Conversation with David Schwebel, Vice President of Business Development and Market Intelligence at Swisslog. We chat about about how Swisslog partners with startups on some of its next generation projects, how startups should hyper-focus and how corporates think about taking strategic risk.
1. Tell us about yourself, where you currently work, and your path on getting there.
I’m the Vice President of Business Development and Market Intelligence at Swisslog Logistics Automation. I represent Swisslog in leadership roles in a number of associations, including MHI (the nation’s largest material handling, logistics and supply chain association) and SCLA (Supply Chain Leaders in Action Business Forum, a collection of 60–70 leading major corporations’ senior management that seek strategic ideas and thought leadership to improve supply chain and logistical operations).
Prior to joining Swisslog, I worked as managing executive with Material Handling Industry (MHI), the trade association for the material handling and supply chain industry. Before that, I held a number of leadership, strategy, engineering and business design roles at Coca-Cola. As a consultant, I’ve executed business process redesign and improvement projects for automated warehouses, packaging suppliers and supply chain information technology integrators.
Swisslog Holding AG is a Swiss company specializing in automation solutions for health systems, warehouses and distribution centers. Headquartered in Buchs/Aarau, Switzerland, Swisslog is organized into two business units, Healthcare and Logistics Automation. Swisslog has 2,700 employees located in 28 countries, and (as of 2015) is a member of the KUKA Group, a leading global supplier of intelligent automation solutions.
2. Tell us about your role and what your mandate is and how this specifically relates to working with startups?
In my current role, I manage many of Swisslog’s most important strategic relationships with technology partners. As part of my work, I have to stay up to date on all the emerging technologies and through that part of the work I keep tabs on a lot of the interesting startups who are providing solutions that might be of value to my customers.
These customers challenges don’t necessarily align to clearly documentable business requirements; they rely on our experiences in other market segments to provide insights to how to overcome their unique challenges. This is where my internal mandate becomes clearest: to understand their go-to-market methodologies, collaborate on the change roadmaps, and find solution sets that ‘fill those gaps’.
Often, those gaps are filled by startups. Aligning those ‘islands of automation’ that may be created by hyper-focused startups is my external mandate.
3. What are some of the interesting types of projects that you’re currently doing with startups?
I’m currently working on two projects that involve many startups: publicly known, in stealth and wholly owned by my parent company: (1) QTainer and (2) Horizontal Robotic Picking and Sorting.
QTainer is currently an internal Swisslog / Kuka project. Our alpha product will be operational in 2019. The QTainer is designed to be a flexible, mobile container-based warehouse or micro-depot that is built around the global shipping container standards.
Essentially, this would be like creating a mini-warehouse out of a set of containers (ones that can also be moved around by trailer heads); these containers have standardized racks that can fit packages inside and can allow for both automated storage and retrieval capabilities as well as retrievals by individuals (allowing for direct to consumer).
The goal is to provide modularized warehousing that can be flexed up or down depending on need, with “storage” containers connected to each other via “aisle” containers, and the ability to stack multiple containers on top of each other. Moreover, containers can also be designed to allow for temperature controlled and refrigerated environments. This gives customers who don’t want to necessarily invest in increasingly expensive warehousing real estate the ability to invest into “flex” warehousing options that can potentially allow them to not have to invest in fixed asset real estate for another 2–3 years.
Since these containers are also easily mobile and take up less space, it’s possible to set up urban micro-fulfillment centers; this can be helpful for customers who might want to expand into urban areas without needing to lease or buy expensive infrastructure or real estate.
For example, if you already have warehouses on the East Coast but want to establish on the West Coast without having to buy another warehouse OR if you’d like to flex up existing East Coast capabilities for high seasonal demands such as Black Friday and CyberMonday by adding 4 to 6 containers’ worth of storage.
This technology is designed to handle being built out for single sites or a group of sites. We’re estimating that this can help certain customers reduce their total network costs anywhere from 40–70% depending on the location. We should be able to just quickly show up and drop off these containers and get them up and running within a few weeks.
How this relates to startups is that we need to partner with them to outfit the internal parts of the container with technologies that can work within confined spaces, ranging from shuttle systems to picking, packing, kitting, sorting, separating, and packaging technologies to other types of value add for semi-finished state products.
We’re also interested in technologies that can perform in refrigerated and freezing temperature environments — for example, we don’t currently have a good enough shuttle system for freezing environments.
Overall, we have a roadmap of nine different types of projects over the course of the next four years that we want to be working on. We can partner with startups to provide them a lab environment that mimics the inside of these containers to work in in order to test out their technologies. We’re currently partnered with two global 3PLs on this project.
Another project I’m working on is in the area of horizontal picking and sorting. Currently, we’ve collaborated with Kuka’s network of subsidiaries, a sub-decade robotics vision firm and a robotics startup out of Boston, MA on this problem. The goal is to get to a state where the robotic arm can quickly contextually switch in picking up all different types of objects from flat box containers to unstructured items such as sponges, different sized bottles or flat packed T-shirts and plastic over-wrapped packages. We have many, many customers asking for this product.
4. What number of these projects move into production? By what criteria? One of the challenges we see startups facing is how to move a customer from pilot to production.
Our industry is typically looking for hardened solutions before we adopt. It’s not about how innovative the technology is but rather it’s about whether or not it has been through many successful operating cycles; for example: four non-stop operating years and three software upgrades with no issues in a production setting with a reputable customer.
We think it’s important for startups to be hyper-focused on one thing and to do it better than anyone else in the industry. For example, Berkshire Grey recently came out of stealth in November 2018 and already is working with a large omni-channel company. Their pilot is within the entire warehouse and to me, that shows they’re getting closer to becoming hardened technology because the technology is now in an actual production stress environment.
My advice is to not be everything to everyone. You need to focus on hyper improving a single core component of your technology, digital and/or physical — figure out what you’re really, really good at. Unless you have the vision and ability to own the entirety of the customer solution set you’re going for, you’re not going to be well positioned to succeed.
5. What are the major challenges in your industry these days, and specifically ones that you think can be addressed by the right type of AI and or robotics application? Can you give some detailed examples?
Beyond the other problems addressed above, one of the biggest challenges is in unloading flat loaded trailers: technology that can pick the entire container clean, with every package taken off with no damage in 35 minutes or less. Currently, it takes one to two humans, per trailer, 45 minutes to do this job. The packages also have to be placed onto pallets (with forklifts) or on conveyor belts. This is a very high churn job for people — so, is there a way to automate this process and allow the humans do more critical thinking roles?
Another area of interest is in adaptive robotics for sorting, pick-pack-seal, and decanting. We’re not yet a believer in true lights out warehouses for various reasons. What this means is that we’ll have a long period of time where robots and humans are working together in dynamic warehouse settings and we’ll need the right type of technology to allow for this.
Lastly, there’s interest in physical and digital combined track and trace in the fulfillment arena that marries both blockchain and a form of <20 foot distance RFID. Our customers, even in automated facilities, still misplace critical products — this is due to the human elements overriding the software provided decisions (where to store it, when to move it, where to release it, etc). Having a human element into an automated system set with traditional 1-D or 2-D barcoding will always introduce potential modes of failure.
This is why identifying true end-to-end track and trace technologies fulfills yet another gap in our solution sets, and further mitigates the natural bias of error that manual workers instill in our customer’s facilities.
6. What should startups know about your industry before going in? What nuances or details about the industry are not so apparent from someone looking in?
Startups really need to understand who they’re selling to. In our industry, their audience is going to be 30-year veterans who have been predominantly told that supply chain is in support of sales, not that logistics can be a competitive weapon. As such, historically, their audience has been used to simply throwing labor at the problem.
Startups might also have to help shift the mentalities of some of their potential customers to see technology as an enabler to top line growth and not only as a bottom-line cost reducer.
Another thing to note is that generally people would prefer to fail and fail often on smaller bets versus putting everything into one expensive basket and hoping that succeeds. For example, they’re much more likely to want to spend $10MM in $1MM increments and fail nine times with the last one being successful versus betting everything on one $10MM project; historically, they’ve been burnt by large expensive bets that have resulted in falling short of required expectations in speeds you can’t maintain, package sizes that won’t run, etc.
Customers might be feeling pressure from their executives to implement fast deployable solutions; they might see technology as some type of magical wand that’s going to make all of their problems disappear versus something to partner with. In that state of mind, you can’t always rely on them to give you the most useful input. They might tell you they critically require XYZ process but you might need to challenge and push back against their requests because what they’re hoping you can solve for them might be outside your purview.
For example, I once had a company who was receiving stock from an overseas provider tell me that they wanted to upgrade their storage of their inbound distribution boxes into an automated storage and retrieval system. I took one look at the storage boxes, all of them in various states of falling apart, and told them that in order to have a shuttle system work they needed to go back to their supplier and request thicker cardboard boxes because otherwise these boxes would fall apart in the robotic system. My point is that you can’t take everything that the customer asks for at value face — you have to figure out what it is that they should take care of versus what you can provide.
The reverse scenario can also be a problem, where startups might try selling themselves to customers as a complete solution set when that’s not the case; in reality, most products are not complete solutions for all of a customers’ needs. Instead, most products only mitigate a particular part of a supply chain problem — you should be very upfront with customers about what exact problem you’re solving for them and set proper success expectations.
Lastly, it’s almost always worth it to partner with other companies on areas outside of your core competency. This will give you the time and energy and resources to hyper-focus on what you’re really good at: your core product set. Moreover, customers also don’t want islands of automation so the more you can partner and make yourself an indispensable part of the overall solution the better.
7. Lastly, any recommended resources / reading (ex. Industry conferences, publications, experts to follow, etc.) for startups looking to build in your space?
The Robotics Group @ MHI.org
The Solutions Community @ MHI.org
http://www.mhi.org/solutions-community
World Economic Forum Annual Meeting
https://www.weforum.org/events/world-economic-forum-annual-meeting
Futureproof Supply Chain: Planning for Disruption Risks and Opportunities in the Lifeline of the Global Economy — Author: Jason Schenker
https://www.amazon.com/Futureproof-Supply-Chain-Disruption-Opportunities/dp/1946197262
The Power of Nice: How to Conquer the Business World With Kindness — Authors: Linda Kaplan Thaler and Robin Koval
https://www.amazon.com/Power-Nice-Conquer-Business-Kindness/dp/0385518927
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