Mike Allan of Routeique On How To Reduce E-commerce Logistics Costs
An Interview With Francois Marchand, Editor of The Ecomm Manager
Any systems you can buy, design, or implement to achieve a full high-level view of your logistics and supply chain performance across your network are beneficial. Often, even if companies have a pretty good picture of what is happening in one facility or with one partner, they don’t necessarily see the bigger picture or view. Having this wider purview enables optimization across the network, rather than only within each node or location.
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 Mike Allan.
Mike co-founded Routeique in 2016, bringing with him more than 25 years of experience in business and technology. Mike also holds an MBA in Supply Chain, a BA in Communications, and a Project Management Certification. As a technologist with nerd-like enthusiasm for all things supply chain and technology, Mike has been working with enterprises including some of the world’s largest retail firms, travel and tourism companies, sports & entertainment firms, and manufacturers.
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?
Well, to start off, I’ve been a technology person pretty much my whole life. I’ve always been an early adopter. I grew up in the seventies and eighties. So, I got to watch the dawn of personal computers and all the way through to the Internet and all those kinds of things, and I’ve been a part of a lot of the early history of where we are today in that digital universe. I started developing and learning code when I was twelve or thirteen. I started actually helping companies when I was in my early teens still living at home. I got my start that early into programming and really never looked back ever since.
The other co-founder of Routeique [Scott Birkby], he is an operator. He’s involved in supply chain. It was new to me when we first met, but certainly, the world of e-commerce was not. I’d been working, developing software for major retailers like Lord and Taylor and Saks Fifth Avenue and Best Buy and Future Shop, and Sears for quite a number of years, all the way back into the nineties.
And so this business on the supply chain side is very much an extension of what I was always doing. It just moved a little back further up the chain from dealing with retailers specifically to going back to the supply side through a distributor in a 3PL, plus all the way back to the manufacturers making the products.
But that’s really how I got my start and why there was a nice fit between the two founders. I come from the technology side with a lot of retail e-comm experience, and our other founder comes from the supply chain side, and we sort of meet nicely in the middle.
What led you to this specific career path?
I think it’s a combination of, as I said, I was fascinated with what computers and coding could do from a really, really early age and combining that with my love of just exploring new things and learning new things.
So, it’s a combination of “what can machines do to help solve problems?” with the fascination with what kind of problems are out there.
Those two things led to this place. I’ve had a pretty extensive background in everything digital going back twenty-five, thirty years. And then combine that with everything else: retail sales, marketing, product, and service delivery.
I feel like it wasn’t really an accident that I ended up here: it’s just a natural evolution of everything that I’ve been doing for, like I said, several decades now.
Can you share the most exciting story that has happened to you since you began at your company?
To this day, the most exciting event in our history was the day that we flew out to meet Nestlé Canada in their boardroom.
They told us that they thought that the solution that we had built for ourselves–because we built it to solve our own problem in one distribution firm in one part of the world–could potentially be the solution to problems across their network.
They were the ones who really took this platform under their wing and said, “we think there’s there’s something to this.”
And we met them, and they confirmed that they wanted to make a bet on us. And this was very, very early. The platform was barely MVP (minimum viable product). It was barely a platform at that point, but it had potential. And they obviously saw that, too. And they decided to make a bet on us.
Routeique is actually called Routeique because they said, “we like it, we think this has merit. You know, what’s its name?” We said, “it doesn’t have a name.” They said, to give it a name and tell us who to make the agreement out to.
So I don’t think anything to this day has eclipsed the thought that the world’s largest food service company agrees that a solution that we created might be the right solution for them, network-wide.
What are some of the most interesting or exciting projects you are working on now? How do you think that might help people?
Artificial intelligence. We are in service of the idea that we want to enable our customers with autonomous intelligent decision-making at scale, at a distance.
How that helps is there’s so much data, there’s so much volume of products moving through these networks at any given moment that no one human could possibly manage at all, nor make any sense of it.
So by adding machine learning, you allow the intelligence you’ve built into the system, and the algorithms, to make decisions in areas where they’re good at it, where it’s proven that they’re as good or better than humans.
And you take some of that need to make rapid decisions in the moment with volumes of information, and you just automate that, you basically put decision-making on autopilot.
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?
- Know what you don’t know. This is probably probably the number one thing — acknowledging and appreciating your limitations.
- Know how to identify and attract the people who do know the things that you don’t, and who have the skills, attitude, and aptitude to make your vision happen.
- Know when to hold on and when to let go. There are certain parts of the vision that are non-negotiable, and ways of doing business and moral codes that shouldn’t be flexible. But other than that, a good founder has to find great people that know what you don’t know and then let them run and try not to interfere so long as their activity aligns in general terms with the larger vision.
I don’t know if we need examples because these three things flow together, and are [essentially saying]: “I can’t do everything, I don’t know everything. You know, I know some things. I know enough to start it.” For example, the first major coup for Routeique was finding Eric [Routeique’s VP of Operations]. He’s an operator, an organizer, you know, a wrangler of talent. He’s better at those things than I am. And then, he was able to find and identify a lot of the other core people on the team.
What are some of the biggest challenges you currently face regarding e-commerce logistics costs?
We are exclusively focused on the logistics and supply chain challenges of e-commerce.
We let the e-commerce retailers themselves deal with the front end of the business in terms of sales and marketing, and we help shore up and optimize everything upstream from that.
Our main function is network optimization, which is a fancy way of saying we wrangle the participants and assets in your supply chain network into a cohesive unit that behaves as one entity instead of many competing ones.
One of our clients once said, “we don’t want to own the trucks, we just want to act like we do,” and that’s our whole value proposition. Our solutions allow businesses to do just that by providing visibility, connectivity, and optimization.
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?
We think that it’s about data and about automated decision-making. At this point, it is about moving from having all the intel that you need to make good decisions and then automating some of those decisions where it makes sense for a machine to do it. In other words, it’s autopilot for your supply chain network as much as possible.
To sum this up as a story, currently, our system can say, “do these ten things, and you’ll have a great month next month.” My vision is that clients can wake up and Routeique says, “I’ve taken the liberty of already doing these ten things, and you’re already going to have a great month next month.” It’s like the story of the Shoemaker’s elves: you wake up and the bulk of the work has been done already.
To provide a bit more detail on these solutions, automated decision-making would be when the machine decides: there are areas where machines are good at deciding. For example, it’s a mathematical equation, it’s something that’s defined.
And then there, are other places where you need human intervention. That is where businesses can use automated decision support, which is effectively, the system providing a dossier of everything you need to make a decision. A human still needs to make that decision, there is still a human in the loop. But now, that human is armed with all of the best information that can be available to them.
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?
Measure everything: what gets measured gets done.
Provide your partners with very specific requirements and expectations up front, document everything in contractual terms, and then make it clear that expectations are being constantly monitored and reported on, based on agreed-upon KPIs.
In terms of KPIs, the obvious ones to measure are perfect order rate, fill rate, on-time, and in-full deliveries.
What are some of the key factors that influence your decisions when selecting logistics providers, and what advice would you give to other e-commerce professionals looking to make similar choices?
You would be looking at customer ratings and reviews, and the professionalism with which they carry themselves through the sales and onboarding process, the condition of the assets and the attitudes and culture of the team, the capabilities and robustness of the tech that they employ, as well as any specifics you may require, i.e. handling certifications, bonding, insurance, etc.
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. Right-sizing inventory. This is making sure that the right amount of inventory is on hand in the right location at the right time to minimize shorts and lost sales opportunities, as well as minimize inventory storage and management costs.
Setting those numbers and being able to manage them in real-time ensures that you’re always in balance and that you’re never out on one side or the other.
2. Using technology like machine learning to better predict demand and match demand to supply. As noted above, using intelligent systems helps support and automate decision-making, allowing for faster, more accurate predictions of how much you will need where, and when.
3. Employing end-to-end tracking technologies allows you to gain better visibility across the entire product journey, including transportation.
Once you have a good demand and supply forecast and a good picture of what you’re going to be looking to move through the system, now it comes time to actually track the movement of those goods through the system. This end-to-end tracking can be accomplished whether or not you’re using your own fleet, third parties, or a hybrid of both. With the right solutions, such as software, IoT sensors, and more, you have insight into the status of all of your products and assets, and can more easily diagnose problems or ensure you’re meeting your KPIs.
Additionally, gathering alternative datasets in addition to just human input wherever possible can also help validate and correct for human error: any time you can get more sources of truth than someone saying they did it or someone clicked a button helps ensure that your data is accurate.
4. Recording EVERYTHING in your central source of truth, whether that be your ERP, or some other system such as Routeique. The more the system has access to in terms of data, the more informed decisions can be made. Anything that happens outside of the system is effectively invisible to your optimization tools and therefore presents a greater risk. For example, if product is moved, but this isn’t recorded, the system now thinks that product is somewhere other than where it actually is -– from the system’s point of view, that move never happened, and it will make decisions on incorrect/complete data.
5. Any systems you can buy, design, or implement to achieve a full high-level view of your logistics and supply chain performance across your network are beneficial. Often, even if companies have a pretty good picture of what is happening in one facility or with one partner, they don’t necessarily see the bigger picture or view. Having this wider purview enables optimization across the network, rather than only within each node or location.
Looking ahead, what are the biggest challenges and opportunities in reducing e-commerce logistics costs, and how do you plan to address them in the coming years?
Availability and quality of data is the #1 in terms of being both a challenge and an opportunity.
Most companies and partners/suppliers have the best of intentions and often make their best efforts to achieve the results that are required, but issues come from making decisions based on bad or incomplete data sets.
So, the more data and the more accuracy there is, the better optimization decisions can be made.
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. :-)
Aligning financial goals with softer goals such as sustainability, zero waste, and ESG-oriented goals would be the most valuable thing we could do for the planet.
There is a huge focus on managing costs in these challenging times, and there is often a separate focus on doing what’s right for our species and our planet long term, but it would be great to see more focus on consolidating the two views.
Our premise as Routeique is that if we’re all doing things right, what’s good for the planet and ourselves should ultimately be good for our bottom line as well.
How can our readers further follow your work online?
You can reach us at:
- LinkedIn for Mike or Routeique
- Our podcast “the PODCast”
- Our website
I want to thank you so much for your time and for sharing your expertise with us. I wish you continued success!
Thank you!
What “next big thing” tactic or strategy should leaders in e-commerce be digging into? AI/ML-automated decision-making at scale.
What is everyone wrong about in e-commerce? Definitely “Shipping is free”: there’s no such thing in terms of financial or environmental cost.
What are you reading right now? Academic journals on AI.
What product are you obsessively using right now? Three.JS, which visualizes complicated spatial and volumetric relationships, such as products moving around a warehouse environment.
About The Interviewer: Francois Marchand is the editor of The Ecomm Manager. Throughout his 20+ years in journalism, communications, and marketing, Francois has created and managed high-value content for Postmedia, Vancouver Film School, and Unbounce. He loves helping business leaders grow their skillsets and knowledge base to stay ahead of the competition. Visit The Ecomm Manager: theecommmanager.com
