Rick Tellez: 0:03

so when people ask me if we're gonna put brokers out of business, actually it's the opposite. I can give a one man or one woman show the power and ability to compete at par and better than the largest companies in the world

Tom Raftery: 0:20

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. And welcome to episode 304 of the Digital Supply Chain podcast. My name is Tom Raftery, and I'm excited to be here with you today sharing the latest insights and trends in supply chain. Before we kick off today's show. I want to take a quick moment to express my gratitude to all of our amazing supporters. Your support has been instrumental in keeping this podcast going. And I'm really grateful for each and every one of you. If you're not already a supporter, I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about supply chain. Supporting this podcast is easy and affordable with options starting as low as just three euros or dollars a month. And that's less than the cost of a cup of coffee, but your support would make a huge difference in keeping this show going strong. To become a supporter, simply click on the support link in the show notes of this and every episode. Or simply visit tiny url.com/d S C pod. Now without further ado, I'd like to introduce my special guest today. Rick, Rick, welcome to the podcast. Would you like to introduce yourself?

Rick Tellez: 1:41

Hi Tom. Thank you so much for having me. it's a pleasure. Appreciate your time. Rick Tellez, founder of KlearNow, in, uh, logistics looking forward to our discussion today.

Tom Raftery: 1:53

Superb. So for people who may be unaware, Rick, I know we had an intro call, but for people who weren't on that intro call, what's KlearNow?

Rick Tellez: 2:02

KlearNow is a digital software company, designed and built for logistics and supply chain. We are very unique in the sense that we were the first ones to really implement AI, which is artificial intelligence, techniques into our proprietary software that allows us to essentially remove your historical data entry type work that was required throughout the bottlenecks, uh, within the supply chain, whenever you're importing goods into a country. So, we specifically started out with a niche areas, as customs brokerage, and with our broker network we're able to, uh, service many clients. Since then, we've grown, and expanded into other areas, which I look forward to getting into.

Tom Raftery: 2:50

Okay. Superb and, what was the genesis story of KlearNow? How did you, you know, wake up one morning and go, I know, let's start a company to help out customs brokers?

Rick Tellez: 3:05

Yeah, no, it's a, it's a funny story. I think, uh, on a lot of times these, these are often, mother is the necessity of invention or however the saying goes, right? Or necessity is the mother of invention. I was working for DHL, uh, large, let's face it, maybe the largest logistics company in the world. I've been working with many divisions in the company. Had a tremendous experience. I mean, from anywhere from operations to labor relations to, performance improvement, for, uh, efficiency within the network. It was the engineering group, as well as sales, customs. I mean, it was really everything you could imagine. Hub and spoke network, uh, you name it. And it was interesting to, you know, when I finally started consulting with large organizations, importers that, uh, you know, letting them know what the best way to move goods was, right? Um, where you should set up your, your manufacturing, what, country pairing was best for their commodity. Meaning was there a specific trade agreement between Taiwan and the United States for what they're manufacturing? Was it better done in China? You know, so a lot of these things that, that you would try to help importers, uh, find the, the best route, most efficient, cost effective way of doing things. And along the, the journey learned that, each of our divisions was, was really supporting the efforts of customs clearance in a different way, right. And none of them were, optimal. It was often, you know, you had to throw bodies at it, human beings. Mm-hmm. uh, you'd have to customize, uh, SOPs. You'd have to do a lot of, labor intensive work, in order to accomplish what it was that the importer was really looking for. Oftentimes you have a, a square box and you say, listen, importer, this is what I have to offer. This is all there is, you know, you kind of take it or leave it, but the larger ones you, you had to customize, right? There was really no way around it. If you wanted to win the business, and obviously that increases the price, of what the customer was gonna have to pay. And so, uh, you know, one afternoon, uh, it was almost one of those things, the light bulb goes off and, you know, I'm living in San Francisco at the time, and, you know, I'm surrounded, I'm selling to technology companies. I'm surrounded by engineers at coffee shops and, and , social networking and things like that. And, hearing about the latest technology that they've, developed for, for other harings and other industries. And it was fascinating. And it just hit me like a ton of bricks and it just says, listen, I mean, we were so far behind, there has to be a better way to do what it is we were doing. And when it comes to customs clearance, you know, all of the paperwork, all of the, let's call it, links in the chain that you would have to make phone calls, emails, communication to every siloed, individual and entity out there. It's mind boggling. And it's clearly a, a problem was a problem in the industry that, we, feel we've solved. So it, that was really the genesis and, I took the idea to, uh, Ulf and Sam, they couldn't believe that that companies, billion dollar companies hadn't solved these problems already. And, uh, but obviously, they hadn't, which was good for us at the time. Right. So, uh, you know, the three of us, uh, Ulf with the engineering background, Sam, with the, the business acumen and, and, financial background, you know, it was really, we felt the trifecta, of being able to culminate, the subject matter, the technology and the business altogether in one and really, uh, now create a, valuable and and sustainable business.

Tom Raftery: 6:47

Okay. And can you walk us through how KlearNow's AI powered platform works, and what sets it apart from other solutions in the market?

Rick Tellez: 6:58

Sure. So if you can imagine, uh, I mean, you'll, you'll probably, you've probably have seen, right, there's a ton of, technology companies out there that if it gets starting to catch on the, digitization, the, let's call it the paperwork, uh, you know, they want to get rid of the paperwork. So everybody's talking about, ingesting or, or converting documents into data, that type of thing. Mm-hmm.. So, uh, I think that's fairly standard lingo and language out there today. In the past, what it was, and, and some with what it is today. For some of those is, an old OCR type technology. You know, on top of it is, is an, you know, an RPA robotics, uh, you know, kind of match type thing, right? And Yep. we knew from the very beginning that that was not the path for scale and sustainability. The sheer mass amount of different, types of documents. Different formats, right? It's gonna be impossible to see every single one of them. And then customize, the OCR for that particular format. And so what you needed to have was an artificial intelligence that could actually read the document. To categorize it, to identify all of the labels, to identify the content that are below or within those labels. And that's what we had really set out to do and that was the nut that we cracked. So, uh, when we say our AI and how we are differentiated, it's truly because we are able to. You know, have, there aren't abounding boxes, there aren't, what they call quadrants. None of that is, what we are limited by, right? So we were able to actually look at the complete, comprehensive, document and capture all of the data within that document. And what's interesting is, is we have all of it, right? You may not, and, in what ends up being, ultimately a data lake, you may not use it all. Mm-hmm, but you, you have it all. So really for the importer, the difference is, you may only need, for an isf, for example, uh, 10 plus two data fields. Well that's fantastic, right? But what happens in the future when you need 75 different data points, or a 3PL needs 150 different data points? It's always this, cycle that, that they're in trying to find, okay, well let's go capture those. Our software has a hundred percent of it captured up front. And really, the, the genius behind it and, and what we've solved is you have now digital data from all of those documents or data feeds, and we've automated the workflows. So it becomes more of a proactive and artificial intelligence driven, communication, if you will, with all of the parties involved in the supply chain. So we are, we're the first ones that have really, uh, we feel that have cracked the, the code and, are providing value in the market in a different way.

Tom Raftery: 9:51

Okay. And there's a huge amount of talk lately in the press and everywhere else about AI, particularly with the ChatGPT tool that has come on the market since last November. And literally, I just published an episode of the podcast around Chati p t and supply chain, uh, recently, will that have any implications for KlearNow? Are you planning on working with it or do you think it's not necessary that you're way beyond that already?

Rick Tellez: 10:20

Well, I, I think it's, amazing the fact that that is now, at the forefront today, right? Because when we first started, we couldn't talk about really in depth the AI component, right? It really wasn't something that our industry or, or the folks that we were trying to sell to, um, were, were up on the latest and greatest. Right. It, it just was a matter of, they haven't been exposed to it, so you wouldn't know it, right? Sure. Um, and so the fact that ChatGPT is out, and, and it's all of the talk and, from Wall Street to Main Street, everybody's talking about it and what the implications are. And, and, and it's fascinating. It's a brilliant technology. It becomes relevant, right? So, we're actually, uh, you'll, you'll probably be the first to hear Tom, our rebranding is going to be, uh, we're releasing it later on this week, but, uh, we're, going to be doing business as KlearNow dot ai uhhuh . And the, the point of that is that AI has always been used. That's always been our secret sauce. That's always been our, our backbone, if you will. But now that it's an accepted and mainstream discussion, it's not scary for us to now go to importers and, talk about it, right? Because, uh, let's face it, a digital network, a digital platform that is automating workflows, that's in, creating digital data and, and providing value to the customer for customs brokerage, or customs clearance. That was a difficult concept to grasp, without it, right? I mean, let's face it. Sure. It, it's not too long ago that we had fax machines, some still do. And it's phone calls and emails, right? Yeah. I mean, one shipment to import from China could take you, 25 emails. And I hope you weren't off sick that day. Cause you know, you're talking about other bottlenecks, right? Yeah. And so I, I think, our secret and, and again, it's AI. Now is the time that we can discuss it and talk about it, and, and be open. And it's, it's something that is now accepted. So we're excited about it. I don't fear it. There's a lot of, you know, sci-fi stuff out there. I think that's, we'll leave that to them, but I think the practical application of how it can support companies and the importers and the trade community, across borders, I think it's going to be fascinating. Right? I think that you can apply AI and let's face it, you have to have a data source, right? And, and, and all the ChatGPTs of the world, they have access to public data and anybody that gives them access to share, whether they know it or not. Our system is, is providing that technology for the user that owns it, right? So it's not going to be spread, shared, and, out in the open. So ours is a secure, AI network that is, that is for the importer themselves. So it's, dedicated to our customers, our clients, and for their purposes only. So it's not something that we're actually gonna be sharing with, any, uh, AI type communities that, you know, would have access and be able to then learn them and train their models on. It's for our model and it's for our customers.

Tom Raftery: 13:24

Okay. That brings me nicely onto the next question I was going to ask actually, is how do you ensure data privacy and security for your clients?

Rick Tellez: 13:33

Yeah, no, it's a, obviously the, uh, heightened security awareness out there. We've seen some of our, uh, let's, let's face it, some of the largest companies in the logistics industry, you've probably seen it. And, and I'm sure everybody's aware of in the news, uh, the breaches where they've been hacked, held hostage. I mean, and you're talking, these are customs, brokerage, uh, companies, right? And, and, unfortunately the, the on-prem that, that type of old data model that they were operating on, it's anybody's susceptible, but certainly that, that leaves it more. And, the fact that we're cloud-based, that we are operating on the backbone, well, quite frankly can be any right. AWS, Azure doesn't matter. We can, duplicate it on, on any platform or cloud if we had to. But today we're on AWS and, that security backbone on top of what we've implemented. I think if you did any kind of research on KlearNow you'll see that, an early investor as well as board member, Atiq Raza, uh, you know, part of, Virsec, uh, which is an incredible technology, firm for security. They are, up on the latest of, preventing these type of, hacks. And that's the type of technology that we've embedded in our platform, to protect our data and our customers because we know that that's the holy grail, right? We, we cannot have, any loose ends on that side. So, we've been very diligent about that part and, uh, we wanna make sure that our customers feel very comfortable with us.

Tom Raftery: 15:05

Yeah, because people will forgive downtime, but they will not forgive an issue with their data.

Rick Tellez: 15:12

That's true.

Tom Raftery: 15:13

So, uh, next question. Seeing as you are using a lot of AI, does that mean you're gonna put loads of customs brokers outta work? Rick Tellez: No. That's always the first question, that's always the first question people ask. Oh, what about the broker? And quite frankly, I would describe it as, as maybe the opposite, right? You know, I think the history of our customs brokerage, in the country and at least in the United States, you know, you, you face it, we used to have to have a broker in every port, right? I mean, it was, you're talking about a clipboard and a pad, and that's why you had to have that individual local. Because the goods that were coming into that port had to be inspected, had to be, transmitted, the paperwork had to be exchanged at that port. So the, the original premise was you needed somebody everywhere. And then the US, of course, went to national permits, which allowed a broker that was, let's say in Portland or in LA they could file in Florida without using a, a partner. You know, everybody, the, the brokerage community really used to band together and, and they would trade, right? They would say, you handle my Florida business, I'll handle your California business. And, and they could do that. A lot of legislation and a lot of things have, have changed since then. Let's face it, this POA, update that's really been, uh, prevalent in, in the customs community, which is the need to make sure that you have, an importer of records signed directly with the broker. That's the enforcement of that, that's new, right? It used to be able to, you could have a freight forwarder, have an umbrella POA that they could then sub it out to, 5, 10, 20 other brokers if they wished. And now that the regulations clearly state no, the relationship has to be between an importer of record and the customs broker, you know that's, It is what it is. That's the change. And so, our network supports that, right? That, doesn't, affect us at all. It actually, is one of our strengths. And so when I look at, where we've got your customs brokers, and the need for that direct relationship, you see a lot of large companies buying them up, okay? Right. So, can a small niche white glove, customs brokerage firm, compete with the giants, the elephants out there, right? I mean, you've got your major Livingstons, your major expeditors, your dse, you, you've got huge companies that do a fantastic job at what they do. Right? And I, and, and I never want to discount, any of these, large companies because I worked for one, right? And, and what they do, they do incredibly well. It's a difficult thing to move freight from point A to point B, as simple as it sounds. Uh, but that being said, these larger companies would buy up the smaller freight, the smaller brokerage firms. And the smaller brokerage firms would quickly lose business because they couldn't offer the, the technology maybe, right? So they couldn't offer a track and trace, they couldn't offer a website, the UI, the experience that a customer, an importer really has come to expect. That takes a lot of money. It takes capital, right? And it takes sales and marketing. Mm-hmm. Small brokerage firms can't afford to do that. That was word of mouth business, you know, that was, so when people ask me if we're gonna put brokers out of business, actually it's the opposite. I can give a one man or one woman show the power and ability to compete at par and better than the largest companies in the world. They will have better technology at their fingertips. They will be able to offer their customers digital data, right? They'll be able to offer them a, a track and trace. And let's face it a journey that no other freight forwarder or company can offer today. It takes a many pieces of software to all stitch together in order to provide what we do in one platform. So this small broker that maybe has 12 clients. They can provide a better service than what a large, multinational company, in the market can provide. So, and we haven't even touched then on the efficiency, right? Where it used to take them, you know, up to two hours, four hours, six hours, depending on complexity and how many lines to type all of that information in, to have them understand that they can do the job in less than seven minutes for, you know, the same job. And so, uh, we can allow them to scale, we can allow them to do more with less. We can allow them to perform better, and give them a, you know, let's face it a better work-life balance because they won't require all of the manual effort that they used to have, to apply in the past. So we're giving brokers the ability to compete and actually win business that, quite frankly, they've lost in the past. And that's what some of the feedback has been. Some from some of our brokers. Very nice. Very nice. And is there a data story here as well? Because you are dealing with a lot of data and obviously you are changing the story for the customs brokers, whereas previously it might have been quite a paper-based solution. Now it's digitized. So you're presumably giving them access to a lot of data as well.

Rick Tellez: 20:24

A hundred percent. Right. And so for that particular broker, they had access to the data before. The importer had access to the data before. we are able to provide, that data and reporting and analysis to the responsible parties, and we limit it to that, right? I mean, it's not a situation of, providing it or selling it outside of our, our platform. So I think what's nice about the platform is that the data has, has always been there, it's always been on a piece of paper, right? And, and it would really take somebody to transfer that information into an Excel spreadsheet, run reports, create a pivot table, you know, the typical thing, But what we have enabled through our, technology is that data now is there for the importer to do with what they want, right? If they'd like to create a customized report, they can do that without an IT team or a team that says, all right, I need you to figure out how to piece all of these things together. Put it in a nice, beautiful spreadsheet that I can then take a screenshot of, put it on a PowerPoint and present it to a board. No, we're actually providing importers the ability, and this this is a really cool part. We are providing importers the ability to use natural language requests. Much like a Google, right? You type in what you're looking for and it will produce a result, right? And, and so we've partnered with a company called ThoughtSpot, and uh, you know, I'm sure, listeners and, and viewers can, do a bit of research on them, but they are on the forefront of technology in business intelligence, allowing companies to do more with their data that wasn't possible before. And so, by having that embedded in our software, it gives the importer the ability to do something that they've never been able to do easily. I mean, let's face it, by the time those spreadsheets were all accumulated and, and patched together from 15 sources in five countries, and 20 different companies, it was already stale. Right? It was already stale data. It, it wasn't even current. This stuff is real time. It's happening. Uh, you, can see it as the shipment gets cleared. You'll be able to run a report and say, the number has changed a minute from now. So, no really good stuff that, that we've done. And, and again, it's all value that we are providing to the importers and to our brokers, our broker partners.

Tom Raftery: 23:25

And where to from here? I mean, what can we expect from yourself and, and the industry in the, in the coming years?

Rick Tellez: 23:35

Yeah, I think, the really neat thing about what we've done, and I think where the future is going is really that collaboration, right? It's about automating those workflows. It's about being proactive with everything that's required. Whether you're on, on the left side of the right side of globalization and, and what it takes. There's always going to be goods moving throughout countries and going across borders, one way or another. Right? It's, it's, it's the nature of, of the world. You, you cannot manufacture and create everything, to service your, community and citizens, right? Sure. I mean, it's, it's impossible. The UK was a great example with Brexit. When that happened, and, and again, it's not right or wrong, it is just simply something that happened, right? That they made a decision, for their country. But what that did was it created a different, a change in how things were going to cross borders. Well, with technologies like ours, it didn't matter that before, there were 20 million transactions a year, and now there were gonna be 250 million transactions a year. That number didn't matter to KlearNow. Right. Because we can scale. And so it didn't mean that we had to then, all of these companies that were based in, in the UK. They literally had to go hire, more data, entry clerks, right? They had to find as many people, they had to train them, they had to teach them. Uh, you can only imagine. And, and it's still there, there's still way that there's gonna be enough human beings to data enter that big documents, right? So, the, the bottom line is that, that as these changes take place and the variables move around, it's going to require a nimble technology that can adapt and that when business rules change, meaning, a trade agreement changes instantly, the platform is updated. Right? So this is all, it's, it's taking care of all of that for you as an importer. And so what I see for the future is really going to be those proactive and automated workflows where you're, we're not reacting to a phone call or to an email. It's the software and the technology that is allowing all of the parties to collaborate digitally. The owner of the data can provide access to it, to, uh, different personas if they want to, right? You can give some to your TMS, you can give some to your 3PL, you can give some to your freight forwarder or your broker. It can be shared and it can then they can add, add value to it and add documents and add data to it. but it's all your data in, in much like a control tower. And so I think the future is gonna be, uh, around collaboration. There's been a lot of talk, in the past about blockchain. It was a little early. I think we're still a always off, but the concept of having data in one area that, that people can use, and leverage was sound, it was just a matter of, could you get all of those parties to agree? And so it's a difficult thing. Mm-hmm., what we've been able to do is, is give, that centralized data concept to the owner of it, which is the importer of record or our customer, which could be a freight forwarder or broker. But bottom line is they now have that data that, they can use as necessary.

Tom Raftery: 26:43

Cool. And do you have any customer success stories you can speak to?

Rick Tellez: 26:48

Well, well, we do have a couple multinationals, which unfortunately I did not get their permission before the call but I'll, I'll speak of, one, in particular, chemicals, uh, type company that, makes a lot of things better. It was really one of those aha moments and it really gave us validation in it, and it made me feel incredible inside, right? I mean, it was one of those validation things where, their entire global team, was exposed and shared the platform with them, and they understood and it was, they instantly got it. They, they saw the vision. They're actually on the forefront of doing something that I think, a lot of multinationals are going to start moving towards, which is going to this digital data centric type platform, which is what we are. And they, they're on the forefront of it and they have quickly, uh, taken and said they recognize the value, they recognize the savings. They recognize, the power of that data that they can leverage globally. And centralized reporting and data analytics, everything is there for them. So for them it was a matter of let's prove in the United States where we started, and then slowly to Canada, then to UK, Netherlands, and I mean, we are just, division by division, being able to help support their many different business units and divisions of that company. But it's one of those things where, a huge validation and a nod to the incredible work that our engineers, that our customer success team does. Our sales team does all of the hard work that, that everyone put in over the past few years has really gotten that seal of approval, from some very large companies this year, and late last year, which is fascinating to me and, and we're excited to be able to share it.

Tom Raftery: 28:35

Fantastic. We're coming towards the end of the podcast now, Rick, is there any question that I have not asked that you wish I had or any aspect of this that we haven't touched on that you think it's important for people to think about?

Rick Tellez: 28:49

Well, I think, the one thing I, I thought of, and, we may have touched upon it briefly, was around labor shortages. Right? And there was, uh, that was a, that's a big topic. And something that we've seen globally. Uh, it's not just something in the United States, right? And, and so, to, to really, address that, unique situation is again, being able to do more with less. We came from a background of logistics, which meant that we understood that unfortunately, the logistics department wasn't always the most well funded. Right, it never really made it to a boardroom discussion. It was more of how hard can it be to get something from point A to point B? Go do it. And you're only gonna get a couple people. Right. and the software we're gonna give you, you know, well, what's the cheapest available? Like, it really wasn't something that a lot of thought was put into. It's not right or wrong, it's just the way it. Unfortunately the things that have occurred when it's covid, when it's government shutdowns, when it's recessions, when everything that, we've seen and, been through as a company already, which quite frankly for a startup and, and a technology company, to not only survive, but thrive, I think again, is a testimony to, the hard work that our, employees have, done. But that idea that, we're able to allow our customers to do more with less means, it doesn't mean that, like you mentioned earlier, putting brokers out of, business, it means that they can have a better work-life balance. It means that they can, take a day off. Where in the past it was, again, one of our, one of our first customers was, one man in a, warehouse, uh, with a space heater on the floor. And, uh, an L desk with four monitors. And the guy would, he was incredible at what he did. He was a wizard, right? He had spreadsheets on each of them. He had sticky notes with, with user IDs and, and passwords. I, I mean, it, it was amazing to watch it work, but if that guy wasn't there, what was gonna happen? So what we've done is it's not all of a sudden the company said, oh, well we can afford to, hire five more people and, and help this person out. No, we were able to give him a tool that, you know what, he only needed one monitor and, he could take some time off if he so choose that he didn't feel guilty, because let's face it, he's loyal. He was loyal to the company. I mean, he had grown up in that business, right? Working for that, furniture company. And, he had pride in his work. And, and I think most employees do. They have pride in what they do, and they want to do the best, which is why they take their work home with them. It's why they, they try to do the extra effort. And what we have provided and what we have done is we've been able to help those individuals do more with less, while providing the company, with something that they've never been able to have in the, in, in, in the past without having to hire 20 extra people. So I think, uh, you know, addressing that labor shortage concern has been, really one of the benefits that, that I think companies and users themselves didn't recognize prior, but recognize now.

Tom Raftery: 31:57

We are coming towards the end of the podcast now, Rick, if people would like to know more about yourself or any of the things we discussed in the podcast today, where would you have me direct them?

Rick Tellez: 32:09

Yeah, I would have them go to KlearNow.com. You'll find all of our information, you'll find up some bios as well as more about our products and, services and, things that we offer. And again, I, I look forward to, uh, the future and, and thank you for having me, Tom. I really appreciate it.

Tom Raftery: 32:25

Oh, great. Thanks for coming on the podcast today.

Rick Tellez: 32:29

All right. Cheers.

Tom Raftery: 32:32

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.