used to be very people centric plans. Right. You know, survey the sales team. What do you think you’re going to sell next year?
00:16:51:03 – 00:17:13:35
Speaker
Then it goes up to that. And before you know it, the snowball is growing bigger and bigger and bigger is not based on reality. And I think a lot of the larger ERP demand planning, those providers have been around that they’re aware of that and they’re taking advantage of that technology to make that more accurate and more flexible in response to trends and demands and even catastrophes in the world.
00:17:13:35 – 00:17:33:01
Speaker
Right. Remember a year and a half, two years ago that that ship got stuck in the Suez Canal. Right. Ever would have anticipated that. I mean, the the level of machine learning and AI, etc., the ability to react to those catastrophes and just having supply chain visibility, risk management, this is all a brand new world, right? That didn’t exist really five years ago.
00:17:33:01 – 00:17:55:46
Speaker
Six years ago. But now it’s becoming more and more mainstream. So I think there’s a tremendous opportunity for AI and ML in those types of applications to react more dynamically. Chicken and egg question software or hardware, which comes first? Software in my mind, look, three, five years from now, we’re going to look at today’s robots and say, Oh, my God, look how silly we were.
00:17:55:46 – 00:18:17:04
Speaker
Look at those things. They’re kind of dumb and etc.. So we’re going to see continue evolution of hardware, technology, right? But if you think about it, it’s the bot needs software to guide it and drive it. So fundamentally, it’s a software play. I’m so early in my career in supply chain and even in the course of the year and a half that I’ve been in the industry, I’ve seen so much change.
00:18:17:06 – 00:18:36:19
Speaker
Automation and robotics is going to get to a point where maybe it’s morally not or ethically not. Right? And it’s still so early on that we haven’t really defined what that looks like. There’s not as much control over it. What should I be cautious of in the future? I mean, there’s I’m going to be met with some difficult decisions and questions to ask.
00:18:36:42 – 00:18:59:05
Speaker
I think a word that doesn’t get used enough with automation is safety. If it’s not a safe solution, it’s dead. Yeah, right. I forget who the gentleman was, but I read a quote from a CEO who said their number one focus is safety. I can’t have a quality organization without safety. First, we have to ensure the safety of the workers on the floor with regard to what kind of automation it is.
00:18:59:05 – 00:19:17:47
Speaker
So. Well, I think we’ve just debunked all those top five myths of automation. What do you guys think? It’s here to stay. I know that. I think one question, though, is really cherry on top automation and robotics. Are they the same or are they different? Define it to us. That’s a good one. I really haven’t really thought about it that much.
00:19:17:47 – 00:19:39:46
Speaker
Oh, we’ve stumped him. Stumped the king of robots? No. You know, for me, I see a glitch in the software. Yeah. What’s going on? The update didn’t hit at midnight. I think they kind of go hand in hand, to be honest with you. Right. A robot is just a device that can do something most commonly that a human can do, but it could do it repeatedly.
00:19:39:46 – 00:20:05:09
Speaker
365 days, 24 hours a day, ad nauseum. Yeah, robots are good at that. But when I think of automation, I think back to back to the orchestration, right? What’s orchestrating the flow of goods through my facility from receiving, through shipping, picking, etc.? All of the components coming together, whether it’s a shuttle system, whether it’s a robot, but what’s the software doing to help manage that in the most efficient manner?
00:20:05:09 – 00:20:21:37
Speaker
That, to me, is what automation is all about. Mm hmm. Well, thanks for joining us, and we hope to have you back. Yeah, I’d love to. It’s great. Absolutely. Thanks a lot, Steve. Always a pleasure. Welcome. Thank.