Ryan Chesterfield Podcast Transcript
Ryan Chesterfield joins host Brian Thomas on The Digital Executive Podcast.
Ryan Chesterfield: Welcome to Coruzant Technologies, home of The Digital Executive Podcast.
Brian Thomas: Welcome to The Digital Executive. Today’s guest is Ryan Chesterfield. Ryan Chesterfield is the founder of Auto-FC, a leading consulting firm specializing in warehouse automation and supply chain optimization. With over 15 years in the industry, Ryan is recognized for his hands on expertise in guiding companies through complex automation projects and designing technology roadmaps that address both operational challenges and industry demands.
As a conference speaker and a featured expert in publications such as Automated Warehouse, Supply Chain and Demand Executive, and Air Cargo Week, Ryan shares his insights on the critical factors for successful automation adoption and product market fit.
His practical approach emphasizes user friendly scalable solutions that align with real world environments, helping companies maximize ROI and meet evolving market needs. Ryan’s work continues to support businesses in navigating the rapid shifts in technology, labor, and logistics within the supply chain sector.
Well, good afternoon, Ryan. Welcome to the show!
Ryan Chesterfield: Thank you so much, Brian. Thank you for having me.
Brian Thomas: Absolutely. I appreciate you jumping onto a podcast and hailing out of my old stomping grounds there in Orange County, California, Costa Mesa area. I appreciate making the time I’m in Kansas City but love these. I get to traverse the globe every single day and this is what really jazzes me.
So, Ryan jumping into your first question here with over 15 years in the industry, how have you seen warehouse automation evolve and what major trends are you seeing now that weren’t as prominent when you started?
Ryan Chesterfield: Yeah, so I’ll start off with the trade shows.
I’ve spent my whole career and on the vendor side, mostly selling automation. And so therefore I’ll go to all these trade shows and a trend that I’ve noticed just in the past couple years is the shift type of company is that are at these events. When I started the folks that would go to these trade shows and these are mostly aimed at, you know, industrial environments, warehouses and factory on the material handling sector.
So, it was mostly companies that sold steel. This means conveyor, this means forklifts, this means shelves. This was the majority of the equipment that was being brought in to aid and fulfillment in a warehouse. And if you go to these shows now, you see that the companies that have the biggest booths are technology companies, their software companies, their robotics companies, and a lot of the, you know, the folks I refer to as the steel companies before the forklifts and conveyors.
They have shrunk their booths and or not even bringing them their booth to the shows anymore. So, there’s just an observation and technology is definitely bringing new tools to the warehouse and the customers are interested in different things, really. And I think this is being driven in two ways. One way is the service level consumer demand is rising, right?
Amazon offers two-day shipping, one day shipping, same day shipping. If you’re a major retailer, you need to achieve this service level to be competitive. Lots of people have free returns or lenient return policies to increase volume out of the facility. And so, this is creating the need to be closer to the customer.
And as a Southern California native, I’m sure you’re familiar with the IE, the Inland Empire here, which is really our hub for distribution in Southern California. And it has just exploded in the past 10 years. And this is to bring goods to all the consumers in order to get it to them in a day or 2, you need to be close.
You can’t afford to have one DC in Kansas City to service your customer as quickly as you would like. So that is driving customers to change how they’re operating. Another shift is e-commerce. And e-commerce has totally rearranged the warehouse needs to work in order to get product out of the door in the, you know, the brick and mortar model where we were shipping goods to stores.
We would put a whole bunch of stuff on 1 truck that would go to a store. Maybe it goes to a couple stores. And so, we would pick cases or pallets of stuff that goes on this truck. And if you, when you move to an e commerce model. You now have to pick at a unit level. I now to get the same amount of units out the door as a pallet, for example, you know, you may have like, say, 1500 units on a pallet, depending on what it is.
It could be assured could be a phone. And you used to go get that with a forklift, pull it off the rack and drive it onto the truck to get those same units out the door. I have to go back and get that unit. 1500 times, however many would be on that palette. And you can imagine one trip with a forklift is much different than 15 individual trips to a location to grab a good.
So just the fact that we’re ordering things and, you know, one or two item orders. It has put a lot of stress on a warehouse, or rather it just needs to be done in a different way. And technology is really enabling this by having goods being brought to users. So, we don’t have to walk as far or maybe we’re organizing our information better.
You know, 1 example I can think of is what we call batching, where it’s kind of like we go shopping for the whole neighborhood instead of. Just ourselves, meaning we’ll go to the store once and get stuff for everybody and we’ll sort it out later versus everyone having to go to the store themselves. And this can bring some operational efficiencies, but really e commerce is driving a lot of changes for customers that are doing fulfillment and also opening up lots of opportunities, right?
There are most brands that are. That is starting today. A lot of them are e commerce only or, or they start out e commerce and brick and mortar is shrinking. So, I think safe to say that the whole market is shifting towards this model. And a lot of companies that still have brick and mortar stores. Are doing what’s called omni channel fulfillment where they’ll do e commerce fulfillment out of a facility and also their retail fulfillment and this can be done.
It’s very tricky, but if you get some technology and some snazzy software, you can do this. And a lot of times you can even do this picking from the same inventory, which has lots of operational gains or cost savings. You could say. Another trend is the labor shortage. I mentioned the Inland Empire earlier, and if you go driving out in the Inland Empire today, you’ll see hiring signs on all the massive warehouses.
You’ll see hiring signs on the sides of the trucks that are shipping stuff between them. The baby boomers are retiring, and this labor supply has not really come back since COVID. COVID sort of was a tipping point. You could say maybe a catalyst is a better word for what we’re seeing. You know, basically everyone couldn’t go to work because it couldn’t go into the building or for some reason and / or maybe they were getting, you know, supplemental income from somewhere else.
And so, they decided not to go to work. But after COVID was over, we did not see a lot of this labor come back, and this is a huge problem for customers today. Not only is the labor hard to find, it’s really hard to retain. I can think of a major retailer that I was working with a couple of years ago, and this was pre COVID, and they would discuss 200 percent turnover within one month in their facility.
And I remember that just boggling my mind. Like I couldn’t even imagine how you could, how you can run a business that way. I had other customers tell me that they would have to hire 30 percent extra people per shift, because on average, that’s about how many just don’t show up the next day. So, labor shortage is a large driver here.
We also have technology on the rise. It kind of referenced the trade shows before I call this the Amazon effects. And I think you could take this a couple of different ways, but I think it was 2012 that Amazon bought a company called Kiva robotics, and that was really the conception of Amazon robotics.
And they’ve gone on to really grow their technology portfolio since then, but it was a big deal in our industry. And this has caused a lot of consumers to one chase the service level, but also chase the technology strategy. They see the success that Amazon has had in investing in technology. And you could say it’s kind of been a trendsetter.
Brian Thomas: Thank you, Ryan. I appreciate it. We have seen a lot happen over the last 10 years easily, and COVID obviously was really an anomaly that kind of changed some things. As you mentioned, it was a tipping point for the labor market, but you obviously saw a need here and you ran with it. And we really appreciate what you’re doing here to solve a bigger problem because now with folks popping up, there are little e-commerce shops everywhere.
It’s, this is becoming more of a connected world, not a brick and mortar. So, I appreciate that. And Ryan, if you could briefly share and you tell us what inspired you to found auto FC and what unique value you believe your firm brings to the market in warehouse automation and supply chain automation.
Ryan Chesterfield: I mentioned before that I spent most of my career in sales of automation and through selling automation, the type of automation I was, I was selling, you would call integrated systems.
So, these could be anywhere from a hundred thousand dollars of technology or equipment all the way up to a hundred million dollars of technology and equipment. So, you can imagine it at a hundred million dollars or even 10 million. This is a whole mess. Of hardware and software. And so, to come up with what kind of mousetrap is this customer going to buy?
My job was to understand the customers and their business and really what they were going to buy. The customer may tell you they want the Ferrari when they really need the Honda is like kind of an example. And so my job was to understand the customer and then manage our engineering disciplines to, to produce this solution.
Through that process, I got to work with customers from cradle to grave, I’ll call it. So, from the very beginning until after they’d been using the system for a year. And so, I got to see, you know, everything they wish they would have changed or wish they would have known. And, you know, it occurred to me, gosh, if I worked for the customer, if I could take my knowledge of how this technology performs and works and doesn’t work, that’s also important.
I could save this customer so much time and money. And I also saw a disconnect in communication. You’ve got like, you’ve got engineers that are talking to warehouse managers or warehouse folks. So, you’ve got really two different flavors of background. They need to come together in a very effective way to make these outcomes positive.
And you can imagine, you know, a 10 or a hundred-million-dollar investment is a huge investment for a customer. And, you know, this is normally like a new warehouse or maybe they’re going to redo their warehouse. So, the point being, it’s really going to rock the boat when it comes to automation and customers, I saw them not fully understanding what to expect when it came to operating this widget.
And, you know, if you can imagine giving an iPhone to your grandparents and seeing, you know, how, how they’re able to use it, it takes them a while and, or they’re much. Their aptitude is much different than, say, a 12 year old, and that’s basically the condition that our warehouses are in today. There’s, I’ve seen the stat a couple different ways, but it’s something like 80 plus percent of warehouses are still utilizing manual processes.
So, I just thought if I could go work for the customers, I can educate them on how this technology is going to impact them and really steer them in what’s going to make sense for you. Because, you know, if you’re a hammer, everything’s a nail. So, all the vendors are going to tell you that they can save you money and there’s tons and tons of solutions out there.
AMRs or autonomous mobile robots. And five, 10 years ago, let’s say five years ago, there was only a handful or several providers that we were implementing AMRs out there. And I was at a trade show earlier this year and I saw more than a dozen AMR companies that I had never seen before. And I’ve been going to these shows every year for the last 15 years.
So, it’s hard to understand which Solution is right for you when they might all look the same to the customer and frankly, like after talking to people, they do all look the same. So, I hope to go to a customer, understand their unique business because there’s a specific recipe and order of operations, depending on what your business is, what your product is.
You know how big and what shape you’re building is that’s going to bring you a return on investment the quickest and they’re like I mentioned order of operations, there’s certainly an order in which you can do things to maximize your R. O. I. So, I really just plan to utilize my knowledge of this technology and even my network in this technology, right?
A lot of my peers, my friends are at these providers. I can get, you know, updated information on the solutions and really be able to arm the customers with this so they can make good decisions.
Brian Thomas: Amazing. Again, Ryan, looking at the problem you saw probably clear as day and helping out to streamline, you know, process improvement is so big to me in my career when I was CIO and it’s needed everywhere and I’m glad that you’re infusing your knowledge and helping customers streamline their operations.
So, I do appreciate that. And Ryan, my next question, if you could briefly share for companies investing in automation, ROI is crucial. What strategies or metrics do you advise clients to focus on to ensure their investment is both financially viable and operationally effective?
Ryan Chesterfield: I would say you need to understand your pain points and how much they cost you.
This isn’t going to be easy to necessarily put a dollar amount to this. But you’re going to need that to be able to justify any automation that you may be interested in. I mean, every sales situation I’ve been in, you have to show the CFO how they’re going to save money. And they’re certainly going to know, want to know detailed parameters around this.
And often I would have to like work with my customers to help them come up. With their ROI in order to get this deal over the finish line, but understanding, you know, your pain points, like I said before, and how much they cost you will point will kind of steer you towards that order of operations that I spoke about earlier and what that order might be, you know, just maybe start what hurts the most or rather like what costs the most.
You may find that what you think hurts the most doesn’t actually cost you as much as you thought. I know in selling automation, you know, it’s always about, you know, how many people does it take out? And, you know, it’s, it’s rarely a one-to-one ratio. Like for example, it’s, you know, robot is going to cost more than a person most of the time.
And or you need to be able to look at it to what this person does in my operation and how much does it cost me if they don’t show up? Because the robot is definitely going to show up. It may be slower. It may have constraints or things that it can’t do that a person can do. But I mentioned that turnover before, you know, the reason that you’re going to do this.
It is to help you soften the hit when you have variables in your labor supply. So, I would say understanding your business really and go through an exercise and putting dollar amounts to your pain points.
Brian Thomas: Thank you. I appreciate that you actually take that time to show the customer kind of the why and what’s going to cost you in the long run, obviously right out of the gate on a piece of paper, robotic process automation, right?
Bringing in AI or those types of new processes, platforms or machines are certainly going to have a big price tag initially, but I do appreciate you breaking that down for us. And Ryan, last question of the day with technology advancing so quickly, how can companies. Future proof their automation systems to stay competitive without overhauling their operations every few years.
Ryan Chesterfield: So, I spoke about the order of operations a couple times now, and this is really going to start with data. The data is crucial. You have to be able to get the zeros in the ones to the robot and warehouse systems of today, you know, we have WMS or warehouse management system. It’s software that many warehouses are using.
A lot of customers don’t even have a WMS, and they use their ERP that has an inventory module to do WMS like functions, but you need to have an understanding of how your zeros and ones. This is what I’m calling data organized because this is what the robots are going to need to be able to consume. So, if you don’t have these to begin with, the robots are not going to provide the results that you’re looking for.
And this is all this is a kind of an example of what I was referring to when I mentioned the cradle to grave and saw where, you know, where customers may have missed up front, even though the automation was doing exactly what we said it was going to do. If there was a piece of data that they were not able to get to us or weren’t able to get to us in the same format, it changes how the automation is going to perform.
So. Certainly having a data strategy in place and the expertise on the data is going to be crucial. And back to that expertise, I would say that it’s going to be a big part of this. There’s not that many, well, I guess I’ll say that I have found that I’m able to bring a unique perspective to the customers based on my knowledge of this.
And I kind of mentioned before. Right. Warehouse operations. Their job is to run a warehouse, manage people, and solve problems on the floor. When it comes to logistics, their skill set is not going to be understanding data necessarily or understanding robotics and certainly how that’s going to affect. The operation, so you need a subject matter expert that does understand this, whether you know, you bring it in house, and I get these jobs often.
I try to turn them into consulting opportunities, but lots of major retailers or major companies are now starting to hire automation experts on their internal teams, and you did not see this. More than three years ago, these positions didn’t exist. It would just essentially rely on the vendors. So, the awareness has come to a lot of the warehouse operators that they need this expertise.
And so certainly I think that it’s going to be crucial to your project is having an understanding of what you’re getting into and making sure your organization is ready to allow that technology to perform.
Brian Thomas: That’s awesome. Thank you again. Shining that light on the problem. Bringing a solution to this industry is so helpful.
And as some of the technology is exploding and we’re seeing more and more of a demand where consumers want to see their product in their doorsteps within 4 to 8 hours is truly a reality today. So, I appreciate you breaking this whole thing down as far as the industry and automation goes in warehousing, I think it’s so important and so crucial that we get this message out to the world.
And Ryan, it was such a pleasure having you on today and I look forward to speaking with you real soon.
Ryan Chesterfield: Thanks so much, Brian. Glad to be here.
Brian Thomas: Bye for now.
Ryan Chesterfield Podcast Transcript. Listen to the audio on the guest’s podcast page.
