The Smart Warehouse With Dan Gilmore
The Smart Warehouse With Dan Gilmore
Want to know how you can deploy a smart warehouse for your business? Today’s guest is Dan Gilmore of , a company that provides a full suite of flexible and robust end-to-end supply chain software solutions to deliver success. He joins Joe Lynch to talk about the idea and technology behind their system. They discuss some of the big trends impacting warehouses, e-commerce, and retail. From labor shortages to automation, Dan enlightens on the benefits of WMS and WES for any business. Tune in to better understand the perks of this new smart technology for optimizing your business! The section below is transcribed. Transcription has limitations so there may be grammar and typo issues. The Smart Warehouse With Dan Gilmore Today's topic is the smart warehouse, with my friend, . How's it going, Dan? Great Joe. Very happy to be here today. Yes, I'm glad I'm finally getting to interview you. Dan, please introduce yourself, and your company, and where you're calling from today. Yes, again, Dan Gilmore. I'm chief marketing officer of a supply chain software company called . We'll get into that maybe a little bit more in just a second here, but company's headquartered in Reston, Virginia, just outside Dulles Airport. I happen to be in the Dayton, Cincinnati, Ohio area. Buckeye through and through, so go Bucks. Why, I got to say go Blue now. Man, you dragged me down. Anyway, Dan, what does Softeon do? Sure. Well, again, it's a supply chain software company, primarily supply chain execution. The company was founded in 1999, first customer all the way back then was L'Oréal, and just proceeded to build out a suite of solutions, very broad and deep capabilities. That includes warehouse management systems, as I said, that all the stuff that kind of goes around warehouse management systems. People package those differently, but things like labor and resource management, slotting optimization, yard management, and those kind of tools. And then a newer thing, which we'll get into today because it's so critical to what's happening in terms of the smart warehouse, is something called warehouse execution systems, which have been around for a while, but really gained prominence the last couple, three years, as a way to optimize and orchestrate order fulfillment level at a capability that's just beyond even very good tier one WMSs like Softeon has. And then the category of stuff called distributed order management, which has to do with the optimal sourcing of product based on customer commitments as well as network capacities and constraints, and how do I get the lowest cost alternative that meets the customer needs, very prominently in omnichannel commerce. It's almost essential in retail, but we have a lot of B2B type successes in distributed order management as well. So there's some other things, but that gives you a pretty good flavor of what we do. You guys started well before eCommerce was a thing, so you still support stores and that kind of warehousing? Sure, so I mean, in addition to traditional WMS type capabilities, and for retailers, that would largely was store replenishment, now moving in obviously to eCommerce fulfillment, but many retailers are also looking to have a lot of activity at the store level, whether that's buy online, pickup in store, curbside pickup, or store fulfillment, so we've got some solutions there, both in terms of the distributed order management that I just referenced a second ago, is the tool that's going to say, "Hey, the best place to fulfill this order from based on the time commitments as well as inventory availabilities, labor availability, et cetera, is store three, four, five, six, seven," and then have the ability... So first you identify where is the right location, and that could be obviously a DC or a third-party facility or something like that, but the first word is the best place to source it from, and then if it's a store, we have a store module that facilitates the inventory transactions, and the picking transactions, and the shipping at a store level. Yeah. That became a thing. I mean, I know, I think Target's one of those companies that delivers a lot... If you buy something online from them, they're more likely to ship from their stores these days. Yeah, if it's a huge... I've seen a figure. I don't know, and it keeps rising. The whole market has changed. The more high-tech feel and touch, the less back-breaking work and less bending over and lifting heavy cases. It’s like 80% or 90%. Yeah, I was going to say around 80%. That's the number I had in my mind too, that they're doing it from stores, which is rather incredible. Yeah. Well, before we get into all of that, tell us a little bit about you. Where'd you grow up? Where'd you go to school? And give us some career highlights and bullet points before you joined Softeon. Yeah, sure. Again, I've been pretty much, except very early in my life, an Ohio guy, my whole life. I grew up in the Akron, Cleveland area, and then got a job with NCR after grad school. I got an MBA from the University of Akron and I got a job at NCR, that was here in Dayton. I was a project manager, kind of in charge of barcode and data collection, and the way serendipity just kind of works, I moved from barcode data collection systems, and wireless systems, and then got into WMS, and was into consulting for a while, so I actually have done a lot of marketing in this space. I was also a chief marketing officer at RedPrairie before it got acquired by JDA and became ultimately Blue Yonder, but earlier in my life, I spent a couple of years implementing WMSs, a couple major projects down there in the Cincinnati area that really helped me learn a lot about how the technology actually works, and what's good, and what's less good. Notably, in 2003, I started a publication called , which changed the face of online supply chain and logistics, news, and coverage. I still keep a light hand on it. I still write a column once a week still for Supply Chain Digest. Yes. I know I have read that. It's funny. I did a lot of blog posts in the past, so when you are a writer, I joke I might research a little different than a professor's research. I Google, and you start to realize which publications have good content, because I'm a blogger. The bar's a little lower for a blogger than it is for somebody writing in a publication, and I would just go, "Man, oh man. This is a good..." Supply Chain Digest always had good stuff, so anyway. When and why did you join Softeon? Yeah, it's been about four years now, and I had done actually a little bit of side consulting with Softeon before joining, and was just impressed with two things, first off just the breadth and depth of the software and a number of innovative capabilities, but just as important as that, I mean, there's a lot of companies that got good software. We think we've got bleeding edge software, but a number of companies out there. But really just the approach to customers and success, so I've never seen a company that consistently put its own interests behind those of its customers on a regular basis, and was just not going to let anything get in the way of a successful implementation, and that's really a track record that's unequaled in the marketplace, so just the care and concern for success at the customer level, and not looking at everything through a lens of how many professional services hours I can sell or something like that. It's really just kind of a different attitude, and that really intrigued me, and plus the company needed some help in the marketing area to get that message out, so a combination of those factors led me to join Softeon. Excellent. Well, today's topic is the smart warehouse, with my friend Dan Gilmore. Obviously, things have changed quite a bit in this business, so talk about some of the big trends that are out there, that are impacting warehousing, and eCommerce, and retail. It impacts everybody And these, most of the audience is going to say they're living these, so you know, it's not like these are big surprises, but it's still kind of nice just to put it all in context. Obviously, the growing distribution and labor shortage and there’s a shortage and manufacturing. Very acute, and everywhere you go, that's what you hear about, and just the turnover levels, and the retention, and just unprecedented, even with the wages rising substantially, so that's everyone's concern. That is naturally... And actually, after about a decade of very flat wage growth in warehousing and distribution until a few years ago. Now all of a sudden, of course the costs are taking off. I mean, Amazon is over $20 an hour with attractive signing bonuses. In many parts of the country, maybe a couple, three months ago now. With parental leave for 20 weeks. I saw it on TV yesterday. Is that right, now? I did not know that. That would be a very attractive benefit, and that's the advantage. And then Target, maybe two or three months ago, announced that they were raising their wage, in both stores and distribution centers, in some markets, not all markets, but in some markets at $24 an hour, and you think, "But that's $48,000 a year," so... And assume there's probably some overtime in there, right? Whatever, so a husband and wife, I'm just making up an example there, working at a Target DC in those markets, they could be pulling in $100,000 a year for a family, which is not bad money. [caption id="attachment_7940" align="aligncenter" width="600"] The Smart Warehouse: With the e-commerce-driven cycle time pressure, it's unbelievable how fast you can get products these days.[/caption] If I could add something into that, Dan, I think also... And this has come up on my podcast a few times. If I had a choice right now... I'm getting too old for that kind of work, but... I can't walk 10 miles a day. I think we needed to make that job easier, and we're going to get to that, because this is what the technology does, but I think it also makes the job more attractive, when they can say, "I go to that job, and I'm learning all this cool technology," as opposed to, "I'm just a strong back." If you can bring somebody in, there's a different feeling when I get to wear all that high-tech gear, and use high-tech systems, and say, "I'm part of the supply chain," as opposed to, "I'm just a strong back, and I walk five miles a day, and nobody gives a damn about me." Yeah. There is no question about that, and I think both in terms of just a shortage of labor, and second just the ability to attract people into this career now, it's just the whole market has changed. I think that more high-tech feel and touch, and less back-breaking work, and less bending over, and lifting heavy cases, and all the kind of things that [inaudible 00:09:32] for a long time. I think you're spot on on that dynamic. And if we do have a shortage, that means the people we do have have to be more efficient, and the way they can be more efficient is with tech of course, and we'll get into some of that in a minute, but... So that's one big trend that's going on. What's another big trend that's happening? Yeah, well there's a bunch, and they're kind of interrelated as well. Obviously, the eCommerce-driven cycle time pressure, so obviously it's led by Amazon over your tablet, it’s unbelievable how fast you can get products these days, even somewhat obscure products. Not that long ago, I needed a new power cord for my HP computer, and somehow, Amazon was able to deliver that the next day. I'm like, "How do they have this cable someplace that they can get it to me in one day?" I think of all the thousands and thousands of cables that are out there, and they've got mine. So the cycle time pressure, and that both is in terms of getting the order processed from when it drops into the DC and out the door. Obviously, companies are also moving distribution facilities closer to the customer, so the transportation part and parcel part of the journey is cut down as well. I mean, I can't remember the specific numbers, but I think it's Home Depot is building 170, 180 different of these local fulfillment centers that are being the largely cross-stock type of facilities that bring bulky items in and get them right to the customer in addition to the big giant warehouses that they already have. It's a fact of life. Eventually, we will teleport or whatever the product from the warehouse because it seems like we are reaching the Laws of Physics there that it can't be here any faster but maybe we will find a way. I remember probably five, seven years ago, I was working on a digital marketing project. I was helping this distribution center, nice good size in Chicagoland, Peoria, and they said, "We're one-day shipping to 65% of the population of the US," and that was always what Indiana, and Illinois, and I guess there's so many DCs down in Ohio, could always make that claim, and that was good enough. So if you said, "I have a DC in the Midwest that can get me to the East Coast, and I have one out West," and that was good enough. We're not seeing that anymore. Yeah. I mean, we're going to get to increasingly where same-day delivery just becomes a fact of life, and rather incredible, and you've heard Amazon and others talking about getting it down to two hours, or 30 minutes, or whatever again. Well, that's what Target's doing with those DCs. I mean, their DCs are their stores, and we think we'll get to Walmart doing some of the same. No question. So, what's another trend that you're seeing out there? Yeah, well just because obviously we're calling this the session, we're going to talk about the smart warehouse of the future, that's largely here today, but we've got smart everything, right? We've got smart houses, we've got smart cars, we've got smart refrigerators, we've got smart toothbrushes even. I saw that a couple years ago. I'm not sure if it's exactly taken off or not, but monitoring how often you brush your teeth. But what has that really meant? Well, primarily, it's just talked about internet connectivity and sort of some kind of analytics around it, so you know, easy example is John Deere, or Caterpillar, or companies of that kind, putting sensors and other IoT-type devices on their equipment out in the field, so they can get a sense for how people are actually using it. They can do predictive maintenance on it. They can say, "Hey, your guys aren't using the equipment as effectively as they could if they change their techniques," or et cetera, et cetera, so I think it's certainly timely, and if we're going to have all the smart things, it's time for the smart warehouse too, but as we'll get into for the rest of the broadcast here, it's a lot different than just plain more internet connectivity, and sensors, and things like that. That can be part of it, but it's just a small part of it. But the bottom line of it is, we are entering a new era of warehouse software technologies that are in fact much smarter than we've ever had before, and I've argued publicly for a couple, four years now, that we really had about 20 years of relatively incremental progress in WMS technology. I've used this in speeches before, but a few years ago, I pulled out of cleaning up my office around the holidays, as I often do, and I found an RFP from a major food company for a WMS circa 2003. I looked through that, and I thought, "You know what? This doesn't look all that different than the RFPs we're seeing in 2019, or 2020," or whatever year I was looking at that. Really, the big difference is I looked at it, I said, "The big difference is not in the functionality being asked for." It's just that today, a lot of that functionality is in fact core product, configurable product, whereas back then, maybe a lot of it had to be achieved... more of it had to be achieved through customizations. I think that's probably true, but the fundamental way a warehouse operates, WMS operates, didn't change all that much from give or take 2000 to 2020, or somewhere in that kind of a range. But now with the smart technologies that we're talking about, they are brought in to bear by the warehouse execution systems, working with WMS I talked about before. This is a new ballgame, and it's going to be a fun for the rest of the discussion here, to talk about that. So you threw in a new term there. You said warehouse execution system, and I know you said those have been around for a while, but they're now becoming kind of the norm, did you say? Just becoming very prominent, and the value's starting to be recognized. What is it? They came about actually a good while ago from a couple, three companies really, that had the belief, and I think correctly so for most WMSs, that the WMS systems did not care enough about equipment throughput and utilization, so you wound up with big peaks and valleys. Now, anybody who's been in a distribution center, even a really busy one, you've seen it where there's all kinds of activity at the beginning and the middle of the wave, and then as the wave starts to dissipate, even on a big, expensive, huge sortation system, you've got a relatively small number of boxes moving around, waiting for that wave and everything to close out. When you say wave, does that mean the orders come in waves? Yeah, the work is released in what are called pick waves, and that's based on any number of different attributes. It could be the carrier schedule, or value-added processing that needs to be done, or just workload balancing across different pick areas of the company, so you organize the work against various attributes that constitute a block of work, that's typically referred to as a wave. Yeah, so the problem is that I know I've got all these trucks that are going to show up, and they're taking different orders, so maybe I'm working to that order that's going to fill up that truck, or orders that are going to fill up that truck, and the problem is, to your point, is we've got already maybe a shortage of head count in there, and now when we have waves, now I'm not being efficient, because I've got too much work at one moment and then not enough in another. Yeah, and the whole goal of WMS, and what we're going to talk about today with the smart warehouse, is really overcoming... I mean, obviously you've got to plan and execute based on the workforce that you have here today, and we'll talk about that. So just having a warehouse management system that gives me stuff was great in the past, but you're saying, "I'll help you with a WES," or warehouse execution system. "I'm going to help you manage the flow. Manage the flow of work and the resource utilization, so that's exactly right. In and just new ways. Part of that still ties into that interest in level loading or making the flow of goods across an automation system more smooth and consistent, because if you can do that, a couple things. First off, the total throughput of the system is likely to be better, and second, if it's a new facility, you could actually probably get by with a smaller sorter, if you will, because you're going to be able to utilize that sorter more consistently over a block of time, a shift, or however you want to look at it there. And the other kind of breakthrough that Softeon has had is that WES, while it has its roots in that level loading of the automation and better utilization there, the WES works extremely well even in non-automated facilities or lightly automated facilities. [caption id="attachment_7941" align="aligncenter" width="600"] The Smart Warehouse: The fundamental way a warehouse operates didn't change all that much from 2000 to 2020. But now, with smart technologies, this is a new ball game.[/caption] As a matter of fact, one of our leading customers, I'm not sure I can say their name, so I'm not going to, but actually did a press release a couple years back that talked about a 50% productivity...