Transcripts
There's no such thing as fully autonomous anything.
Speaker:Because it's such a human-led process, it really matters-
Speaker:Isn't that interesting?
Speaker:-About the human.
Speaker:Welcome back to Unboxing Logistics.
Speaker:I'm your host, Lori Boyer, and this is the coolest, most fun, most
Speaker:chill, most interesting podcast in the supply chain universe, and
Speaker:I'm not even a little bit biased.
Speaker:And today we're gonna talk about one of the places in this industry that
Speaker:I just love, and that is warehouses.
Speaker:The first time I went into a warehouse, I think my mind was blown at the
Speaker:sheer magnitude of what goes on there.
Speaker:And today, we have, I've brought on as a guest Kevin Gibbon, and he has
Speaker:an incredible company, an incredible story, and he's gonna teach us a
Speaker:lot about the modern warehouse, what it means when warehouses
Speaker:are running almost autonomously.
Speaker:And, and maybe we'll, we'll let Kevin tell us more about that.
Speaker:But Kevin, welcome, welcome to the show.
Speaker:Can you tell us a little bit about yourself, your
Speaker:background, and your company?
Speaker:Yeah, absolutely.
Speaker:Thanks so much for having me, Lori.
Speaker:A big EasyPost fan.
Speaker:I, I actually almost and maybe he'll, he'll refute this, I almost
Speaker:co-founded EasyPost with Jarrett.
Speaker:All right
Speaker:… Yeah, yeah.
Speaker:I, it-
Speaker:Well, we'll get Jarrett on the show to see what he says about that
Speaker:Yeah, I, I, I don't know.
Speaker:Maybe he wasn't… He, it was his company, and he was looking to bring me on.
Speaker:But yeah, I, I… So my background I studied school computer science.
Speaker:I moved out to the Bay Area about, I'm from Canada, from Vancouver.
Speaker:I moved out there about 15 years ago.
Speaker:I picked that up immediately when you said "about."
Speaker:About, yes.
Speaker:Uh-huh.
Speaker:And yeah, I started my first real venture-backed company.
Speaker:It was a company called Shyp.
Speaker:It was also in logistics.
Speaker:I, I've been now, it's going on 15 years that I've been in logistics startups.
Speaker:And what it was is, was I'm solving my own pain point.
Speaker:I used to be an eBay power seller.
Speaker:It was terrible to try to take all the, the boxes to the post
Speaker:office and package all that stuff.
Speaker:So we built a call it Uber for a shipping app that basically take a picture
Speaker:of whatever you want, we'll come to you, and box it up, ship it out, and then
Speaker:we we actually used EasyPost on the back end as well to print labels.
Speaker:And so through that, I, I, I learned a lot about, like, so we
Speaker:actually had to have warehouses.
Speaker:We were in five major markets.
Speaker:We raised a lot of venture capital.
Speaker:And it was, it was an amazing product.
Speaker:And the company ultimately did not survive, like most startups don't.
Speaker:But we had a great fan base and people loved the product, but
Speaker:it just wasn't a business.
Speaker:The, the frequency of use for consumer shipping just not there when you
Speaker:have so much overhead to, that we had to make the, the operations work.
Speaker:And then after that I, I took all my learnings and some
Speaker:people started my next company.
Speaker:It was called Airhouse.
Speaker:And what that was was to go and solve a different, part of the, the shipping
Speaker:puzzle for a different audience, and that was direct-to-consumer brands.
Speaker:It was to, how do you make the, the warehousing, the 3PL
Speaker:space a little bit better?
Speaker:And I did have some wounds from Shyp, so I didn't wanna go and,
Speaker:and start my own fully vertically integrated warehouse again.
Speaker:So I decided that there was enough partners out there that we
Speaker:could just basically put a wrapper on a, a technology wrapper on top
Speaker:of kind of a very messy ecosystem.
Speaker:And that's what we did.
Speaker:And, and we had a pretty good business.
Speaker:We, we were doing tens of millions of dollars in revenue.
Speaker:But we took venture and that unfortunately is just not,
Speaker:is not what I aim to do.
Speaker:And that's not what investors are really looking for you to do.
Speaker:So we had a, a soft landing and then I just…
Speaker:I, I love the space so much, and I think that, I don't know if I have,
Speaker:like uh just like the punishment or whatever about logistics.
Speaker:It's, it's not as easy as technology, just pure tech is.
Speaker:But-
Speaker:Kevin, I feel like once you get in logistics, you, like, can't leave it.
Speaker:It, it, it's like-
Speaker:There's so many problems
Speaker:It's part of you.
Speaker:Yes.
Speaker:There's so many problems to solve, and-
Speaker:Exactly
Speaker:… so I took all of my, my lessons from the previous two companies,
Speaker:and it was like, okay, well, this, the 3PL problem was massive.
Speaker:We just couldn't solve it any better.
Speaker:Partnering with other warehouses basically made their problems our problems.
Speaker:So you have a GM.
Speaker:It's all human based and you're dealing with warehouses that
Speaker:have hundreds of employees.
Speaker:It's a lot of temp labor.
Speaker:And you have a warehouse manager that's not doing their job good enough
Speaker:within a, a larger 3PL organization.
Speaker:And just that one warehouse can take out, like, 20% of your customers potentially.
Speaker:We, we, we had a network and so it all had to work together.
Speaker:And so took that learning that this is still a massive problem and then
Speaker:took the learning of Shyp to, to be like, okay, maybe it wasn't that bad
Speaker:to, to actually stand up buildings and do a lot of the hard stuff.
Speaker:But what has changed is that there's just so much more
Speaker:robotics out there in the world.
Speaker:And there's really nobody that's positioned well to actually take
Speaker:a look at all of the different components and kind of make what is
Speaker:going to be the next version of, of the Amazon warehouse, for example.
Speaker:And that's essentially what we did.
Speaker:We saw the, the prices fall and the number of different competing
Speaker:products for different parts in the warehouse just soar.
Speaker:But a, a lot of the legacy operators, it's just too hard for them to, to figure
Speaker:out how they continued their operations with a, a fully staffed, a human-powered
Speaker:warehouse, and then automation comes in.
Speaker:It's completely different skill set and all those different things.
Speaker:You have competing interests.
Speaker:And so what we did, we did at Cytronic so now it's, it's two
Speaker:years and we're, we're we're just getting our, our first customers
Speaker:now that we've been, we've building it's a fully autonomous warehouse
Speaker:for direct-to-consumer shippers.
Speaker:So it's a very small use case.
Speaker:So typically 3PLs, they'll do everything.
Speaker:They'll do B2B.
Speaker:They'll do a ton of returns.
Speaker:They'll do all these things.
Speaker:We're just really good at getting a bunch of different SKUs into, like, a,
Speaker:a poly bag or a box out very quickly.
Speaker:And so I'll, I'll kind of let you know some of the numbers that we have.
Speaker:But we, we do a micro fulfillment center.
Speaker:So with about 30,000 square feet our ceiling per day is about
Speaker:20,000 orders that we get out.
Speaker:And that's with a handful of people working a 24-hour shift,
Speaker:and also seven days a week.
Speaker:And the majority of the operation is actually automated.
Speaker:The, the only pieces that really aren't are some of the, the more
Speaker:complicated packaging pieces but also just the, the kind of making sure
Speaker:everything's running and, and all, all, all the different odds and ends.
Speaker:We, we try to make it very narrow what we, we'd be really good at and
Speaker:we say no to a lot of other stuff.
Speaker:But there still is, as you know, in logistics, there's so many edge cases.
Speaker:There's so many different things so that, that is a, a continuous problem.
Speaker:But ultimately what we do is we use robotics to bring down the cost.
Speaker:So typically, fulfillment can cost up to five, six bucks a a package.
Speaker:We bring it down to $2.
Speaker:And so it's a, a huge savings and is only gonna get better for us.
Speaker:But the, the most important piece is that we started with this.
Speaker:We didn't have any customers, anything else.
Speaker:We started with this.
Speaker:We started with an idea, a very small R&D facility, making sure that we would hit
Speaker:our throughput metrics with the CapEx that we actually needed to, and we, we did
Speaker:it, and we're continuing better today.
Speaker:And now, right now, we're live in Chicago.
Speaker:We're live in the East Bay of California.
Speaker:And then we'll be in the East Coast this year, LA this year,
Speaker:Dallas in a couple months.
Speaker:We've really found something that's working and we're, we're,
Speaker:we're gonna be expanding it.
Speaker:I'm gonna throw a few questions at you that I know my
Speaker:audience will have right off.
Speaker:First, so is it like a 3PL model, where your customers are D2C people who come to
Speaker:you, and your warehouses are autonomous, or are you talking that you come to
Speaker:somebody who has a warehouse, and you're building them an autonomous warehouse?
Speaker:Like, where- Talk about it like if our- if we have a shipper out
Speaker:there listening, for instance.
Speaker:How would they understand it for them?
Speaker:We're another 3PL that's gonna get your stuff there a lot cheaper.
Speaker:And how we do it is with robotics.
Speaker:Okay.
Speaker:So the price is lower, so it's still 3PL, so-
Speaker:Yeah
Speaker:… You know, you're not dealing with what- whatever's going on in the warehouse.
Speaker:But Kevin has created a system where people get the advantage.
Speaker:'Cause one of the big challenges, obviously, of automating a
Speaker:warehouse is that upfront cost people often have for themselves.
Speaker:But you've taken that cost and now been able to pass along all the
Speaker:savings to your 3PL customers, correct?
Speaker:Yeah, exactly.
Speaker:It's, it's, it's very similar model than like AWS works on, right?
Speaker:Like They get the buildings.
Speaker:They have the, the racking.
Speaker:They, they do a lot of on the technology side.
Speaker:Well, it's the same thing with us.
Speaker:And we do all, all … make sure everything's running.
Speaker:You don't need to come and see the the warehouse.
Speaker:A lot of people actually did when they had a 3PL because things just went wrong.
Speaker:And so-
Speaker:I would, Kevin.
Speaker:And whenever I have guests on for the podcast, I, I always recommend
Speaker:getting some boots on the ground.
Speaker:It's a good insight for you as, as a business owner.
Speaker:Totally.
Speaker:Well because the, the … just the nature of the labor and also the peaks and,
Speaker:and in demand, it just make it extremely hard business to run, especially when
Speaker:you are trying to get the lowest price point and pay people less, and also
Speaker:operate in, like, lower paying areas.
Speaker:And so it's, it's really hard, and that's also what I saw at Airhouse.
Speaker:Like, we work with, I thought, the best 3PLs.
Speaker:Every 3PL has the same issues.
Speaker:Every 3PL is gonna go, and they're gonna screw up your stuff, and might
Speaker:be two weeks before you, you get that, those … some of these orders out, and
Speaker:it's just the nature of the actual model.
Speaker:And so with us, we're trying to automate everything, but that
Speaker:doesn't just mean the robotics, so we're looking to just do 100%.
Speaker:It's like every single process.
Speaker:So we've rethought about the, the very first touchpoint, the the first
Speaker:call you get on with a 3PL 3PL.
Speaker:It's typically, like maybe the owner or one of the managers that is actually
Speaker:running the day-to-day operations.
Speaker:We … We'll get you a quote literally on the first sales call.
Speaker:We actually close our big clients in two to three calls, which is
Speaker:unheard of for this industry.
Speaker:So we speed up everything possible within the technology, within
Speaker:the warehouse, within everything.
Speaker:And so it's not just it's robotics, but it's like a streamlined process
Speaker:throughout the entire thing.
Speaker:So we do want it to, to feel like the difference between having to run your own
Speaker:data center and going to AWS for example as a, as it relates to us and logistics.
Speaker:I love it.
Speaker:I wanna back up a little bit and, and I've got some of the questions
Speaker:kind of that I often get from people.
Speaker:So when we're talking you know, when we hear warehouse without people-
Speaker:Yeah.
Speaker:Right?
Speaker:Some people are like, "Does that even really work? Is that risky? How are
Speaker:you gonna catch if something goes wrong?" As you mentioned, things
Speaker:always go wrong in warehousesright?
Speaker:Even with robots and automation, things may go wrong.
Speaker:How would you respond?
Speaker:Is this risky?
Speaker:How do you offset challenges when it comes
Speaker:sort of the lack of people around?
Speaker:So I, I think that a, a mistake would've been to try to fully automate everything
Speaker:before having customers, and that's why we, we specifically didn't do it.
Speaker:There have been a couple companies that have done this, and they spent hundreds of
Speaker:millions of dollars and we probably have more revenue than, than they do right now.
Speaker:Because it's just very difficult to, impossible to kind of make
Speaker:everything just run right.
Speaker:So we look to, to just kind of chop off the, the biggest either time
Speaker:sucks for, for people or the, the cost, the price point.
Speaker:And so, like, some of the big things that we do, and also people that
Speaker:are listening to, to this, if you, if you do run your own warehouses,
Speaker:you could do the same thing.
Speaker:The, the, all the, a lot of the, the stuff that we actually use,
Speaker:we, we do have a robotics team.
Speaker:We do build some of our own stuff, but most of it actually is purchased from,
Speaker:from a number of different suppliers.
Speaker:But, like, the ASRS system, that's a, a great example.
Speaker:The automatic storage and retrieval system.
Speaker:if you've ever seen these, these, these big cube, cubes looking things in
Speaker:a warehouse that will have … Ours has different totes that operate on
Speaker:an aluminum basically 3D matrix, and there's robots up top that will
Speaker:basically move the different items to the actual packing bins base.
Speaker:And so you could get an actual, like, a SKU every seven seconds, for example.
Speaker:Just unheard of if you're gonna be going and go and doing the picking.
Speaker:Even with Kiva.
Speaker:Kiva is just, it's, you're bringing all of the, the actual warehouse
Speaker:to the packer versus just the items that they actually need.
Speaker:And so that, that was the biggest kind of difference in, in everything.
Speaker:In the, the cost, yeah, there is, it's expensive.
Speaker:It, it'll run you more than a million dollars.
Speaker:But, like, if you're running a high volume operation, you could
Speaker:get that paid off pretty quickly.
Speaker:And so we, we look at just, like, areas that we could just reduce the, the
Speaker:price point and, and also the, the human complexity or whatever and, and not
Speaker:try to opt to, to be fully autonomous.
Speaker:There's no such thing as fully autonomous anything.
Speaker:Okay.
Speaker:So first thing that I'm hearing, and advice for you if you're looking to create
Speaker:your own kind of automated warehouse, take your warehouse into the next, you
Speaker:know, generation, into our, our new days.
Speaker:Don't try to go fully automated.
Speaker:I, I said warehouse without people.
Speaker:That's absolutely not true.
Speaker:They are a warehouse with people, because we're still in the tech phase where
Speaker:people need to oversee some things.
Speaker:So you've got some people in it, but just far fewer people, and you're automating
Speaker:specific bottleneck processes rather than trying to go fully automated.
Speaker:Does that sound right?
Speaker:Like, that's your first piece of advice is don't go that way.
Speaker:Totally.
Speaker:Yeah.
Speaker:No.
Speaker:Okay.
Speaker:I, I, I know, I know some legacy 3PLs that, that use the
Speaker:same robotics that, that we do.
Speaker:Now, if, if you're not an expert in it, you probably are gonna pay
Speaker:a lot more, and you're, Mm-hmm
Speaker:you most likely are gonna use like, an systems integrator, and so
Speaker:it, the price point is higher.
Speaker:But yeah, you could absolutely do it yourself and save
Speaker:yourself a, a ton of time.
Speaker:And also, the, the quality is just a lot higher.
Speaker:A, a lot of those repetitive tasks that humans really are
Speaker:not designed to can be sol-
Speaker:Not fun for anyone.
Speaker:No.
Speaker:They can be solved a lot easier with automation robotics.
Speaker:So Kevin, where are the kind of bottlenecks?
Speaker:Where are the limitations you've found in kind of the human-driven warehouses?
Speaker:What are the areas that you feel like- lend themselves
Speaker:best to automation right now?
Speaker:It really is the, the pieces of time that take up the most the, the,
Speaker:the pieces of the operation that take up the most amount of time.
Speaker:So actually picking from the bins, getting it to a pick cart to the
Speaker:actual packing station, that takes by far the most amount of time.
Speaker:And then it would be the actual packaging to get it into some sort of assembly
Speaker:line or into different carrier bins or something like that, sortation.
Speaker:Those will be your, your two biggest time savers.
Speaker:And then everything else I think a lot of it actually has to do with what
Speaker:types of customers you, you take on.
Speaker:Traditionally, 3PLs have, have kind of just been like, "We'll do
Speaker:anything to win your business," because it's so competitive.
Speaker:And so now you're putting the sticky notes like, and you're handwriting this thing
Speaker:for this one customer, and then this other customer has fragile stuff, and it's not
Speaker:properly packaged from the manufacturer, and all those different types of things.
Speaker:So if you're running your own brand, you could control it more.
Speaker:But if you're running a 3PL, like with us, we, we just say no.
Speaker:We, we, we just … We, we, we don't do big B2B stuff.
Speaker:We'll do small B2B.
Speaker:But, like, that is not an area that we know that we can, like, really
Speaker:compete on price and, and, or, or anything else with the way that
Speaker:we're, we're, we're positioned.
Speaker:So it's really small ecommerce goods.
Speaker:So the vast majority, it's like, it's like 75% of what people will
Speaker:sell on Shopify, for example.
Speaker:That's kind of our target audience.
Speaker:But that, that, that really, I, I think from anything, if, if 3PLs
Speaker:can just, like, focus on that and not do everything, they would, they
Speaker:would be in a much better position.
Speaker:And so yeah, other than that, those are the, the two big pieces.
Speaker:I could say that returns is still a, a pain.
Speaker:Returns is an opportunity.
Speaker:Opportunity, yes.
Speaker:Which basically all pains are opportunities at some point.
Speaker:Right.
Speaker:You and I, Kevin, we'll figure it out together and become like billionaires.
Speaker:I love it.
Speaker:I love it.
Speaker:Okay.
Speaker:So I wanted to back up then.
Speaker:I said step one, you know, figure out what you're automating.
Speaker:You have people in the warehouse, blah, blah, blah.
Speaker:No.
Speaker:Step one, define your audience.
Speaker:So if you are a 3PL out there, and you are looking at who you
Speaker:want, be willing to say no.
Speaker:I love Kevin's mantra there.
Speaker:Be willing to say no.
Speaker:Understand, don't get sucked into like, "Oh, but that looks
Speaker:like such a good deal." No.
Speaker:That may, like, mess up your whole warehouse system, and things that seem
Speaker:like you're gonna be bringing in tons of revenue with all the extra costs here
Speaker:and there end up not being worth it.
Speaker:So define who your audience is, and then set up your warehouse in a way that you're
Speaker:automating the most time-consuming tasks.
Speaker:Now, Kevin, I would think from warehouse to warehouse, that
Speaker:could potentially be different.
Speaker:I know that I've talked sometimes with warehouse owners, and this is outside
Speaker:of the automation field, but they'll say, "We'll have the same processes."
Speaker:Yeah.
Speaker:But then we realize, one, the picking is taking 20% longer than
Speaker:the other simply 'cause the layout's slightly different, or the…
Speaker:Do you know what I'm saying?
Speaker:Like do you have to kind of automate by building versus just one process
Speaker:that flat goes out to everyone?
Speaker:So yeah.
Speaker:We, we've spent a lot of time thinking about that.
Speaker:So we, we purposely do smaller warehouses- Mm-hmm … so we
Speaker:don't run into that problem.
Speaker:So we really are,
Speaker:we're best suited towards people with lighter weight stuff that
Speaker:are doing a lot of throughput.
Speaker:And we'll-
Speaker:So lighter weight, what do you think weight-wise?
Speaker:Like less than five pounds an item.
Speaker:Less than five pounds.
Speaker:Okay.
Speaker:Yeah.
Speaker:Which is you, you know more than I do.
Speaker:You have more, more of the data, but that's the, the vast
Speaker:majority of, of shipments.
Speaker:You really can't do everything and you just kind of need to,
Speaker:to pick your different area for whatever you're gonna do.
Speaker:And, and, and that, that goes to every single type of business.
Speaker:Like, why are you uniquely positioned to actually do
Speaker:this better than somebody else?
Speaker:And, and we've just taken the approach that we're, we're gonna be the, the,
Speaker:the lowest cost, highest throughput.
Speaker:We're gonna have the most amount of nodes in the US and then globally.
Speaker:We're not gonna be for everybody, but the, the companies that we're
Speaker:gonna be best for, we're gonna completely change their business.
Speaker:And so that's what we picked, and there's enough to go around for everybody else.
Speaker:And hopefully-
Speaker:The way ecommerce is growing, you betcha.
Speaker:Exactly.
Speaker:Yeah, yeah.
Speaker:Totally.
Speaker:Okay.
Speaker:I love that.
Speaker:So let's say as you've moved to this kind of more automated format, are
Speaker:there things that have surprised you?
Speaker:Are there maybe things that were harder even?
Speaker:Was it hard for people to adjust to doing it?
Speaker:I guess give me kind of the real-life scenario of what's it like to go
Speaker:from kind of the more traditional warehouse to kind of more, more
Speaker:of those things being automated.
Speaker:So that, that was kind of one of the benefits of starting a new company.
Speaker:Didn't have any of that baggage.
Speaker:You didn't have to do a whole change management thing, right?
Speaker:Exactly.
Speaker:So, so everybody that was hired knew exactly what they were getting into.
Speaker:So for, for people that are we obviously still have people on the
Speaker:floor and, and sometimes they're doing the similar tasks that an a regular
Speaker:3PL would, would, would typically do.
Speaker:But our, our, our goal is to just make it a lot easier for them.
Speaker:So it's gonna be a more lightweight kind of warehousing job, or, and also
Speaker:the, the opportunities to, to grow within the company and run these things.
Speaker:The, because we're a startup, but also because we're, we're, we're
Speaker:trying to push the, the, the envelope on a lot of these different things.
Speaker:That's what we really sell people on.
Speaker:And people like that.
Speaker:People like… It's, it's kind of amazing how You, you take an old
Speaker:industry and you, you put a lot of cool tech, and this happened for me
Speaker:also at, at my first company, Shyp.
Speaker:People just go crazy for, like, when you're just change something
Speaker:that, like, thinking about going to the post office and, like, that's,
Speaker:like, comparable to, like, the DMV.
Speaker:Same thing with us.
Speaker:Like, it, it's just, it's, it's one of those pieces for, like,
Speaker:fulfillment is, like, kind of just, like, a, a, a very expensive, like,
Speaker:tax on the ecommerce industry.
Speaker:And nobody really wants to pay for it.
Speaker:Shipping's the next piece, and obviously that's a, a little bit bigger.
Speaker:But you need to actually get your stuff there, so that makes sense.
Speaker:And yeah, we're, we're, we're just focused on bringing that down and
Speaker:so people can make more money.
Speaker:And, and also, I, I think a, a, a big thing about us is that we wanna, we wanna
Speaker:allow people to sell where they want.
Speaker:I think that Amazon did an amazing job kind of sculpting the ecommerce
Speaker:industry and getting everybody used to consumers, the, the two-day shipping.
Speaker:But there really is no alternative to Amazon FBA if you wanna get
Speaker:those really quick delivery times.
Speaker:And as you know, you have the, the data as well, that the, the, the actual,
Speaker:like, conversion that you see, the repeat rate from, like, a two-day,
Speaker:one-day, two-day shipment versus, like, a six to like, eight, nine days for
Speaker:some of these direct-to-consumer brands.
Speaker:You… People are just gonna go to maybe a competitor on
Speaker:Amazon or something like that.
Speaker:So it completely changes people's businesses when you bring down the price
Speaker:point, and then what we do is we will put it into our network of, of different
Speaker:nodes to get it there faster for, through the end customer, just like FBA does.
Speaker:But there really hasn't been anybody that's really, like, really
Speaker:challenged Amazon with their two-day delivery, and then allowed
Speaker:people to sell wherever they want.
Speaker:Like, Amazon, you still kind of, you need to still, like,
Speaker:sell on Amazon Marketplace.
Speaker:I know they have a different product now that you could put, do DTC shipments
Speaker:on, but that's what their still is.
Speaker:Absolutely.
Speaker:So one of my questions that I'll often get, so one of the issues especially
Speaker:Somewhat smaller ecommerce companies get is what what we're calling in
Speaker:the industry micro surges, and that's where they will have a sudden burst of
Speaker:demand that was a little bit unexpected.
Speaker:Maybe it's an influencer posted something about their stuff, or maybe
Speaker:it's just peak season stuff, or maybe there was a marketing campaign that
Speaker:went great and they didn't know.
Speaker:How does a facility like yours handle, I guess, like, kind of demand,
Speaker:supply, like, big fluctuations?
Speaker:Does that still work fine with the automation?
Speaker:Is there anything people should be aware of?
Speaker:The good thing is, is because even though the we're pretty, we're
Speaker:early, our, well, the throughput is pretty high for a warehouse.
Speaker:So typically, like, if you're gonna be doing 20,000 orders, you're gonna
Speaker:be in probably a 500,000 square foot warehouse with at least 200 people.
Speaker:And so we're able to because you'll, you'll see mostly outside of the holiday
Speaker:season, you'll see mostly the, the demand curves be customer related.
Speaker:So as you get more, more variability in your customers,
Speaker:that demand kind of smooths out.
Speaker:And so the only thing you really need to, to forecast is, is peak,
Speaker:which is like 2X everything else.
Speaker:So we just can't, in non-peak time, we just can't fill up our
Speaker:throughput to be more than 50%.
Speaker:That's just our, a rule that we, we have to go with.
Speaker:That's perfect.
Speaker:So that brings me to the question, if you were an ecommerce business, if you were,
Speaker:or a retailer, whatever, if you're looking at D2C and they, you were investigating
Speaker:3PLs, including Cytonic, what questions would you recommend that they ask?
Speaker:What kind of things should they be finding out to make sure that it's
Speaker:gonna be a, a good solid experience for them and for their customers?
Speaker:I could talk on this because we did that.
Speaker:Like, our customers, our, our partners were the 3PLs.
Speaker:So, like, I've-
Speaker:Yeah
Speaker:… Partnered with, I don't know, 50 different ones and seen the operations.
Speaker:Honestly, it's nothing that they say.
Speaker:It's, it's really just, like, do you know somebody there?
Speaker:Can you get a good reference?
Speaker:How long have they been working with them?
Speaker:How responsible is the actual team that is going… Because it's such a
Speaker:human-led process, it really matters-
Speaker:Isn't that interesting?
Speaker:Even here where you've got this, like, autonomous robots.
Speaker:We're not-
Speaker:Well, not for us … We're perfect.
Speaker:We're perfect.
Speaker:And yet we're still people.
Speaker:Right.
Speaker:It's still that whole human.
Speaker:Okay.
Speaker:I, I love that.
Speaker:I wanna make sure we point that out.
Speaker:It's not anything they say.
Speaker:No.
Speaker:It's more the legwork that you do.
Speaker:Yes.
Speaker:So continue, I interrupted.
Speaker:You were, that was so great, I loved it.
Speaker:Yeah, yeah, no worries.
Speaker:Yeah and it, it, it makes total sense, too.
Speaker:Like, you could have a good salesperson and they're, they have no, they're
Speaker:not involved in the operations at all.
Speaker:A completely different skill set.
Speaker:Some 3PLs have really good sales teams.
Speaker:Some other ones are more laid back and have a great operations team.
Speaker:And then it's, it's honestly, it's like, it's even, like, shift dependent.
Speaker:That's how, like, granular it gets.
Speaker:Because you as you can imagine, like, you have a bad manager that's managing,
Speaker:what, 12, 15 different packers.
Speaker:Like, if if they're not on top of things, if things start getting mis-shipped
Speaker:or something like that, the whole operation just goes to, to the crap.
Speaker:And so it, it really, the, the human-led ones you need to rely
Speaker:on the people there, and the only way you could do that with a new
Speaker:relationship is try to get references from people that have worked with them
Speaker:before, hopefully for a long time.
Speaker:And I, I, I definitely would say that do not skimp on your 3PL.
Speaker:Do not go to the cheapest one because those are the ones that are cutting
Speaker:corners and doing all those things.
Speaker:Like, to run a good 3PL is very, very difficult, and I, and I, I, I really
Speaker:respect the, like, the owner/operator ones that don't try to do too much.
Speaker:They're not trying to, to be everything to everybody because it's very, very
Speaker:hard to scale that type of business.
Speaker:And so I've actually found that the, call it the 250 to $500,000 single-run
Speaker:facilities have the highest quality of any other… Like, we work with,
Speaker:like, the sequels of the of the world that are doing five or $10 billion in
Speaker:revenue worldwide, and a most of it is just, like, a mismatch of, like, they
Speaker:purchased a bunch of different 3PLs, and they're trying to put them all together.
Speaker:And so even from a technology standpoint, they, they have, like, six different OMS
Speaker:systems and all this stuff that they're trying to figure out in the background
Speaker:because this person they bought here and this person and then the cultures
Speaker:don't work right, and then you have a GM that has to approve of different…
Speaker:It's kind of just a, kind of a cluster even within the ones that
Speaker:seem like they have it all together by the, the bigger brands names.
Speaker:I, I, I like the, the smaller owner/operator ones
Speaker:I, I, I'm just gonna totally agree with you there.
Speaker:I … A lot of people get scared of some of the smaller of everything.
Speaker:Yeah.
Speaker:But you get so much more personalization.
Speaker:You get so much more say in what's happening.
Speaker:Like they actually care if you're like, "Hey, I want this." Where in a bigger
Speaker:organization, you mean nothing to them.
Speaker:But also, you know, there's really, really interesting data that's been
Speaker:coming out that, like, the percentage of ecommerce sales is through the roof.
Speaker:Like, we're going up 10%, 15% a year.
Speaker:Right.
Speaker:Profits are not following, and that's because of the complexity that is coming
Speaker:in with shipping everything, and the importance of that customer relation,
Speaker:and the loyalty and repeat customers.
Speaker:That experience, you can't risk losing good customers because you went cheap
Speaker:and they have a poor shipping experience.
Speaker:It's simply financially not viable into this world.
Speaker:You'll, you'll go out of business.
Speaker:So completely agree.
Speaker:We're totally out of time, Kevin.
Speaker:I feel like we could talk forever, but two things.
Speaker:If somebody is either, I know how great you are, if somebody's just curious on
Speaker:automating their own warehouse and wants tips and, and like, "Kevin, if I do this,
Speaker:do you have any suggestions or tip for me?" Or if somebody wants to actually
Speaker:find out about Cytronic … if they want to, you know, maybe sign up and be
Speaker:part of it what are, what are the best ways to kinda get in contact with you?
Speaker:Yeah, so our, our website, Cytronic well, you'll probably see us in
Speaker:the title of something the .ai.
Speaker:You could-
Speaker:Yeah, we'll throw it down in the description
Speaker:… But you could reach me.
Speaker:I'm kevin@cytronic as far as email, if you have any questions or anything like that.
Speaker:And yeah, I'm, I'm happy.
Speaker:I, I think that, like, we're not gonna be the, the, the only
Speaker:person that's gonna do this.
Speaker:I'm happy, on, on a from a selfish perspective, like, I want
Speaker:more people developing solutions.
Speaker:I want this return solution.
Speaker:So like, I, I, I … This is the way that, that the warehouses are going to go.
Speaker:The, the older ones are gonna take longer, but this is definitely
Speaker:the way that it's gonna go.
Speaker:So I, I
Speaker:For, for anybody that's looking out there, I, I definitely would.
Speaker:I … If you have a 3PL I would ask them what their, what their plan is.
Speaker:If not, you, you might wanna start looking at something else, because I could tell
Speaker:you, like, the cost savings is massive.
Speaker:So that's where whether you do it yourself instead of your own warehouse or go
Speaker:to somebody else or, or come to us.
Speaker:It, it, it, it will potentially change your business.
Speaker:So.
Speaker:Yeah.
Speaker:Do your due diligence.
Speaker:You've got to be looking at all the small little price differences when it
Speaker:comes to the fulfillment process, because they're just eating up our profits.
Speaker:So absolutely, Kevin.
Speaker:This was great.
Speaker:I cannot wait to see all the great things that Sytronix does.
Speaker:I'm here in the Dallas area.
Speaker:You mentioned you have a Dallas facility.
Speaker:I'm gonna have to go check it out.
Speaker:All right.
Speaker:Anytime.
Speaker:Okay.
Speaker:Sounds good.
Speaker:Thanks, Lori.
Speaker:And thanks so much for being here.
Speaker:We'll see you all next time.
