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Kristi Montgomery, vice president of innovation, research, and development at Kenco Logistics Services, is a dynamic explorer of strategic innovation that drives revolutionary change. With 30 years of logistics and supply chain experience, she leads a dedicated team of specialists in Kenco Innovation Labs, who research, prototype, and execute creative solutions with the potential to positively transform the supply chain. As the senior innovation officer, recognizing that no single approach works for every customer, Montgomery leads the combination think tank and practical working physical lab utilizing design thinking and open innovation to deliver business value for the 200+ customers that Kenco serves in North America.
Montgomery holds a Bachelor of Science degree in Organizational Management from Covenant College and is a certified Specialist in Design Thinking and Innovation as awarded by the Darden School of Business, University of Virginia. Montgomery serves the industry speaking, participating as a panelist, and publishing articles promoting supply chain innovation.
David Maloney, Editorial Director, DC Velocity 00:01
How do you create a culture of innovation? Reports show problems with our cold chains at a critical time for vaccine distribution. And what may be down the road for transportation in the coming year?
Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Yale Materials Handling, a leading warehouse brand that specializes in much more than just lift trucks. Logistics operations rely on Yale for everything from robotics and advanced power options to the company's most recent addition, an innovative tag-to-tag solution to help enforce social distancing protocols and inform reactive measures to limit virus spread. For more information, visit Yale.com. That's Y-A-L-E dot com.
As usual, our DC Velocity senior editors Ben Ames, and Victoria Kickham will be along to provide their insight into the top stories of this week. But to begin, what does it take to build a culture of innovation? With us today to discuss that topic is Kristi Montgomery, vice president of innovation, research, and development for Kenco, a large third-party logistics company based in Chattanooga, Tennessee. Kristi heads the Kenco Innovation Lab, which is sort of an internal think tank and physical working lab. Kristi's worked in supply chain for more than 30 years and has studied at Covenant College and at the Darden School of Business at the University of Virginia.
Welcome, Kristi. Good to have you with us today.
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 01:41
Thank you, Dave, it's a pleasure to join you.
David Maloney, Editorial Director, DC Velocity 01:43
Your title contains the word "innovation," which is a term not usually central to someone's job description, let alone a title. How do you view your role there at Kenco?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 01:53
Well, Dave, I think it's a critical piece of what's happening in our world today, and I am appreciative of our leadership understanding and recognizing that five years ago, when they gave me this title. I think that our customers—shippers, manufacturers, retailers—are looking to their third-party logistics organizations to provide more forward thinking, looking at the trends that are coming down the road and helping them transform their supply chains to be ready for those things that are coming down the pike. So, we believe that innovation is critical to the success of us serving our customers better.
David Maloney, Editorial Director, DC Velocity 02:29
We had mentioned that you head the team at Kenco Innovation Labs. What sort of work does the team do there?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 02:36
Our work is mostly focused, Dave, on our customers and what their needs are and what their challenges are, as well as testing emerging technologies, working with startups and entrepreneurs that are bringing new technologies into the supply chain, really vetting those solutions to determine, are they viable in today's warehouse environment, and will they be viable three, five years from now, as well as helping our customers choose which one is right for them.
It's interesting, I'll give you an example. The robotics market is flooded with various types of mobile robots. And our customers. Say, gosh, I want to get into this space, and I want robotics in my warehouse. I understand the value, but which one's right for me? And so what we do is a lot of studies and testing and comparison testing of robotics to say in this particular space, profile, SKU mix, volume—all of the things that go around determining what makes the best solution—to be able to come back to our customer and say, this is the right one for you, and here's the data behind that, and here's why that's the right thing.
David Maloney, Editorial Director, DC Velocity 03:43
So you're bringing those robots actually into your testing lab and trying different scenarios with them?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 03:48
Yes, we are and working with various different types of warehouse management systems as well as fulfillment systems.
David Maloney, Editorial Director, DC Velocity 03:55
So you've been at this for quite a while with the innovation labs. What have you learned over that time? And can you share what some of the developments have come out of those labs?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 04:03
Sure. So, probably the biggest lesson learned is, innovation is less of a lightbulb moment and more hard work.
And I think, you know, just working with our startups, particularly helping them understand how logistics work. And they often come into it with a very set mindset around how the robot should work, and they don't really understand the warehouse and what happens on the warehouse floor. So, working in hand-in-hand, joint development to try to help some of these startups bring their technology to a viable solution has been a lot.
Obviously, I think one of the key lessons learned is, you know, failure is an option and you're going to learn from it, and it's okay to fail. I think if you, in an organization, do not have that mindset, then innovation will fail. So I think part of it is just recognizing that a solution is viable quickly. I want—you hear that you hear the conversation of, you know, "fail fast and fail cheap, " and I always like to add to that "and iterate forward." Because when you fail, and when you do that inexpensively, you've learned something, so move forward. What's the next step? What do you need to do to learn more, to get more information to bring about the right solution? So really, that's the lesson, the biggest lessons learned.
I think, from a development perspective, we have brought a number of startup technologies to the marketplace. We have a patent pending on one of our first mobile apps that we developed to address chargebacks in in the workforce with retailers. We have a number of things we've been working on this year, particularly in Covid-19 times. And just, you know, some of it is our own invention. Some of it is taking what's already in the marketplace and helping make it better, or working with a vendor, like, let's say, Yale, for instance, that's sponsoring this, you know, going to that vendor and saying, "Hey, we have an idea, let's jointly develop that idea together." So that's a lot of what we do in the Innovation Lab and some of the developments that have come out of it.
David Maloney, Editorial Director, DC Velocity 06:09
That's all very interesting. And you have a company that is obviously looking forward and focused on the future and developing these kinds of things. But how does a company actually begin to create a culture that fosters that kind of innovation?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 06:25
Well, I think, Dave, that's a difficult thing, right? But the great thing about Kenco is we've been entrepreneurial since day one in our organization, and so our founders have always challenged us to look for what's next and what's better. And so, beyond continuous improvement, just looking at how we help our customers, you know, go to the next level within their supply chain. So, I think that's part of our DNA as an organization.
But some of it comes from really challenging the folks on the floor. So, when we first formed this Innovation Lab, we knew that the ideas couldn't come from us, the ideas had to come from the people who were doing the job every day, who understood the customer's business at the detail level. And so we created a portal for the employees at Kenco to be able to go in and give us good ideas. And, quarterly, we run a challenge to our employees. We ask them a question like "If you had a robot that could do anything to make your job easier, what would that look like? If you could automate a manual process, what would that look like? How could we help you better overcome Covid-19? We just throw challenges out there and let them give us the feedback, and those ideas are what generate our pipeline for the next, you know, year, or sometimes even longer into how we do our job better. So, building that culture is around, you know, getting your employees involved, every single one of them, and incentivizing them to be part of the process, and allowing them to, you know, have input into it, I think.
David Maloney, Editorial Director, DC Velocity 07:57
We've obviously been through a very difficult year, a time when a lot of companies are just trying to hang on. Do you think innovation has taken a backseat during 2020? Or has it just spurred on new needs that the Covid-19 pandemic has revealed in our supply chains?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 08:13
I honestly think it's accelerated innovation, Dave, I think particularly in the area of digital transformation. So, we've learned a lot about how supply chain, you know, to some extent, is still somewhat manual, and how do we change that and do it quickly? Covid has pushed us into a realm of, you know, "We need to be able to do a lot of things digitally now." We need to be able to do it quickly. We need to be able to do it accurately. And we also need to be able to do it visually, so our employees, our customers have visibility to what's happening within their supply chain.
So, I think innovation has only accelerated during during Covid-19 times, and how do we automate more? How do we—not just physical automation, but digital automation?
How do we, you know, accomplish more with almost less, because the workforces is difficult right now, during Covid times. We, you know, struggle sometimes to find enough employees to do the job. So how do we continue to allow our customers to grow their volume?
And then, also, just the sheer e-commerce changes that are happening in the marketplace have driven a lot of our customers to look at "How do we go straight to consumers with our products," when traditionally that hasn't been their business model. So, it's forced innovation, I think, to accelerate.
David Maloney, Editorial Director, DC Velocity 09:36
Yeah, I agree with that.
As we close here, what would you say to our listeners as to the importance of developing innovation within a company. Why is that critical to their future?
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 09:48
Well, I think if you're not innovating, then you're not moving forward, and those who are not moving forward are going to get left behind. And I know that seems trite, but it really is true. I think if you as a company are not looking to what's next, and how do you meet that challenge, then your competitors are going to fly by you. Technology continues to accelerate. Digital transformation continues to accelerate, and we have to keep pace. And, hopefully, we're outpacing, and not just keeping pace, but at least there should be some eye toward how do we help our customers move quickly in this market of constant change? And innovation is a part of that change, and I think everybody has to have an eye on that, in today's world.
David Maloney, Editorial Director, DC Velocity 10:29
We've been talking to Kristi Montgomery of Kenco. She heads the Kenco Innovation Labs, and she's blessed to work for a company that actually supports innovation.
Thank you, Kristi, for being with us today.
Kristi Montgomery, Vice President of Innovation, Research & Development, Kenco Logistics Services 10:41
Thank you, Dave. enjoyed it.
David Maloney, Editorial Director, DC Velocity 10:42
Have a happy holiday. Thank you.
Now let's take a look at some other supply chain news from the week. Victoria, you shared a report this week about how manual processes and a lack of visibility is leading to big losses in the cold chain. Can you tell us more?
Victoria Kickham, Senior Editor, DC Velocity 10:58
Yes, Dave, absolutely. And this ties in nicely with Kristi's comments on technology, automation, and digital transformation. So, a company called Cloudleaf, which provides supply chain tracking solutions, released this week what it calls its "State of Supply Chain Visibility report. And what they did was, they surveyed 210 supply chain executives in pharmaceutical and food and beverage industries, they found that most—92%, is what they found—say they can't trust the data they have on their products as they travel through their supply chains. And these are products that often need to be transported and stored at certain temperatures in order to maintain freshness and viability. So, the main reason many companies say they can't trust that data is because they lack visibility and sort of real-time information on those products.
And the problem's causing what the researchers listed as five top challenges, and that's product damage and spoilage; temperature excursions, which is when a product is exposed to temperatures outside the range that it's prescribed to be stored and transported at; also unexpected delays; lost or misplaced inventory; and compliance issues. So those are kind of the key things that they noticed in the study.
David Maloney, Editorial Director, DC Velocity 12:07
Those must be very costly problems for companies, right?
Victoria Kickham, Senior Editor, DC Velocity 12:11
Absolutely, yes. So, the research found that on average, pharmaceutical companies, the ones that they surveyed, are losing between $95 million and $130 million a year in inventory damage—and that range depends on the size of the firm—and that food and beverage companies are losing between $71 million and $179 million a year. So yeah, absolutely. You're right. It's a pretty costly problem.
David Maloney, Editorial Director, DC Velocity 12:32
That is quite a lot. Did the research list any specific reasons for their lack of visibility?
Victoria Kickham, Senior Editor, DC Velocity 12:38
Yes, and it's interesting, because, you know, again, it ties back to technology. And they found that almost all of the respondents on the pharmaceutical side—99%, so virtually everyone—claimed to be using some sort of manual process to achieve visibility. In food and beverage, that was a little less; they found that 79% are using some form of manual process. And those processes include spreadsheets, pen and paper, and what they call alarm-clock technology, and that's essentially timing how long a product has been outside the cold chain as a way to determine viability. So, they're using those kinds of methods to monitor product through the cold chain.
The answer, of course, is technology. And more and more tech companies are digitizing this process and using things like artificial intelligence and machine learning to improve product monitoring through the supply chain, and, as you know, especially the cold chain. And we've seen this issue take on a higher profile during a pandemic for many reasons, but especially as the Covid-19 vaccines roll out around the world. Of course, it's a big opportunity for companies that supply tracking and monitoring technology, again, especially for pharmaceutical, so it's something interesting, I think, to watch.
David Maloney, Editorial Director, DC Velocity 13:42
Yeah, certainly is, and it's something we'll be tracking as well, to make sure that in the critical times of the vaccine rollout that the cold chain is secure. Thank you, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 13:50
David Maloney, Editorial Director, DC Velocity 13:51
And, Ben, you covered a couple of news stories this week that gave us some hints about the future of transportation trends, and some changes that may be coming. Could you share what you wrote about?
Ben Ames, Senior News Editor, DC Velocity 14:01
Hi Dave. That's right. Yeah, it's been a really interesting week. First was the news that the incoming Biden administration plans to nominate Pete Buttigieg—he's the former South Bend, Indiana, mayor and presidential candidate—as the next Secretary of Transportation. If confirmed by the Senate, then he would follow the current DOT Secretary Elaine Chao.
It's worth noting that Buttigieg lacks a background in the transportation industry, but he does have experience in government military. So, perhaps because of that, several industry groups are—quickly begun pushing him to follow a different kind of attack in the next four years than what Chao had done. Chao's term has been focused on regulatory reform, such as just yesterday's news about loosening restrictions on who can test applicants for their commercial driver's license—their CDL—for trucks and buses. Before that, we saw an easing of restrictions on truck drivers' hours-of-service caps. Also, there was a restriction on the minimum number of crew required to drive the freight trains. But groups like the American Trucking Associations, and also the Association of American Railroads, after Buttigieg's nomination, they issued statements pledging to work with him on getting an infrastructure bill done. So, that has been a real challenge to Congress for years now. So much so that the annual Infrastructure Week that's supposed to sort of shine a spotlight on those deteriorating roads and bridges, has become kind of a Washington shorthand for a useless press conference. So, we'll have to see if Buttigieg can reach some agreement with the different parties there, particularly on getting some infrastructure funded.
David Maloney, Editorial Director, DC Velocity 15:37
Yeah, that would be nice. Infrastructure definitely needs some attention.
And another report you had on some changes that we may see with parcel carriers. Can you tell us about that?
Ben Ames, Senior News Editor, DC Velocity 15:48
That's right, so also transportation, but this would be more about sort of last-mile, here. We learned this week about a program in Amsterdam, where a Dutch real estate investment firm is building a 30-acre campus to study better ways to perform last-mile deliveries, particularly in dense urban settings. The group is called Somerset Capital Partners. They're spending about $300 million to create that center, where researchers will gather to look for ways to avoid congestion and handle the explosion of e-commerce volumes, which are trends that our U.S. readers are also very familiar with.
So, how it'll work is that the center will act as a test site or an incubator where researchers can visit—and they would come from dozens of different, diverse organizations, like food companies, technology providers, delivery specialists, logistics equipment providers, the whole range—and the goals, together, would be to reduce emissions, reduce noise pollution, vehicle movements. So, again, concentrating on these dense urban city networks.
And their method—it's all new, so nothing's been rolled out yet, but they did give some ideas of the directions that it might be going, and those could include strategies like combining flows of goods; deploying electrically powered green fleets; using intelligent stockpiling strategies; sustainable packaging, so there's not as much to throw away; and also better ways to enable returns for everybody, from online supermarkets to package delivery, meal delivery services—all the things that we see arriving on our doorsteps nowadays.
David Maloney, Editorial Director, DC Velocity 17:24
Yeah. Well it certainly continues our theme of innovation, the need for that in the coming years. Thank you.
Ben Ames, Senior News Editor, DC Velocity 17:30
David Maloney, Editorial Director, DC Velocity 17:31
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories. Go there to check it all out.
Thanks, Ben and Victoria, for sharing highlights of the news this week.
Ben Ames, Senior News Editor, DC Velocity 17:42
Thanks, Dave. It's always fun.
Victoria Kickham, Senior Editor, DC Velocity 17:43
Yes, my pleasure.
David Maloney, Editorial Director, DC Velocity 17:45
And again, our thanks to Kristi Montgomery of Kenco for being with us today. We encourage your comments on this topic and our other stories. You can email us at email@example.com.
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We'll be taking a break for the next two weeks to allow our editors to spend some time with their families on Christmas and New Year's Day, but we will return on January 8, when our guest will be Zac Rogers of Colorado State. He will discuss how retailers will be dealing with a deluge of those holiday returns, so it should be an interesting topic. Be sure to join us. Until then, please stay safe and have a great week.