In the fast-paced world of e-commerce, efficiency in fulfillment and logistics is more crucial than ever. Today, we’re joined by Jon Schechter, VP of Business Development North America, to discuss how their innovative solutions are revolutionizing the industry.
ABOUT JON SCHECHTER
Jon Schechter, VP of Fulfillment Solutions at AutoStore, is a seasoned expert in warehouse robotics with over 15 years of experience. Formerly with companies like Amazon and RightHand Robotics, Jon has been instrumental in designing and implementing advanced robotic systems for fulfillment centers since 2008. With a Bachelor’s in Engineering from MIT and an MBA from Harvard Business School, Jon leads AutoStore’s efforts in North America, partnering with clients to optimize their fulfillment operations using innovative technology solutions.
RESOURCES
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Transcript
Note: This was AI-generated and only lightly edited
Greg Kihlstrom:
In the fast-paced world of e-commerce, efficiency and fulfillment and logistics is more crucial than ever. Today, we’re joined by John Schechter, VP of Fulfillment at AutoStore, to discuss how their innovative solutions are revolutionizing the industry. John, welcome to the show. Thanks, Greg. Great to be here. Yeah. So as VP of fulfillment at AutoStore, could you share a little bit about your background and how you’ve seen some of these demands of e-commerce evolve and just kind of start there?
Jon Schechter: Yeah, happy to, Greg. I’ve been fortunate to be part of fulfillment for e-commerce since I graduated MIT. And I’ve seen the rapid growth and rise since 2008 of people wanting things shipped directly to their home. But even further than that, retailers and various industries are looking at how they can be leaner in their supply chain. And that means breaking down the manufacturing cases further down to the each level, to the piece level, so they can be more precise. And so what that then drives is this really cool transformation in a warehouse where you need new tools to handle eaches or to handle the less than case volumes that are flowing. And I started my career at Kiva Systems doing that for a number of fast growing e-commerce players. We were then acquired by Amazon and helped Amazon scale up its automation efforts. It really started as a manual first organization until about 2012. They had layered in certain kinds of sortation, but they really ramped up the robotics in 2012. And then I spent a little bit of time doing piece picking, helping customers further automate their bleeding edge labor challenge they’re seeing with e-commerce fulfillment. And, and now at AutoStore for the last four years, leading our business development efforts, helping all kinds of customers discover how automation might help solve some of their space and labor challenges.
Greg Kihlstrom: Yeah. So yeah, I think we’re gonna, we’re gonna get a little bit to some of the drivers of automation and things as well. But why don’t we start with just kind of talking about the e-commerce sector. As I mentioned at the top of the show, unprecedented demand for faster delivery times. I know we all want our next day delivery and things like that. But this can pose some challenges for retailers. So with consumers increasingly expecting things like next day or other things. um, sometimes even same day at this point, you know, how has this shifted the landscape for retailers in terms of order fulfillment?
Jon Schechter: Yeah, it’s such a key driver for their brands demand and like capturing the business that they’re out there to, you know, they’re selling products to people. And if you can’t deliver fast enough, you know, 30% of carts, I was just at home delivery world, 30% of carts get abandoned if the shipping speed isn’t fast enough. And that starts with inventory placement, getting the right inventory in the right regions and stores. It then goes to, you know, what are the carriers and transportation and freight methods that you have to deliver that cost effectively. And then the last thing is just how quickly and flexibly can you. Turn around and order. When somebody clicks to ship on their website, can you feed the cycle time information right up to the purchase decision? And then can you actually follow through with that customer promise? And so that’s really put a lot more dynamic pressure on operations leaders to deliver on these e-commerce and sort of fast retail promises.
Greg Kihlstrom: Yeah. And so AutoStore plays a role here. So, you know, can you explain a little bit how AutoStore’s solution, how does it enhance the speed, accuracy of storage and retrieval? Obviously that storage and retrieval seems like a key part of getting the right thing to the right place at the right time. So, you know, what’s the role of AutoStore there?
Jon Schechter: Yeah, we’re like a hard drive for someone’s physical inventory. We’re the engine of most people’s order fulfillment. And what that means is helping them maximize the space they have to store inventories so they can store four times as much in the same footprint and also maximizing the productivity of the people that are involved in the process. So helping people eliminate wasted motion like walking, searching, and really non-value added activities and really focus on order fulfillment. That first part, this sort of storage piece comes from our roots. Actually, we were ourselves an electronics distributor and we kept filling up warehouses and being disappointed in the space utilization. So we invented the system, but we still wanted to be able to access all the inventory at any time and fulfill orders dynamically. And so the whole fundamental of any bin to any operator allows for you to really have software-driven decision-making in your fulfillment process and prioritize the most important orders now, the ones that can save you on the freight end, the ones that are most important customers or high value goods. And those two fundamental principles are still kind of the core underlying thing after 27 years of delivering systems like this to customers. And yeah, nowadays customers have the same kind of challenge we saw ourselves internally, but even ramped up with the e-commerce trends we just talked about. So operators that used to plan one, two, three days, maybe a weekly distribution and fulfillment plan are now looking at orders that are just streaming into their facility on a minute by minute basis. So when you’re clicking on a website to order something and assuming that company can follow through, you’re really reaching into the warehouse and driving the next activities for the operation there. So it’s a really close customer relationship that, you know, even though you’re not standing there in the store, you’re really close to the fulfillment operation when you’re working with the e-commerce retailer.
Greg Kihlstrom: Yeah. And I would imagine, you know, as you’ve described so far to automation is a key component. I mean, this is this is moving, moving way too quick for some you know, older methods of manual processes and all those things. So, you know, my understanding, there’s robotic systems, there’s automation, there’s, you know, it’s, you mentioned a fourfold increase in storage capacity, just based on kind of AutoStore’s own experience and leveraging that. Can you talk a little bit more about you know, businesses that are moving from maybe a more traditional approach to, uh, to one that uses your technology and your approach, like what impact does this have on operational efficiency, cost savings, all of that stuff.
Jon Schechter: Yeah. Yeah. And I think, you know, in a recent episode you did with Laura Ritchie of Radial, like, you know, that’s one of the paths people use to get, you know, get kind of access to automation and sort of advanced fulfillment through a third party. But for many other companies, they’re looking at that option in comparison to upgrading their existing operations or, you know, finding other ways to partner in between. And the first thing, of course, is good people in process. And Fulfillment and distribution centers that don’t have those skills, that sort of core management and execution, you can’t layer any technology on top of that and expect good outcomes. The second thing to that is really making it software enabled. And whether that’s a warehouse management software, whether that’s an in homegrown, in-house kind of solution for connecting the tasks that need to happen within the facility with the demands being put on the business at the website or within the ERP. And so that’s kind of software layer is another key requirement. And then you can start to layer in where are the wasted activities within our process? How do we reduce the touches? How do we streamline the end-to-end supply chain from manufacturer to the customer’s doorstep? And yeah, the auto store is a piece of that supply chain within the fulfillment center, kind of in the center of the fulfillment center. But there’s a lot of pieces of automation and some of it is, you know, just good continuous improvement to reduce, you know, wasted movements and reduce maybe touches in a network design. And a lot of it is within the four walls of the facility where we mostly operate.
Greg Kihlstrom: Digital marketers, this one’s for you. I’ve got 30 seconds to tell you about Wix Studio, the web platform for agencies and enterprises. So here are a few things you can do in 30 seconds or less when you manage projects on Wix Studio. Work in sync with your team on one canvas, reuse templates, widgets, and sections across sites, create a client kit for seamless handovers, and leverage best-in-class SEO defaults across all your Wix sites. Time’s up, but the list keeps going. Step into Wix Studio to see more. And so one topic that I don’t think we talked about nearly enough on the show is robots. So let’s talk a little bit about that. How do AutoStore’s robots play into this, helping the storage and retrieval process, all the efficiencies that you’ve mentioned? What does that look like?
Jon Schechter: Yeah. Thanks, Greg. And I, you know, I’ll never shy away from a chance to talk about robots. That’s kind of the core. So you, you could probably sense from the first part of our discussion, you know, resisted to think about the problems we solve, but the robots are really cool and it’s one of the most mesmerizing and. You know, just fun to watch, fun to have in your operation. And I think what it’s implemented well in collaboration with good people in process, uh, it’s a really powerful, like force multiplier. Yeah. So I’ll tell, let me talk a little bit about like the auto store and the robots and what they’re doing and how they’re supporting people and then maybe automation more broadly. You know, this is a collaborative tool. This is like a forklift for the modern age. So you need to provide tools for people working in your company. You know, whether if that’s somebody at a desk, they have a laptop. If it’s somebody in, you know, a manufacturing process, they have certain tools of the trade and 5S and continuous improvement methodologies. And if they’re material handling, doing fulfillment or distribution, right, they have a forklift, they have conveyors, they have automation tools that work alongside them. And so the auto store fleet is out there going and retrieving bins, delivering those bins of inventory to the workstations where people are filling orders. They’re counting, they’re validating the right product, they’re folding, gift wrapping, making the orders. But the walking time and the searching and finding time has been eliminated because the inventory is now walking and talking and making its way over to the fulfillment process instead of the other way around.
Greg Kihlstrom: Yeah, yeah. So with that also, I would assume, I mean, every situation’s a little bit different. So we need to talk about modularity as well. So what one robot is doing in one place is probably very different than another. So how do you account for just, I assume you’re working with vastly different types of things and everything, depending on the situation. So what role does modularity play?
Jon Schechter: Yeah, we made a really clear design choice to basically center around a certain bin design, a certain unifying unit of measure, which is an auto store bin. And our robots can carry that, dig for those, stack them, deliver them anywhere in the grid very, very reliably. And so that was a simplifying sort of environmental consideration that we made. Um, there are other kinds of robots that work with different form factors, but we, we chose the bin and that really unlocks like a certain level of, um, robustness that you can rely on this thing day to day.
Greg Kihlstrom: Yeah. Yeah. So. There’s a lot of issues obviously with logistics and supply demand and, and, you know, some of the things that we’re talking about when we’re talking about augmenting human teams and, and things there’s, there’s still labor shortage issues. And certainly that’s, that’s a pressing issue, even in uncertain economic climates. So how do you, you know, how, how do you and your customers look at this as, as far as, you know, as far as labor shortages and ebbs and flows and all of that, you know, how, how do you think of that as a solution to some of those challenges?
Jon Schechter: Yeah. So as e-commerce has grown and this sort of each is challenge I described at the beginning, there’s a huge, huge labor content that goes along with that. And there just aren’t enough warehouse fulfillment associates to do those jobs. So you need tools like this to really get the throughput out of your building. Furthermore, when companies tend to build their locations and their network design based around transportation optimization, because that’s such a high cost driver, but then they end up with these clusters where you can have very, very extreme unemployment at the single digit 1%, 2%, because there’s such a fight for the limited labor force there. And so the only answer to get more throughput is to add tools like warehouse robotics to enhance what your team can get done. So most of the time that we’re getting installed, it’s because somebody’s outgrown their workforce. They need to be able to do more with the team that they have. They need to use their space better so they don’t have to buy a second facility or expand their facility or just their workforce.
Greg Kihlstrom: Yeah, yeah. And I would imagine then that, I mean, the same goes when if the system’s modular, you can scale up, but you could also scale down, right? So in other words, you know, think economy could be really good, really not so good. And the technology can kind of adapt. Is that is that safe to say?
Jon Schechter: Yes, that’s a great point. And that kind of gets back to what I was describing to Ben. Our modularity is really that whatever the requirement of your facility is, we can customize the grid with the right amount of robots, the right workstations, the right amount of bins for that exact operation. So no two operations look the same. And that’s a really important value driver. building, overbuilding for some capacity that you’ll need for a few years. And then what’s really powerful with a modular system like this, if you have a network, I’ll use an example of one of our great customers, Best Buy. They have eight different facilities leveraging AutoStore, and they’ve been able to readjust the capacity of all those buildings by just shipping the robots between the buildings. So, you know, during holiday season, they could push robots at the end of the node to fulfill closer to customers for e-com orders. Earlier in the peak season, they might shift those robots back to the central DCs where they’re really focused on restocking stores. And so you end up with this fungible asset or capacity that you can move around with a modular system that’s really powerful.
Greg Kihlstrom: Yeah. Yeah. That’s, that’s interesting. And from an ROI perspective, I mean, you’ve touched on several things here as far as potential ROI, as well as the, you know, the fourfold increase in efficiency and stuff like that. How do, how do some of your customers look at ROI and you know, what, what are they typically see, you know, we didn’t specifically mention real estate costs as well. So, you know, being able to shrink facility size and stuff like that, too, is certainly another consideration. So, you know, what’s what’s the what is the thinking of as in terms of how ROI is measured?
Jon Schechter: Yeah. Real estate, of course, is one of the largest value drivers, especially if you’re in a warehouse and you’re full because you’re in a healthy business that continues growing. You’re adding inventory. You need to be able to keep up with that inventory growth. And the obvious answer for most people is, well, let’s buy a new building and move. But that turns out to be super costly. So any life extension of an existing warehouse and operating team can be really, really big. built in ROI. In addition to that, of course, getting more throughput with the same number of people. You know, a lot of operations use a very simple total throughput over total labor pool or, you know, lines per hour, boxes per hour, something like that. And you can really have almost a double of the boxes per hour that you can ship out with the same workforce by implementing the right kind of automation tools. We’ve even seen higher ratios when someone that also implements packaging automation and other things, depending on the industry.
Greg Kihlstrom: Yeah, yeah. Wow. Well, as we look towards the future, one last question for you here. What do you see as the next big steps for warehouse automation, for auto store? How should companies be thinking in terms of what’s coming down the pike?
Jon Schechter: Yeah, I think the first thing to realize is as cool as warehouse robots are, and how obvious it is to me that they should all operate in this way with robotic fleets, most facilities still don’t have this stuff. Many of the businesses that you buy from are still fulfilling with clipboards and no software, let alone automation. So we think 85% of warehouses globally are mostly manual, people walking around with carts and paper. So there’s a huge opportunity just in the core challenge we’ve been talking about here. I think as we go beyond that, the really advanced end users that have been in automation for a few decades now are thinking about either their next generation that is something like an auto store that’s more modular, or they’re pushing us to do larger and larger auto stores. So one of the big initiatives for us has been delivering these high throughput facilities that are shipping 20,000, 30,000, 40,000 order lines every hour. And it’s really the kind of critical max scale that you’d see at the largest fulfillment centers of anyone. And so we’re able to grow our system to fleets of over a thousand robots, over a million bins of inventory. And most people that have that much, they end up with a second building when they go beyond those limits. So it’s really been fun to see the scale increases, especially over the last four years that I’ve been here, but really over the last 27 years since we started this.
