AMR Strategies and the Future of Warehousing with Locus Robotics
In this conversation, Chloë Lind interviews Steve Simmerman, Head of Global Alliances at Locus Robotics on the future of warehousing and key AMR strategies.
This interview has been edited for length and clarity. Please listen or watch the episode to catch the entire conversation.
Chloë: Today I’m so excited to be joined by Steve Zimmerman, who is head of Global Alliances at Locus Robotics. Welcome to the podcast.
Steve: Thanks, Chloë. I’m really happy to be here.
Chloë: Alright, well, I would love to just start out by talking a little bit about Locus in general. I feel like you guys are everywhere. There’s been some big announcements in the industry. I’d say recently just, I think it was in May the partnership with DHL was announced, which was I think, the largest AMR deal to date in the industry. So I’d love to hear about that.
Steve: Sure. Thanks Chloë. And you’re right. DHL is one of our premier customers on a global basis. Probably our single largest user of our bots to date. And I think that, you know, the announcement that was made regarding their latest acquisition of Locus bots to be deployed around the globe is really a testament to their team, their vision, their commitment to delivering value to their customers.
Then leveraging our bots and our software technology to help them along that journey. You know, we’ve got a fairly longstanding relationship with DHL. We’ve learned a lot along the road in various parts of the world as we’ve deployed. But again, I think it’s really a tribute to their strategy, their vision in terms of being a market leader and you know, we’re thrilled to be working with them.
Chloë: Yeah, that’s a big one. And another, I think it was maybe even last week. The announcement around your new global headquarters up in Wilmington?
Steve: Yeah, we’re super excited about that. Yeah, we just broke around about two weeks ago. We’ve got a new corporate office going up. It’s around 180,000 square feet.
It’s called Locus Park, and it’s going to be really centered around the customer experience in terms of working with our bots and our software, et cetera. So it’s going to be a very customer centric journey through that building. And of course, help us from an operational perspective as well.
But yeah, I can tell you the entire Locus team is super excited about it. You know, I don’t think we can get there soon enough, but it’s expected we’ll move in sometime early next year.
Chloë: I know you mentioned DHL, and I’d like to frame this conversation today with you around 3PLs, right? Because I know you certainly work with a lot of them. SVT does as well. It’s a sweet spot for us, and I would love to talk through some of the challenges that 3PLs face when it comes to obviously optimizing their facilities, but starting to figure out where to begin their automation journey. And what workflows to optimize first.
Steve: So, I’ve been in this market for quite a while. And historically 3PLs do really invest in a lot of automation for many, many reasons.
Right. But it is a hyper, hyper competitive global market right now in the 3PLs world for a number of reasons. Their customers in many cases, just quite simply can’t find the available workforce labor to ramp up quickly as they launch new businesses, maybe divest of others, et cetera.
But it’s a very changing dynamic and changing world for the 3PLs providers. But as I said, it’s also super competitive. So, their end customers, their tenants, if you will, are looking for innovations like robotics to help drive value, quality, service level agreement priorities, et cetera, as well as reduce costs.
So it’s, again, it’s all about the value proposition that a 3PLs can provide to their customers and prospects. And, you know, the 3PLs are not standing still. I mean, they are all very active in many aspects of automation, not just with Locus. So, it’s really a changing dynamic in that 3PL world, and I don’t think it’s going to change.
You know, they’re a tremendous outlet for many, many customers shippers, if you will, and manufacturers. So, I think it’s going to continue, but their adoption of automation to drive value, reduce cost, and improve quality and value is really what it’s all about.
Chloë: And it reminds me you’re at Locus now, but you have a very extensive career in this space. I won’t go into every single role you’ve held, but I know you’ve also been at a big WMS, Blue Yonder. Could you share your experience working with 3PLs? Because I imagine it’s not just one WMS that you’re connecting. Potentially these 3PLs have multiple systems depending on who their end customers are.
Steve: Yeah, absolutely. I’ve been blessed. I’ve had a very fortunate and lucky career in many ways in supply chain. I could tell you that when I got out of grad school and took my first job I, the word supply chain, the term supply chain didn’t even exist, to be honest with you.
I was involved in a small software company doing basically inventory control systems, order entry, those kinds of things. This was pre-WMS and the market evolved very quickly. So, the firm I was with was one of the pioneers from a WMS’ perspective. I just kind of rode that wave over the last, you know, almost 35 years now.
And it’s funny, you know. You think everybody has a WMS, but the reality is they don’t. And so that market is today, as vibrant as it’s ever been. And now with the advent of Robotics, it’s really many ways. So, the collaboration between the bots and today’s WMS solutions out there is really an amazing transformation of the industry as a whole.
And yeah, I came from a large software company but when I saw the trend of what was happening in Robotics it was clear to me, based on my experience, that that was the next wave in terms of supply chain execution. And I just wanted to make that migration and was fortunate enough to, to land here at Locus.
Chloë: When we think about 3PLs, you know, they’re potentially managing different host systems depending on their end customers. Right? So, when you’re having conversations and thinking about, you know, helping guide those prospects and customers on how they they bring in some of these robotics, how does that come into play? Like in terms of supporting disparate systems for 3PLs in particular?
Steve: Yeah you’re exactly right. A lot of the 3PLs historically have ended up with multiple WMS’ platforms and most of that’s through consolidation, acquisitions, mergers, et cetera, in, in the marketplace.
It’s natural. You know, the 3PLs that I’ve been involved with, you know, all have a concerted effort and a vision to minimize the number of platforms out there. And in many cases, they’re still dealing with one or two or three different WMSs for different reasons, different regions of the world et cetera.
But at the end of the day, it really comes back to working with them and understanding their business objectives. Okay, what they are trying to achieve, working with us, integrating our bots with their WMS? And again, it goes back to how are they reducing cost, improving quality service levels, et cetera, and value to their end customers.
So fundamentally, it really comes down to what is the business driver, and that will then help dictate what WMS do I stay with, do I convert to a more common platform, et cetera. So, a lot of different factors, but fundamentally it comes down to the business case.
Chloë: And then when it comes to navigating the world of AMRs, what are the questions that end users or prospects should be asking to understand what the best AMR solution is for their business?
You go to ProMat and it’s just like robots everywhere, right? I would imagine as an end user, it could be quite overwhelming. So, what questions should I be asking and how does that dictate you know, what path to go down?
Steve: Yes. You’re absolutely right, Chloë. There are lots of, lots of choices as we all saw at ProMat. The number of automated robots, autonomous robots, whatever they might be, high density robots, et cetera. It’s such a dynamic and growing environment.
Lots and lots of new ideas popping up. But to go back to your question about what should end users be asking and looking for, again, I’m going to say it goes back to the business case and primarily from an operational perspective, what is the use case? Delivers the greatest value for you and your customers, and how can automation help improve the value that’s coming out of that use case?
So, it might be e-comm fulfillment it might be lights out, you know, ASRS, pallet storage types of applications. Again, each customer in different verticals and where they sit in that vertical market are going to have different use cases. So, I would say fundamentally, let’s begin with the use case.
Let’s keep it simple, not try to solve every problem within the four walls of distribution center or manufacturing environment. Let’s focus on those strategic use cases where it gives a 3PLs a unique competitive advantage. How do we improve that competitive advantage with them?
Chloë: Absolutely. So, I think one of the, I would say a really big use case in this space is picking, right? How do we optimize that workflow? And what are some of the solutions that Locus has to optimize picking? I know there’s a lot of variables here, but what are some of the subsets of that workflow, right?
Steve: Yeah. Optimizing, picking number one, picking whether it’s each picking, case picking is, tends to be and continues to be. Sort of the largest consumption of labor hours in the distribution center. And I think that’s kind of how we, as an organization, came about.
And again, in terms of optimizing, picking activity, one, we’re trying to optimize two things. One, we’re trying to optimize the, the work of the associate on the floor, as well as optimize how our bots are supporting those associates on the floor. So, it really is an interesting blend of not only the Robotics technology and everything physical about that bot, but also the optimization software behind the scenes.
So as we get order and demands and pick requests from the WMS’, we have our own Locus One platform that goes through Retiming. How the bots are best going to serve that piece of work in minimizing non-productive walk time and all those other benefits that the bots provide. But it really is a combination of the Robotics themselves as well as the optimization software in the background.
And again, just like humans, our customers are asking us to address more use cases, whether that’s each picking, case picking, put away replenishment pallet movements et cetera. So again, from a software perspective, we’re trying to optimize the utilization of the bots in the various workflows.
Chloë: And you, you talked about the human element a little bit. I’d love to dive into that. I know there’s a lot of safety sort of concerns that come into play.
Steve: Yeah, I think a couple of things that you bring up are very you know realistic topics that we’re working with our customers and prospects.
Let just talk about the fear of bots themselves, right? I’m in an aisle and a bot goes whizzing by me. The bot navigation software and all the safety parameters and subsystems within that bot make them very, very safe. Part of that is goes back to introducing the whole concept of automation to an existing workforce.
And we’re talking about change management training, getting some hands-on experience with the bots, overcoming that fear. And I could tell you that from my experience when a new prospect or a new user comes on board, and they start to interact with our bots. In particular. They see how easy it is to work with them to work side by side with them.
So a lot of those fears go away in a hurry. I think the other thing is that we’re helping to improve the work life for those associates on the floor. So, for example, I’m no longer pulling a pallet jack with multiple totes around a 250,000 square foot facility. Having to, or a headset or, you know, lug an RF device along with a cart, et cetera.
So, you know, through simplifying the way that our associates, our users work with our bots, it’s a simple low energy Bluetooth tag. And you know the bots recognize who the associate is. We record their labor against that. It’s a very simple and intuitive iPad interface. So again, a lot of that fear goes away, but you know, the big impact.
We talk a lot about the hard savings, the productivity, the ROI, which is important to justify the investment in bots. But a lot of our customers come back and talk about the soft savings, the number of reductions in work-related injuries decreased turnover. Again, just improving the overall work life of an associate on the floor.
And, you know, a lot of our customers are using bots as a recruiting tool. So, if I’m an associate and I’m out there looking for a warehouse job, I go to one warehouse and I’ve got to pull a pallet jack, or I can walk side by side with a bot, which is a more attractive alternative to me. We hear that all the time.
The soft side savings, in addition to the hard savings are, are really, really critical. You know, the other interesting thing is we see it every once in a while, with startups. Customer may start with, you know, say 10 bots initially, and they’ll continue to pick with cards and they’ll ramp up, et cetera.
We see kind of a rapid adoption of the bots in those scenarios because, the folks that are left pulling the cards or, or pallet jacks are questioning, hey, why am I not, you know, having some fun with the bots over there, I’d rather go work with the bots. So, we do see that time and time again. So, again, I think just in addition to delivering the business benefits to our customers, helping them engage and retain, their really good associates is fundamentally what it’s all about.
Chloë: Yeah. That, that makes a lot of sense. And to expand upon that a little bit, could you give an example of. The impact of the bots on injuries in particular. Do you have any examples you could share around that?
Steve: Yeah, we’ve got several customers that have stated publicly, you know, the, the reduction in work-related injuries.
I won’t name names without permission here, but in one case it was a 77% reduction in work related injuries. That pretty dramatic. And if you think about work related injuries, it’s, it’s, it’s bad enough. There’s, there’s some sort of injury. If you think of the total cost to deal with a work related injury and all the different groups within your organization that have to get involved and what the cost of that injury is you know, if we can do anything to help make it a, a safer more user friendly environment, that that’s really what we’re, we’re striving to do with our customers.
Chloë: Yeah, I imagine there’s serious liability there that.
Steve: Yeah. Our bots travel just slightly slower than average human walk speeds about 1.1 meters per second. Okay. So they’re very, very safe.
They’ve got great vision capabilities in terms of detecting obstructions or people et cetera in their path and their ability to dynamically navigate around those obstacles. But, you know the speed of the bot is, you know, we don’t want people chasing bots all over the, the warehouse.
It’s got to be at a fair pace that an associate can maintain over the course of an eight or eight hour plus job.
Chloë: And you know, as you see your customers adopt Locus Robotics, how have you seen that shift?
Steve: Yeah, and so that goes back to your question about, earlier about the fear of bots taking my job. And really what happens is a couple things. If you think about a typical picking operation and we’re able to reduce the required number of associates to, you know, double or triple productivity, we’re finding our customers are then re-signing those associates to different parts of the business.
Okay. So, for example, it’s not uncommon that we see people that are normally picking move to a packout operation, right? Because of the increase in velocity and productivity, et cetera. So our customers are, are working with us and with their associates, you know, in a smart way. We’re also seeing in the market where a lot of practitioners are dealing with a heavy percentage of temporary labor.
And so that’s a really difficult thing to work through on a day-to-day basis. So many customers are working with two or three different temp agencies in a given building just to get the bodies in the building to do the work. And so helping our customers kind of avoid that operating mode. We can deploy bots that show up every day.
They’re smiling, they’re happy to go to work and can reduce that du that that dependence on temp labor. That’s one side of it. I think the other side of it is as the bots are deployed and we’re gathering data and working with our customers, analyzing the performance, not only the facility, but of the bots themselves.
It’s a tremendous opportunity to drive continuous improvement. So, all of the data and dashboards, et cetera, reporting that we do we actually build in continuous improvement service hours into our robots as a service contracts for their customers. So, our continuous improvement team will sit with the customer’s team on a periodic basis, review the performance of the system, look at the layout of the building, how’s the business changing?
Make those adjustments and again, continue to, to strive to reduce cost, improve productivity from a continuous improvement perspective, that’s a huge downstream benefit of deploying the bots.
Chloë: Yep. And you bring up robots as a service. Could you break that down a little bit for people that might be less familiar with that model?
Steve: Locus was really one of the pioneers in terms of going to market robots as a service. So, it really is a it, it’s essentially a subscription. So our customers are subscribing to use our bots for a period of time typically multiple years.
But you know, the benefit is there’s no large capital expense outlay upfront. It makes the approval process much easier. It’s really, you know, the cost of the bots are really an offset to the, some of the labor that gets reallocated within a building. So again, the big advantage is, is no CapEx upfront.
Easier approvals. And it fits within budgeting much easier than, than, again, absorbing this huge CapEx upfront and having to buy the bots. So in our robots as a service, we bundle not only the bots, but the software dashboards and service and maintenance and support. So, it’s an all-inclusive fee on a monthly basis for the bots.
In addition, what we can do is we can scale up and down based on the customer’s business cycles. So, let’s say that you’re an apparel manufacturer maybe children’s clothing. Yep. So back to school would be a peak season for you as well as the traditional holiday Black Friday season. We can, because of our robots as a service right into the agreement or those peak periods, we will ship the customer peak bots.
Customers will use those bots during peak season and at the end of peak season, they return them to us, and they only pay for those bots during peak season. So, it’s extremely financially acceptable and alternative versus having to buy a, a bunch of extra bots and have them sit around the warehouse and off peak.
So again, very flexible and customers absolutely love it.
Chloë: So, you’ll literally, at the end of a peak season, go and pick up X amount of bots, bring them back to your facility and redeploy where they’re needed.
Steve: That’s correct. Absolutely correct. We, we also find is that customers through peak season, start to take a look at overall demand.
Is my demand increasing or decreasing? In most cases, it’s increasing, and so they may actually take some of those peak bots and add them to the fleet on a, on a permanent basis and return, you know, the remainder of the peak bots to us. So a lot of flexibility for our, for our customers. Mm-hmm.
Chloë: Yeah, that’s great. Flexibility is key. Name of the game. I think in this industry, and particularly for 3PLs s, because there’s so many variables that they’re navigating. Could you talk to me a little bit about what makes a customer a really good fit for Locus in particular?
Steve: Yeah, that’s a great question and we do a lot of homework up front. Working with our partners and prospects in identifying I’ll go back to the term use case, you know, what are the data volumes? What do the order profiles look like? What’s the labor situation? What’s the physical layout of the facility?
Does the facility is it readily acceptable in terms of being able to deploy bots or are there changes that have to be made? We’re lucky that we’re able to deploy our bots in most existing warehouse facilities with very few, if any, changes to the physical environment. So, there are a lot of factors.
Again, order volume could be on the picking side, could be on the replenishment side. Labor availability, labor costs, labor turnover and again, a lot of the physical aspects of the distribution center. Where and how will the bots be used? What are the travel paths? Where are induct points drop off?
Where are the pack stations? All of those things go into kind of the mix of data that we gather. We run that through our models, and we’re able to then to begin to work with our partners and customers to say, given this environment, we think aisle WMS’ are adequate. You’ve got enough free space for charging units, et cetera.
Or if we face a situation where there are some constraints, maybe the order volume is not really what the customer thought it was. And can’t really substantiate the use of bots. There’s all kinds of factors that come into play though.
Chloë: And let’s talk a little bit about integration, right? I know we do a lot with you on that front, but before we even get into that, I’d love to hear your thoughts on how your prospects navigate that piece of the puzzle, right? Like everyone is bought in, but then what does that look like to actually deploy and integrate into existing systems?
Steve: Yeah, I mean, integration, you know, as you’re aware in the market historically, has been, you know, a tough nut to crack. But you know, with the, the evolution of bots the maturing of WMS systems out there, I mean, just decades and decades of experience in WMS implementation out there, you know, companies like SVT have taken advantage of their skills and experience in the marketplace and say, Hey, wait a minute, there’s a better way to do and a better, easier, cheaper, faster way to do integration.
And the SVT SOFTBOTs are a good example of that. So, you know, we can go to market together and present a case to a customer and help them overcome the cost and hurdles typically associated with integration. So, in general, integrations have gotten easier. I think it’s going to continue to get easier particularly on one-to-one with bots.
Where it gets start to get a little complex, and we’re starting to see this now, is where multiple automation subsystems exist in a single facility. That becomes a real challenge from an integration perspective, and it always will be. Again, I think that the approach that your organization and others are taking are helping to really overcome the fear and cost and risk associated with traditional old school integration.
Chloë: Yeah, absolutely. Because I think that, I don’t know the stats off the top of my head, but I think if you look at the projected adoption of automation in this industry, and then you look at the existing skillset to of specialized developers and integrators to support that, the numbers don’t quite work, right? The demand is simply too high to continue doing it as we’re doing it today. So yeah, to your point, I do think there’s more focus, obviously that’s why SVT exists and is solving that barrier to automation.
Steve: And I think it’s related, you know, if, if you look at the industry and the, you know, the emergence of all these robotic solutions that are coming up of all shapes and flavors There’s another angle to this whole bot and integration and systems, et cetera. And that goes back to what is our basic design philosophy for a facility that is going to deploy bots.
This is very new, if you think about it, you know Locus as an organization and for example, we’re seven years old, I believe. That’s a very short window, particularly in an industry where distribution centers have always sort of been designed the way we always do them. Now with the advent of all these different bots, it changes the layout, it changes the material flow.
It’s a very interesting thing to see in the marketplace in terms of those traditional systems integrators, design consultants, et cetera, and how they are designing buildings today versus how they did that 10, 15, 20 years ago. It’s really an amazing transformation on that side of the business. Yeah,
Chloë: That resonates with what we’re hearing as well. And even, who was it? I had someone on the podcast a couple months ago even just talking about in this sort of post-Covid world where like real estate has just simply changed drastically in the past few years. How spaces are being used, what spaces are emptier than ever, like office spaces, and what spaces are in more demand, right?
Steve: Oh, tremendous demand. I live here in Phoenix, Arizona, and I witnessed one of the major malls in the area being torn down in the last couple of months. The way we buy today is a generational and cultural shift, opening up tons of opportunities in real estate, like micro-fulfillment centers. Traditional retail stores and buying habits are changing. My grandsons don’t even know what a mall is; they recognize Amazon Prime, FedEx, and UPS trucks. It’s a different paradigm, and exciting changes are happening.
Chloë: It’s wild. Personally, I prefer shopping online, but returns are a headache for many. It adds costs and creates issues. I wish someone could handle returns for me.
Steve: Returns are a huge market globally. Bots might replace workers or redirect them to manage returns processing. It’s a major challenge in the industry.
Chloë: I remember a startup that handled returns by picking up packages from offices or homes. Returns are both a challenge and an opportunity.
Steve: Returns challenge everyone, and it’s a global issue. Collaboration between operations, digital, and marketing teams is crucial to reduce returns through better customer education.
Chloë: True. It requires collaboration to manage returns effectively in a changing environment.
Steve: The Locus origin picking connector simplifies integration with our bots and customers’ host systems, offering a plug-and-play solution. It reduces upfront development costs and minimizes risks associated with integration, supporting upgrades seamlessly.
Chloë: It’s a valuable partnership, making integration easy and ensuring ongoing support and maintenance.
Steve: AI is integral to our business. It generates insights from the vast amount of data our systems produce. AI and machine learning support continuous improvement and are crucial for the future.
Chloë: AI is terribly fascinating, offering cool opportunities and responsibilities.
Steve: AI will change how systems are deployed, supporting continuous improvement. It’s a strategic part of Locus’s future.
Chloë: Exciting times. Any advice for those starting their journey with warehouse bots?
Steve: Identify use cases causing pain points, focus on proving them, and then explore broader applications. Visit sites, overcome fears, and work closely with vendors to expedite decisions.
Chloë: Great advice. Seeing bots in action and working alongside humans helps demystify the process. Thanks for your time, Steve.
Steve: It was wonderful spending time with you, Chloë. Look forward to doing it again. Cheers.
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