For companies like Edy's Grand Ice Cream, voice technology is paying huge dividends in the distribution center. So why aren't the vendors getting the air time they think they deserve?
John Johnson joined the DC Velocity team in March 2004. A veteran business journalist, John has over a dozen years of experience covering the supply chain field, including time as chief editor of Warehousing Management. In addition, he has covered the venture capital community and previously was a sports reporter covering professional and collegiate sports in the Boston area. John served as senior editor and chief editor of DC Velocity until April 2008.
For the management at Edy's Grand Ice Cream, going live with its new voice technology system was like being handed an ice cream scoop and an unlimited supply of Strawberry Fields—they just couldn't wait to dig in.
In Edy's case, the move to voice was prompted by the management team's search for ways to boost both picking accuracy and productivity in the harsh environment of an ice cream facility, where workers pick products in temperatures that average minus 20 degrees. "To stay warm in an ice cream freezer, you really have to keep moving," says Brad Adams, division logistics manager for Edy's."It's a real advantage to be able to pick fast."
Edy's managers were soon convinced that voice tech was living up to its hype. Buoyed by the success of the voice system installed at the company's Chicago distribution center (DC) in 1999, Adams went back for seconds—installing voice technology at the company's Rockaway, N.J., DC last year. Not only has productivity increased 14 percent, but the company has reported a 50-percent decrease in mispicks as well. That all means fatter margins for Edy's, which operates 14 distribution centers nationwide.
Vocal minority
No question these are impressive results, but in a sputtering economy, that doesn't guarantee that orders for voice tech equipment will come rolling in.Though Edy's and other big name companies like 7-11, Supervalu, Corporate Express and Petco have enjoyed great success implementing voice technology, which enables a computer to communicate with workers via spoken instructions,the perception out in the marketplace is that the technology has been slow to catch on. One estimate puts the market saturation for voice products within the DC at only 5 percent.
"From everything we've seen, its still a wait and see kind of thing," says Bob Silverman, president of Gross & Associates, a Woodbridge, N.J., company that specializes in warehouse consulting. "It was poised to be the next big thing, but the growth in that area hasn't been what I expected."
To no one's surprise, the vendors tell a different story. "This market is growing at a very rapid pace," argues Larry Sweeney, vice president of marketing for Vocollect, which produces the technology used at the Edy's facilities. "We're looking at about a 70-percent increase in our revenues over last year, so the technology is really taking off."
Sweeney, who claims that voice technology is making the most headway in the grocery and retail industries, says the biggest worries—concerns about the technology itself, its durability, payback and employee acceptance—are fading as more and more installations take place. "Customers look at our install base and see a lot of people using it on an everyday basis, 24/7, 365 days a year," he says. "Some had concerns about payback models, but we've seen payback in the area of six to 12 months, and it's not unheard of to have payback in under six months."
Fear factor
To get that kind of payback, managers have to get their workers on board and up to speed with the new technology quickly. And that's not always easy. Adams reports that while some employees at Edy's were excited about replacing their paper system with the new technology, it created temporary headaches and anxiety for others.
"We had some challenges," admits Adams. "Basically the employees need to be somewhat computer literate, since they are now working with a computer as opposed to paper and pencil. Not every employee started up smoothly. It took some workers months to make it work for them, while others were up in two or three days."
Sweeney says time has a way of solving most of the startup difficulties. "Throughout our customer base, we consistently see that em ployees accept it once they realize it makes their job easier," he says. But in the rare event that acceptance is not forthcoming, he cautions, the company should move quickly to address the problem. "If [employees] don't accept it, you can just for get it. Even if the technology works, they won't use the equipment to the best of their ability."
Chris Barnes, a consultant with CMAC Inc., a technology solutions company based in Atlanta, suggests that companies seeking to expedite worker buy-in invest in dedicated equipment for each person,a move that helps quell the concerns of even the most germ-phobic staff members. "You can buy your way out of some resistance by getting enough units for every person on each shift," he says.With the average cost of outfitting a worker running to about $5,000, however, that is not an option all companies can afford.
Can you hear me now?
As voice penetrates more industries, experts hope the resistance issue will dissolve and that DC managers will be persuaded that voice technology is not something out of the next century. "The market is rapidly adapting and investigating voice-based products," says Nick Narlis, chief financial officer of voice technology provider Voxware, a competitor of Vocollect. "What has changed in the last six months or year is that the major leaders in food and grocery, apparel, and consumer products have a lot of sites up.
"People used to believe the technology wouldn't work in their environment," he adds. "That isn't an obstacle anymore. We are beyond the point of people seeing this as scifi stuff. People can see that it works."
Just six months ago, DC managers had a choice of three vendors in the voice technology market space. But the August demise of Boulder, Colo.-based Syvox Corp. leaves only two survivors on the voice tech island—Vocollect, located in Pittsburgh, and publicly traded Voxware of Princeton, N.J.
Syvox's story is sadly familiar: Despite infusions of capital and a history of partnerships with other companies, the vendor found itself awash in red ink a few years ago. A name change and reorganization were not enough to keep it afloat. Instead of realizing profits in 2002, as the company predicted a year ago, it ended up filing Chapter 7 bankruptcy. With less than $500,000 in assets and debts approaching $10 million, Syvox left behind several major customers, including food giant Nabisco.
The remaining two competitors both claim to be financially sound, although Voxware has plummeted to penny stock status. (Its stock hovered near 5 cents a share at press time.) According to chief financial officer Nick Narlis, the company is in the process of landing up to $5 million in private funding. He expected a deal to be finalized by the end of 2002. Rumors persist that Vocollect may purchase Voxware should it fail to receive financing.
For Voxware's fiscal year ended June 30, 2002, total revenue was $4.5 million, an increase of $2.5 million, or 120 percent, over the previous fiscal year. Net operating loss for the period was $2.8 million, compared with $8.7 million the previous year. "Our challenge is to convince the public we are not underfunded, should this financing round materialize," says Narlis, who admits that landing new customers has been difficult due to concerns about the company's future viability. "The expectation is this is the final round of financing, and it would really enhance our chance of winning new deals."
Rival Vocollect does not release sales numbers, but industry analysts say the company is roughly 10 times the size of Voxware. Vocollect had sales of between $10 million and $20 million in 2001, and vice president of marketing Larry Sweeney says his company expected to grow sales by about 70 percent in 2002. That would put Vocollect's sales at approximately $25 million to $30 million.
Vocollect recently calculated that at least 100 million voice transactions occur each day throughout the world using its technology. As of November, the company had 175 sites installed, with plans for 60 to 80 new installations by this spring.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.