In Person interview: Bart Cera of Vargo

When Bart Cera left the banking industry in 2006 to join Vargo, he was intrigued by the challenges and opportunities he would find in the material handling industry. First joining as the CFO/COO, he is now president and chief operating officer for Vargo, a company that specializes in material handling systems integration, warehouse execution software, and equipment solutions for fulfillment and distribution centers.

Cera’s previous experiences in the financial sector were with Emerald Bank, Ohio Central Savings, and American Share Insurance. He is a certified public accountant and holds a bachelor’s degree in finance from Bowling Green State University in Ohio.

Q: You came out of the banking industry. What led you to take a job at a supply chain company?

A: There’s an old adage that says it’s not necessarily what you know, but who you know, and that helps explain how I wound up here. My background was in finance and accounting, and focused on banking up to the time I joined Vargo. My last endeavor was chartering a new startup bank that was sold, and given the probable loss of management control that comes with these types of acquisitions, I reached out to my professional business mentor to let him know I might be open to exploring other opportunities.

Well, timing is everything, as they say, and he introduced me to the Vargo family and the uniqueness (at least to me at the time) of their business. They had just acquired a specialty distribution software group out of Austin, Texas, and Berkeley, California, and because of their growth, they were looking for a CFO/COO to help organize and run the business. My passion lives in connecting finance to the operational aspects of the business, and I felt the opportunity to learn an entirely new industry essentially from scratch was too good to pass up. As you can imagine, I initially felt like a fish out of water, but I relied on my finance background and, connecting that to the underlying business processes, I was able to quickly learn to swim in the new pond of material handling/automated equipment, systems integration, and warehouse execution software.

Q: How do you view the state of the warehouse automation and software markets?

A: Unfortunately, during the Covid pandemic, supply chains quickly became compromised, and the “retail sourcing” of goods and products to consumers was nearly non-existent or significantly reduced for long periods of time in 2020. While recovery is underway, many brick-and-mortar retailers have been harmed beyond repair or continue as shadows of their former selves.

This impact has challenged retail sellers of goods to refocus on their e-commerce or omnichannel facilities and to rethink their fulfillment processes. The old days of throwing labor at it and muscling through spikes in demand are over.

Today’s leading supply chain executives are showing an increased appetite for warehouse automation (including robotics) as well as more upstream and execution-level software intelligence to facilitate both increased processing volumes and increased fulfillment speed. It is an exciting time in our industry right now, and we couldn’t be happier with our company’s successes to date and our positioning to help distribution professionals with these accelerated challenges.

Q: As a consulting, design, and integration firm, Vargo is agnostic when it comes to selecting equipment for its solutions. What are the benefits of that for your clients?

A: Among other advantages, being equipment and technology agnostic gives Vargo a lot of flexibility in designing our systems and, at the same time, affords us the ability to better meet client budgets. We are not married to a particular technology or OEM manufacturer, nor forced to only design and sell from one provider’s playbook like our direct OEM competition. Furthermore, the focus of our designs is on the people, the processes, and then the equipment/technology (in that order). Fulfillment systems need to be easy to run and the processes undertaken able to meet the desired operating requirements, first and foremost. The addition of equipment or a specific technology is merely the vehicle used to support (or optimize) the process. By being an agnostic equipment provider, we can source the best equipment (or technology) to fit the process, rather than forcing the process to fit the equipment. This is one of the most important factors driving systems integrator businesses like ours.

Q: Vargo has long been an advocate of waveless fulfillment. What are the main advantages of that?

A: The main advantage of waveless (or continuous flow) fulfillment is that it allows a facility to consistently and continuously work at maximum processing rate and avoid ebbs and flows in productivity levels. It does this by organizing and controlling the flow of product through the facility in such a way that lines/SKUs (stock-keeping units) required for an order are all delivered independently of each other at as close to the same time as possible (typically, less than 20 minutes, on average, in our high-volume e-commerce facilities).

As a result, these order consolidation points turn more frequently than traditionally, which, in turn, allows for more throughput and a much higher adherence to SLA (service-level agreement) requirements. There are other significant benefits of waveless/continuous processing as well, such as reduced facility footprint and equipment capital requirements; automated exception handling built into the process; the fact that supervisors are responsible only for managing people and not managing the process, etc.

Q: In the past year, you’ve formed a number of strategic partnerships with robotics firms, including Kindred and Fetch Robotics. Why did you target partnerships in robotics, and what do you hope to gain from them? 

A: With the impact of Covid-19 on e-commerce demand and today’s emphasis on social distancing requirements, automation no longer is an enhancement to the operation but rather a requirement, in many cases. A common theme we hear from our clients is that they have three big problems to solve with respect to fulfillment: labor, labor, and labor. We see robotics (and goods-to-person) technologies being a significant option for reducing or limiting the need for labor in facilities given the “physicalness” required to receive product, put it away, pick it, pack it, and ship it.

Furthermore, we do not believe any one company can be great at everything. So, we have taken this partnership approach to align our company with solid robotic providers that focus solely on a core mission of promoting and enhancing—mechanically and programmatically—the robot itself. This allows the experts in distribution (like Vargo) to handle the actual deployments—applying the robotics to the right operational fulfillment process and then integrating them seamlessly into the final engineered system.

From a partnership perspective, a more formal arrangement of working together allows our respective teams to work closely together on common interfaces, prototyping “use case” applications, creating mutual testing “sandboxes,” providing exposure to our respective clients, etc. This way, we can mutually drive more interest in these technologies and deploy more quickly upon sale.

Q: Do you anticipate more interest in major projects this year?

A: We do! The activity level and interest in supply chain and distribution is like nothing I’ve seen in my 14 years with Vargo. Most multichannel retailers, I believe, are re-evaluating their supply chains and scrambling for either equipment and/or new facilities to handle the increased e-commerce demand. Others are exploring converting retail-operations focused buildings (where demand has fallen away) to more omnichannel-based or e-comm facilities.

Furthermore, there is a lot of interest in moving away from a centralized fulfillment network (one or two nodes) to a more regional fulfillment approach. This shift to regionalized fulfillment allows for a lot of the larger facility operating benefits, and it brings the product closer to the consumer to compete with the speed of Amazon, optimizes freight, and spreads labor needs over more geographies. It is an exciting time to be in the fulfillment and distribution business.

Q: Are you working on any current projects or products that you wish to share?

A: We have several large client initiatives underway for 2021 and 2022. Vargo’s warehouse execution software, COFE (Continuous Order Fulfillment Engine), continues to garner significant industry interest coming off yet another year of record-setting peak volumes across our clients. This, together with the rollout of a new cloud-based COFE option (reducing client-based IT requirements), the partnerships with robotics companies I mentioned earlier, and our early 2020 partnership with a cloud-based warehouse management software provider (Koerber, formerly HighJump), is why we are so excited about what the future holds.