Jacob Shakked of Fabric On How To Reduce E-commerce Logistics Costs

An Interview With Rachel Kline

Authority Magazine
Authority Magazine

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Increase throughout per footprint: Our system allows retailers to fulfill orders in a much smaller footprint. However, they do not have to sacrifice on throughput as our system is designed to maximize operational efficiency.

As e-commerce continues to grow and evolve, businesses face increasing challenges in managing logistics costs. Efficient and cost-effective logistics are crucial to remaining competitive in this rapidly changing landscape. In this interview series, we are talking to e-commerce managers, supply chain professionals, logistics experts, and anyone with hands-on experience in the field of e-commerce logistics. As a part of this series, we had the pleasure of interviewing Jacob Shakked.

Jacob Shakked is a highly experienced Senior Product Director at Fabric with a proven track record of leading the development of solutions from concept to successful launch. His expertise lies in materials handling technology, e-commerce, fulfillment, robotics, automation, logistics, and supply chain. He has multi-disciplinary technical skills coupled with a strong business and commercial awareness, allowing him to effectively navigate complex landscapes and drive strategic decisions. Throughout his career, he has consistently demonstrated my ability to translate strategic visions into actionable plans, leading to the successful execution of projects across a variety of industries.

Thank you so much for your time! I know that you’re super busy. Before diving in, our readers would like to get to know you. Can you tell us a bit about your backstory and how you grew up?

I grew up never really knowing what I wanted to do. I ended up studying wildly different things (biochemistry and finance to name a couple), and my professional background is also quite varied. I started in the world of consulting where I gained exposure to many different industries and markets. That really instilled in me the notion of always questioning ‘how can we do it better’. After that I worked in roles formulating strategies for adopting novel and pioneering technologies.

What led you to this specific career path?

Having worked in various fields of emerging technology for some years, I was always keen to focus on something both thought-provoking and challenging, but also very dynamic and on a powerful growth trajectory. It turned out that the automated e-commerce field combined so many of these appealing elements, and to this day I continue to be fascinated by it. We’re not just answering current questions — we’re asking questions that haven’t yet been asked. I knew days after starting in the company that I’d found my niche.

Can you share the most exciting story that has happened to you since you began at your company?

Solving particularly tricky or persistent problems is always exciting, but designing our first automated grocery fulfillment center a few years ago was an experience I’ll never forget. From sketching the layout on paper all the way through to defining the operating model and launching the site, it was an exhilarating ride from start to finish, and one where I was learning throughout. It was also inspiring to see how genuine and strong collaboration between teams translated to so much success.

What are some of the most interesting or exciting projects you are working on now? How do you think that might help people?

We have numerous R&D projects underway, ranging from designing our next generation of hardware, to evolving our software, designing efficient operating models, and building powerful data tools, amongst others. The most exciting ones are those that are particularly creative, that find elegant solutions to classic problems. Often this involves adapting our technology stack to suit unique applications or to transform legacy operations. All the development we do is designed to help companies and people, such as improving their customer proposition, refining their operations to be more efficient, or helping to make fulfillment centers safer.

You’re a successful business leader. What are three traits about yourself that you feel helped fuel your success? Can you share a story or example for each?

I always try to be creative in everything I do. This means challenging the status quo, seeking new ways to do things, and achieving things that were previously thought impossible. For example, if a persistent problem cannot be solved with existing means — create new ones.

Secondly, I think I’ve benefited from being highly resourceful, which involves improvising where required with whatever is available.

Finally, I’ve found that attention to detail is a critical aspect of success that is often understated compared to the ‘bigger picture’. Whilst it is obviously important to retain the wider perspective, a deep understanding of the elemental parts of a project or system will reveal the nuances and intricacies that often hold the keys to success.

Excellent, thanks so much for sharing that. I want to shift gears and talk about e-commerce. What was the original vision for your e-commerce business? What pain point(s) were you trying to solve for your customers?

The original idea, which hasn’t really changed, was to automate some of the most inefficient and problematic parts of the fulfillment process for e-commerce. This solves many of the pain points experienced by our customers, for example: increasing capacity and throughput by speeding up the replenishment and picking operations; getting closer to consumers, reducing last-mile costs, and adding new channels to existing nodes all thanks to very high storage densities; and reducing employee turnover due to better ergonomics and improved safety, to name but a few.

What are some of the biggest challenges you currently face regarding e-commerce logistics costs?

Supply chain issues that arose during the pandemic such as labor shortages in warehouses and rising customer expectations for fast delivery at a low cost are still stressing supply chains. Last year, Fabric released research detailing that most consumers have a baseline expectation for free two-day shipping, which is a challenge and a heavy cost burden for retailers of all types. Most retailers don’t have the manpower or space to overcome these challenges in their legacy operations.

Additionally, many retailers don’t have clear visibility into their inventory and can’t effectively track and manage each item in a warehouse or back-of-store storage. In 2021, retail shrinkage, or lost or stolen merchandise from a store or warehouse, cost retailers $94.5 billion, and it’s estimated that it will be higher this year.

What most fulfillment providers overlook is that optimized fulfillment operations goes beyond the realm of robots and automation. While technology plays a pivotal role in streamlining operations, it is essential to understand and address the broader operational needs that underpin the success of any eCommerce fulfillment ecosystem.

What role do technology and automation play in reducing e-commerce logistics costs, and what specific tools or solutions have you found most effective in achieving this?

Any solution must be tailored to fit the space and labor needs of a retailer. In Fabric’s work, we’ve found that high-density and high-throughput automation can transform and improve everything from customer experience to real estate investments.

Additionally, any automation solution needs to be specifically tailored and designed for a space, and be able to “learn” how to improve processes as it works. A cube-based robotics system is able to easily identify and transport goods in a warehouse in a timely and efficient manner.

Automation also needs to be designed with humans in mind. The “dark warehouse” sounds ominous but is unlikely in the near future. With an effective robotics system, human workers are freed from the more dangerous and labor-intensive tasks for higher level warehouse management.

Fabric has a proven track record of operating our state-of-the-art facilities for the past five years. We have honed our capabilities to make each piece of the fulfillment process work together seamlessly. In turn, we are enabling retailers to realize real business value in automating fulfillment operations.

How do you ensure that your logistics providers deliver the highest quality of service at the lowest possible cost, and what metrics do you use to measure their performance?

Fabric measures the increase in throughput achieved when implementing its robotics solution, in addition to other metrics that measure efficiency and accuracy. With the Fabric system, brands see 3x increased throughput compared to manual fulfillment and a 60% reduction in labor costs to directly address some of their most urgent concerns. Fabric also helps brands achieve a 70% improvement in storage density and 99% inventory accuracy to meet other challenges like retail shrink and set themselves up for long term success.

Ok super. Here is the central question of our interview. Can you please share five innovative or unconventional strategies that you’ve employed to reduce e-commerce logistics costs? Please share how each has been successful in achieving your goals.

1 . Add automation to fulfillment and back-of-house operations: This reduces labor expenses by making operations much more efficient, as well through costs savings such as recruitment and hiring costs, other turnover costs, personnel equipment costs (handheld terminals, clothing and workwear, etc etc), and reduce employment risk (legal, operational, safety).

2 . Micro-fulfillment centers: With automation solutions where robots handle many of the more time-consuming activities (such as storing and retrieving items, picking, sorting, and packing orders), warehouses don’t need to be as large and companies can utilize micro-fulfillment centers instead. This will lower real estate acquisition/occupation costs and grant more choice over location.

3 . Reduce real estate costs: Micro-fulfillment centers reduce last mile costs by being closer to customers, with a higher urban real estate cost offset by smaller footprint enabled by high storage density.

4 . Create flexibility: Adding in automation also gives companies more control over their operations in the way that labor mobility and availability doesn’t dictate things like warehouse location as much.

5 . Increase throughout per footprint: Our system allows retailers to fulfill orders in a much smaller footprint. However, they do not have to sacrifice on throughput as our system is designed to maximize operational efficiency.

Looking ahead, what are the biggest challenges and opportunities in reducing ecommerce logistics costs, and how do you plan to address them in the coming years?

One of the principal challenges in reducing e-commerce logistics costs is simply that they are always growing. Whether it is the unit cost of labor, transportation, or warehousing, or whether an improved customer proposition results in higher costs, such as faster delivery times and free returns, e-commerce margins are under ever increasing pressure. Which is why it is so important, more than ever, to introduce technologies that can diminish these costs significantly.

Big opportunities such as automation can have very positive impacts on the unit economics of an e-commerce operation, and we are continuously developing and advancing our technology in this field. Fabric automates multiple stages in the fulfillment process, which achieves cost savings in two main ways. Firstly, the fast goods-to-person architecture increases the efficiency of the operation, directly reducing operating expenditure. Secondly, the technology allows for very high storage and throughput density, meaning reduced footprint and therefore lower rent and facilities costs. Similarly, it means Fabric’s fulfillment centers can be deployed in existing locations. In addition, Fabric’s technology can also be used to significantly reduce the logistics costs surrounding customer returns.

You are a person of significant influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

It is frequently remarked that people are more divided and polarized in their opinions than ever before. However, I believe that people are actually more closely aligned, and that often there remains a larger area of common ground than is perceived.

A movement that helped identify this common ground between people and use this as a foundation to build stronger ties would lead to more unity, more agreement, and greater harmony amongst populations.

How can our readers further follow your work online?

I would encourage interested readers to follow Fabric’s LinkedIn page to stay up to date with our latest news and developments.

I want to thank you so much for your time and for sharing your expertise with us. I wish you continued success!

Thank you very much.

Jakes’s bio:

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