E10 The 411 on ASRS technology with Hai Robotics

With Brian Reinhart and Hunter Senn of Hai Robotics
Brian Reinhart and Sunter Senn of Hai Robotics
Brian Reinhart and Hunter Senn of Hai Robotics

In this conversation, Chloë Lind interviews Brian Reinhart, Chief Revenue Officer and Hunter Senn, Director of Sales from Hai Robotics. This discussion covers ASRS technology, including VLMs, and the importance of storage density and throughput.

Chloë: Today, I’m so excited to be joined by not one, but two people from Hai Robotics, Hunter Senn and Brian Reinhart. Welcome to the podcast!

Brian: Thanks for having us. Looking forward to it.

Chloë: So, starting with Brian, could you give me a little bit of background on what your role at Hai looks like and any background that would be helpful to share with our audience around experience within the supply chain?

Brian: Yeah, absolutely. So, again, thanks for having us today. Brian Reinhardt, Chief Revenue Officer of Hai Robotics. Prior to joining, I was on the integration side of the business and have spent most of my career in supply chain and material handling. Throughout my career, I’ve integrated over 40 different automation manufacturers, hundreds of projects across numerous verticals and different industries. I’m excited to get our new message out into the market.

Chloë: Thanks, Brian. What about you, Hunter?

Hunter: Yeah, again, as Brian said, thanks for having us today. My name is Hunter Senn, Director of Sales here at Hai Robotics. Very similar to Brian as well. I come from the integrator side. So, I spent the last seven years there, in and out of software sales and system sales and again, getting a lot of different industry experience across a number of different verticals with different forms of automated technology. Now transitioning over to the Hai team. And on the manufacturing side, I am really excited for the discussion today and to dive into it. So, thank you for having us.

Chloë: My pleasure. All right, so before we dive in, Brian, could you give me a just high level explanation of Hai Robotics?

Brian: Yeah, we build robots. Was that too high level? No, I’m kidding. So, we manufacture the term that we coined is ACR, Autonomous Case Handling Robotics, which is a subset of goods-to-person technology, a subset of the greater ASRS technology. At the highest level, we help our clients and partners with any type of tote case or mini unit handling, storage, or transportation. So, the goal is to provide them gains in storage, savings, operational efficiency throughput volume, all those good things. We do it through a number of different avenues and methodologies, but at the highest level, we’re a robotics manufacturer that serves warehousing and distribution.

Chloë: Thank you, Brian and Hunter. Question for you. Any background you can give me around Hai as a company and even the name.

Brian: So, we’re a Chinese founded company, founded in 2015 in China and roughly translated, “Hai” means water or ocean. And the goal of the company was always to be very expansive both in our geographical coverage as well as our technology that we bring to market. And so the theme of kind of water and expansiveness we thought played really nice into kind of the ambitions of the company. So, that’s where high comes from. Hai pronounced just like hi. Hello. So, yeah, a little interesting tidbit there.

Chloë: Great. Thanks for sharing that. Great background. In terms of implementing an ASRS, if A, you want to define that for the audience in case they’re not familiar with that acronym and B, what is the advantage of implementing that over another sort of inventory management solution?

Brian: Yeah, so definition again, and I think we’ll use a lot of acronyms that can be a bit of an alphabet soup in this industry. Right. But for ASRS, it just stands for Automated Storage and Retrieval System, which is really kind of one of the highest level automation platforms that you would really start to describe. And it comes in numerous shapes and sizes. We’ll start with how traditionally it was developed in the pallet space. And so you would have pallet based ASRS, sometimes referred to as cranes that utilized mechanization or automation traveling down an aisle to store and retrieve pallets. As industry evolved and products started to be handled at the Tote or the case level, you saw that ASRS kind of evolved into more mini load or goods to person or tote based technologies. And so from there, it’s gotten extremely expansive.

Brian [Continued]: There’s all kinds of different shapes, sizes, benefits, speed, density, flexibility, what have you. But at the end of the day, that automated storage and retrieval of any type of product is really what ASRS kind of encompasses.

Chloë: Okay, and one clarifying question there for you, Brian. I’m fairly new to the industry. I was at a site last week and the customer had multiple automation technologies deployed, one of which was a VLM. And I think conceptually it probably addresses a lot of some of the tasks that an ASRS does. Is it a subset of that, or could you just help me understand how those relate?

Brian: Yeah, one of the things is when you’re trying to understand, is it or is it not an ASRS? It’s a common discussion. Right? I would say it doesn’t really matter. It’s just a term. I personally would classify a VLM as an ASRS. It maximizes vertical space. It uses automation or mechanization. In the cases of VLM, like a lip style tray based mechanization to, again, store and retrieve goods to an operator.

Brian [Continued]: One of the unique things about a VLM is that since they use that tray, you actually don’t have to store the product on a pallet or in a tote or in a box. You can just kind of have it loose sitting on the tray, and you can have different sections, cubbies, if you will. From a speed perspective, VLMs are generally more for your slower movers, but they can go very tall, use good vertical space. So, I would absolutely consider a VLM a subset, albeit a relatively narrow one of the ASRS. But VLMs have been around for a really long time. It’s a tried and true technology, a good, traditional, reliable technology. So, yeah, they absolutely have their place in the market.

Chloë: Okay, that’s helpful. And going off of that, Hunter, I’d love to understand who typically uses an ASRS, and then what are the reasons why you might choose a VLM versus some other ASRS solution, in your opinion?

Hunter: Yeah, absolutely. So, it’s a pretty broad term that’s utilized today. So, it’s used across a variety of different industries and verticals and happy to kind of dive into each of those. But I would say as a general kind of blanket statement, it’s anyone and everyone that is storing and handling inventory, whether that’s totes cases, pallets, whatever it may be, can utilize an ASRS in some aspect or another. So, obviously that falls into the warehouse and distribution center space.

And if you look a bit more granular into that, more specifically into retail and ecommerce, those are the companies that have really seen the boom within the ASRS industry here lately. A lot of the reason for that is because when you’re placing an order online today, consumers hit that purchase button, they’re expecting same day, if not next day fulfillment. And that’s put quite the demand on distribution centers.

Hunter [Continued]: So to fulfill that demand and stay competitive within this landscape, they’re now looking to automation, and more specifically within automation, they’re looking into the ASRS subsect to kind of fill that gap and achieve those SLAs, SLAs being service level agreements for same day, next day fulfillment. You can look at manufacturing facilities that can be providing components to a manufacturing line that can be a buffer for finished goods, automotive and aerospace industries. And then one, I think worth mentioning, we’ve really seen kind of a boom in the last probably two to three years, is MFCs and MFCs being micro fulfillment centers. Really the birth of the MFC concept has caused ASRS to push into the cold storage facility. So, now not only looking at ambient temperature environments, we’re also looking at chilled and freezer environments for the technology. So, again, there’s kind of a lot to it. Again, a more broad statement, I would say storing and handling inventory. If you fall into that platform, you can utilize an ASRS in some capacity or another.

Brian [Continued]: If I may, just because I think you brought up some really interesting points there. But the one that is really fascinating to me is that all of this innovation, this advancement in the space, really has been driven by consumer and buyer behavior. So, Hunter touched on how what used to be three days is next day, what used to be next day, same day. But the trickle down effect that has had on your big box retailers, just your standard companies that used to put stuff on a shelf, it’s not on the shelf anymore, you just order it from your phone. So, even those pressures in the ecom world have trickled into the retail world, which creates a need for micro fulfillment, inventory constantly being available. You don’t have time in the warehouse to consistently shuffle things around, lose track of inventory, have operators handling it. And so by bringing in an automated solution, you can now meet those market demands. And what’s also been interesting is to expand one step further.

Brian [Continued]: It hasn’t been linear. I think the last ten years, really specifically, the kind of advancements of the ASRS space has been exponential. And that’s why you see kind of a confusing, spider web of acronyms and technologies and names and understanding the differences between them can be complex. But it’s also extremely important that we as an industry provide them because every user, every warehouse, every company, those demands are going to be a little bit different. We want to make sure we’re hitting those advantages that they need as opposed to just selling a product. And so I think that’s really where ASRS, as a tech, has kind of gone. And it’s really exciting again on the implementation side as well as the user side to start to see and realize those advantages.

Chloë: And so Hunter, what would you say some of the most common kinds of ASRS are there in the industry and could you kind of break down each.

Hunter: One for the yeah, yeah, absolutely. So, again, ASRS being automated storage and retrieval systems, there is a large portfolio of technologies on the market today. ASRS has become a very kind of public term with a lot of different technologies that fall underneath that term. So, within it you can have what is commonly referred to as unit load. You can have a mini load, and I think you referred to it already. Or, you can have VLMs, which are vertical lift modules. You can have shuttles, you can have aisle based technology and you can have grid based technology. You could have AMRs.

Hunter [Continued]: And again, we can kind of go in and out of each of those as we see fit and happy to dive into details there. But all of those are falling underneath that ASRS umbrella. And I think what’s most important to keep in mind again, is all of them have different pros and cons. So, when it’s coming into looking at automation, in particular looking at ASRS solutions and trying to identify what your needs are, you need to kind of understand what I would refer to as your non-negotiables, what are your absolute must haves. So, is it maximizing your storage density? Is it flexibility? Is it the ability to respond dynamically, to expedited orders and different things of that nature, you need to know kind of what are your must haves, what are your non-negotiables, and then you can start to tailor your focus on the individual ASRS each of them having a different offering to the market. Again, the same criteria but with all the different solutions out there, each of them have some different pros and cons within the solution. So, it helps to understand your data profile going in, what you’re looking for and what your needs are for the future.

Chloë: Okay, and one of the sort of subcategories you mentioned, was it like mini storage, is that what you said?

Hunter: Or mini mini loads.

Chloë: Mini loads. Okay, so could you give some examples for each of those categories? If there’s like an obvious use case or item or industry where you see each one of them more? Not if there isn’t anything, then that’s fine, but just to help sort of land or anchor

Hunter: Yeah, absolutely. So, there’s really two key factors and again, there’s more than that, but two key factors that people always kind of play between, that you have to find the right balance between is storage density and then a throughput play. From a storage density perspective, storage density in the most simplistic terms, being within a given footprint, how do I maximize the number of SKUs, the amount of inventory I can fit within that footprint? So typically the industry is leaning towards grid based solutions. When you’re purely looking at storage density, again, that’s been stacked on top of one another in a grid that has given you the most dense storage in today’s market.

The other side of that coin is kind of throughput, throughput and more of a speed perspective. Typically as you get more storage density, you’re giving up a little bit of that throughput and flexibility play. So, you have to kind of learn the balance and where your business fits and where your order profile is. But on the other side of the coin is that throughput and that’s typically where you’re getting into more of kind of the shuttle industry.

Hunter: So Shuttles can be aisle based, but utilizing Shuttles, where now you have access to any product, to any bin of inventory at any point in time. So, you’re typically a bit more flexible and dynamic in terms of being able to respond to expedited and priority orders because you have access to any bin. So, in terms of a speed throughput play, you’ll see the industry start leaning towards the shuttles and again, that storage density leaning more towards the grid solutions and kind of a plethora of different technologies within that spectrum as well.

Brian: I think what’s interesting about that is kind of how the industry evolved over time, right? So if you go back 20 years, 30 years, everything was manual based. You had shelves, you had mezzanines, you had rack, people on fork trucks. And the volumes that were trying to come out of these facilities just became so substantial that manual operation wasn’t one. So, speed was kind of the first problem that was solved 1520 years ago. Hunter nailed it with the shuttle systems. Companies like Dematic, Vanderlande, SSI Schaefer, KNAP, they have been manufacturing really high-speed, reliable shuttles to solve that speed problem for a couple of decades now. And it was really only in the last ten years or so when real estate costs started to go up, the price of moving, the price of expansion really kind of exploded that we saw folks prioritize storage density.

Brian: Autostores, right, those types of companies of the world that, again, can really pack a lot of inventory in. As Hunter mentioned, you may sacrifice speed. I think what’s interesting now, what we’re really seeing and where the market’s heading next is kind of the third big thing they want us to solve for is flexibility. So, both shuttles and grid-based systems, there’s a rigidity to them. There’s hurdles to get over to installation. There’s cost, point of entry expansion and moving is them very challenging. And so we’ve seen a lot of more mobile technologies provide flexibility elements historically, but maybe not at the density of a grid or the speed of a shuttle. But now the technology is evolving to where you can kind of get two of three or potentially all three in one.

Brian: And that’s what people are trying to understand. 1 – How do I make a shuttle more flexible? 2 – How do I make a grid system faster? 3 – How do I make a flexible AMR to get better density? And so kind of that next step is really, again, checking all three boxes at once. And I think some of the companies that are really bringing flexibility to the market, obviously, that’s one of our key tenants here at Hai Robotics. But a lot of the AMR companies out there, Locus, formerly 6 River Systems, just anybody focusing on mobile technology, like I said, is really trying to check all three of those boxes.

Chloë: And that’s a good lead into my next question. Brian around when it comes to sort of managing inventory in general, we also have AMRs, as you said, Locus, 6 River Systems. What are some reasons or benefits?

Brian: Yeah. The Beauty of AMR. Which again stands for Autonomous Mobile Robots. And again, like every acronym, depending on who you ask, will provide an answer of yes, this is one. Yes, this isn’t one. Right. I think with AMR there’s a couple of key indicators for what classifies one, you still need an operator to be at the product. So, AMRs do not bring product to an operator.

Brian: They assist the operator with that operation. So other terms you’ll often hear pick, assist, follow, behind, transport. Those are some of the common terms with an AMR. The beauty of them is, again, just maximum flexibility. So, they’re very easy to deploy. They’re a relatively inexpensive technology, so they can be pre-manufactured. You can scale them up for peak season. The kind of limitation, though, like I said, is still that reliance on an operator.

Brian: So from a density perspective, you can’t go much higher than what an operator can reach. Six feet or so. You still need aisles for the operator to walk in and the bot to travel in. And then from a speed perspective, you’re still limited by that operator’s requirement to grab it and then walk to the next position or the next pick will be. There’s still a walking element. And so AMR has kind of developed jointly alongside the grid-based technologies the last five years and really exploded onto the market. They’re extremely popular in 3PL, specifically because 3PLs never know what their inventory is going to look like tomorrow. They could add a new client, they could lose a contract, they could have alternative peak seasons.

Brian: And so flexibility is kind of like Hunter said, the non-negotiable for AMR, for 3PL. In fact, I’ve got a buddy, he’s a director at a large 3PL and his rule is nothing that bolts to the floor. Right. And so he wants his automation to be mobile at all costs. And so the industry got an appetite for that flexibility. Oh, my God, we can get them live in three, six months. We can use flexible financing models as a service models. Now, what they’re trying to say is, okay, but man, we’re really not dense.

We just got air everywhere. We have to put in a big mezzanine and we still have 500, 600 operators running around the warehouse. So, how do we capture that flexibility of the AMR without losing everything else that we’ve already talked about? And again, that’s kind of where the next step and the evolution is heading. But that’s kind of a little bit about AMR, who they are and what they do. And there certainly are use cases, again, where flexibility is top priority. That’s going to steer you there.

Chloë: I’m curious, when you guys are working with new customers, where are they typically in their path to automate facilities? Are you going in and they have zero technology or do they have AMRs and they’re like, OK, we need to bring in an ASRS to handle another use case for us.

Hunter: In short, it can vary wildly from opportunity to opportunity. But I think one thing that is extremely important, regardless of who you’re working with and what state of their automation journey they’re at, whether they’re still in manual, they’re semi-automated or they’re fully automated, lights out.

You have to have a consultative approach to it. So, a lot of times that means a data-driven approach. So, obviously data is key in today’s industry. That’s analyzing what your historical figures look like, what is your throughput going to look like, how many SKUs do you carry? How much inventory, what are your days on hand? And then as you start to understand and kind of understand what that future is going to look like, as you do those five year, ten year projections, I know you never have the crystal ball, but when you look at that, that can hopefully start to tailor you towards different types of automation. And again, the answer isn’t always, let’s go, lights out. Fully automated, no operator is required.

Hunter: That’s not always the answer by any means. Again, you have to look at the data, you have to look at the order profile. And again, I’m going to refer to it. Again, you have to look at the non-negotiables. Brian called out 3PLs. One of their non-negotiables every time is flexibility. It’s got to stand up quickly, it’s got to work, it’s got to be proven, it’s got to be flexible. For someone else, it could be the storage density play.

Hunter: So really just understands what are the needs of the customers. And I have a silly metaphor I was saying the other day, but it’s like if you go to the grocery store today, I’m going to use toothpaste as an example. You go look for toothpaste. You want mint toothpaste. There’s about 300 different toothpastes that you could select from today and it’s almost an option overload. And again, I’m not saying that’s directly what our industry is, but you need to have a consultative approach regardless of who you’re working with and what their appetite is. That consultative approach allows you to look at the data, kind of take an assessment of it. And then again you look at those key factors, flexibility, storage density and throughput and understand kind of where that balance is.

Hunter: And then you can start to hone in on the individual technology that’s right for that customer.

Brian: One thing that’s interesting, the end user today, the buyer, the people running warehouses are much more savvy and knowledgeable around technology than they ever used to be. They really put in the effort to learn it because like Hunter said, the choices can be a little overwhelming. And if you don’t do your homework, a fancy sales pitch may sell you the wrong gadget. So, they attend trade shows, they do seminars, they watch webcasts like this to get alternative opinions and source knowledge.

The other kind of really game changer in this area of buyer knowledge base was the Amazon effect. So, Amazon over the last kind of ten years went from automated push carts to the Kiva style systems to the grid-based systems or Shuttles, and some of their DC. So, they as a company grew and expanded and pumped a ton of resources and revenue into the industry. And now all the engineers over the last decade that spent time in that ecosphere are kind of branching out.

Brian: And so you hear the phrase all the time, that’s an Amazon girl and that’s an Amazon guy. They’re running DCs for some of their competitors to Amazon now. And they’ve been on that automation journey. They’ve already done it. And so they can leverage that knowledge to mix with all the other resources that I’ve talked about. So typically on day one, they know a little bit of what’s going on. But I’ll add again, the companies in this industry that have succeeded and are still around, they want to help on that journey and most of them want to do so in an ethical, transparent way. That’s right.

Brian: For the customer. There’s so few companies that are just selling products anymore. Everybody is really looking to solve problems. And there’s a lot of cases where maybe it’s not a Hai robotic solution. We’ll tell the customer that, no, your requirements lend more to a Shuttle, no, you’re an AMR. And I think the industry as a whole has done a really good job of that. Not overselling, not over-promising, but rather solutioning and consulting.

Chloë: Yeah, thank you both for your answers on that. I think you bring up so many good points, one of which is that it is daunting. I mean, you go to these trade shows and there’s so many products out there and so many great salespeople pitching and it’s really cool technology. But does it work for your business and your needs? Maybe not, right? And to figure that out is no small feat, especially because these projects are not cheap.

And so one of the things we’ve talked a lot about with partners and even internally at SVT is around how we help mitigate risk and take a more Iterative approach. So, we’re not going from pen and paper and no WMS to a lights out facility. That’s not happening. There’s a lot of steps on that journey and we talk about micro deployments, right? How do you start to introduce new technology? I’d love to hear from your perspective at Hai, how do you help your customers navigate that?

Brian: Everyone’s automation journey is different for us. We really want to get to know our customers. What is your tolerance for risk? What does your timeline look like? What’s driving these needs and these decisions? Are you in the educational phase or is it time to go? We have a bunch of fundamentals to derisk things like pilot projects, proof of concepts. Again, the technology itself, being extremely flexible, lends itself to starting small and expanding. Right.

Brian: And so, again, I think most companies are going to have, like I said, those fundamentals. But I also think ethically, as a company, one of the things we really try to do is ensure that we have matured a product before we bring it to market. This industry often runs so fast that it’s gotten out ahead of its skis a few times. And there’s some pretty sizable case studies out there around companies that sold a technology that was a bit more exploratory, a bit R and D. It blew up in the field and the companies are no longer around. At robotics, we consider ourselves the master of ACR. It’s what we do, it’s what we focus on. Which isn’t to say that we’re not doing R and D or new developments.


We are. But there’s an extremely extensive cycle that they must go through before we actually take them to market. The key is don’t make your customers absorb your risk as a manufacturer. And so I think, like I said, there’s some fundamental things you can do. There’s also just some cultural things as a company or organization that you can do to help mitigate that. And then I’ll let Hunter touch on this one a bit more. But the software element is often a very large risk point. And so in a pilot or an expandable system, you can often do the software, the integration, in a much more controlled, small, low throughput low risk environment.

Brian: Then when you’ve debugged and worked out that software operational flow, you stay at hardware in, which is much less risky. And so that’s kind of also an approach you can take.

Hunter: Yeah, a couple of other things. And I can talk on software as well. Brian and I both have a software background, so we get a little nerdy in terms of that. But before I do that, he brought up some of the cultural things, and I think that’s of the utmost importance to your initial question, Chloë, and really one of the. Things Brian and I constantly preach to our team is really just transparency. Just be completely honest. We are the experts here, right? They are looking at us. Again, that consultative approach for the right answers.

Hunter: And to do that, we need to be fully transparent. An example of that is, hey, I’m going to invest in this X million dollar system. Can I go live a week before peak? Probably not. And again, we kind of smile, but it’s a question we get, and I don’t want to say other people would answer that the different way, but I’ll speak for our team specifically. We’re fully transparent and say, no, there’s a ramp up period with automation. It’s not necessarily just flip the switch and everything’s going to be perfect. Day one, there’s typically a curve, typically getting miles on the system, getting everything stocked into the ASRS. So, you do have to allocate the proper time testing and resources.

Hunter: Once you kind of hit that go live point before you can just automatically ramp up and be running full steam ahead. And then the last thing I’d say is be active listeners. As salespeople, we often get this idea of I’m going to give this presentation and it’s all about Hai Robotics, it’s all about this system and the technology and the benefits and everything we could do and all these metrics.

But at the end of the day, there’s a time and place for that that’s needed, but it’s also listening. If I can’t come in and tell you your pain points and how my technology can solve your pain points, then myself and my team, we’ve done something wrong. So, always preaching transparency, be honest with the customer and then active listening, they come first, understand their pain points, then we can assess how our technology could fit within their distribution center.

Brian:And I’ll say the folks who operate differently. And again, sometimes I don’t think there’s ill intent. I think we’re an ambitious industry. It’s a lot of creative thinkers. This industry continually pushes the bounds on what can and cannot be done. And so there’s almost an implicit appetite for risk that I think sometimes we don’t even check ourselves on as an industry. But the folks that consistently do it right say, yes, we’ll get you alive before we peak a week. One, you’ll win that first project, you’ll do that implementation, but you won’t build a partnership and you won’t build something sustainable and scalable because at the end of the day, even if maybe you pulled it off, the customer is going to know, wow, you really put my organization at risk there.

Brian: And so the good companies, the strong ones that have been around for a while, those are the ones that operate like Hunter’s, describing transparent, listening, learning, and again, you want to be that solution partner, not that equipment salesperson.

Chloë: We talked a lot about flexibility and it makes me think about integration. Right? Because if these systems don’t talk to each other, we’ve got a problem, right? Both of you guys, it sounds like, have backgrounds in integrating different systems in this space. So, I’m very curious about your thoughts on this. Most customers, day one, might not have multiple automation technologies. Maybe it’s just their host system and one technology. But long term they may add additional technologies.

Chloë: So how does Hai support the integration of your systems with a host system and extend that out to other tools as your customers bring new ones on board?

Brian: Yeah, I think there’s a couple of approaches to it. So, the first thing you need fundamentally is a really flexible software platform. Your integration and interface layer needs to be able to handle different types of communication protocols, different types of middleware, add-ins, plugins, whatever it may be, so that you can ease the upstream burden on a host system. Nobody wants to have to adjust or reconfigure their WM or ERP for an island of automation.

And then secondarily, once you’ve kind of solved that issue, as you mentioned, there’s going to be other equipment in the warehouse. So, can you communicate horizontally as well as vertically within that kind of It stack? And that really gets around like your appetite for software advantage development. A lot of folks, you’ll do your box, right, your thing that you’re good at and then it’s on someone else to figure out if you want to go out there. But the companies that really want to help their people help their customers, similar to SBT robotics, you guys do a lot here in terms of pre engineering, flexible solutions for ease of deployment, right? And I don’t mean to do like your sales pitch for you, but it’s kind of again, it’s a culture around solving problems.

Hunter: One thing I’d add to that just because I have to make mention of it and Brian really alluded to this software is of the utmost importance, especially when you look at automation, the complexity and all the interface touch points, the communication protocols, the test server production environment and everything that goes with that. Someone mentioned it earlier, you kind of go to the trade shows and every now and then you can get a little caught up, kind of see the new technology out there, how fancy it looks. And everything looks great because it is an extremely innovative and competitive market. And you’re going to continue to see new technology, I would say every single year coming up in the industry and at all these trade shows.

But one of the important things to remember is the brains behind that hardware. And the brains behind the hardware is really the software. And I don’t want to say software is always an afterthought, but it tends to be that you select your manufacturer, you may get all the way to contract. Then it’s like, okay, what do we do from a software landscape? So I know for us at Hai, we push that conversation really into the sales phase to make sure that both teams are in alignment.

Hunter: We understand how technology is going to communicate. So, in turn, then it can start to operate. We can go through testing and it’s a much more seamless integration and sales to go live cycle.

Chloë: Yeah, that’s a great point. I think bringing those conversations up earlier removes that moment where you’re like, oh great, I have all this tech on site, but it’s not connected or working.

Hunter: Yeah, go through their automation journey. As we were talking about, you may start in the manual, you might go semi automated, then one day be lights out. I think as you kind of get that first one under your belt, maybe the first two, you really start to realize the importance of software. So, again, for us, that may be preaching software to some clients that don’t have as much experience within the automation world. But then as you start to see really mature companies with multiple distribution centers, they understand the software landscape and it’s usually reversed. They’re bringing it up first before we even get to the hardware. So, it does kind of matter on that automation journey. But the summary is that software is of the utmost importance.

Hunter: So we always make sure that’s a talking point during the sales phase.

Brian: I have another silly metaphor hunter, and I like metaphors, but I’ve described the warehouse as a band before. And the ASRS, that’s your lead singer. That’s your lead guitarist, right. And the conveyor, that’s your bassist. Maybe you’ve got some pallet storage as the drummer. And you can select the best guitarist and the best bassist, but if they’re not playing the same song, if they’re not operating on the same sheet of music, it’s going to sound terrible. This metaphor in the warehouse, the software is always that sheet of music. And so, yeah, you want to test out the hardware and make sure that it hits your throughput density flexibility requirements, but can it play with the rest of the band? Right.

Brian: And it’s difficult to see throughout the selection process. And so it’s always a great question to answer. How do you integrate? How do you test? What if scenarios run a bunch of kinds of thought exercises around, well, if this, then what? And that’ll really put kind of the manufacturer or the integrator that you’re working with to the test to make sure that they understand how to play music.

Chloë: I like that visual, Brian. Thank you. I would love to hear you guys each share a story or maybe describe a moment where you’ve seen an ASRS implemented and actually on site. That customer is starting to see the impact and the benefit of the solution. Because I don’t think we’ve done a great job today of talking about humans, right? The people that are affected at these facilities, what that looks like to them, good and bad, what does that interaction look like? What does onboarding look like? And what does the after, right? The before versus after, what does that transformation look like? How does it impact the human and also the business?

Brian: Hunter’s been a lot more successful than me, so I’m letting you go first on this one.

Hunter: I don’t know if that’s true, but I would say one of them and I’ll kind of circle back to your question, but I think one of the greatest marks of success is really we alluded to it earlier and it’s repeat business. I don’t think there’s anything else you could say that would say, hey, I trust you, I trust your company, I trust your services. Nothing says that better than repeat business. So, our goal at Hai and really just in the industry in total, again, it’s not that one project, it’s really not even two projects.

It’s growing and evolving with our customers as their business needs change, as they evolve, as they bring on more SKUs, as their throughput increases that relationship and that lifecycle being able, whether it’s multi sites or multiple phases, for them to come back and say, hey, I love what you did here, I trust you with my business. And again, people’s jobs are on the line. This is of the utmost importance and something we take very seriously. So, for someone to come back and say, hey, I want to repeat business, that is extremely important to us and something we pride ourselves on.

Brian: Yeah, and I agreed with all that. What’s always awesome is integration. It can take time, it can take effort. Like I mentioned, Hunter spoke about needing to get some miles on automation, right? But once the system is up and running, those benefits are started to realize on day one it’s not a thing that takes a while. And I’ll use one of our global partners, JD.com. They’re sometimes referred to as the Amazon of China. They’re a very large of three PL in the ecommerce space. And our first project in the US was with them.

Brian: And at that time we were still kind of building out Hai US. This was about three years ago. And so the project had its hurdles to get over. Very challenging equipment testing on site. We needed labor and system experts to help with that from both parties. And we were running so quickly that there was confusion around there. And so candidly, what probably should have been a two month implementation maybe took an extra month or so.

Brian: But once the system was up and running. They were able to do the volume with about a third of the operators that they could in some of their non automated facilities. And so they started realizing those capital excuse me, those labor savings on day one. In addition, it used kind of like a marketing piece for them because again, they’re in the three PL space and they were able to attract a major client that about doubled their volume overnight. Now, luckily, the technology was flexible enough to handle it. We put some conveyor sword infrastructure downstream of it. And so what you saw was a warehouse. That one was ergonomic, operator friendly.

Brian: They weren’t walking, they were picking. So, the teams acting with the automation were much happier long term. You saw the folks running the warehouse extremely happy because they were seeing sizable cost savings on day one. And then you saw company ownership really happy because they were able to onboard and bring in a new client. When you’re able to check three boxes like that simultaneously within the first year for a partner, that’s where you get kind of like Hunter talked about, decades long partnerships that lead to multiple successes versus, know, one nice project. And so that’s one that I always like to give a shout out. They’re a really strong partner of ours and it was a great project to be on.

Chloë: Yeah. Thank you for sharing that story. I appreciate it. And I think that echoes a lot of what I’ve been hearing in conversations that we’re having internally. Right. It’s not really just about a project. It’s about a larger strategic partnership.

Brian: Again, if you’re doing it right, that knowledge process, it takes time, it takes resources, capital, energy. If you have to do it every single time with a brand new customer and a brand new warehouse, it’s going to be really tough to operate your business and grow. But if you’re doing it with the same people over and over again, similar industries, you get some economies of scale in there that one make it more advantageous for us, but also them as the end user. Those advantages are passed on to them. So, not only is it the best way, it’s kind of the only way to do it. It’s almost not sustainable to reinvent the wheel every single time.

Chloë:Yep. Absolutely.

Hunter: Chloë, one other story I’d tell just because it came to mind. I don’t know if I can share the customer name, so I’ll leave that out for now. But we did a site visit probably just last month and I think it was probably one of the most satisfying moments I’ve had in my career here within this industry. And we took a prospect on a site visit to this customer. They gave us the approval and then when we showed up, actually, the customer that had the system took over the tour for me.

And it was just a really cool thing because I wasn’t going in there just to pitch and show our technology. He was actually so proud of the job we had done in the successful implementation that he felt a sense of pride and sense of ownership over the technology, over the project. And that meant everything to me because, again, Brian actually preaches this all the time.

Hunter: It’s starting to kind of reframe how we’re looking at distribution centers. It used to be more of this mindset of a distribution center, let’s just make it work. Let’s get orders out the door. Now it’s, hey, let’s flip that mindset, let’s change that. Look at these innovative solutions. This can actually become a value add to you and your business and across the industry. You see actually so many people nowadays that have really figured it out, almost modeling the 3PL landscape. I can’t tell you how many conversations we’ve had, hey, we want to add on to our system because we’re growing our SKU base.

Hunter: We’re actually going to do operations for someone else and they’re going to bring their inventory in here. But back to that story, it was just seeing the satisfaction there, and Brian mentioned it too. It’s really operator satisfaction. Again, when you talk about ROI, that’s not really a quantitative metric. You can say, hey, your operators are going to be happy and satisfied. It’s more a qualitative thing and something you see on the back end. But again, we’re engineers here, we’re nerds. It’s cool technology.

Hunter: When you see ASRS in the field and you see robotics moving and bins being presented automatically to you and lights going and the user interfaces going, it brings a sense of joy and a sense of privilege to your job. And I know that may sound cheesy, but that is serious. And just seeing that operator satisfaction and overall customer satisfaction really makes you feel good and makes them feel like it’s all worth it.

Chloë: Yeah, absolutely. So, looking ahead, I would love to hear each of your perspectives on what you foresee as the next big milestone or trend within warehouse automation over the next few years.

Brian: Yeah, I kind of alluded earlier, right. But I do think the introduction of flexibility is extremely important, and that comes in numerous shapes and sizes. Right. From a financial perspective, flexible pricing models as a service, lease to own, lease to buy, short ROIs with still sizable life of equipment paybacks, right. All of that needs to be there. The ability to scale up, expand, or potentially even contract if needed. So, as that business evolves, the warehouse and automation is evolving with it.

Brian: Can’t forecast that far out. The landscape is too dynamic. It has to be eight months or less. Right. So, taking all of those flexible elements that AMRs introduced and applying them to grid shuttle based, ACR based systems is where it’s going. I think from a hardware perspective, really where I see kind of the next big leap for the industry though is in software. A lot of industries are ahead of us when it comes to AI business intelligence. If you look at some of the things that are going on in the manufacturing space, defense, medical, when we really start to give freedom of knowledge to the software platforms running these systems to make real time decisions real time adjustments provide real time feedback versus a more kind of reactive approach.

Brian: I think you’re going to see significant efficiency gains there as well. And so those are just some of the areas where I could go next. But again the one thing that I think we can all be sure of is that progress will not slow down in this space. Minor percentage of efficiency improvements is worth billions of dollars in this industry and so no one’s resting on their laurels, no one’s happy and at the finish line. Now honestly it’s kind of just beginning.

Chloë: All right, final question for you both. What advice would you give to companies considering implementing automation for the very first time?

Hunter: I’ll take a first stab at it. I think we could go a lot of different paths with that but I would say two things: reliability and scalability. And I’ll kind of start with the scalability card and Brian really just kind of alluded to this as well but it’s keep the end in mind. So, again if you’re designing for day one, phase one and you’re having X orders per day and that’s what you’re sizing the automation and the ASRS in particular to that’s, fine.

But you need to understand from a forecast perspective what is that going to look like in five years? What does that look like in ten years? And again that’s hard to forecast. But you need to understand when you’re going with that ASRS landscape, don’t landlock yourself into a solution that’s not scalable because again you’re going to have to grow whether that’s storage locations, whether that’s throughput whatever it is you need to make sure you’re going after a solution that’s scalable.

Hunter: So again it’s just kind of going back and resetting yourself. I know we talked a lot about software and the new and innovative technology but it’s also understanding hey where is my business going in five years? And that does take ownership because integrators and manufacturers, as much as we listen and understand your pain points, at the end of the day you know your business better than anyone. So, it’s understanding what you’re driving towards, where you’re going, and then how that automation, how that manufacturer can grow and evolve alongside you and making sure you pick the right partner with that.

And then the last thing I’d say is really reliability. Reliability is of the utmost importance. And that’s going back to the idea of having no single point of failure. If you kind of look at one of our systems, let’s say we deploy 100 bot systems and one bot goes down, your entire system is not shut down. You can pull that one bot out, do the maintenance on it, do whatever needs to be done to resolve it.

Hunter: But simultaneously, the other 99 bots are running so your operations can keep going. And again, both of those people can’t shut down for two weeks, for a month, for two months. Nowadays they just can’t do it. It would cripple their business. So, that’s why I say when you look at a face expansion, make sure the automation you’re looking at is scalable and also make sure it’s reliable because again, is this competitive landscape, this same day, next day fulfillment, growing SKU bases is only going to continue to become more competitive. Those are two key factors I’d make sure I look at when looking at the automation landscape and when I say automation landscape, that’s really in particular the ASRS technology that you’re considering for your distribution center.

Brian: Yeah, well said. Hunter mentioned it earlier and what he talked about were two key elements of it. But do your homework. It is complex. There are large investment points here. Don’t just say, hey, we need to automate and go to a trade show, right? Do data analysis, do time studies on your current operation. Study your competitors. What are they doing once you get into kind of the discovery process, do site tours, go see this stuff in person.

Brian: Talk to the end users about how it’s working for them and the problems they had along the way. So, just kind of do your homework because that minimal investment of having a few engineers focus on this for three to six months is going to pay itself off. Ten x when you select the right partner and the right provider. And then the last thing that I would say is do it. There still is some hesitancy or what I call technology leap, going from a manual or paper based operation to a fully automated operation. And I get it, it can be scary. You’re standing on the ten meter high dive, it’s really far down. But if you don’t do it, you’re going to lose to your competitors.

Brian: The warehouse and distribution center is not just something that we ignore in a box to check anymore. It is absolutely a competitive advantage. And if you leverage it the correct way, not only are you able to get your product to market better, faster, cheaper, you’re able to create an internal revenue and value stream for your organization that can be reinvested elsewhere. Marketing, expansion, whatever you want to do. And the Savvy companies are doing that. And so every year you wait, every quarter you put it off, you’re just getting that much further behind and taking that much more risk with your own livelihood.

Chloë: Amazing. Well, thank you so much, Brian and Hunter, for joining the podcast today. It’s been a pleasure.

Brian: Thank you. Likewise.

This interview has been edited for length and clarity. Please listen or watch the episode to catch the entire conversation.