[00:00:00] Lori Boyer: Welcome back everyone. I’m your host, Lori Boyer from Unboxing Logistics, and today is gonna be a little bit different when it comes to the Unboxing Logistics podcast. A few weeks ago, I enjoyed myself in Orlando, Florida at RILA, the Retail Industry Leader Association event, and I was able to have a really great chat on stage with John Naylor from Trew and Scott Davis of JD Finish Line.
They had recently completed in conjunction with our Summit Advisory Team. Completed a project where they had taken a, a legacy fulfillment center with fully manual processes and turned it into a fully automated modernized facility. All, all while everything was still happening in the facility, they were still sending off shipments, receiving goods, all that.
So. It was really interesting to hear their insights on how they did that, the tips that they have for you if you’re looking on modernizing on any of your facilities. So you’re not gonna wanna miss it. Sit back, enjoy, and we’ll see you later.
This is a, you know, I think this session was called Beyond the Hype, and that’s because there’s a lot of hype and talking about different things, but I have brought two of the best real people.
Oh, these are real boots on the ground people who are gonna help you understand how to take a warehouse or multiple DCs and modernize them while keeping everything going, and that is a freaking hard thing to do, as I know you guys know. So I was introduced to these gentlemen through some of my cohort. I am Lori Boyer.
You heard from Unboxing. I host the podcast Unboxing Logistics. I work at EasyPost and one of our teams is the Summit Advisory Team, and they worked with these gentlemen on this project for multiple years to get these warehouses up and going. Love working with our Summit Advisory Team. And so I wanna dive in.
I want each of these guys to introduce themselves first and tell you why the heck you should even care who they are, what their role was in the project, and what they kind of did for us. So we’re gonna start with Scott and then we’ll hear, hear from John.
[00:02:22] Scott Davis: Thanks, Lori. So my role in the program was really to establish what our design criteria was before we even got started, right?
What are we trying to accomplish, and then what partnerships do we need to bring to the table to be able to complete that?
[00:02:36] Lori Boyer: Okay, awesome. Easy peasy. John.
[00:02:39] John Naylor: Good morning. I’m John Naylor. My role in the program was actually the early boots on the ground working hand in, in glove with Scott and his team, the Summit team really on data collection, information gathering working with the operational teams, mapping out all the process flows and working with the leadership team with, with Scott and Scott and Jimmy understanding what the business goals would be for the, the next five years of the program.
[00:03:06] Lori Boyer: Okay, perfect. So let’s, let’s talk about the project itself for a second. For someone who hasn’t, wasn’t boots on the ground, wasn’t living it, how, how do you describe the project?
What is it that you actually did? Scott, you wanna start?
[00:03:21] Scott Davis: Sure. So the goal, so this distribution center’s in California, so the overall goal was to help maintain the staff that we had while doing more productivity and how could we introduce automation into that program so that we could have a seamless transition from the way we did the old way.
And the new way. And through that process was our guiding principle, which was not to disrupt the business.
How can we do that simultaneously? And it’s really easy. So, you know, you guys, there’s not a lot of stories here.
[00:03:50] Lori Boyer: Oh wow, wow.
[00:03:52] Scott Davis: But really through the process, you, you really learn that the people that you’re working with, that that’s what’s important.
[00:03:57] Lori Boyer: The people that you’re working with.
That’s important. That’s perfect. I love that. Can you tell us a little bit about the size of the facility? How many people are working there? Either one of you, John, you haven’t.
[00:04:09] John Naylor: Sure. I I think Scott really oversimplified it, or, or I could simplify it more of.
[00:04:13] John Naylor: It, it was open heart surgery as you’re walking down the street, is really what we accomplished here.
[00:04:18] Lori Boyer: Open heart surgery as you’re going down the street. Okay. Really easy.
[00:04:21] John Naylor: No, from a size of a facility, I, I think it’s really not the size that I, I think in this case is, is the speaking point. It was the the complexity of, of the, the solution itself. This is a highly automated facility.
It involves multiple aisles of mini load technology. ASRS shuttles with light sortation but also, and, and most critical, it, it had a team in place when we showed up before we ever automated anything. And it was working with them to understand how do we keep product going out the door? At the end of the day, it mattered.
Product had to get to the client, had to get to the store. Ultimately that’s what mattered each day.
[00:04:57] Lori Boyer: Okay, so I’m curious, you mentioned the team was already there. Do you feel like that was a positive, that you had a, a team already in place? Or do you feel like that was more challenging?
[00:05:08] Scott Davis: No, absolutely.
The, the team there, manual environment, so pallet, pallet jacks, you know, single picking racks with carts, but the excitement that they had to move into automation was just fantastic.
[00:05:20] Lori Boyer: Oh, okay.
[00:05:21] Scott Davis: So the buy-in that we had to get from them and that team out there is just fantastic. When you go through this transition, you never know what you’re gonna get out certain leadership and outta certain people and how they’re gonna acclimate to the new processes. And so with Jimmy’s leadership and our operations team and really the core group that they had, they have a tenured group. They really love the, the business that we’re in.
And so it made it really easy to get their buy-in from that perspective. And it became more about including them more often instead of, you go over here and keep doing your thing while we’re doing this real bright, shiny thing for everybody.
[00:05:56] Lori Boyer: Did you have?
[00:05:57] John Naylor: I was that was one of the things that struck me in our, our first visit, if you remember went to Morgan Hill.
You know, I’ve automated a lot of DCs in the course of my career. And, and when the operational staff knows that change is coming, it creates a lot of anxiety. And I think the team had done a really good job at JD of introducing that change is a positive for the building. There was already a sense of pride in the building.
Which I show that was evident, you know, talking to the leads. I, I call it servant leadership that you see at JD, we like to do the same at ours, of of the first response from anybody on the floor is, what can I do to help? You know? Tell me a little bit about this process. And, and when I started the, the initial findings of, you know, tell me about what you do.
Can you walk me through the steps, the process of how you receive this? How do you check this in? You know, mapping out everything. There’s enthusiasm. There was pride of, well, how am I gonna change this going forward? What does this look like? They were really empowered to be a, a partner through the process all the way down to the people that were packing and receiving boxes up to the, the CEO level of the company.
It was, it was a really refreshing environment.
[00:06:59] Lori Boyer: Okay. So I’d love to talk about buy-in then. ‘Cause that’s like fantastic. They were all bought in, they were enthusiastic. But I think we’ve all been there when people aren’t bought in. So I guess my first question is, what is it that they did to get such good buy-in?
Early on? You mentioned the team. Was that, from your angle. You know how,
I mean, what were your methods?
[00:07:21] Scott Davis: The first thing is honesty, you know? So these things are complex. And so you have to bring some excitement when you’re discussing it. It cannot just be, watch these slides with me, this automation’s gonna be great.
You know, you really have to get their buy-in in that regard so you teach ’em early and often, and then engage ’em frequently.
[00:07:43] John Naylor: Yeah. We really didn’t work in a vacuum for the, the design process. So write down, you know, Jimmy, your, your staff bringing in the site leads, the supervisors, get their opinion.
The ones that have to live with this for the next 20, 25 years, are we improving their life each day?
[00:07:57] Scott Davis: And, and not on an island too. So this distribution centers in Morgan Hill, California. We’re in Indianapolis, Indiana.
[00:08:04] Lori Boyer: Okay.
[00:08:04] Scott Davis: So this team of people are gonna come, you know, kind of into my house and they’re gonna do this thing.
What is, what is that really? And so we immediately had to make relationships with those leaders and that ended up, you know, really working out for us.
[00:08:18] Lori Boyer: So you mentioned honesty. I think that’s a really good one, being clear. But also what I picked up from both of you were the fact that you were open to feedback from people.
I, I think sometimes when we go too top down. We’re pushing our ideas on people, and that always ends up not really getting legitimate buy-in. So we mentioned buy-in of the actual operators, workers on the ground. What about higher level in terms of, I’m guessing this didn’t cost $3. You know, it’s, it’s a spendy thing.
So how do you get buy-in to automate a facility that is gonna cost money?
[00:08:57] Scott Davis: Sure. Just ask, they normally say yes, right?
[00:08:59] Lori Boyer: Just ask.
[00:09:00] Scott Davis: There’s not a lot, you know, pushback. No. So, so, so really it is a process, right? You have to have the data, you have to have the correct data. You have to get the correct buy-in from the right leaderships across all the different companies.
In our example, so, you know, JD Sports acquired Finish Line in 2018 and Shoe Palace just thereafter. And with that they were moving outta one building into another building. And so it was a clean slate for us, a brand new building, and they were gonna operate manual and we were gonna bring this automation in.
And during that time we had a shift in our CEO. So we had to sell this project to twice CEO.
[00:09:37] Lori Boyer: Twice.
[00:09:37] Scott Davis: Twice, Again, so easy. The second time was even easier, but so, so we had to go through, really over and over again, just selling that we know the ROI is gonna be there for us. We know the impact to the people that the boots on the ground in the distribution center was gonna work.
And so I would say tirelessly working back and forth with the new leadership, engaging with our leaders at each facia to let them know that the project was gonna be a success. They just needed to give us the money.
[00:10:05] Lori Boyer: So transparency. And I also am hearing for you, you kind of a trigger point, right? Like most of the time when you’re gonna do a big something, it, it may be because there was an acquisition, or it may be because there is a new CEO. That could even be a trigger point in itself. That kind of brings up these ideas. I’ve got a couple of questions that have come in already. One of them was though about headcount. So it says, assuming the automation, decreased associate headcount, how did you manage that with employees as you went?
[00:10:35] John Naylor: Do you want me to take a stab at that? To start, because I thought you guys did a great job. So the, the first question you know, I’ll take a step back ’cause it was part of the buy-in. When we look at these types of projects collectively, all of us in this room automation is, is to serve two functions.
One, it’s either to add capacity to an operation that you just manually can’t get there, or it’s to reduce your cost by eliminating labor. At the end of the day, the, the focus was on the right process, the right business flows. Once you have those ironed out, and that’s where we collectively spent our first year.
Was making sure we had the big beautiful room day. You remember that? A big, beautiful mind with all the strings attached. We actually had one of those for this process. But part of that, you get the ROI model and, and one of those was around labor specifically in the forklifts in the back for reserve storage.
We had a big day of discussing do we automate this with ASRS? Do we go with forklifts? It was going to be about 65 people I think if we went manual. The critical thing for us was mapping out the growth of the company. Where are we gonna be in three months, six months? Six years? And the Finish Line team did such a great job of hiring appropriately so we didn’t overstaff to lay off people later when that job function was eliminated.
So there was a real conscious effort to allow the staff to grow and stay just behind the curve of where we needed people as we phased in the implementation. So it was a, a very what I’m gonna call people focused type approach. I, I thought they did a great job of putting the people first.
[00:12:06] Scott Davis: Yeah. It’s, it’s the do more with the same people. Not reduce the people. Right. Because we knew once with the automation, what that did is that enabled us to bring different products from different facies into that building, which increased our volume. And again, the selling point back to how do we get the project approved, looked at the store growth and looked at the volume growth and where we needed that to be so we could.
You know, increase our speed to our customer, both our stores and our digital customer, you know, while maintaining quality and reduced costs. So the people, we can’t say enough about that over and over and over again. But they had the buy-in because just that it was the hiring practices that Jimmy and his team started with.
[00:12:46] Lori Boyer: Yes.
[00:12:46] Scott Davis: And it was the transparency over time. ‘Cause let’s not fool ourselves. That was absolutely a question that people had. You’re gonna eliminate roles. Is this your goal? No, that’s not our goal. We need to do more, and we’re gonna do it with the same and we’re gonna tailor our hiring practices to do just that.
[00:13:03] Lori Boyer: Okay. I really love how you mentioned looking to the future. I think that’s so critical when you’re doing any of these big projects that you’re not looking for just today, but you’re looking to the future. We have a couple of additional questions I think kind of tie in here. Somebody asked you to talk and I think John, this may be you, but I’m sure Scott as well, can you talk about the selection process of how you decide which technology?
And, you know, you mentioned some of that a little bit. How did you decide what was gonna work best for this operation?
[00:13:37] John Naylor: Okay. Great question. So again, as you step back and you map out what you think is your perfect process, you’ve interviewed everybody on the floor that has done that. You understand what steps they go through.
It, it really becomes a, a fairly simple black and white math exercise. It’s an ROI. Do we invest the money. What is the payback on that? We’re automating a process that we’ve defined as efficient and productive. The only other piece that comes into that is, or, or two pieces that we kind of weighed.
Is it future proof? You know, am I painting myself into a corner because I, I know nobody else’s operation in this room changes over time. Well, only yours. So are we future proof? Have we painted ourselves into a corner? Or if our business needs change or flex like ours did, you know, acquisitions happen will this be able to accommodate that change? The last piece comes down to just risk. What, what is the risk profile of the client? There are some people, well, you might have a fantastic ROI, it’s just not in their DNA to, to take that high risk step on, on technology. So I felt like we landed on a good balance of, of really good IRR and ROI in the building, but also a, a good element of risk for future-proofing the the operation.
[00:14:44] Lori Boyer: Were there any debates?
[00:14:48] Scott Davis: So we, you know, didn’t coin the term, but we value engineered some things so that we could, you know, reduce the cost while looking at what the forecasts were, knowing that things change. And then you take that and say, how can I expand on the automation at the current footprint within the current building without having to go say, you know, add another building.
So when we did that, we immediately said, okay, we can design this this way. And we have room for expansion and growth. Hmm. And so that was a real partnership. And John mentioned it, we basically created a flow that was, we called it the Beautiful Mind, which was essentially every case that came in had a destination and it went to some area and then it shipped out some way.
And that really helped us define what we needed and what we would say the go live year would be for the target, and then where we thought we would be in three and five years based off of your merchant forecasting and your other business plan forecasting that you have, such as store growth.
[00:15:43] Lori Boyer: Okay. I would love to hear where maybe you were surprised when it came to things whether it’s technology, whether it’s, I know you had slab issues and power challenges and all the kinds of things you can imagine going on that are surprises.
What, what, maybe share some of those with us, the challenges you ran into things that caught you off guard. How that went.
[00:16:12] John Naylor: Well, I knew it was gonna be perfect the first day I walked in first. And
It was a seven sided building. I, I challenge anybody in this room, would you design a, I imagine seven sided building?
It’s, it’s the first one I’ve seen in my career of 30 years.
[00:16:25] Scott Davis: Did we mention it was in California, so.
[00:16:27] John Naylor: Yes. Yes. You know, interesting yards to work with. We moved shipping and receiving a few times, but there, there were some challenges that did pop up with slab electrical that came up. Just some things that none of us would’ve known.
‘Cause it was on the print. It was supposed to be that way, and it just turned out not to be that way.
[00:16:46] Lori Boyer: And so how did you respond or what are your suggestions to respond nimbly, because I’m sure you responded perfectly.
[00:16:54] Scott Davis: So it starts with your business case in the beginning. You need to define what you need, you know?
What extra do you need to have just in case? Right. What contingency dollars do we need to have? They need to be defined somewhere.
[00:17:07] Lori Boyer: Okay, write that down. Have some backup dollars. Gotta have some contingency dollars. They’re gonna come.
[00:17:13] Scott Davis: Yeah, you have to have that. And then, you know, being in California, we knew that the rules were gonna be more strict.
And other areas. And so, so we, when we met and we made the business plan, we had to say, listen, we would normally not request some of this, but we know this can happen. And so contingencies are huge. Do you want to go back in a year and ask for more, or would you rather fight the battle upfront so that you can stay within your budgets?
How can we do this? And we’re, we’re gonna be good stewards of Of the dollar, so we’re not gonna spend it if we don’t need it. And unfortunately, and fortunately in this instance, we did have to rip up some, some of the slab and we had to go back and add some additional electricity.
[00:17:55] Lori Boyer: Oh, why do you say unfortunately.
[00:17:57] Scott Davis: So I say, unfortunately.
[00:17:58] Lori Boyer: You said unfortunately, and fortunately.
[00:18:01] Scott Davis: Because we had to do it.
[00:18:03] Lori Boyer: Unfortunately we had to do it.
[00:18:05] Scott Davis: I didn’t want, I didn’t wanna have to do it. But fortunately, ’cause now it’s good.
Fortunately, we, we did have the contingency in place. But the unfortunately thing is really that, you know, you want to do, you wanna make the best plan and have the best information and execute as fast as you can with as much quality.
You know, all those things that you want to do. And so when that happens. That’s not just about the money, it’s about the time. Right. We, we had things that we were, we were practicing already on what our schedules would be. How would we move the manual environment around to get this automation being built. How do you unload all the steel, all these details. So I say that, but I, I really enjoy this stuff. So for me it was just something else to have some, you know, opportunity to work on. Right. This is another challenge we can get into, so.
[00:18:49] John Naylor: I, I’m an optimist, so when I, I. See, things like that, I, I’ll tell you what the positive was for me.
It pressure tested the team. So when all of a sudden we had to rip up an area of the floor that they were already manually picking orders from it, it actually forced us to say, okay, all these contingency plans that we meticulously went through for a year it forced us to put that into play long before we ever thought we’d need to.
And, and it really forced the, the operation to get efficient in some areas. Are we taking up more space than we need? What do we do if the next phase of this, I’ve gotta move over here. And, and it actually pushed the operation and the installation teams to work a little closer together and, and pressure test that what do we do next weekend if we have to pivot?
And, and I think that allowed us to, quite frankly, hit some curve balls out of the park every time they were thrown at us for the next year.
[00:19:36] Lori Boyer: Can I ask, that’s brought up a question for me. You mentioned timeline a little bit. You talked about a year of working on contingency plans. Can you gimme a timeline of kind of how it worked from when you first decided, okay, it’s time to make an investment here.
So did you spend a year planning and then start implementing, you know, what, what was the, the timeline look like if somebody’s thinking of doing it themselves?
[00:20:01] Scott Davis: I’ll take the front part. As I mentioned earlier, we had a shift in CEO, so that actually extended the timeline about a year longer than we wanted.
I call it a year ’cause we deal with peaks and.
[00:20:11] Lori Boyer: You get contingency time too, right?
[00:20:13] Scott Davis: Yeah. Well you have to deal with back to school for us then also, you know, Christmas holiday. So you’re really, you’re looking at six months that are the times you could actually potentially raise something up without risking, right, the business. And so that was the first hurdle we had to get over is, you looked at the forecast, you knew we needed the capacity. Okay, let’s pause for a little bit. And rightfully so, you know, the new CEO came in, he needed to get his bearings, we owed him that and and we worked through it.
And after that, you really had, for us at JD Sports, we had to take, when’s the optimal time to go to go live and then work backwards. ’cause again, you can’t go live on November the 15th. Right? Because that’s right during your holiday peak, so.
[00:20:54] Lori Boyer: You can go live on November 15. You can do whatever you want.
[00:20:59] Scott Davis: Yes, ma’am Yes ma’am. You could. So, so that, that’s how we defined it. And then certain things throughout the process would also create opportunities for you, let’s say, since we designed in a way we could do manual and automated at the same time.
[00:21:13] Scott Davis: What that did for us was we said, okay, we don’t wanna risk digital during holiday.
Let’s do that the manual way.
[00:21:20] Lori Boyer: Okay.
[00:21:20] Scott Davis: And it is pretty complex to do things that way, but we just, you know, de-risked ourself, if you will.
[00:21:26] Lori Boyer: Anything you have to add John in terms of timeline?
[00:21:30] John Naylor: I, I think quite frankly, we spent the right amount of time on the planning. You know, it was, my mother used say, ounce of prevention’s worth a pound of cure.
That I think we avoided a lot of the pitfalls. We really did a great job of going through, starting with happy path specifically on the IT side. Not only, you know, we talked about the automation. But there was a whole side to WMS implementation. All the systems that were behind this merchandising.\
There were a lot of things that came into play to make this happen. And I think the teams worked really well between it operations, mechanical to really map out not only the happy path, but gosh, did we spend a lot of time on the exceptions and the what ifs scenarios. I mean, some of them, I, I swear, involved meteors hitting the building. They were ready for that.
We went down every possible plan that could happen, and I, I think. I, I don’t regret spending that time of, of over planning up early.
[00:22:19] Lori Boyer: Over planning. So over plan, that’s another thing you can write down. Go through as many contingency plans as, as you can think of, as your team can think of.
I’m curious you mentioned doing, you know, manual at the same time that you were trying to automate. How, you know, I guess what did it look like on the floor when you’ve got fulfillment still running while you’re ripping apart the building? How did you manage that, successfully?
00:22:47] Scott Davis: Sure. I mean, it’s, it goes back to the team that was on the floor.
And so we worked with Jimmy, who’s the vice president of operations and said, can you give us one or two people so that they can really focus on the system side? ‘Cause we’re not gonna take our operators, our DC operators, and have them build the, you know, the steel, right, the construction. But we did want some people to be at part of the meetings and different things like that.
So I want to say it’s not as hard as it sounds. But also it’s very complex and if you, if you plan for it well enough, then you can get through it.
[00:23:20] Lori Boyer: Scott says it’s not as hard as it sounds, but it’s also very complex.
[00:23:24] Scott Davis: Say, let’s, let’s use the term excitement and opportunity and not challenge or problem.
We’re in good shape.
[00:23:30] John Naylor: But I think it was a good example though of, you know, that buy-in we talked about earlier you know, we had learned some lessons from Indy and some of the other facilities and brought them forward. But embedding those teammates that are working hand, hand, and glove beside you, you know, you processing manually on one side while I’m building lights out automation on the left.
And because they’re embedded, they, they get excited. They, they say, okay, you’re not changing what I do each day. You’re just making my day easier. I’m going to be able to get this done with a, a little more predictability. I’m going to be able to do this with a little more ease in the function. We got great buy-in from that, and I think that helped ultimately when we went live, that we didn’t have that gradual. Okay. I’m learning. I’m learning. I’m learning.
We had more of a hockey stick type yeah productivity. I think one of the comments you made, I is when we looked at how we processed versus indie, that you had like a 20% increase in productivity, almost immediately out of the gate versus just ’cause we fixed a few things in the process of how they did it and what waving versus no waves, for instance.
[00:24:28] Lori Boyer: Okay. I love it. We’re, I know my friends at Summit are always talking about people, processes, and technology, and that’s what I’m hearing from you all the time. You’ve gotta look at the people. The buy-in seems massive. Having people onboard, taking the time to go through it, the processes, being able to look at other successful, taking the knowledge and the expertise from people who have been there and experienced it, that’s huge.
And getting the right technology. I have a few more questions that. I wanna make sure we get to. This one from Brian says, change management is critical in bridging the gap between technology and operations in the warehouse. What kind of level of change management did you use? Did you feel like it was effective?
Did you have any lessons from that?
[00:25:14] Scott Davis: And it’s at all levels, I think. Right. So it’s not just, I’ll take it from a distribution operations perspective. And so I think we did again, it was embedding the people in the roles early so that they could have, they could have comprehension. The best day that you’ll have is when you go into a break room and they’re actually talking about the thing that you’re trying to accomplish.
[00:25:34] Scott Davis: Right. We can go into a meeting room as leaders and different things. And we can, you know, we’re way here on the change curve. But the people, when you walk into the break room or you’re out on the patio and you hear those people that are out there talking about that, that’s when you know that it’s, it’s a pretty solid plan and you’ve done everything you can to make it be successful.
[00:25:51] Lori Boyer: It’s really easy for people to just be like, yeah, yeah, yeah. And then roll their eyes at you. I think one of those keys, and it sounds that you were really successful with this, was that the change was actually good for them. Right? Like, I think sometimes it’s not actually that much better for them, and that is when they roll their eyes.
[00:26:10] John Naylor: I, I, I get a kick out of it when I walk.
I spend a lot of time on the floor when I’m out there and, and I love talking to the operators. And I, I get a kick out of it when they explain it back to me of, lemme show you how this works. You kinda smile and you go, yeah, I know I drew that up myself. But, it’s working just like I drew it.
But it, it, it’s really, really fun to hear and see when the operators have embraced that change that you’ve made. Because they do see that, hey, this has been a positive on, on how the business runs. So again, there’s a lot of pride in that building if you get out there.
[00:26:37] Lori Boyer: Oh, that’s, that’s fantastic.
Somebody wanted to know what motivated the investment to start like why when it happened.
[00:26:46] Scott Davis: Sure. So you know, we had a really aggressive store growth plan. And we had a great opportunity with the Shoe Palace team in California moving out of an old building into a new building. So everything really kind of aligned that it was, and you just kind of feel it most of the time. It was just time to do it. And then we knew that in order to make speed to market for us. So we had one DC in Indianapolis, so if we had one on the West Coast all of a sudden our retail deliveries are gonna be faster for replenishment to the stores. You know, less frequent size run breaks, if you will.
So for us it was a, it was a pretty easy decision. And then, you know, of course then we talked about the journey already quite a bit.
[00:27:33] Lori Boyer: Yeah. So the business case for it, it sounds like you already had a plan to grow. I think you had some acquisitions, some other things were going on, right. And you could see also the opportunity for splitting the DCs.
Is there anything you had to add, John?
[00:27:50] John Naylor: Yeah, I think the only other thing that really was a catalyst for it was just the labor market at the time. I mean, you know, coming outta COVID or in COVID at the time. On top of, I don’t know if anybody else has tried to hire people out in Silicon Valley, but it’s, it’s it’s a little expensive.
You know, so going out and trying to find a hundred people that wanna slug boxes in a DC they’d rather write code sometimes. But So I, I think the labor that was needed to hit those forecasts also really helped selling that upstairs in terms of, getting corporate buy-in to make the investment.
[00:28:23] Lori Boyer: Mm. That’s fantastic. Buy-in seems super important to me. We talked about kind of the execs, the board, getting the money. We talked about operations. What about engineering or merchandising, or did you need to get buy-in from them?
[00:28:41] Scott Davis: Yes, certainly. Because I happened to work with the engineering group, the buy-in there was pretty easy.
[00:28:46] Scott Davis: So I just basically said, here, let’s take, let’s take a shot at this. But what we did is we had a series of leadership meetings and we talked about what’s your five-year forecast gonna be? And then we were able to show them at some point in time that, you know, their goals for what they wanted to do did not meet our infrastructure, right?
Our infrastructure could not meet their goals, rather, so, so with that, again, it wasn’t easy, but it was, there was a lot of time spent with each individual leader to show them at some point, we’re not gonna be in a position to, you know, provide the best service that we, that we need to.
[00:29:19] Lori Boyer: Okay. So you made your business case.
Somebody asked, how did you address the different needs from various sales channels in terms of automation, like retail versus ecommerce?
[00:29:29] John Naylor: Oh, what a great question. They they’re opposing forces. You, you’ve got a push model of the classic retail, a new style excuse that comes in. We’re gonna push that out through the allocations.
You work with the merchants, we get their buy-in on percentages and then all of a sudden you’ve got point of sale replenishment that starts pulling from the DC and .com that starts pulling from the DC And, and while none of those challenges are, are unique on their own, it becomes a little more complicated when you’re doing it in the same building but you’re also doing it with the same inventory pool that suddenly I want my residuals to fulfill .com and point of sale.
I wanna round up my retail orders. You’re competing for the same inventory with the same pool. You’ve got opposing forces on how you wanna run your automation and staff, your areas. So I, I think we put a lot of planning into how do I balance the day so that the stores don’t miss their deliveries.
We don’t miss our cut times and promises to the customer. You order a pair of shoes on JD.com, it’s going to show up on time, on promise. So how do we balance that through our software, through the staffing plans, through the operation to make that happen? There was a lot of work that went into that and I think the only caution I learned for it or from it was, don’t ignore when you talk to the merchants, those one little peaks, like the super Saturdays when 10,000 Air Jordans get launched and everybody goes, well, I didn’t see that in the averages.
[00:30:51] John Naylor: You know, make, make sure you understand those peaks that are gonna hit your operation and where they inject nicely in, into your solution.
[00:30:57] Lori Boyer: Yeah. Did you have, what were your biggest challenges, I guess, in creating that balance? Was it technology? Was it the actual work on the floor? Between the push and the pull?
[00:31:10] John Naylor: From our, our team standpoint on, on design. When I say ours, I mean your engineering teams. Our engineering teams. It was really understanding capacities. I, I talked about that beautiful mind day. We mapped out every flow with the peaks, the averages. We modeled it across a year’s worth of inventory, years worth of orders where we could, and, and trying to model what happens when that peak day hits at the same time we’re bleeding over from Yeah back to school.
Do we have the mechanical capacity to absorb those those two flows? Do we have a staffing plan that allows us to operate those at the same time? Or are they separate flows that happen at separate times and we can balance? So we put a lot of time you know, between the two engineering groups to size the appropriate technology to handle what happens on a day-to-day.
You’ve gotta put that element of time into your plan, not just the mechanical three-dimensional layout, if you might. It’s a living, breathing thing each day in the DC.
[00:32:04] Lori Boyer: Absolutely. Absolutely. Okay, so let’s talk about, we’re getting, we’ve got. 10, 12 minutes left. So make sure you’re send in questions if you’ve got ’em.
But I wanna talk about kind of results, what you’ve seen. First, I guess, anything else you wanna say in terms of lessons learned during the process on communication, on people, and any tips that you have for them on that before we move on?
[00:32:30] Scott Davis: For, for me, it is that as soon as you get your requirements, you know, so what, what does your success criteria look like?
Whether the requirements get the buy-in from the other leaders. Merchants would say this percent is doing digital, this percent is doing retail. You should refine that all the time throughout the process. Make sure that’s in play.
[00:32:47] Lori Boyer: Okay. Continually refined.
[00:32:49] Scott Davis: Also, also, once you get with the, with the vendor, make sure that you review the electricity requirements.
‘Cause that’s huge and that can cause some delays for you. And you have to think this building had nothing in it for us.
[00:33:02] Scott Davis: So when we put all the steel and we built it vertical, then all of a sudden we had to have a sprinkler system. And there’s, so when you, when you take a look at, well, we would, we call our ancillary list.
You have to really go from the slab all the way to the ceiling. And it’s also, you know, where they say measure twice and cut once.
[00:33:21] Scott Davis: So you should probably always measure your building heights and your different things that can get in the way.
[00:33:26] John Naylor: Just in case you’ve got one joist that’s off by 10 inches.
[00:33:28] Scott Davis: Just not that that happens. So yes.
[00:33:31] Lori Boyer: That would never happen.
[00:33:31] Scott Davis: Just in case that happens. So yeah, you’ll measure twice and cut once. And I know we all understand that, but you really should start at the concrete and you should work your way up and you should think you can come into a building like this, your existing DC and you can look around and just start taking some quick notes on, you know, what have you done over the years, right? What have you done here to make it better?
[00:33:50] John Naylor: I, I would add not necessarily a lesson learned, but a lesson reinforced. And that was communication is one of the things you brought up. Anybody that’s gonna tell you these projects go flawlessly and on plan is lying to you.
No, no plan, battle plan.
[00:34:03] Lori Boyer: I think that was Scott at the beginning.
[00:34:04] John Naylor: Yes, he no battle plan survives the first volley. And I think where we collectively as a delivery team did really well and at all levels was communication, over communicating. We still have a weekly executive call every Friday that, you know. Bad news doesn’t age well.
It was kind of our motto from day one and that we, we’ve got that relationship between the partners and the project of problems are gonna come up. It, it’s does nobody any good to hide them, get them out front, let’s deal with them and knock them down so that we can stay on our happy path of success.
So I, I think that communication at all levels from the people on the floor to the project teams, the installers, all the way up to the exec levels of, of top to top communication. It was paramount to the, the success of this endeavor.
[00:34:46] Lori Boyer: I love that. Bad news doesn’t age well. I think we can all take that as life lessons as well, but communication being huge.
I’m really struck by how much preparation and time, I’m a little guilty of being the kind of person who’s like, okay, let’s just get started. And so I’m really impressed. Take your time with the planning. Be thorough. Look through everything, communicate well, all really, really impressive things. So what, where are we at now?
One of our questions actually I wanna ask is, what are your plans for your next step? Impressive. You can tell these gentlemen would have a next step, you know, where do you wanna go from here? But I also wanna know here, like what improvements have you seen? How is it running now? What, where, what is the current state?
How are we doing with everything? ROI, buy-in.
[00:35:44] Scott Davis: Yeah. So it’s to realize everything, you have to realize everything now, right? We said that we were gonna do these things. And now we have to do ’em consistently. So we need to make sure that our cost per unit stays in line. We make sure that our quality is maintained, so, so right now in this project, we’re at the point where we’re gonna go back and refine everything.
You write an SOP out how you think things are gonna work, and then you gotta go to the floor and you have to work through the team members on the floor and say, give us a feedback. That’s probably more quality than me just up here on the stage trying to make an SOP. So we’ll do that refinement, we’ll do the engagement piece, which is really the follow up on what we spoke about already, which was communicate early and often for us.
And you know, then, then after that we want to really exceed what our expectations were. So how can we be creative now that we have this automation at our fingertips? If you don’t, if you just settle all the time, you’ll just be settled.
And so we’re not, we don’t wanna do that. We wanna consistently be creative on what we have available to ourselves now.
[00:36:45] Lori Boyer: So refine after, so plan before, continue to refine after. And during, keep everybody happy and excited. Did you have anything?
[00:36:56] John Naylor: No, I, I think Scott had said, well, my personal goals are just, you know, continuing to monitor the progress, you know, coaching.
What did, what did we learn that we can apply at the other buildings other operations, but we know the business is going to change again. It, it’s inevitable there. There’s always going to be change. So I think for all of us, it, it’s a critical mandate to continue to watch for it, be out in front of it.
And, and when we see that change coming from, whether it’s merchants acquisition change in volumes or profiles knowing that we’re self-aware of what our operation looks like of okay, let’s get a plan in place before that wave hits us.
[00:37:31] Lori Boyer: Okay. Awesome. All right. I’ve got a few questions. We’re gonna go through ’em.
Is, was there anything that surprised you in the results, positive or negative?
[00:37:43] Scott Davis: I think we did such good planning, as you mentioned several times, and I don’t know if anything surprised us. No. So really the involvement of the operations team, I wasn’t surprised, but, just how quickly they adopted. I mean, they didn’t use computer screens in a room or anything. It was just pallet jacks and like little scanners and one little computer.
So the way that they’ve adopted things if I had to pick something and, and it’s a real positive is, is just that they adopted it and then they become experts at it. I think that was an accelerated timeline for me.
[00:38:17] Lori Boyer: The, the power of the people. Did you have anything that surprised you, John?
[00:38:22] John Naylor: No, I, I think, you know, I hate to repeat Scott’s answer, but it, it is really impressive to see a, a team that went from a very manual, I mean as manual as it gets.
[00:38:31] John Naylor: In some cases working off pieces of paper out on the floor to how they, they can sit there and describe to you a one touch process. If I touch that box once on the receiving dock, and then it hits the other dock at some point and goes through ASRS and all that. They have adopted high-end technology in one little leap.
And they’ve embraced it, but not only did they figure it out, but they’re really happy about it. It’s been encouraging.
[00:38:54] Lori Boyer: Somebody wants to know what investment or like, is there a specific thing in the warehouse that you feel like had the highest ROI?
[00:39:03] Scott Davis: Hmm.
[00:39:04] Lori Boyer: I think I remember chatting about cranes or something.
[00:39:07] Scott Davis: I mean, yeah, the cranes definitely eliminated, you knows the forklift work, the the racking work. We actually have a put store module too, so, you know, the environment they had, they had to travel a lot, and so now the goods come right to them and they do a packing process.
So I think really for, for me, it’s all the above because we took it from, from nothing and you know, they didn’t even have an inline print and apply as an example.
[00:39:32] Lori Boyer: It’s like a whole new world.
[00:39:34] Scott Davis: They’re just labeling everything on the side, so. It’s all, it’s all the above.
[00:39:38] John Naylor: But, but part of that process that we went through is every little area had to have an ROI.
Otherwise you leave it manual, you, you leave it basic. So I, I don’t know if you could point to one thing and say, Hey, that’s the best thing in the building. They all contributed. There are some that had better ROIs than other areas, but I don’t think. That process allowed us not to over automate an area.
Everything was the appropriate level of investment. Based on the.
[00:39:59] Lori Boyer: I like that. Over automate an area, the appropriate level. Okay. Somebody wants to know, how did you integrate the new automation into the existing SW landscape? I couldn’t think Whats SW meant?
[00:40:13] John Naylor: Software.
[00:40:13] Lori Boyer: Oh, software, software.
[00:40:16] Scott Davis: It was, it was pretty complex.
But we just, we were thoughtful about engaging our vendor partners early. So we had. You know, Aptos was our WMS there, and so how can we integrate that, but then also operate it manually and then have Aptos still feed the new system. And so all, all very technical, all very technical things.
But it was really just mapping.
[00:40:44] Lori Boyer: Engaging the right people.
[00:40:44] Scott Davis: Mapping it out, mapping it out, engaging the right people early to make sure that we had named resources. So that people that had worked on our projects before knew what we were going through and we didn’t have to start over with somebody new all the time.
[00:40:56] Lori Boyer: It seems like you used a lot of different resources. Can you share like all I I, there’s so many, but you know, you’re talking about vendors. What, what did you do in terms of who would you reach out to to get, you couldn’t feed the meeting with three pizzas.
[00:41:11] John Naylor: I can tell you that. There were, there were some big meetings.
I, I think the only thing I’d add to what Scott said was I don’t think at one given point in the, the whole software integration layer, did we ever put ourselves in a position where we couldn’t back out and go to where we were yesterday if it didn’t go according to plan that weekend. There was always a, a backport if.
[00:41:31] Lori Boyer: You had a contingency for a contingency for a contingency, I think.
[00:41:35] John Naylor: Yes.
[00:41:36] Scott Davis: Roll, rollback plans are, are critical and because it gets everybody thinking that way all the time.
[00:41:42] Scott Davis: It’s not just when we put this in, we’re all in and if something bad happens, we have to just muscle through it. And so when we got all the teams to think that way, then everybody that came into the room knew that was just expected.
And fortunately for us, we didn’t have to back out a lot of things because they’re well thought out.
[00:41:58] Lori Boyer: Okay. And we’re gonna do a couple more. We have a lot of questions. Curious about the slab issue. Was the issue with site prep, with loading applied? What? What did you learn about slabs from that?
[00:42:09] John Naylor: It, it was a spec building build that just wasn’t poured for high automation.
We had upward force with the cranes.
[00:42:16] John Naylor: You know, so we had to do some slab remediation, which you know, is a fancy word for you cut the concrete out, you put in some rebar, you pour some new concrete. Which, which ironically was not as painful as I thought it would be in the area. The, the teams did a very good job.
It’s not the first time I’ve had to do concrete work. But it wasn’t a miss on the project team, it was just, it was an existing building that never contemplated.
[00:42:38] Lori Boyer: How did you identify that it was an issue?
[00:42:40] John Naylor: When we submitted engineering plans and did core samples it became a little curve ball for us.
[00:42:45] Lori Boyer: Okay, good. Was there any consideration to the future state of merchandise returns? What about reusable transport and other packaging as a result of current and future, EPR regulations, California regulations.
[00:43:03] Scott Davis: So merchandise, returns you know, we did design that into our process. It’s something that typically automation wouldn’t probably handle very well.
You know, everybody’s got a manual return. You have to look at the shoe. There’s all kinds of details you have to get, but we did design a way and to take inventory that should be available for, for sell again, and to introduce it into the automation, into the shuttle system, so it’s available for each channel after that.
[00:43:31] Lori Boyer: Final tips. I’m sure that both of these gentlemen can answer so many questions if you have them specifically. They really are so good. I love, one thing I just had to shout out Scott here at the beginning, he said, I hate when I have to introduce myself. I don’t wanna be a VP. I’m just a team member. That kind of mindset is why his teams get buy-in and why they’re excited, because he cares about the people, and he’s not just about being the VP.
So, any final words, any last things? Our time is up.
[00:44:03] Scott Davis: Go ahead, John.
[00:44:05] John Naylor: I, I think we’ve probably outlined a lot of it here of, of just take the time to really map at your business, understand where you wanna be in five years. Know that that plan could change, so leave yourself some white space in the building.
Leave some contingency plans, but get the buy-in of your entire team. Don’t be afraid to talk to everybody from the, the person that that changes the, the garbage can locations each day, all the way up to your CIO. They’ve all got some input that you will find meaningful. I, I promise you, it’ll have an impact on your design and ultimately the health of your building and your culture.
Thanks.
[00:44:36] Scott Davis: Just be honest. Communicate a lot. That’s really it.
[00:44:40] Lori Boyer: Thank you so much. This has been such a fun session.
