Harry Drajpuch: 0:04

Customers love it. When you start to give all this information to customers and you give it to them, pictorially, I mean, heat maps, things like that. It's just a, a wonderful amount of data that everybody can use. And it creates a level of transparency so that my customers know what's going on behind the four walls, and they're not worried it's just a big concrete box, and God knows what goes on there. Now they're able to see for themselves what's happening through any part of the day.

Tom Raftery: 0:32

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi, everyone. Welcome to the Digital Supply Chain podcast. My name is Tom Raftery. And before we start, I'd just like to welcome a new supporter of this podcast. Olivier Brusle. I think that's how I pronounce your name. Olivier. I'm sorry if I got it wrong. Olivier signed up over the weekend to support this podcast. So thanks so much for that, Olivier. If you'd like to become a supporter of this podcast, to help me continue creating informative and engaging episodes of this podcast, visit the support page by going to digital supply chain, podcast.com and clicking on the support button. Or by following the link in the show notes, I'll have a link to the support page in the show notes of every episode. So follow that. And you can make a small donation starting at just three euros per month. That's less than the cost of a cup of coffee, but it would really help me. Okay. With that out of the way. On with the show today, I have my special guest Harry Harry, welcome to the podcast. Would you like to introduce yourself?

Harry Drajpuch: 1:45

Thank you Tom. It's a pleasure to be here. I'm Harry Drajpuch. I am the CEO of Amware Logistics. We're based here in the United States and we handle close to 17 million shipments direct to consumer every year.

Tom Raftery: 1:58

Okay. Superb and before we get into the, what it is you're doing, tell me first of all, why, how long has Amware been around and who set it up and why?

Harry Drajpuch: 2:11

Well, Amware started in 1989 at a as a industrial warehousing company. Distribution is the term that they used back in 1989. Back then typically big warehouses, a little bit on the dark side. If you can imagine. They're never well lit. And you're handling big shipments, pallets in, pallets out, and you're shipping to a lot of industrial users, a lot of end users, some retail at the time. But that was, that was Amware's Nexus. And it's interesting, a colleague of mine that I worked with was part of that beginning if you will. So from from there, we grew to 15 facilities across the country. And we changed the focus about eight years ago from b2b business to business industrial to direct to consumer, smaller shipments, smaller buildings more same day similar to the Amazon effect, if you will. They've raised the bar for everyone when it comes to fulfillment. So we followed that path, but we're kind of a, a little bit unique in that we focus on nutraceuticals, cosmetics you know, high-end product that that is shipping direct to consumer.

Tom Raftery: 3:22

Okay. And so who would be a typical customer and what problem are you solving for them?

Harry Drajpuch: 3:32

Well we handle the problem of growth for our customers. A typical customer for us would be someone that is in the health industry nutraceutical. Someone who's in the lotions and potions, cosmetics we do apparel customers that ship direct to consumer for apparel. And again, the, these are customers that are now growing. We service growing e-tailers and where they may have done it originally themselves. Or where they may have outgrown themselves and gone to a smaller kind of fulfillment, local fulfillment house that maybe is down the street. Maybe it's a car right away so that they can drive over and see what's going on. Or maybe they've just decided themselves that they would come out of their garage and they would have a little building of their own to do it, but have quickly found out the successful growth has created a challenge. Either doing it themselves or doing it with a small local player that just can't keep up with the growth. Typical customers of ours have anywhere from 50 to 500 SKUs. I would say typically we're dealing with companies that probably do 25 million, 20 to 25 million in annual sales up to a billion dollars.

Tom Raftery: 4:50

Okay. And how is your industry being impacted by things like, automation, for example, are your warehouses full of robots running around moving stuff, or are you still got people, or is it a mixture or how is that all working for you?

Harry Drajpuch: 5:10

Clearly, clearly it's a mixture. I would say up until about two, three years ago, It was predominantly all people that was very manual, a lot of people working in the building, getting things done. But then as our customers grow and physics don't seem to stop existing within a warehouse, you can't keep piling more and more people into a warehouse e especially if you're going to be a same day shop. You've gotta give people some tools, some automation. Typical picking approach would be paying people to walk. They, they cover a certain area in the warehouse. In fact, they may, handle multiple orders, but they're going to go start to finish. They'll walk the length of the area where the product is. It could be significant. And when they're done picking five, 10, how many orders they have, they'll come back to a pack station and drop that off. 50% of that time in a warehouse is spent just walking. So, you know, if you think about that, and obviously as you get more people in walking gets more difficult, it gets congested. What we've done is we've initiated robotics in our warehouse, and what the robotics do is they do the walking in a warehouse. They take the, the orders. And the empty carton. To a picker, to an individual who was stationed in an area and within that confined area that that person works, the robot will walk with him or her and as they fill orders and they're done for that section, the robot will walk to the next section. Or the robot, if the orders are complete, we'll take those orders back to a pack station and then another robot immediately comes behind so that someone just stays in an area and that all they're doing is picking within their area. And the robots, again, do the transportation. So if you think half the time was spent walking, now that half of the time is spent actually picking fulfilling an order. So just that alone is going to increase your productivity 2X just from doing that. You're not walking anymore and you're just picking. So things like robotics you know, anything that helps an individual become more efficient. So robotics is one. We use things like pick to light, which means that when a picker is facing the pick fronts they're looking for lights and they're looking for quantity. So, uh, over a location, a light will light up. It might say two or three. The picker will grab two or three. We'll scan those with a wrist scanner and then give it to the robot or put it into a box. Again, a picker doesn't have to look down and say, okay, where am I going next? What do I have to do next? The lights light up. They walk in sequence with the lights, very efficient. They pick and they put it in the box so they don't have to do the thinking, they don't have to do the translation, if you will, from what I have to do on either a screen or on paper to a box, which introduces an opportunity for potentially making a mistake, picking the wrong thing, misinterpreting that. They're just following lights and it makes it very simple. Another thing we've invested in and many fulfillment houses like mine might be voice picking. Picker wears a headset and it's interactive so that the, computer, if you will, will, will tell them, you know, pick five in this location. The picker will walk over to that location, pick five, and acknowledge back to the system. I've picked the five. And then the computer will tell them you know what to pick next again. Less thinking, and it's not that people are certainly not capable of thinking, but again, as you start to think, it takes time. As you start to translate the thinking into action, there's an opportunity for a mistake. The computer telling you exactly what to do, how many really takes a lot of the stress off someone. They just follow an instruction, but they have to acknowledge that instruction so they can't start daydreaming, right? The system is looking for an acknowledgement that you've actually completed this and you're repeating back what you've been told. You know, not unlike the checklist that pilot and co-pilot go through on their plane before every flight. Pilot or the co-pilot will call out whoever's flying and the other one will respond, but will respond exactly what they've done, not just Yes, yes. They respond back. I've done this, I flipped this switch. I've set the altitude, I've set the speed indicator. They, they have a positive kind of feedback. So that's, the process that's used. It's obviously very efficient when you're flying and it creates a safety environment so that there's no mistakes. We follow the same protocol. So, those are some of the examples that a large fulfillment company, and I wanna be careful about large, obviously not Amazon size. You know, we have 750 employees, that's the size of our organization, but we are able to make those investments because the payback is there, we can spread it over multiple customers in my warehouse. Generally, there's 10 to 12 customers in a warehouse. So I can spread the use of that over 12 customers. So they pay for only what they use. They don't have to pay for the robot 24 hours a day sitting there idle 16 hours a day when the building is shut down. It's spread out more efficiently. We can, you know, we can increase our day so we can make sure that our customers are getting the absolute most efficient use and the lowest cost for the latest technology.

Tom Raftery: 10:24

Okay. And do you have any metrics around efficiency gains from rolling out some of these automations? I know you said 50% for walking, which means two x with the robots, but do you have any, stats beyond that on how much more efficient or how much more throughput or hours saved or anything like that?

Harry Drajpuch: 10:43

Pick to light, for instance, where, the lights light up over the locations that you have to go to. We've seen 30% plus improvement in efficiency once we've implemented that. And we've been with pick to light now for about a year, so we have tremendous amount of data prior to that as to what every individual would do, but we've seen a 30% uptick in that. Now, you think about what that means, right? It means that you can handle 30% more growth with the same workforce. Obviously you can do 30% more of the work in a shorter amount of time. And you know, this all helps the e-tailer, if you will, really get a bang for the buck and really get better service. We can handle much more volume and a shorter period of time so we can be more just in time on the order cycle time. Which means cash gets coming in faster. It means reviews on, on social media get done more positively, which everybody looks at including us. So we've seen 30% on pick to light. Obviously the robots make us literally twice as efficient because we can eliminate all the walking. So that's a, very, very nice number. And we've seen about 25 to 35% on the voice picking side. What I didn't mention about one of the advantages of voice picking is it's multi-language. 65% of my workforce is Spanish speaking. That's their primary language.

Tom Raftery: 12:09

Sure.

Harry Drajpuch: 12:10

Many of them don't even speak English, you know, just enough to communicate, but wouldn't do well in a warehouse environment where everything is written in English, for instance. So, you know, we, we communicate with that part of the workforce with voice picking in Spanish. The learning curve is incredibly quick. Where it used to take us weeks to train somebody. In fact, we would have to double them up. So you would have somebody watching everything they did. Highly inefficient. Now we get them up to speed in a matter of hours, really at the productivity levels that used to take months to get to. So, those are some of the efficiencies that you get from automation today. Some of the other things I didn't mention was things like box makers or carton erectors. We do, like I said, 17 million shipments a year. So you can imagine how many cartons we have to make. We used to make all those cartons manually in a building and we would generally have three to four people working full-time, doing only, but making cartons not only is that inefficient, it's fairly boring.

Tom Raftery: 13:12

Mind numbing. I would've said

Harry Drajpuch: 13:14

right. As exciting as we try to keep it it's still a, a tough job and we have carton erectors now that can displace two, two and a half full-time employees. Again, freeing them up to do other work in the warehouse, more efficient work. You can make the cartons off hours you know, it just gives you a lot of flexibility and a lot of efficiency. So, the carton erector's a little bit low tech. We employ things like carton tapers that we run them through a taping machine. It makes every carton look professionally sealed. The old way was getting that tape on a handle. You know, you would just hand do that and the best of 'em looked okay. The worst of them looked like it was done by hand. You run it through a carton sealer looks incredibly, incredibly professional. We have label applicators that we use where people used to slap a label on. Sometimes they would do it right, sometimes it wouldn't be in the right spot. Sometimes the label would get crinkled cuz they're in a hurry to put it on. Label applicators, put each one on the same exact spot or wherever it has to be. Each label is applied uniformly, squarely. Again, just a more professional look. And as you get a package in the, mail that you open up, that you've been waiting for and you're excited to see, it's nice to see that it comes professionally, looks good. You feel like, yep, this is what I paid for. It was worth paying for you open up the carton, it's packaged nicely. Those are, those are the advantages that we have from automation.

Tom Raftery: 14:42

Okay. I'm curious as well, because you've talked a couple of times about the workforce. Has this had any impact on retention rates with the workforce in your warehouses?

Harry Drajpuch: 14:53

Overall, I would tell you yes. Because it creates a less stressful environment for associates. It's also allowed us to do things like create variable incentive for associates. So those associates that. Do more and they can do more now because they have the efficiency of robotics. They're not tired from, I mean, a typical employee can walk several miles in a warehouse over a shift. That's fairly tiring. So now they've got energy. Now they've got help. They've got the right tools to do the job. They're more productive. We, we reward that productivity with incentive pay. The more they do the more variable pay they can receive. So, there's a reason now that they wanna stay and yes work. It's more organized. And people like to feel like they're getting things done and they like to feel like they're working not only in an organized work environment, but they're working for a company that's willing to make the investments, to give them the tools that they need to be efficient. So, warehousing here in the states, typical warehousing companies or the warehouse industry itself, 43% is normal turnover. It's a high turnover environment. Again, if you could think about the cost of hiring, the cost of training, the impact of that. I mean, think about half the people that you're working with are not going to be there in a few months. They turn over. That's disconcerting, right? I mean, everybody likes stability. Everybody likes to have an expectation that is met. So yes, for us, it's made a significant impact. It's probably cut our turnover down in half and we're working very, very hard now to get that down to the single digit. So it's a journey. The automation was part of that journey. Yes, it's had a very, very positive impact. And again, it's helped us be efficient. It's helped us keep our costs in line and it helps us keep our customers competitive from a logistics perspective.

Tom Raftery: 16:48

Nice. Nice. What about things like data and analytics? Are they uh, impacting you as well? I mean, I know there's big trends towards far more data being made available and then using the likes of analytics to analyze that and get kind of, intelligence from that. Is, is that something that you guys are working with as well?

Harry Drajpuch: 17:06

So yes, prior to the automation and, and a byproduct of all the automation is that you get real time data. And, and the advantage of real-time data is that when you look at it over time, you can see periods in the day activity by time of day, you can understand when your workforce is starting to potentially, maybe get tired or you can start to see productivity dip a little bit. You can start to schedule things like breaks at a time when it's most effective for an associate as opposed to just saying, okay, we're gonna do it now and now every day and not change it. But yes, the, data that we're able to get today is significantly more improved than we used to. We used to just do a macro, right? We, we would look at an eight hour shift. We would look at what we did in that shift. And we would adjust accordingly. Now, again it's kind of like an MRI versus an x-ray where, you know, you saw a picture of something in two dimensions and you did the best you could with it. Now you can really, really take a look at not your operation, the flow, people, with an eye towards how do you help everything get better, more efficient? And again, not just on a macro level, but on an individual level. You can find things that you weren't able to find before. And you can spot trends before they're actually trends and anticipate them so you don't have to go through the pain of learning things that cost money to learn. Slow downs at certain times, mistakes that people may make because you have product that is too similar close together and people are making a picking issue. So, a, a byproduct of all the automation is the amount of data that you get so, you can parse it, you can post it, you can graphically display it because a picture is worth a thousand words. I used to look at spreadsheets. And I, I really envy the people who are able to do that over a, a full day. Accountants, for instance, who just look at numbers and numbers and you get to the point where you don't see numbers anymore. Now you graphically through bar graphs. Through line charts, you see things and you see trends that you couldn't see in the number, except if you were really, you know, if you were a Mensa member and you can crunch all the stuff in your head. Now you don't have to. Now you can start to see trends so that when you start to tweak and make fine adjustments to your operation, you can immediately see whether that line is going in the right direction or not going in the right direction. And by the way, customers love it. When you start to give all this information to customers and you give it to them, pictorially, I mean, heat maps, things like that. It's just a, a wonderful amount of data that everybody can use. And it creates a level of transparency so that my customers know what's going on behind the four walls, and they're not worried. It's just a big concrete box, and God knows what goes on there. Now they're able to see for themselves what's happening through any part of the day.

Tom Raftery: 20:11

Yeah, you, you actually anticipated my next question, which was going to be, is this data shared with customers as well? I'm just curious though, taking that little further seeing as you've already answered that question, what is the data they're most interested in?

Harry Drajpuch: 20:26

So, customers are most interested, we'll start with the delivery time, for instance. Right. They'll start with the time and order was, sent over, transmitted to the warehouse, to the time it was delivered by area. Things like this give them insight as to whether they want to move that inventory into a second or third facility to get closer to customers. Incredibly useful. They love to see costing. They love to see the cost of the shipment. They love to see the cost of what's happening in the warehouse. They love to see the cost of any value added services that they're paying for. Broken down that way so that they can make a determination, are they getting a premium for the service that they're providing a certain segment of their, of their customers? Is it worth doing? What's the impact of it? So they look for quality, they look for cost. They look for transit time. They look for accuracy, inventory accuracy, things like that. You know, is the warehouse efficient in the box utilization? For instance is my warehouse shipping air or are they using the best boxes for me? I mean, they're able now to help me make the right decisions as well. And they're there to if you will, another set of eyes, for lack of a better term, to keep me honest. I mean, listen, my competitors keep me honest, which is great. That keeps me, at the forefront. My customers keep me honest. That keeps me at the forefront of cost. I have to survive as well, and I have to grow. And if I'm not doing the right things by my customers I'm gonna hear about it and I'm gonna be, and my, you know, my market share won't grow. And growth, growth is the name of the game for all of us.

Tom Raftery: 22:40

Sure, sure, sure. So over the last 15, 20 years, this is a two part question. What do you think has been the greatest advance you've seen in the industry? That's the first part. And looking forward, seeing as we're now at the start of 2023, looking forward, what do you think over the next 5, 10, 15 years is gonna be the greatest advance you'll start seeing

Harry Drajpuch: 23:07

Well, I'm gonna go back further than, you know. I've been in the industry for 40 years and I, and I started out I, I started out before everybody had a computer on their desk. I know it's hard for many young people today. What do you mean you didn't have a computer? How did you do things? I would say the, the, the biggest advancement that we got was the, the improvements in warehouse management systems in a couple of ways. One, in that it would help you run your warehousing better with slotting product. With pick sequences and then with data that it provided you, that was the first level of improvement that all of a sudden now you're getting data that you didn't have before, that you were able to get down and find out which, product was moving faster. You could get that fairly quickly, which people were working better. And then, from that, you started to get the introduction of robotics, automation, technology, the voice picking the pick to light. I, I, I think that evolution of improved warehouse management systems to improve technology that became very affordable or more affordable than it used to be. Again, so robotics huge pick to light, huge auto taping. Things like that. What I didn't talk about is we've actually implemented our first drone in a facility that does cycle counting for us. So where we used to have two or three people do nothing but cycle counting. Now we've got a drone operator that can do this off hours so that there's no interference in the business and, and, and the amount of area that you can cover with a drone. Because think about it, you're not getting a, piece of equipment that you have to drive somewhere, then get up three, four levels in the warehouse, then work precariously. You've now got a drone that's able to scan barcodes, send back pictures, do things like that. So I, I, I would tell you those are the the biggest improvements that, that have happened in my career. And if, you know, even 20 years ago, if you told me there would be robots running around in the warehouse.

Tom Raftery: 25:13

Or drones,

Harry Drajpuch: 25:14

said I, not in my lifetime, I don't think I'll see that. I think for the future, I think what we will really start to see is we're going to see greater use of artificial intelligence. I think we're going to start to see better use of what's anticipated to happen. Better analysis, trend analysis of ordering patterns by people, by area, what we can expect for the next promotion that happens, you know, today. Today we're still relying on customers to give us a really, really good forecast. And even my customers run a promotion. Let, let's be honest, they don't know how the people are going to respond to it. You know, we've got Good Morning America here where some of my customers go on the Good Morning America Show, and they set a target of what, what we've liked to see happen. In a few instances, it's fallen a little bit short and we were overstaffed. In other instances, and I would say in most instances it probably is better by 20 to 30% than even the customer thought it would be. So, over time we've gotten better at staffing. So I think what's critical for us is a forecast with our customer of knowing what they plan on doing, even if it's just events. What they're doing to drive increases in their business. Again, so we can take that data, anticipate and have it staffed properly for that. I think going forward the use of artificial intelligence will help us much, much more. And actually will probably guide us and customers as to when they should run promotions, how they should run those promotions, what's effective. So that, that I expect to see that increasing plus a bigger proliferation again, of robotics. A little more standardization maybe of the way not things are packaged. Because for my customer's, unique packaging is part of the marketing. They, they want unique packaging, right? If they didn't, everybody would be rushing to Amazon so they can get those shipments in a big brown box with a smile on the outside, as opposed to coming to Amware where we can put the smile on the inside because it's unique. Packaging is unique. It's part of your marketing, part of your brand, part of what you fiercely fight for. So I, I think we'll see a little bit more standardization maybe in EDI, in data exchanges, I mean, today it's data exchanges is the one thing I would like to see going forward get more standardized. Every customer is a little bit different.

Tom Raftery: 27:41

Sure.

Harry Drajpuch: 27:42

Is there a way we can package all this data that everybody uses into like the 2D barcode that exists today? And every customer can take advantage of that so that a unique bar coding will go on everybody's package, but it will be, it will be readable and it will be a spectrum across all customers that we can take advantage of today. It's every customer barcodes differently has different information in there. It means something to them. I think standardization to that will benefit everybody.

Tom Raftery: 28:12

Sure. Sure. Yep, absolutely. We're coming towards the end of the podcast now, Harry, is there any question that I haven't asked that you wish I had or any aspect of this we haven't touched on that you think it's important for people to be aware of?

Harry Drajpuch: 28:26

Tom, it could probably be another whole show, but as, as, as your listeners come to the tipping point and start to think more, about the logistics piece of it, right? Taking the order and converting it to cash and everything that happens in between. One is how do I make that decision between doing it myself and finding someone like Harry and, and Amware to do it for me? And then if I do make that decision that, you know what? I really do want to have someone, I do want to access all that technology. I do wanna access that data. How do I pick the right partner to make sure that I'm going to get the most efficient, the best bang from my dollar? And a company I can actually grow with, because I'm gonna tell you, changing your provider is a stressful, stressful situation. And I would tell you that the one thing that many, many e-tailers do out there, Is they bump along with kind of mediocre service because they fear making that change. It's almost, the devil I know. It's, you know, I, it's kind of like that car you have that when it rains, you know, the car's gonna struggle to start, but you know what, I, so I planned 15 minutes early to get out to my car and struggle with that. And so they, they wind up with kind of mediocre service. And not take advantage again because they fear the change. So, how do I make that decision insource outsource? How do I find the right outsourcing partner and when is it really time for me to make a change from my existing provider to someone else? And I would just tell you that companies like mine are geared to that. We, we have a whole section of our operation that focuses on nothing but transitions. Holding a customer's hand, making it as painless as possible. Walking them through that and filling in the gaps that they have and the the disciplines and expertise that they don't have, we can fill that in for that and make that a fairly seamless occurrence for them. And I think the one thing I hear most from customers who have transitioned from other, providers to me is I wish I would've done this a long, long time ago. I wish I wouldn't have waited as long. But there's so much apprehension, and again, I think that's a whole nother discussion that we can get into as to how do you do that. So I think that that's something for your listeners to consider. And while we can't necessarily go into every aspect of that now, if they go to my website amware fulfillment.com. There are all case studies and a whole knowledge base that you can tap into on the website at your convenience to take a look at that. And if it piques your interest, you make a phone call to Amware or another provider and say, Hey, I'd like to start this journey. Let's talk.

Tom Raftery: 31:19

Okay. Superb. So my, my final question is always if people want to know more, where would you have me direct them? You've already said your website is amware fulfillment.com. Is there anywhere else you'd, you'd have me direct people to find out?

Harry Drajpuch: 31:33

No, just well obviously if you google your issue, you'll get more than just Amware there. You'll, you'll open up a whole. There are many, many good. Three PL providers that have a lot of knowledge on their websites as well. It's not just unique to Amware. So, I would look at as many as I possibly could, but I think the best thing to do is to send an email, there's a phone number on the website call, get a knowledge expert to call you back and spend time with you. It will be time well spent. We're more than happy to do it. If we're not the right provider. If you have a product that we're not particularly good at, we'll, we'll tell you where to go. We'll tell you who is good at handling your product. You know what goes around comes around. We try to do right by everybody. It garners us a good reputation for being professional in the industry. Nothing sells Amware better than word of mouth and my customers and referrals. So I would tell you, talk to one of us in the industry. And again, we'll, the real ones, the good ones, the professional ones will help you regardless of whether they're your solution or not. They will direct you where you best, where you will best be served.

Tom Raftery: 32:44

Nice. Nice. Superb. Harry, that's been great. Thanks a million for coming on the podcast today.

Harry Drajpuch: 32:49

Tom was my pleasure. Love to do it again.

Tom Raftery: 32:56

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, simply drop me an email to TomRaftery@outlook.com If you like the show, please don't forget to click Follow on it in your podcast application of choice to be sure to get new episodes as soon as they're published Also, please don't forget to rate and review the podcast. It really does help new people to find a show. Thanks, catch you all next time.