What To Build: Prof. Benoit Montreuil (Georgia Tech)

Conversation with Prof. Benoit Montreuil, the Coca-Cola Material Handling & Distribution Chair and Professor and Co-Director Supply Chain & Logistics Institute at Georgia Tech. We talk about the major trends currently taking place in supply chain and logistics, the importance of establishing oneself in a hub city such as Atlanta, and what a future of standardization within warehousing and ground logistics might look like.

1. Tell us about yourself, where you currently work, and your path on getting there.

I am currently the Coca-Cola Material Handling & Distribution Chair and Professor in the H. Milton Stewart School of Industrial and Systems Engineering at Georgia Tech. I am also Director of the Physical Internet (PI) Center and Co-Director of the Supply Chain & Logistics Institute (SCL).

Prior to this, I was a professor of operations and decisions systems in the faculty of Business Administration at Université Laval in Quebec City, Canada before joining Georgia Tech in 2015. Overall, I’ve been in the logistics and supply chain space for nearly 40 years, with my original training in industrial engineering (Bachelor’s, Masters and PhD).

2. Tell us more details about your specific research focus areas and how they’ve evolved over time. What are the major recent trends within your space and what’s their impact on the current industry?

My main research interests generically lie in developing concepts, methodologies and technologies enabling businesses, supply chains, logistics systems, industries, and regions to sustainably thrive in a fast evolving hyperconnected world.

Outside of academia, I’ve worked with numerous companies in this field, ranging from e-commerce players, manufacturers, technology ventures, logistics service providers, to carriers and others.

Since 2006, I have been focused on the Physical Internet (PI), which I introduced to enable transforming the way physical objects are moved, stored, realized, supplied, designed and used, pursuing global supply chain and logistics efficiency and sustainability. The Physical Internet initiative now has projects around the world, often jointly lead by industry, academia and government.

At Georgia Tech, around the PI Center and SCL, research and innovation on Physical Internet hyper-connectivity is an inter-disciplinary team effort with over 100 faculty across multiple schools, not to mention a large ecosystem of companies, working together to help rethink logistics and supply chain on a global scale — sometimes at the level of mega-cities but also at the level of smaller facilities.

I am fortunate that Atlanta is a true logistics hub city, a worldwide economic leader in supply chain technology, and that Georgia Tech is #1 globally for industrial and systems engineering, with a School that’s twice as large as anywhere else. Being here gives me a great vantage point in being abreast of all the trends in this space.

Some major trends that I’m seeing right now:

a) The rise of “smart” everything: smart cities, smart networks, smart buildings, etc. due to a proliferation of sensors, data access, faster computing, better algorithms and optimizations.

b) Autonomy and connectedness: everything from drones to autonomous trucks.

c) Intralogistics: the rise of smart robotics such as robotic swarms and collaborative robots, as well as augmented reality, human augmentation, etc.

d) 3D printing: this is not yet everywhere but even now we see 3D printing for crowns in our mouths, accessories such as earrings, etc. We also use 3D printing more and more for prototyping and critical service parts.

e) Rise of flexible automation: historically, we’ve had highly automated, expensive infrastructure such as automated storage and retrieval systems (ASRS). For example, we’re now trending towards more flexibly automated fulfillment centers exploiting new generation of Kiva inspired mobile robots that bring the goods to the picker in innovative ways.

f) Smart standardized modular containers: beyond pallets and cargo containers, modular packaging, handling and transport containers exploited beyond single-facility or client-supplier context, designed for easing logistics while being eco-friendly.

g) Shared and circular economy business models: overall, there’s much more focus now on sustainability, climate control, social responsibility, and extrapolating from platform-based sharing models such as AirBnB and Uber.

2. Within warehousing / supply chain, what are some of the specific challenges that you see that you believe might be solved via the right type of AI and/or robotics technologies?

One challenge is how we can run the warehouses of the future without the types of fixed assets that we’ve had historically. It used to be that warehouses would come with a sortation system, fixed racks bolted to the ground, big forklifts, etc., but the trend right now is to go against that and to run a warehouse without fixed assets.

In the same way that standardized maritime shipping containers have helped streamline that entire process, with ports being designed and automated around containers (i.e., unloading a container in a port is the same anywhere in the world), I expect a similar standardization to happen for warehousing and ground logistics as well. Just as all port equipment is designed around the same sized containers, warehousing equipment and robots should be designed around more and more modularized handling containers that facilitate end-to-end logistics.

We want robotic systems that take advantage of clearly defined standardized and modularized units that are easy to pick up and handle, without needing fancy tactile technology. As mentioned earlier, modular packaging and handling containers are coming, from small tote sizes to pallet and cage sizes, easy to transport within the warehouse via shuttle-based systems and that can also circulate easily outside the warehouse via mobile and manipulative robots. Logistics equipment and robots can be designed around these different sized packages, ones that go down to the individual case level, and will make it easy for them to circulate everywhere, not captive to a single facility but rather able to flow and exchange across the entire worldwide ecosystem. Such a design would allow for much more robotized and smart logistics, with distributed AI being used to coordinate the thousands of robots that need to work together.

Another big innovation area is around getting to faster and more time-window precise last-mile pickup and delivery, in megacities, suburbs and rural areas around the world. Amazon has led in this space by establishing fulfillment centers across the U.S.A. that are located near major cities. Alibaba and JD.com are also disruptors in the omni-channel space, with 30-minute delivery of online orders from their Hippo Fresh and Seven Fresh stores.The next step is in thinking about building micro-fulfillment centers or smart lockers for deploying products in major urban cities or in remote rural areas to get items faster to customers; in these cases, it’ll be a lot of robotization in smaller spaces — almost like smart vending machines on a bigger scale.

We need major industry initiatives as the challenges are expanding way beyond single company scope and scale. I know that a few major players in the logistics space are already seriously studying this problem and trying to come up with solutions. The European Technology Platform ALICE is a leader in this direction. It is set up to develop a comprehensive strategy for research, innovation and market deployment of logistics and supply chain management innovation in Europe with a goal to achieve the Physical Internet by 2030 and carbon-neutral logistics by 2050.

I believe that engaging startup ventures is key to meeting the challenges. Especially ventures able to work with major players on building out this ecosystem through contributing smart robots, robotic control systems, smart containers, sensor devices, blockchain technologies to track provenance to enable trustable smart transactions, smart supply chain and logistic platforms and operating systems, etc.

3. What type of startup would you be most excited to see / advise?

I do work with startups although given my time constraints I’m very picky about which ones.

I’m interested to help startups who have strong technical, customer experience, and logistics and supply chain knowledge coupled with ambitious yet pragmatic visions and business models. They are rare, but when I do find them, I want to help them to solidify their foundations, to grow and to shape the future of industry.

Other criteria are that the startup should be truly disruptive, with a team that I enjoy working with, and whose work must be related to the Physical Internet and smart hyper-connected supply chains, logistics and response networks. The more niche they are in their solutions, the less I’m going to be interested because it’ll be hard to scale such solutions and businesses, and because I’m generally more drawn to higher-level changes that enable things that currently we can’t do, that can have significant widely felt positive impact on industry, society and the planet.

4. What number of these startups’ pilots move into production? By what criteria? One of the challenges we see startups facing is how to move a customer from pilot to production.

Startups need to understand what game they’re playing and they need to know how to grow up and scale quickly.

Pilots are key to learning and adapting the technology, the solutions and the business models, and to foster adoption and growth. Yet many startups do not understand these pilots’ goals. Furthermore, startups must learn how to pick the right pilot partners and how to set the right expectations from the beginning, in line with the pilot goals.

Even if the pilot goes well with a partnering customer and it wants to move forward, startups generally won’t be ready — it’ll take them years to scale their solutions to the customer’s needs. Can they really produce products at production rate in next few months, in line with this customer’s needs, and service these products going forward?

I remember meeting one startup a few years ago who presented us with a great pitch. We saw a need for what they were producing but it took them another 3–5 years to produce something both useable and scalable, and they lost their innovative edge to other faster competitors, even though they were way ahead at the beginning.

The key is to be smart about scaling up — you need to understand who will be your target customers and build your startup from the beginning to address them. Most large customers will be cautious and will want to adopt new technologies in baby steps; if the startup is to win, it must be aiming to fulfill their needs, needing to align its scaling capabilities to their cadence.

5. 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?

The probability of success as a startup in this industry is 0.001% if it doesn’t have a deep knowledge of supply chain and logistics. I’m not saying that they need 30 years’ experience but the startups’ leaders need to know exactly what market they’re selling into. The more the startup leadership knows, the more they increase their potential for success.

For example, I once talked with a startup that was designing a new type of maritime container; the container was fine technically and used innovative materials but I knew that there was no way they could sell their product into that industry. They were completely off from the beginning regarding their product’s value proposition. After checking further as advised, they realized that it was really the case. They made significant changes and are now much better poised for success. There are many, many examples of technological prowess that result in business-unfit solutions and value propositions.

If you don’t know your customers, you can’t build the right value proposition, you can’t size your market correctly, and you can’t think of reasonable sound roadmaps for growth because you don’t know enough.

Lastly, startup leaders should try to connect with the places where logistics is really important and where there’s a lot of innovation. At a personal level, I am a good illustrative case. For many years, I was trying to steer logistics and supply chain innovation from my basis in Québec, Canada, yet this proved hard and limitative. Now that I’m based in Atlanta, Supply Chain City and a world class logistic hub, it’s a whole world of difference — I get to see how logistics is evolving because everything is here, from Fortune 500 supply chain intensive and logistic majors to a wealth of innovative supply chain and logistics technology ventures. I can connect to so many professionals in this area just within a few miles of where I work. If you’re not connected to such relevant nexus locations, your chances of succeeding are much lower.

6. Any recommended resources / reading (ex. Industry conferences, publications, experts to follow, etc.) for startups looking to build in your space?

MHI, APICS (CSCMP), IISE and INFORMS are organizations that have events and conferences on supply chain and logistics, as well as informative websites and a flow of publications. MHI has notably a series of books on Progress in Material Handling Research. In America, MHI is organizing bi-yearly the top trade shows: MODEX and PROMAT.

The International Physical Internet Conference is a nexus for learning about the leading edge in smart, sustainable, hyperconnected supply chains and logistics (www.pi.events), notably the forthcoming IPIC 2019 from July 9 to 11 in London, UK.

There are several online magazines, such as DC Velocity and Modern Materials Handling, that provide highly pertinent news and articles. Depending on industry, there are highly specialized magazines. Examples in the automotive industry include Automotive Logistics, Finished Vehicle Logistics, and Automotive Packaging & Container Management.

Also, in today’s world, it is good to be connected to social media feeds on the key targeted domains, through the likes of Twitter and LinkedIn.

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