What To Build: Roger Counihan (Fortna)

Conversation with Roger Counihan, Vice President Sales @ Fortna. We discuss Fortna’s three key areas of technology focus and the trickiness of the human side of change management for startups selling into this industry.

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

I’m currently Vice President Sales at Fortna and have been with them for about eight years. For over 70 years, Fortna has been helping brands transform their distribution operations into a competitive advantage. Fortna helps our customers to map the flow of goods, engineer custom distribution operations, select the right equipment, and optimize operations. Our expertise spans distribution strategy, distribution center operations, material handling automation, supply chain systems and warehouse execution systems.

2. Tell us about your role and what your mandate is and how this specifically relates to working with startups?

My role is to work with our clients to understand what they need to do to make supply chain and distribution a competitive differentiator for them and then to help them implement a distribution strategy to support their business strategy.

I certainly see an interest from my clients to work with startups. Since we’re a system integrator, we’re agnostic to all equipment manufacturers and we will source the right equipment for each client on an individual basis. In this type of role, I need to be familiar with the latest technologies so that I know when I can present them as solutions to my clients’ challenges.

Our clients have been somewhat risk averse over the last decade but now they’re recognizing that change will be inevitable in this space so they now want to become familiar with what’s cutting edge technology; even if such technology is not 100% deployable right now, our clients are keeping tabs and getting ready for when that tipping point time will come.

3. What are some of the interesting types of projects that you’re currently doing with startups?

We are focused on a few areas right now and working with a handful of venture backed startups at any given time who are providing relevant solutions. We have a dedicated internal team who constantly meets and evaluates startups to learn about their technology. Since we’re a system integrator, we don’t sign blanket partnership agreements but once we know what a startup is capable of, we can include them as part of an overall solution for our clients.

Currently, our focus is on three key areas:

a) Technology that drives flexible automation, not just in terms of volume but also changing business requirements. For example, if a company is doing only e-commerce right now but wants to later launch retail operations, how do we give them the flexibility to do so? Or if a company is B2B but wants to also go direct to consumer — what solutions allow for this?

b) Any technology that reduces dependency on labor is attractive.

c) Safety is another important topic area, whether from repetitive ergonomic issues or from dangerous incidences.

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

There’s a couple of key pieces to go from pilot to production.

First, we need to look at the company’s health and status. When you’re looking to move something into production, you need to know that this technology will be available and around for the foreseeable future. For example, you don’t want to start using Kiva a year before Amazon acquires them and the support timeline is limited. You also don’t want to buy technology from a startup that will fold in the near future.

Second, we see if the startup’s manufacturing capabilities can reach an appropriate level of quality and scalability.

Third, we want to know how the startup will support their technology. In our industry, a mature company will have 24 hours a day 7 days a week 365 days a year phone support. In many cases, if needed, vendors will send someone on-site within 36 hours to conduct maintenance or to install spare parts. A few vendors might even have one of their employees on-site at all times to ensure smooth operations. The level of support need really differs from industry to industry: an apparel company might be less demanding than a pharmaceutical company. For a startup, it’s a huge undertaking to get to that level of capability and maturity.

Fourth, especially in the beginning of the working relationship, clients will need a manual backup plan at all times. If your robot fails to start, there better be another workaround the clients can turn to order to keep the work moving forward.

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?

Our biggest problem is lack of labor. However, we don’t see solutions right now that are able to handle fluid, flexible processes like humans can.

As an example, there are a lot of people working in the packing process, potentially anywhere from 200 to 400 people in an average distribution center. This goes beyond simple pick and place. I’m talking about the challenges of assembling different products together in a box, stuff tissue paper around the products, inserting a thank you card, putting gift wrap around the box and then labeling the box.

Another major challenge is in truck loading and unloading; this is hard because unless all your boxes are of the same size, people have to play box Tetris in order to mostly efficiently load and unload boxes into a truck. On the unloading side, trailers might not come with an advanced shipment notice so we won’t know what the truck contains; in such cases, humans currently have to figure out what’s in each box and decide on the spot where to place the boxes (i.e., goes into shipping immediately vs. what gets put away into storage) based on whether or not the products in the boxes are on active orders, are back-ordered, etc. Sometimes the boxes arrived entirely unlabeled so you don’t even know what’s inside of them.

I’d love to see AI and robotics technologies go from just handling transport and manipulation to “thinking” about how to handle orders without needing detailed prescription of demand from a warehouse system.

6. What should startups know about your industry before going in? What nuances or details about the industry are not so apparent to someone looking in?

A lot of the larger manufacturers in this space are pretty far behind in terms of R&D because they’re so busy with work they already have from UPS, Walmart, Amazon, etc. that they’re focusing as much right now on new technologies. Since their level of innovation and speed of change continues to be pretty slow, this is a great opportunity for newer entrants.

It’s important when entering this space to understand the perspectives of different stakeholders and how to align their views. A warehouse manager’s objective is to deliver orders on time at the highest quality at the lowest cost — they’re not necessarily looking for the next innovative idea. So if you’re a startup looking to introduce changes into this industry, you have to understand both the end user’s perspective but also recognize that in order to sell you might need to talk with people who are at a higher level in the organization and who have more bandwidth and incentive to think about newer technologies and their future impact on this industry.

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

It’s always interesting to read the public annual reports of key retailers or other companies with complex supply chain operations. Typically, they will highlight a few challenges or strategies that will have a supply chain impact. A great exercise for founders or startups is to read this type of corporate strategy documentation and think about how solutions and technologies align with this broader business strategy.

8. Anything I haven’t asked that you think would be worthwhile sharing with founders who want to build in this space?

The biggest barrier to successfully adopting higher technologies and automation is the human side of change management. Each level of supply chain leadership (senior level through operational leadership) will need to understand the capabilities and limitations of new forms of automation in order to take advantage of it.

It’s also important to think about the organizational impacts of higher level automation. Operators will need to be more technically savvy. The maintenance team will potentially need to handle a higher level of software, programming, or controls maintenance than previously were available. Orders may need to flow through the distribution center in a different way: for example, provide larger batches for a software to optimize, or provide a smoother flow to prevent congestion, etc.

Founders need to think about and potentially educate their clients on this type of change management in order to drive more successful implementations.

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