Transcripts
Welcome back everyone.
Speaker:I'm your host, Lori Boyer from Unboxing Logistics, and today is gonna be a
Speaker:little bit different when it comes to the Unboxing Logistics podcast.
Speaker:A few weeks ago, I enjoyed myself in Orlando, Florida at RILA, the Retail
Speaker:Industry Leader Association event, and I was able to have a really great chat
Speaker:on stage with John Naylor from Trew and Scott Davis of JD Finish Line.
Speaker:They had recently completed in conjunction with our Summit Advisory Team.
Speaker:Completed a project where they had taken a, a legacy fulfillment center with fully
Speaker:manual processes and turned it into a fully automated modernized facility.
Speaker:All, all while everything was still happening in the facility, they
Speaker:were still sending off shipments, receiving goods, all that.
Speaker:So.
Speaker:It was really interesting to hear their insights on how they did that, the tips
Speaker:that they have for you if you're looking on modernizing on any of your facilities.
Speaker:So you're not gonna wanna miss it.
Speaker:Sit back, enjoy, and we'll see you later.
Speaker:This is a, you know, I think this session was called Beyond the Hype, and that's
Speaker:because there's a lot of hype and talking about different things, but I have
Speaker:brought two of the best real people.
Speaker:Oh, these are real boots on the ground people who are gonna help you understand
Speaker:how to take a warehouse or multiple DCs and modernize them while keeping
Speaker:everything going, and that is a freaking hard thing to do, as I know you guys know.
Speaker:So I was introduced to these gentlemen through some of my cohort.
Speaker:I am Lori Boyer.
Speaker:You heard from Unboxing.
Speaker:I host the podcast Unboxing Logistics.
Speaker:I work at EasyPost and one of our teams is the Summit Advisory Team,
Speaker:and they worked with these gentlemen on this project for multiple years
Speaker:to get these warehouses up and going.
Speaker:Love working with our Summit Advisory Team.
Speaker:And so I wanna dive in.
Speaker:I want each of these guys to introduce themselves first and tell you why the
Speaker:heck you should even care who they are, what their role was in the project,
Speaker:and what they kind of did for us.
Speaker:So we're gonna start with Scott and then we'll hear, hear from John.
Speaker:Thanks, Lori.
Speaker:So my role in the program was really to establish what our design criteria
Speaker:was before we even got started, right?
Speaker:What are we trying to accomplish, and then what partnerships do we need to bring to
Speaker:the table to be able to complete that?
Speaker:Okay, awesome.
Speaker:Easy peasy.
Speaker:John.
Speaker:Good morning.
Speaker:I'm John Naylor.
Speaker:My role in the program was actually the early boots on the ground working
Speaker:hand in, in glove with Scott and his team, the Summit team really on data
Speaker:collection, information gathering working with the operational teams, mapping out
Speaker:all the process flows and working with the leadership team with, with Scott
Speaker:and Scott and Jimmy understanding what the business goals would be for the,
Speaker:the next five years of the program.
Speaker:Okay, perfect.
Speaker:So let's, let's talk about the project itself for a second.
Speaker:For someone who hasn't, wasn't boots on the ground, wasn't living it,
Speaker:how, how do you describe the project?
Speaker:What is it that you actually did?
Speaker:Scott, you wanna start?
Speaker:Sure.
Speaker:So the goal, so this distribution center's in California, so the overall goal was to
Speaker:help maintain the staff that we had while doing more productivity and how could we
Speaker:introduce automation into that program so that we could have a seamless transition
Speaker:from the way we did the old way.
Speaker:And the new way.
Speaker:And through that process was our guiding principle, which
Speaker:was not to disrupt the business.
Speaker:How can we do that simultaneously?
Speaker:And it's really easy.
Speaker:So, you know, you guys, there's not a lot of stories here.
Speaker:Oh wow, wow.
Speaker:But really through the process, you, you really learn that the
Speaker:people that you're working with, that that's what's important.
Speaker:The people that you're working with.
Speaker:That's important.
Speaker:That's perfect.
Speaker:I love that.
Speaker:Can you tell us a little bit about the size of the facility?
Speaker:How many people are working there?
Speaker:Either one of you, John, you haven't.
Speaker:Sure.
Speaker:I I think Scott really oversimplified it, or, or I could simplify it more of.
Speaker:It, it was open heart surgery as you're walking down the street, is
Speaker:really what we accomplished here.
Speaker:Open heart surgery as you're going down the street.
Speaker:Okay.
Speaker:Really easy.
Speaker:No, from a size of a facility, I, I think it's really not the size that I, I think
Speaker:in this case is, is the speaking point.
Speaker:It was the the complexity of, of the, the solution itself.
Speaker:This is a highly automated facility.
Speaker:It involves multiple aisles of mini load technology.
Speaker:ASRS shuttles with light sortation but also, and, and most critical, it, it
Speaker:had a team in place when we showed up before we ever automated anything.
Speaker:And it was working with them to understand how do we keep product going out the door?
Speaker:At the end of the day, it mattered.
Speaker:Product had to get to the client, had to get to the store.
Speaker:Ultimately that's what mattered each day.
Speaker:Okay, so I'm curious, you mentioned the team was already there.
Speaker:Do you feel like that was a positive, that you had a, a team already in place?
Speaker:Or do you feel like that was more challenging?
Speaker:No, absolutely.
Speaker:The, the team there, manual environment, so pallet, pallet jacks, you know,
Speaker:single picking racks with carts, but the excitement that they had to move
Speaker:into automation was just fantastic.
Speaker:Oh, okay.
Speaker:So the buy-in that we had to get from them and that team out there is just fantastic.
Speaker:When you go through this transition, you never know what you're gonna
Speaker:get out certain leadership and outta certain people and how they're gonna
Speaker:acclimate to the new processes.
Speaker:And so with Jimmy's leadership and our operations team and really the core group
Speaker:that they had, they have a tenured group.
Speaker:They really love the, the business that we're in.
Speaker:And so it made it really easy to get their buy-in from that perspective.
Speaker:And it became more about including them more often instead of, you
Speaker:go over here and keep doing your thing while we're doing this real
Speaker:bright, shiny thing for everybody.
Speaker:Did you have?
Speaker:I was that was one of the things that struck me in our, our first visit,
Speaker:if you remember went to Morgan Hill.
Speaker:You know, I've automated a lot of DCs in the course of my career.
Speaker:And, and when the operational staff knows that change is coming,
Speaker:it creates a lot of anxiety.
Speaker:And I think the team had done a really good job at JD of introducing that
Speaker:change is a positive for the building.
Speaker:There was already a sense of pride in the building.
Speaker:Which I show that was evident, you know, talking to the leads.
Speaker:I, I call it servant leadership that you see at JD, we like to do the same at ours,
Speaker:of of the first response from anybody on the floor is, what can I do to help?
Speaker:You know?
Speaker:Tell me a little bit about this process.
Speaker:And, and when I started the, the initial findings of, you
Speaker:know, tell me about what you do.
Speaker:Can you walk me through the steps, the process of how you receive this?
Speaker:How do you check this in?
Speaker:You know, mapping out everything.
Speaker:There's enthusiasm.
Speaker:There was pride of, well, how am I gonna change this going forward?
Speaker:What does this look like?
Speaker:They were really empowered to be a, a partner through the process all
Speaker:the way down to the people that were packing and receiving boxes up to
Speaker:the, the CEO level of the company.
Speaker:It was, it was a really refreshing environment.
Speaker:Okay.
Speaker:So I'd love to talk about buy-in then.
Speaker:'Cause that's like fantastic.
Speaker:They were all bought in, they were enthusiastic.
Speaker:But I think we've all been there when people aren't bought in.
Speaker:So I guess my first question is, what is it that they did to get such good buy-in?
Speaker:Early on?
Speaker:You mentioned the team.
Speaker:Was that, from your angle.
Speaker:You know how,
Speaker:I mean, what were your methods?
Speaker:The first thing is honesty, you know?
Speaker:So these things are complex.
Speaker:And so you have to bring some excitement when you're discussing it.
Speaker:It cannot just be, watch these slides with me, this automation's gonna be great.
Speaker:You know, you really have to get their buy-in in that regard so
Speaker:you teach 'em early and often, and then engage 'em frequently.
Speaker:Yeah.
Speaker:We really didn't work in a vacuum for the, the design process.
Speaker:So write down, you know, Jimmy, your, your staff bringing in the site leads,
Speaker:the supervisors, get their opinion.
Speaker:The ones that have to live with this for the next 20, 25 years, are
Speaker:we improving their life each day?
Speaker:And, and not on an island too.
Speaker:So this distribution centers in Morgan Hill, California.
Speaker:We're in Indianapolis, Indiana.
Speaker:Okay.
Speaker:So this team of people are gonna come, you know, kind of into my house
Speaker:and they're gonna do this thing.
Speaker:What is, what is that really?
Speaker:And so we immediately had to make relationships with those
Speaker:leaders and that ended up, you know, really working out for us.
Speaker:So you mentioned honesty.
Speaker:I think that's a really good one, being clear.
Speaker:But also what I picked up from both of you were the fact that you
Speaker:were open to feedback from people.
Speaker:I, I think sometimes when we go too top down.
Speaker:We're pushing our ideas on people, and that always ends up not
Speaker:really getting legitimate buy-in.
Speaker:So we mentioned buy-in of the actual operators, workers on the ground.
Speaker:What about higher level in terms of, I'm guessing this didn't cost $3.
Speaker:You know, it's, it's a spendy thing.
Speaker:So how do you get buy-in to automate a facility that is gonna cost money?
Speaker:Sure.
Speaker:Just ask, they normally say yes, right?
Speaker:Just ask.
Speaker:There's not a lot, you know, pushback.
Speaker:No.
Speaker:So, so, so really it is a process, right?
Speaker:You have to have the data, you have to have the correct data.
Speaker:You have to get the correct buy-in from the right leaderships across
Speaker:all the different companies.
Speaker:In our example, so, you know, JD Sports acquired Finish Line in 2018
Speaker:and Shoe Palace just thereafter.
Speaker:And with that they were moving outta one building into another building.
Speaker:And so it was a clean slate for us, a brand new building, and they were
Speaker:gonna operate manual and we were gonna bring this automation in.
Speaker:And during that time we had a shift in our CEO.
Speaker:So we had to sell this project to twice CEO.
Speaker:Twice.
Speaker:Twice, Again, so easy.
Speaker:The second time was even easier, but so, so we had to go through, really over
Speaker:and over again, just selling that we know the ROI is gonna be there for us.
Speaker:We know the impact to the people that the boots on the ground in the
Speaker:distribution center was gonna work.
Speaker:And so I would say tirelessly working back and forth with the new
Speaker:leadership, engaging with our leaders at each facia to let them know that
Speaker:the project was gonna be a success.
Speaker:They just needed to give us the money.
Speaker:So transparency.
Speaker:And I also am hearing for you, you kind of a trigger point, right?
Speaker:Like most of the time when you're gonna do a big something, it, it may
Speaker:be because there was an acquisition, or it may be because there is a new CEO.
Speaker:That could even be a trigger point in itself.
Speaker:That kind of brings up these ideas.
Speaker:I've got a couple of questions that have come in already.
Speaker:One of them was though about headcount.
Speaker:So it says, assuming the automation, decreased associate headcount, how did you
Speaker:manage that with employees as you went?
Speaker:Do you want me to take a stab at that?
Speaker:To start, because I thought you guys did a great job.
Speaker:So the, the first question you know, I'll take a step back
Speaker:'cause it was part of the buy-in.
Speaker:When we look at these types of projects collectively, all of us in this room
Speaker:automation is, is to serve two functions.
Speaker:One, it's either to add capacity to an operation that you just manually
Speaker:can't get there, or it's to reduce your cost by eliminating labor.
Speaker:At the end of the day, the, the focus was on the right process,
Speaker:the right business flows.
Speaker:Once you have those ironed out, and that's where we
Speaker:collectively spent our first year.
Speaker:Was making sure we had the big beautiful room day.
Speaker:You remember that?
Speaker:A big, beautiful mind with all the strings attached.
Speaker:We actually had one of those for this process.
Speaker:But part of that, you get the ROI model and, and one of those was around
Speaker:labor specifically in the forklifts in the back for reserve storage.
Speaker:We had a big day of discussing do we automate this with ASRS?
Speaker:Do we go with forklifts?
Speaker:It was going to be about 65 people I think if we went manual.
Speaker:The critical thing for us was mapping out the growth of the company.
Speaker:Where are we gonna be in three months, six months?
Speaker:Six years?
Speaker:And the Finish Line team did such a great job of hiring appropriately so we
Speaker:didn't overstaff to lay off people later when that job function was eliminated.
Speaker:So there was a real conscious effort to allow the staff to grow and stay just
Speaker:behind the curve of where we needed people as we phased in the implementation.
Speaker:So it was a, a very what I'm gonna call people focused type approach.
Speaker:I, I thought they did a great job of putting the people first.
Speaker:Yeah.
Speaker:It's, it's the do more with the same people.
Speaker:Not reduce the people.
Speaker:Right.
Speaker:Because we knew once with the automation, what that did is that
Speaker:enabled us to bring different products from different facies into that
Speaker:building, which increased our volume.
Speaker:And again, the selling point back to how do we get the project approved,
Speaker:looked at the store growth and looked at the volume growth and where
Speaker:we needed that to be so we could.
Speaker:You know, increase our speed to our customer, both our stores and our
Speaker:digital customer, you know, while maintaining quality and reduced costs.
Speaker:So the people, we can't say enough about that over and over and over again.
Speaker:But they had the buy-in because just that it was the hiring practices
Speaker:that Jimmy and his team started with.
Speaker:Yes.
Speaker:And it was the transparency over time.
Speaker:'Cause let's not fool ourselves.
Speaker:That was absolutely a question that people had.
Speaker:You're gonna eliminate roles.
Speaker:Is this your goal?
Speaker:No, that's not our goal.
Speaker:We need to do more, and we're gonna do it with the same and we're gonna tailor
Speaker:our hiring practices to do just that.
Speaker:Okay.
Speaker:I really love how you mentioned looking to the future.
Speaker:I think that's so critical when you're doing any of these big projects that
Speaker:you're not looking for just today, but you're looking to the future.
Speaker:We have a couple of additional questions I think kind of tie in here.
Speaker:Somebody asked you to talk and I think John, this may be you, but
Speaker:I'm sure Scott as well, can you talk about the selection process
Speaker:of how you decide which technology?
Speaker:And, you know, you mentioned some of that a little bit.
Speaker:How did you decide what was gonna work best for this operation?
Speaker:Okay.
Speaker:Great question.
Speaker:So again, as you step back and you map out what you think is your perfect
Speaker:process, you've interviewed everybody on the floor that has done that.
Speaker:You understand what steps they go through.
Speaker:It, it really becomes a, a fairly simple black and white math exercise.
Speaker:It's an ROI.
Speaker:Do we invest the money.
Speaker:What is the payback on that?
Speaker:We're automating a process that we've defined as efficient and productive.
Speaker:The only other piece that comes into that is, or, or two
Speaker:pieces that we kind of weighed.
Speaker:Is it future proof?
Speaker:You know, am I painting myself into a corner because I, I know nobody else's
Speaker:operation in this room changes over time.
Speaker:Well, only yours.
Speaker:So are we future proof?
Speaker:Have we painted ourselves into a corner?
Speaker:Or if our business needs change or flex like ours did, you know,
Speaker:acquisitions happen will this be able to accommodate that change?
Speaker:The last piece comes down to just risk.
Speaker:What, what is the risk profile of the client?
Speaker:There are some people, well, you might have a fantastic ROI, it's just
Speaker:not in their DNA to, to take that high risk step on, on technology.
Speaker:So I felt like we landed on a good balance of, of really good
Speaker:IRR and ROI in the building, but also a, a good element of risk for
Speaker:future-proofing the the operation.
Speaker:Were there any debates?
Speaker:So we, you know, didn't coin the term, but we value engineered some things so
Speaker:that we could, you know, reduce the cost while looking at what the forecasts
Speaker:were, knowing that things change.
Speaker:And then you take that and say, how can I expand on the automation at
Speaker:the current footprint within the current building without having to go
Speaker:say, you know, add another building.
Speaker:So when we did that, we immediately said, okay, we can design this this way.
Speaker:And we have room for expansion and growth.
Speaker:Hmm.
Speaker:And so that was a real partnership.
Speaker:And John mentioned it, we basically created a flow that was, we called
Speaker:it the Beautiful Mind, which was essentially every case that came in
Speaker:had a destination and it went to some area and then it shipped out some way.
Speaker:And that really helped us define what we needed and what we would say the
Speaker:go live year would be for the target, and then where we thought we would
Speaker:be in three and five years based off of your merchant forecasting and
Speaker:your other business plan forecasting that you have, such as store growth.
Speaker:Okay.
Speaker:I would love to hear where maybe you were surprised when it came to things whether
Speaker:it's technology, whether it's, I know you had slab issues and power challenges
Speaker:and all the kinds of things you can imagine going on that are surprises.
Speaker:What, what, maybe share some of those with us, the challenges you ran into
Speaker:things that caught you off guard.
Speaker:How that went.
Speaker:Well, I knew it was gonna be perfect the first day I walked in first.
Speaker:And
Speaker:It was a seven sided building.
Speaker:I, I challenge anybody in this room, would you design a, I
Speaker:imagine seven sided building?
Speaker:It's, it's the first one I've seen in my career of 30 years.
Speaker:Did we mention it was in California, so.
Speaker:Yes.
Speaker:Yes.
Speaker:You know, interesting yards to work with.
Speaker:We moved shipping and receiving a few times, but there, there were
Speaker:some challenges that did pop up with slab electrical that came up.
Speaker:Just some things that none of us would've known.
Speaker:'Cause it was on the print.
Speaker:It was supposed to be that way, and it just turned out not to be that way.
Speaker:And so how did you respond or what are your suggestions to respond nimbly,
Speaker:because I'm sure you responded perfectly.
Speaker:So it starts with your business case in the beginning.
Speaker:You need to define what you need, you know?
Speaker:What extra do you need to have just in case?
Speaker:Right.
Speaker:What contingency dollars do we need to have?
Speaker:They need to be defined somewhere.
Speaker:Okay, write that down.
Speaker:Have some backup dollars.
Speaker:Gotta have some contingency dollars.
Speaker:They're gonna come.
Speaker:Yeah, you have to have that.
Speaker:And then, you know, being in California, we knew that the
Speaker:rules were gonna be more strict.
Speaker:And other areas.
Speaker:And so, so we, when we met and we made the business plan, we had to say, listen,
Speaker:we would normally not request some of this, but we know this can happen.
Speaker:And so contingencies are huge.
Speaker:Do you want to go back in a year and ask for more, or would you rather
Speaker:fight the battle upfront so that you can stay within your budgets?
Speaker:How can we do this?
Speaker:And we're, we're gonna be good stewards of Of the dollar, so we're not
Speaker:gonna spend it if we don't need it.
Speaker:And unfortunately, and fortunately in this instance, we did have to rip up
Speaker:some, some of the slab and we had to go back and add some additional electricity.
Speaker:Oh, why do you say unfortunately.
Speaker:So I say, unfortunately.
Speaker:You said unfortunately, and fortunately.
Speaker:Because we had to do it,
Speaker:Unfortunately we had to do it.
Speaker:I didn't want, I didn't wanna have to do it.
Speaker:But fortunately, 'cause now it's good.
Speaker:Fortunately, we, we did have the contingency in place.
Speaker:But the unfortunately thing is really that, you know, you want to do, you
Speaker:wanna make the best plan and have the best information and execute as
Speaker:fast as you can with as much quality.
Speaker:You know, all those things that you want to do.
Speaker:And so when that happens.
Speaker:That's not just about the money, it's about the time.
Speaker:Right.
Speaker:We, we had things that we were, we were practicing already on
Speaker:what our schedules would be.
Speaker:How would we move the manual environment around to get
Speaker:this automation being built.
Speaker:How do you unload all the steel, all these details.
Speaker:So I say that, but I, I really enjoy this stuff.
Speaker:So for me it was just something else to have some, you know,
Speaker:opportunity to work on.
Speaker:Right.
Speaker:This is another challenge we can get into, so.
Speaker:I, I'm an optimist, so when I, I. See, things like that, I, I'll tell
Speaker:you what the positive was for me.
Speaker:It pressure tested the team.
Speaker:So when all of a sudden we had to rip up an area of the floor that they were
Speaker:already manually picking orders from it, it actually forced us to say, okay,
Speaker:all these contingency plans that we meticulously went through for a year it
Speaker:forced us to put that into play long before we ever thought we'd need to.
Speaker:And, and it really forced the, the operation to get efficient in some areas.
Speaker:Are we taking up more space than we need?
Speaker:What do we do if the next phase of this, I've gotta move over here.
Speaker:And, and it actually pushed the operation and the installation teams
Speaker:to work a little closer together and, and pressure test that what do we
Speaker:do next weekend if we have to pivot?
Speaker:And, and I think that allowed us to, quite frankly, hit some curve
Speaker:balls out of the park every time they were thrown at us for the next year.
Speaker:Can I ask, that's brought up a question for me.
Speaker:You mentioned timeline a little bit.
Speaker:You talked about a year of working on contingency plans.
Speaker:Can you gimme a timeline of kind of how it worked from when you first decided, okay,
Speaker:it's time to make an investment here.
Speaker:So did you spend a year planning and then start implementing, you
Speaker:know, what, what was the, the timeline look like if somebody's
Speaker:thinking of doing it themselves?
Speaker:I'll take the front part.
Speaker:As I mentioned earlier, we had a shift in CEO, so that actually
Speaker:extended the timeline about a year longer than we wanted.
Speaker:I call it a year 'cause we deal with peaks and.
Speaker:You get contingency time too, right?
Speaker:Yeah.
Speaker:Well you have to deal with back to school for us then also,
Speaker:you know, Christmas holiday.
Speaker:So you're really, you're looking at six months that are the times you could
Speaker:actually potentially raise something up without risking, right, the business.
Speaker:And so that was the first hurdle we had to get over is, you looked at the
Speaker:forecast, you knew we needed the capacity.
Speaker:Okay, let's pause for a little bit.
Speaker:And rightfully so, you know, the new CEO came in, he needed to get
Speaker:his bearings, we owed him that and and we worked through it.
Speaker:And after that, you really had, for us at JD Sports, we had to take,
Speaker:when's the optimal time to go to go live and then work backwards.
Speaker:'cause again, you can't go live on November the 15th.
Speaker:Right?
Speaker:Because that's right during your holiday peak, so.
Speaker:You can go live on November 15.
Speaker:You can do whatever you want.
Speaker:Yes, ma'am Yes ma'am.
Speaker:You could.
Speaker:So, so that, that's how we defined it.
Speaker:And then certain things throughout the process would also create
Speaker:opportunities for you, let's say, since we designed in a way we could do
Speaker:manual and automated at the same time.
Speaker:What that did for us was we said, okay, we don't wanna risk digital during holiday.
Speaker:Let's do that the manual way.
Speaker:Okay.
Speaker:And it is pretty complex to do things that way, but we just, you know,
Speaker:de-risked ourself, if you will.
Speaker:Anything you have to add John in terms of timeline?
Speaker:I, I think quite frankly, we spent the right amount of time on the planning.
Speaker:You know, it was, my mother used say, ounce of prevention's
Speaker:worth a pound of cure.
Speaker:That I think we avoided a lot of the pitfalls.
Speaker:We really did a great job of going through, starting with happy
Speaker:path specifically on the IT side.
Speaker:Not only, you know, we talked about the automation.
Speaker:But there was a whole side to WMS implementation.
Speaker:All the systems that were behind this merchandising.
Speaker:There were a lot of things that came into play to make this happen.
Speaker:And I think the teams worked really well between it operations,
Speaker:mechanical to really map out not only the happy path, but gosh,
Speaker:did we spend a lot of time on the exceptions and the what ifs scenarios.
Speaker:I mean, some of them, I, I swear, involved meteors hitting the building.
Speaker:They were ready for that.
Speaker:We went down every possible plan that could happen, and I, I think.
Speaker:I, I don't regret spending that time of, of over planning up early.
Speaker:Over planning.
Speaker:So over plan, that's another thing you can write down.
Speaker:Go through as many contingency plans as, as you can think
Speaker:of, as your team can think of.
Speaker:I'm curious you mentioned doing, you know, manual at the same time
Speaker:that you were trying to automate.
Speaker:How, you know, I guess what did it look like on the floor when you've
Speaker:got fulfillment still running while you're ripping apart the building?
Speaker:How did you manage that, successfully?
Speaker:Sure.
Speaker:I mean, it's, it goes back to the team that was on the floor.
Speaker:And so we worked with Jimmy, who's the vice president of operations and said,
Speaker:can you give us one or two people so that they can really focus on the system side?
Speaker:'Cause we're not gonna take our operators, our DC operators, and
Speaker:have them build the, you know, the steel, right, the construction.
Speaker:But we did want some people to be at part of the meetings and
Speaker:different things like that.
Speaker:So I want to say it's not as hard as it sounds.
Speaker:But also it's very complex and if you, if you plan for it well
Speaker:enough, then you can get through it.
Speaker:Scott says it's not as hard as it sounds, but it's also very complex.
Speaker:Say, let's, let's use the term excitement and opportunity
Speaker:and not challenge or problem.
Speaker:We're in good shape.
Speaker:But I think it was a good example though of, you know, that buy-in we talked about
Speaker:earlier you know, we had learned some lessons from Indy and some of the other
Speaker:facilities and brought them forward.
Speaker:But embedding those teammates that are working hand, hand, and glove
Speaker:beside you, you know, you processing manually on one side while I'm building
Speaker:lights out automation on the left.
Speaker:And because they're embedded, they, they get excited.
Speaker:They, they say, okay, you're not changing what I do each day.
Speaker:You're just making my day easier.
Speaker:I'm going to be able to get this done with a, a little more predictability.
Speaker:I'm going to be able to do this with a little more ease in the function.
Speaker:We got great buy-in from that, and I think that helped ultimately when we went
Speaker:live, that we didn't have that gradual.
Speaker:Okay.
Speaker:I'm learning.
Speaker:I'm learning.
Speaker:I'm learning.
Speaker:We had more of a hockey stick type yeah productivity.
Speaker:I think one of the comments you made, I is when we looked at how we processed
Speaker:versus indie, that you had like a 20% increase in productivity, almost
Speaker:immediately out of the gate versus just 'cause we fixed a few things in the
Speaker:process of how they did it and what waving versus no waves, for instance.
Speaker:Okay.
Speaker:I love it.
Speaker:We're, I know my friends at Summit are always talking about people,
Speaker:processes, and technology, and that's what I'm hearing from you all the time.
Speaker:You've gotta look at the people.
Speaker:The buy-in seems massive.
Speaker:Having people onboard, taking the time to go through it, the processes, being
Speaker:able to look at other successful, taking the knowledge and the expertise
Speaker:from people who have been there and experienced it, that's huge.
Speaker:And getting the right technology.
Speaker:I have a few more questions that.
Speaker:I wanna make sure we get to.
Speaker:This one from Brian says, change management is critical in bridging
Speaker:the gap between technology and operations in the warehouse.
Speaker:What kind of level of change management did you use?
Speaker:Did you feel like it was effective?
Speaker:Did you have any lessons from that?
Speaker:And it's at all levels, I think.
Speaker:Right.
Speaker:So it's not just, I'll take it from a distribution operations perspective.
Speaker:And so I think we did again, it was embedding the people in the
Speaker:roles early so that they could have, they could have comprehension.
Speaker:The best day that you'll have is when you go into a break room and they're
Speaker:actually talking about the thing that you're trying to accomplish.
Speaker:Right.
Speaker:We can go into a meeting room as leaders and different things.
Speaker:And we can, you know, we're way here on the change curve.
Speaker:But the people, when you walk into the break room or you're out on the patio
Speaker:and you hear those people that are out there talking about that, that's
Speaker:when you know that it's, it's a pretty solid plan and you've done everything
Speaker:you can to make it be successful.
Speaker:It's really easy for people to just be like, yeah, yeah, yeah.
Speaker:And then roll their eyes at you.
Speaker:I think one of those keys, and it sounds that you were really
Speaker:successful with this, was that the change was actually good for them.
Speaker:Right?
Speaker:Like, I think sometimes it's not actually that much better for them,
Speaker:and that is when they roll their eyes.
Speaker:I, I, I get a kick out of it when I walk.
Speaker:I spend a lot of time on the floor when I'm out there and, and
Speaker:I love talking to the operators.
Speaker:And I, I get a kick out of it when they explain it back to me of,
Speaker:lemme show you how this works.
Speaker:You kinda smile and you go, yeah, I know I drew that up myself.
Speaker:But,
Speaker:it's working just like I drew it.
Speaker:But it, it, it's really, really fun to hear and see when the operators have
Speaker:embraced that change that you've made.
Speaker:Because they do see that, hey, this has been a positive
Speaker:on, on how the business runs.
Speaker:So again, there's a lot of pride in that building if you get out there.
Speaker:Oh, that's, that's fantastic.
Speaker:Somebody wanted to know what motivated the investment to
Speaker:start like why when it happened.
Speaker:Sure.
Speaker:So you know, we had a really aggressive store growth plan.
Speaker:And we had a great opportunity with the Shoe Palace team in California moving out
Speaker:of an old building into a new building.
Speaker:So everything really kind of aligned that it was, and you just
Speaker:kind of feel it most of the time.
Speaker:It was just time to do it.
Speaker:And then we knew that in order to make speed to market for us.
Speaker:So we had one DC in Indianapolis, so if we had one on the West Coast all of a
Speaker:sudden our retail deliveries are gonna be faster for replenishment to the stores.
Speaker:You know, less frequent size run breaks, if you will.
Speaker:So for us it was a, it was a pretty easy decision.
Speaker:And then, you know, of course then we talked about the
Speaker:journey already quite a bit.
Speaker:Yeah.
Speaker:So the business case for it, it sounds like you already had a plan to grow.
Speaker:I think you had some acquisitions, some other things were going on, right.
Speaker:And you could see also the opportunity for splitting the DCs.
Speaker:Is there anything you had to add, John?
Speaker:Yeah, I think the only other thing that really was a catalyst for it was
Speaker:just the labor market at the time.
Speaker:I mean, you know, coming outta COVID or in COVID at the time.
Speaker:On top of, I don't know if anybody else has tried to hire people
Speaker:out in Silicon Valley, but it's, it's it's a little expensive.
Speaker:You know, so going out and trying to find a hundred people that wanna slug boxes in
Speaker:a DC they'd rather write code sometimes.
Speaker:But So I, I think the labor that was needed to hit those forecasts also
Speaker:really helped selling that upstairs in terms of, getting corporate
Speaker:buy-in to make the investment.
Speaker:Mm. That's fantastic.
Speaker:Buy-in seems super important to me.
Speaker:We talked about kind of the execs, the board, getting the money.
Speaker:We talked about operations.
Speaker:What about engineering or merchandising, or did you need to get buy-in from them?
Speaker:Yes, certainly.
Speaker:Because I happened to work with the engineering group, the
Speaker:buy-in there was pretty easy.
Speaker:So I just basically said, here, let's take, let's take a shot at this.
Speaker:But what we did is we had a series of leadership meetings and we talked about
Speaker:what's your five-year forecast gonna be?
Speaker:And then we were able to show them at some point in time that, you know,
Speaker:their goals for what they wanted to do did not meet our infrastructure, right?
Speaker:Our infrastructure could not meet their goals, rather, so, so with that,
Speaker:again, it wasn't easy, but it was, there was a lot of time spent with
Speaker:each individual leader to show them at some point, we're not gonna be in
Speaker:a position to, you know, provide the best service that we, that we need to.
Speaker:Okay.
Speaker:So you made your business case.
Speaker:Somebody asked, how did you address the different needs from various
Speaker:sales channels in terms of automation, like retail versus ecommerce?
Speaker:Oh, what a great question.
Speaker:They they're opposing forces.
Speaker:You, you've got a push model of the classic retail, a new
Speaker:style excuse that comes in.
Speaker:We're gonna push that out through the allocations.
Speaker:You work with the merchants, we get their buy-in on percentages and then
Speaker:all of a sudden you've got point of sale replenishment that starts pulling from the
Speaker:DC and .com that starts pulling from the DC And, and while none of those challenges
Speaker:are, are unique on their own, it becomes a little more complicated when you're
Speaker:doing it in the same building but you're also doing it with the same inventory
Speaker:pool that suddenly I want my residuals to fulfill .com and point of sale.
Speaker:I wanna round up my retail orders.
Speaker:You're competing for the same inventory with the same pool.
Speaker:You've got opposing forces on how you wanna run your
Speaker:automation and staff, your areas.
Speaker:So I, I think we put a lot of planning into how do I balance the day so that
Speaker:the stores don't miss their deliveries.
Speaker:We don't miss our cut times and promises to the customer.
Speaker:You order a pair of shoes on JD.com, it's going to show up on time, on promise.
Speaker:So how do we balance that through our software, through the staffing plans,
Speaker:through the operation to make that happen?
Speaker:There was a lot of work that went into that and I think the only caution I
Speaker:learned for it or from it was, don't ignore when you talk to the merchants,
Speaker:those one little peaks, like the super Saturdays when 10,000 Air Jordans get
Speaker:launched and everybody goes, well, I didn't see that in the averages.
Speaker:You know, make, make sure you understand those peaks that are gonna
Speaker:hit your operation and where they inject nicely in, into your solution.
Speaker:Yeah.
Speaker:Did you have, what were your biggest challenges, I guess,
Speaker:in creating that balance?
Speaker:Was it technology?
Speaker:Was it the actual work on the floor?
Speaker:Between the push and the pull?
Speaker:From our, our team standpoint on, on design.
Speaker:When I say ours, I mean your engineering teams.
Speaker:Our engineering teams.
Speaker:It was really understanding capacities.
Speaker:I, I talked about that beautiful mind day.
Speaker:We mapped out every flow with the peaks, the averages.
Speaker:We modeled it across a year's worth of inventory, years worth of orders
Speaker:where we could, and, and trying to model what happens when that peak day
Speaker:hits at the same time we're bleeding over from Yeah back to school.
Speaker:Do we have the mechanical capacity to absorb those those two flows?
Speaker:Do we have a staffing plan that allows us to operate those at the same time?
Speaker:Or are they separate flows that happen at separate times and we can balance?
Speaker:So we put a lot of time you know, between the two engineering groups
Speaker:to size the appropriate technology to handle what happens on a day-to-day.
Speaker:You've gotta put that element of time into your plan, not just the mechanical
Speaker:three-dimensional layout, if you might.
Speaker:It's a living, breathing thing each day in the DC.
Speaker:Absolutely.
Speaker:Absolutely.
Speaker:Okay, so let's talk about, we're getting, we've got.
Speaker:10, 12 minutes left.
Speaker:So make sure you're send in questions if you've got 'em.
Speaker:But I wanna talk about kind of results, what you've seen.
Speaker:First, I guess, anything else you wanna say in terms of lessons learned
Speaker:during the process on communication, on people, and any tips that you have
Speaker:for them on that before we move on?
Speaker:For, for me, it is that as soon as you get your requirements, you know, so what,
Speaker:what does your success criteria look like?
Speaker:Whether the requirements get the buy-in from the other leaders.
Speaker:Merchants would say this percent is doing digital, this percent is doing retail.
Speaker:You should refine that all the time throughout the process.
Speaker:Make sure that's in play.
Speaker:Okay.
Speaker:Continually refined.
Speaker:Also, also, once you get with the, with the vendor, make sure that you
Speaker:review the electricity requirements.
Speaker:'Cause that's huge and that can cause some delays for you.
Speaker:And you have to think this building had nothing in it for us.
Speaker:So when we put all the steel and we built it vertical, then all of a sudden
Speaker:we had to have a sprinkler system.
Speaker:And there's, so when you, when you take a look at, well, we
Speaker:would, we call our ancillary list.
Speaker:You have to really go from the slab all the way to the ceiling.
Speaker:And it's also, you know, where they say measure twice and cut once.
Speaker:So you should probably always measure your building heights and your different
Speaker:things that can get in the way.
Speaker:Just in case you've got one joist that's off by 10 inches.
Speaker:Just not that that happens.
Speaker:So yes.
Speaker:That would never happen.
Speaker:Just in case that happens.
Speaker:So yeah, you'll measure twice and cut once.
Speaker:And I know we all understand that, but you really should start at the concrete
Speaker:and you should work your way up and you should think you can come into a
Speaker:building like this, your existing DC and you can look around and just start
Speaker:taking some quick notes on, you know, what have you done over the years, right?
Speaker:What have you done here to make it better?
Speaker:I, I would add not necessarily a lesson learned, but a lesson reinforced.
Speaker:And that was communication is one of the things you brought up.
Speaker:Anybody that's gonna tell you these projects go flawlessly
Speaker:and on plan is lying to you.
Speaker:No, no plan, battle plan.
Speaker:I think that was Scott at the beginning.
Speaker:Yes, he no battle plan survives the first volley.
Speaker:And I think where we collectively as a delivery team did really
Speaker:well and at all levels was communication, over communicating.
Speaker:We still have a weekly executive call every Friday that, you know.
Speaker:Bad news doesn't age well.
Speaker:It was kind of our motto from day one and that we, we've got that relationship
Speaker:between the partners and the project of problems are gonna come up.
Speaker:It, it's does nobody any good to hide them, get them out front, let's deal
Speaker:with them and knock them down so that we can stay on our happy path of success.
Speaker:So I, I think that communication at all levels from the people on the floor
Speaker:to the project teams, the installers, all the way up to the exec levels
Speaker:of, of top to top communication.
Speaker:It was paramount to the, the success of this endeavor.
Speaker:I love that.
Speaker:Bad news doesn't age well.
Speaker:I think we can all take that as life lessons as well, but
Speaker:communication being huge.
Speaker:I'm really struck by how much preparation and time, I'm a little
Speaker:guilty of being the kind of person who's like, okay, let's just get started.
Speaker:And so I'm really impressed.
Speaker:Take your time with the planning.
Speaker:Be thorough.
Speaker:Look through everything, communicate well, all really, really impressive things.
Speaker:So what, where are we at now?
Speaker:One of our questions actually I wanna ask is, what are your
Speaker:plans for your next step?
Speaker:Impressive.
Speaker:You can tell these gentlemen would have a next step, you know,
Speaker:where do you wanna go from here?
Speaker:But I also wanna know here, like what improvements have you seen?
Speaker:How is it running now?
Speaker:What, where, what is the current state?
Speaker:How are we doing with everything?
Speaker:ROI, buy-in.
Speaker:Yeah.
Speaker:So it's to realize everything, you have to realize everything now, right?
Speaker:We said that we were gonna do these things.
Speaker:And now we have to do 'em consistently.
Speaker:So we need to make sure that our cost per unit stays in line.
Speaker:We make sure that our quality is maintained, so, so right now in this
Speaker:project, we're at the point where we're gonna go back and refine everything.
Speaker:You write an SOP out how you think things are gonna work, and then you
Speaker:gotta go to the floor and you have to work through the team members on the
Speaker:floor and say, give us a feedback.
Speaker:That's probably more quality than me just up here on the
Speaker:stage trying to make an SOP.
Speaker:So we'll do that refinement, we'll do the engagement piece, which
Speaker:is really the follow up on what we spoke about already, which was
Speaker:communicate early and often for us.
Speaker:And you know, then, then after that we want to really exceed
Speaker:what our expectations were.
Speaker:So how can we be creative now that we have this automation at our fingertips?
Speaker:If you don't, if you just settle all the time, you'll just be settled.
Speaker:And so we're not, we don't wanna do that.
Speaker:We wanna consistently be creative on what we have available to ourselves now.
Speaker:So refine after, so plan before, continue to refine after.
Speaker:And during, keep everybody happy and excited.
Speaker:Did you have anything?
Speaker:No, I, I think Scott had said, well, my personal goals are just,
Speaker:you know, continuing to monitor the progress, you know, coaching.
Speaker:What did, what did we learn that we can apply at the other buildings
Speaker:other operations, but we know the business is going to change again.
Speaker:It, it's inevitable there.
Speaker:There's always going to be change.
Speaker:So I think for all of us, it, it's a critical mandate to continue to
Speaker:watch for it, be out in front of it.
Speaker:And, and when we see that change coming from, whether it's merchants acquisition
Speaker:change in volumes or profiles knowing that we're self-aware of what our
Speaker:operation looks like of okay, let's get a plan in place before that wave hits us.
Speaker:Okay.
Speaker:Awesome.
Speaker:All right.
Speaker:I've got a few questions.
Speaker:We're gonna go through 'em.
Speaker:Is, was there anything that surprised you in the results, positive or negative?
Speaker:I think we did such good planning, as you mentioned several times, and I
Speaker:don't know if anything surprised us.
Speaker:No.
Speaker:So really the involvement of the operations team, I wasn't surprised,
Speaker:but, just how quickly they adopted.
Speaker:I mean, they didn't use computer screens in a room or anything.
Speaker:It was just pallet jacks and like little scanners and one little computer.
Speaker:So the way that they've adopted things if I had to pick something
Speaker:and, and it's a real positive is, is just that they adopted it and
Speaker:then they become experts at it.
Speaker:I think that was an accelerated timeline for me.
Speaker:The, the power of the people.
Speaker:Did you have anything that surprised you, John?
Speaker:No, I, I think, you know, I hate to repeat Scott's answer, but it,
Speaker:it is really impressive to see a, a team that went from a very
Speaker:manual, I mean as manual as it gets.
Speaker:In some cases working off pieces of paper out on the floor to
Speaker:how they, they can sit there and describe to you a one touch process.
Speaker:If I touch that box once on the receiving dock, and then it hits
Speaker:the other dock at some point and goes through ASRS and all that.
Speaker:They have adopted high-end technology in one little leap.
Speaker:And they've embraced it, but not only did they figure it out, but
Speaker:they're really happy about it.
Speaker:It's been encouraging.
Speaker:Somebody wants to know what investment or like, is there a
Speaker:specific thing in the warehouse that you feel like had the highest ROI?
Speaker:Hmm.
Speaker:I think I remember chatting about cranes or something.
Speaker:I mean, yeah, the cranes definitely eliminated, you knows the forklift
Speaker:work, the the racking work.
Speaker:We actually have a put store module too, so, you know, the environment
Speaker:they had, they had to travel a lot, and so now the goods come right to
Speaker:them and they do a packing process.
Speaker:So I think really for, for me, it's all the above because we took it
Speaker:from, from nothing and you know, they didn't even have an inline
Speaker:print and apply as an example.
Speaker:It's like a whole new world.
Speaker:They're just labeling everything on the side, so.
Speaker:It's all, it's all the above.
Speaker:But, but part of that process that we went through is every
Speaker:little area had to have an ROI.
Speaker:Otherwise you leave it manual, you, you leave it basic.
Speaker:So I, I don't know if you could point to one thing and say, Hey,
Speaker:that's the best thing in the building.
Speaker:They all contributed.
Speaker:There are some that had better ROIs than other areas, but I don't think.
Speaker:That process allowed us not to over automate an area.
Speaker:Everything was the appropriate level of investment.
Speaker:Based on the.
Speaker:I like that.
Speaker:Over automate an area, the appropriate level.
Speaker:Okay.
Speaker:Somebody wants to know, how did you integrate the new automation
Speaker:into the existing SW landscape?
Speaker:I couldn't think Whats SW meant?
Speaker:Software.
Speaker:Oh, software, software.
Speaker:It was, it was pretty complex.
Speaker:But we just, we were thoughtful about engaging our vendor partners early.
Speaker:So we had.
Speaker:You know, Aptos was our WMS there, and so how can we integrate that, but
Speaker:then also operate it manually and then have Aptos still feed the new system.
Speaker:And so all, all very technical, all very technical things.
Speaker:But it was really just mapping.
Speaker:Engaging the right people.
Speaker:Mapping it out, mapping it out, engaging the right people early to
Speaker:make sure that we had named resources.
Speaker:So that people that had worked on our projects before knew what we were going
Speaker:through and we didn't have to start over with somebody new all the time.
Speaker:It seems like you used a lot of different resources.
Speaker:Can you share like all I I, there's so many, but you know,
Speaker:you're talking about vendors.
Speaker:What, what did you do in terms of who would you reach out to to get,
Speaker:you couldn't feed the meeting with three pizzas.
Speaker:I can tell you that.
Speaker:There were, there were some big meetings.
Speaker:I, I think the only thing I'd add to what Scott said was I don't think
Speaker:at one given point in the, the whole software integration layer, did we
Speaker:ever put ourselves in a position where we couldn't back out and go to
Speaker:where we were yesterday if it didn't go according to plan that weekend.
Speaker:There was always a, a backport if.
Speaker:You had a contingency for a contingency for a contingency, I think.
Speaker:Yes.
Speaker:Roll, rollback plans are, are critical and because it gets everybody
Speaker:thinking that way all the time.
Speaker:It's not just when we put this in, we're all in and if something bad happens,
Speaker:we have to just muscle through it.
Speaker:And so when we got all the teams to think that way, then everybody that came into
Speaker:the room knew that was just expected.
Speaker:And fortunately for us, we didn't have to back out a lot of things
Speaker:because they're well thought out.
Speaker:Okay.
Speaker:And we're gonna do a couple more.
Speaker:We have a lot of questions.
Speaker:Curious about the slab issue.
Speaker:Was the issue with site prep, with loading applied?
Speaker:What?
Speaker:What did you learn about slabs from that?
Speaker:It, it was a spec building build that just wasn't poured for high automation.
Speaker:We had upward force with the cranes.
Speaker:You know, so we had to do some slab remediation, which you know, is a fancy
Speaker:word for you cut the concrete out, you put in some rebar, you pour some new concrete.
Speaker:Which, which ironically was not as painful as I thought it would be in the area.
Speaker:The, the teams did a very good job.
Speaker:It's not the first time I've had to do concrete work.
Speaker:But it wasn't a miss on the project team, it was just, it was an existing
Speaker:building that never contemplated.
Speaker:How did you identify that it was an issue?
Speaker:When we submitted engineering plans and did core samples it
Speaker:became a little curve ball for us.
Speaker:Okay, good.
Speaker:Was there any consideration to the future state of merchandise returns?
Speaker:What about reusable transport and other packaging as a result
Speaker:of current and future, EPR regulations, California regulations.
Speaker:So merchandise, returns you know, we did design that into our process.
Speaker:It's something that typically automation wouldn't probably handle very well.
Speaker:You know, everybody's got a manual return.
Speaker:You have to look at the shoe.
Speaker:There's all kinds of details you have to get, but we did design a way
Speaker:and to take inventory that should be available for, for sell again, and
Speaker:to introduce it into the automation, into the shuttle system, so it's
Speaker:available for each channel after that.
Speaker:Final tips.
Speaker:I'm sure that both of these gentlemen can answer so many questions
Speaker:if you have them specifically.
Speaker:They really are so good.
Speaker:I love, one thing I just had to shout out Scott here at the beginning, he said,
Speaker:I hate when I have to introduce myself.
Speaker:I don't wanna be a VP.
Speaker:I'm just a team member.
Speaker:That kind of mindset is why his teams get buy-in and why they're excited,
Speaker:because he cares about the people, and he's not just about being the VP.
Speaker:So, any final words, any last things?
Speaker:Our time is up.
Speaker:Go ahead, John.
Speaker:I, I think we've probably outlined a lot of it here of, of just take the time to
Speaker:really map at your business, understand where you wanna be in five years.
Speaker:Know that that plan could change, so leave yourself some white space in the building.
Speaker:Leave some contingency plans, but get the buy-in of your entire team.
Speaker:Don't be afraid to talk to everybody from the, the person that that changes
Speaker:the, the garbage can locations each day, all the way up to your CIO.
Speaker:They've all got some input that you will find meaningful.
Speaker:I, I promise you, it'll have an impact on your design and ultimately the health
Speaker:of your building and your culture.
Speaker:Thanks.
Speaker:Just be honest.
Speaker:Communicate a lot.
Speaker:That's really it.
Speaker:Thank you so much.
Speaker:This has been such a fun session.
