Why AI & Robots Won’t Replace Warehouse Workers

We got to move 25,000 square feet of robotics. I said, “Okay, let me make a plan. We can get it done in 10 weeks, right? I have my my crew that can get it done, right? We can tear it down, make sure we track everything, put it on trailers, get it moved. You have 5 weeks.” Welcome to the Know Your Ship podcast presented by EHUB. I’m your host, Frank Dolce. This is Leo Alves, item.com. Yes, sir. uh a company that’s trying to maximize its talent and abilities in the marketplace. Okay. Why don’t you give us give us the 30,000 foot if if you’re talking to someone for the first time and they say, “What is

item.com?” Yeah. Go ahead. It’s Yeah. No, it’s it’s a great question. I mean, I get asked all the time, right? What do you do? Oh, you guys do this, you do that. Yes. Bottom line, logistics ecosystem, right? anything in that pipeline associated to it, we have something that can handle it. Um, obviously we’re growing into different verticals, right? We we’ve got some AI things that we’re we’re working on. Um, some recruiting, some um, HRM heading that that direction, but only because it’s required by logistics companies who are our bread and butter. That’s our clientele, right? Our 20-year-old system is a WMS. That’s what it was founded on. It built on that system. Mhm. as we

grew every other link in the chain came along very naturally with it which is why I call it an ecosystem right it’s very bio inpired you know every necessary link in the chain is there so who who would come calling like is a is a warehouse going to call you guys and say hey what can you do for us and then in that type of scenario how would you approach that yeah I mean everybody has their own appetite for you know where they are in their search for any kind of solution, I’ll call it, right? We have many solutions. Maybe they’re looking for a WS. That’s awesome. That’s essentially bolt-on for a warehouse, right? That’s

our easiest clientele. Mhm. Um any 3PL, anybody handling their own logistics, that’s that’s easy for us, right? I mean, we’ve got that under control. No problem. Question is, what do you want after that, right? Do you want to automate things? Do you want to set up further in your um robotics, you know, quest? Everyone’s looking for robotics, man, right? That’s that’s a big that’s a big piece right now. And so we I think we are unique in that field, right? We have our WES that handles all the robotics components. WES is warehouse execution system. So that’s the robotics brain, I’ll call it, right? That’s the easiest way to say it. The robots need something to

talk to to communicate to the order level, right? The WMS systems typically don’t handle robotics outside of maybe sending a task here and there, right? But being able to control it from an order level, you can create a smart warehouse, which is what we’re hoping to do, right? We want to be the marketplace for smart warehousing. Whatever robotic solution you need, our goal is to be agnostic to all robotics companies, integrate to everybody so that our customer can say, “Hey, I really like this solution for getting packages off of the truck. I like this solution for palletizing. I like this solution for um sortation. I like this solution for racking. All different vendors, but through

item you it’s streamlined straight to their exactly. Okay. So, I’m sure that the robotics companies will come to someone and say, “We can do it all. We can help you put stuff that way. We can help take it off. We can help put it on the conveyor. Whatever. They can do all of it.” But but individual companies may have strengths in all of those areas. You can take the best of the best put it all together and create a really efficient tie back to sports, right? You don’t build a team off of one player, 10 positions. You need people with different strengths, specialies%. Yeah. Oh, well that’s that that’s really that’s really interesting. Uh this

the stuff that you do and so uh I know that you’re in charge of go to market and in charge of partnerships. So, what does your like kind of what is your daily activity? What are you out doing to to help promote item? Yeah. Um, we’re building a big team that I mean, we just started this whole go to market mission right this year. Now, it’s the building blocks. It’s the we’re hitting the ground running, building the team, making sure everybody’s on the same page, starting to connect with different partners like you guys. Um, working with new potential customers, revisiting um, existing customers that we have that have just been comfortable with the WS, right?

But since we’ve been working with them now, we’ve we’ve evolved so much that it’s time, right, to reintroduce them to the rest of the stack. Maybe um, that’s something they’re interested in. A lot of our current customer base is really only WMS. So we’re trying to really push to get it’s more industry knowledge right that we have that we’re trying to push um and bring that to the field where yes of course there are other companies that do um robotics and they do WMS but everything together that’s kind of what we’re trying to explain to our customer base now that we’re heading in that direction right we want to be that not one-stop shop but

kind of that middle piece tying everything together. Well, I I know the the I I understand the one-stop shop mentality, but you know, you go to some of these trade shows and you walk the floor and I can’t imagine being, you know, a customer. Yeah. And and trying, you know, there’s 15 different robotics companies and there’s, you know, 20 different companies that are say they’re going to help implement AI and and make you more efficient and then there’s and then there’s the WMS’s and everyone else. Like how do you sift through all of those things and determine and then once you determine like this one this is the best in this this is the best

in this this and then tying all those together you guys can manage that kind of an issue that I mean that’s kind of what I mentioned right is the ind industry knowledge that we have we’ve been in the industry for 20 years with IBMS we’ve pretty much seen it all I can’t say we have seen it all there’s always something new but for the most part we’re familiar with all the main pain points in the industry which is why we have solutions for those issues, right? Yeah. Um and really cornering that section of the market and explaining to the customers more as a not not so much a lesson but more knowledge based, right? Um

approach to selling instead of saying, “Oh, our tech is better. We have uh more tech than everyone.” that’s kind of irrelevant in in the conversation when you’re talking to somebody who’s looking to solve a problem, right? AI this and AI that and we have all these systems do that. Maybe doesn’t catch somebody’s eye who’s really just trying to make sure they get their order delivered, right? Yeah. That that’s at the end of the day. That’s Yeah, absolutely. Yeah. Well, okay. So, you were in Brazil until five 5 years old and then came to the United States. Why did Why did the family come to the to the US? My dad went to UCLA, so we

separated. Yeah. I went to law school at UCLA. Oh, you’re kidding. Growing up, like did you want to go to law school? Is that what you thought you wanted? I did. I wanted to. I graduated from UC Irvine. Didn’t stick. I I Well, I wanted to go into IP law. I think as we head into more in this AI space, right? IP is very fuzzy. You know, not a [clears throat] lot of people know how to protect themselves. I still think there’s a lot of value there. Sure. Wrong. Um but as I kind of went through I I hit COVID in the middle of college everything went online. I picked up a job um working

under a CFO at a logistics company. Didn’t think much of it, you know, it’s a job, whatever. I started liking it, you know, and I ended up taking over their IT department. Um and then my classes went back to school in person. I said I had to leave the job after a year. But I, you know, the logistics industry very, you know, perked me up a little bit. you know, I I became very interested in it and I only scratched the surface. So, when Tom came calling, uh, he’s looking for a project manager. I said, “Why not? Let’s do it.” How did you guys get aligned? How did you and and Tom get aligned? I

applied for the job. Oh, gotcha. Yeah. The recruiter found me. Nice. Yeah. And so, jumped on after you graduated. After I graduated. Jumped in. Y. What was your first role? I was a project manager. Junior Junior project manager. Junior project manager. How long ago was that? Uh 3 years ago. Wa. You’ve just kind of climbed through the climb through the ranks. I I I don’t know. It in a company like Adam, it’s it’s hard not to want to keep learning more and climbing and finding out what’s new, what’s next, what are we doing, how are we doing it. I guess by association, I started taking over more stuff. Overseeing more projects, getting into robotics, right?

Yeah. So, what is it? What is it about the industry or what is it about the company that keeps you motivated? Maybe it’s my ADHD, but I like I like having my attention in 10 different places at once. That’s there’s so many logistics. I I would say probably one of my favorite things about myself is versatility, right? Being involved in so many different things, being able to juggle so much and that keeps me motivated, keeps me interested, right? and having all these different teams working on separate projects, not entirely on in silos, but separate, right? I’m poking buttons, right? Asking around, figuring out who’s doing what, how are we doing this, what’s our next step,

um what does the industry need, right? And that’s how I started getting into working in trade shows, right? Last year, we hit, I think, five or six trade shows, and I I was there for most of them. Um getting to know more about everyone else in the industry, what what does our product placement look like in that space? um what are customers looking for? What are partners looking for? That that was my introduction to that. Um meanwhile, I’m implementing and rolling out a bunch of different robotics projects with my robotics team that we have installing. We have engineers and installers that go around um doing those implementations and those rollouts. Um so yeah, I have

my hand in way too many buckets. I still do in a way, but a little more removed. Yeah. And item is a is a would you say it’s an innovative company? I mean that seems like very aligned with your personality. Very much. Yeah. Very much so. I I think we I don’t want to compare, you know, but with what I’ve seen, you know, being at all these trade shows, having conversations with different companies who have similar profiles. Mhm. Our I think best skill is pushing forward. We always try to break the system to make it better and that it’s scary at times trying to you know see what you can push but pushing the limits

is the only way you can grow as you look across the marketplace. Uh and you’ve obviously done a bunch of research you know about all of your competitors. Uh what are the challenges that that item faces when you’re going to market? I think right now making a distinction about where we stand in the AI space obviously massive buzzword AI AI integrated AI driven AI support AI everything which we are right we have our own agents we have a whole marketplace of agents that we use within our system trained on our system we really want to focus on that agentic model making that distinction that we are AIdriven but we’re not an AI company I think

we’re we’re really trying to target that right we’re we’re pushing ing towards that we’re super users of AI in the logistics space which is where I think we do best right pushing the limits of our own system with AI. If your platform is about uh creating efficiencies and um helping to manage costs uh would you say that what you do enhances human behavior? Uh, does it replace people on the floor or does it just make people better? One of our slogans that we had at some trade shows last year was AI agents replace people, which in a way it does directly replace some roles, but we are huge believers in human in the loop, especially

on the warehouse floor. M um I don’t think robotics to any capacity, even though we want to be that smart warehouse marketplace, I don’t think any one of those robotics companies in that can do everything a human can do. Um and they shouldn’t, I don’t think. Right. I mean the the human flexibility and the ability to do various tasks and be driven to do different things and learning it might take a while for the robotics industry to catch up to that. But that’s why we need robots that are good at doing one thing very well. I think that’s a really interesting point. I think people have this concept of when you implement robotics then like

they’re they take over. They’re doing everything. and they have multiple functionality and every but the truth is like you’re you’re telling the robots what to do and it’s a specific task and and the power of a robot is that like they can do it right over and over and over and over and over again. So that and and so you know trying to take away the uh what um an individual uh who can make critical decisions that’s a robot can’t necessarily do that. But if you need a task done over and over and over again y to gain efficiency you have a you have a whim. Yeah. I’d say just like AI, right? We’re AI

and robotics I would put on the same playing field as empowering the the human in the loop. We’re taking the technology as we’ve done for centuries. Taking the technology and as a user enhance our experience, right? We we take the robotics to do that mundane task over and over very efficiently, maybe to scale, right? So we don’t necessarily replace everyone but you do need some kind of specialization which is where the human in the loop comes in right the robot can’t do everything. Yes, our system can empower the robots to handle everything on an order basis and really communicate with all the systems perfectly, but all the systems communicating perfectly doesn’t equal the result. The

human needs to execute, right? Um, and there’s accountability too, right? Yeah. There’s always liability and accountability that needs to come back to somebody who needs to be responsible for that. And of course, as business leaders, we like that, right? We need to be accountable for our business. Yeah. So when you’re when you implement uh into a warehouse like what are the things that you measure? What are the things that you provide to your customer to help them understand efficiency gains, cost savings, all the stuff? Yeah. Uh we look at the whole solution, right? First of the first step is the customer picking the solution that they want, right? Once we look at Do you help

along that path at all? Yeah. Yeah, definitely. Like I said, we we’re a marketplace for all robotics, right? So, we can come in as quasi consultants, right? And help them understand with what we know about the industry like, hey, maybe you don’t necessarily want a sortation robot. You want a racking robot. Okay, cool. And help them understand why and what that’ll yield and where they can modify their operation to make that the most efficient thing that they can have in the warehouse. Mhm. Dollar for dollar. Robotics needs specialization to be efficient. If you don’t pick the right one, it might be great at doing what it’s doing, but if it doesn’t work for you, there’s

no point in having it. Um, so having that mindset of understanding where the market is and what robots we have that can fit into that specific workflow, that’s where we start to talk to them about, okay, once you pick it, now next step. All right, let’s figure out the configuration. How much of it do you need? Do you want the whole floor, you know, covered in robots? Do you really need that? Do you have a million orders a day? I don’t think so, right? And if you do, awesome. Let’s scale it to that. Um, but let’s be real reasonable and understand where the limitations of the operation are too. Put in what is needed. Maybe

a little more than is what what is needed for peak or any kind of flux, right? Um, but being able to handle that, then we start talking about, okay, what’s your current operation overhead looking like? How many orders can you process in a day? Can you operate overnight? Right? What are your working hours? How many shifts do you have? How many supervisors do you have for those shifts? Talk about the entire overhead of the operation. We come out come out with a baseline of okay, this is what we’re trying to beat. What’s our what’s our timeline to beat that? How how quickly can we get your money back, right? What’s your ROI for that specific

operation? Mhm. Not to mention the added benefit of working 24/7 and having right everything else associated with it. Yeah. Um but just in terms of calculating the cost of overhead, seeing how much more efficient we can be, how many people we can um cut down in in that cost and it comes down to numbers, right? If it makes sense for them to replace those people and most likely it will because labor costs go up as time goes on, material cost doesn’t, right? It stays the same. It’s fixed once you start. Um, but we’re seeing a lot more a lot more traction with um the robotics as a service model for maybe a little bit smaller

customers that don’t have the budget to go in a million, 2 million on a robotic system. Mhm. They can pay a third of that less, you know, over time as they need it. And we can support that. Of course, I have a few questions about that. One one is it seems like uh first of all it’s a very in-depth process planning design datadriven helping your customer make it’s a whole system a really good decision upfront which is not not unlike what we do with our customer providing data analysis to so to help a a customer make a really good a really good decision and then continually providing data on what they decided to do. Did

did you happen to read the uh the Elon Musk book? I don’t think so. Recently, there was one I wanted to ask you about this because at one point he wanted to make he wanted to make Tesla completely built by robots. No humans. I think I saw this on the floor. And so they started down that path and in a couple of the areas discovered that the robot wasn’t as efficient as the human and so pulled pulled those pieces back out. Do you ever have that kind of experience where you like it’s over robot too much robotic? Yeah. Um robots have limitations all of them. That’s why we have so many different kinds of robots.

Um there’s always going to be a special special use case uh um some kind of out of the scope u reality. It’s the real world things change daily. Even if you built it for what you have today, it doesn’t mean it’s going to be what you have tomorrow. Um so even just in a sortation line, right? You have these I don’t know 3×3 robots that can handle 24x 24x 24 packages, right? If you get a 2460 package, it’s not going to work. You need somebody to carry it over to where it’s going. That happens all the time. But that is why you need a human in the loop right there. That flexibility that we have

as humans to understand what’s needed. And even if the system is pushing that one 24×60 package down the line, hey, hang on, flag, pick it up. You know, it’s not going to fit. That’s the intuition that we have that robotics hasn’t gone to yet. Maybe with AI, we’ll get closer. Right now we’re not there yet. Yeah. As you look across the history of the company, I know you haven’t been there since the beginning, 20 years, but right in in your time, maybe over the history of the company, what do you think has been the most innovative or meaningful solution that item has built? Honestly, I would say the infrastructure of the new system that we

rolled out. Um, we did a this is our third version, third iteration of the system, which sounds like a Apple update. Hey, new iOS. Doesn’t that’s not the same. This is a rebuild of the entire infrastructure of the whole system, the entire ecosystem, right? The WMS, the MS, the TMS, the everything connected. Yes. All the pieces connected together. All now running on the same infrastructure. That entire endeavor, Tomok, I think 6 months in with our development team last year just to rebuild it all and make sure it was all down to the wire. That seems pretty quick actually to rebuild a whole system in six months. When you have 300 people focusing on one thing,

you can do it pretty quickly. How much does Tom sleep? Uh, I think I don’t think he wants to answer this. He works two time zones. Oh, that’s good. Well, that’s Yeah, that’s amazing. Uh that that must have been [clears throat] I don’t know in terms of maybe the work on it was but the planning and everything. Yeah. Insane. And not to mention once it’s done now you have to implement it. Yeah. That’s been the past 3 4 months you know implementing one by one customer by customer making sure everybody understands what’s new in in the new system making sure it’s working for all the custom tailor tailored solutions that we have for them. all

the different reporting, all the different everything data, right? That that was in the old system now is migrated. Run it again. Make sure it works. Run it again and again and again over and over. UAT forever essentially. Yeah. Okay. So, you’re saying version, if I get this wrong, just tell me. Version two to version three. Now, you’re implementing. So, does that automat that doesn’t automatically roll out? You have to go each customer individually and depends on the customer. Yeah, we we look at all the customer profiles, make sure you know the ones that have customizations. If it’s not a general customization that we apply to multiple customers, then we have to go in and really

audit that customer profile, right? Make sure that it’s working before we roll it out. Otherwise, yeah, we need to put it in a sandbox, make sure it works, test it, run it, run live orders through it, and then implement it. That’s a whole process, right? That’s standard practice. But for us, it takes It takes some doing when you roll out a whole system. Yeah. How many people uh do you have at item? I think we’re a little under 400. Uh we’re growing I’m growing my own team so it’s going to go higher but uh we have a little under 300 um development team uh in Asia and then in the US we have about 100

between business analysts um data analysts. We have um some implementation staff as well and then people like me who bounce around. Uh all your development team is in China. Most of them. Yeah, there are a few that are here in the US but yeah most in China. Are there what are there challenges associated with being split? I mean I know companies do this all the time. We’re we’re pretty fortunate. Like, yeah, we have some offshore developers, but everybody is mostly here in Salt Lake City. Yeah, there there are challenges in terms of meetings between the two teams, of course, but we’re on the West Coast and they’re in China, so the end of our day

is the beginning of theirs. It usually works out. We get some issues with working um with other time zones, you know, for working east coast. Then sometimes it gets complicated. We have to translate a little bit maybe um have some people from that staff work overtime um or work you know during the deployment hours right we work during critical hours if we have a new new customer or a new deployment new feature or something they’re essentially on call during that timing in case there’s something right there’s a bug or what have you um some order didn’t go through let’s double check you know go through the data make sure it’s it’s flowing correctly um there

are challenges not that we can’t handle them um But we we really push ourselves to make sure everybody’s meeting all of our SLAs’s and make sure we we treat the customer as if we were working in their time zone. Gotcha. Which we do. I mean, obviously we have a team here in the US, right? If we have US customers, we work on their time. Where would you rank customer service, customer support in within the company in terms of how much of a priority it is? I think priority nine or 10. um in between innovation I would say new stuff and customers they fight for first place but but new stuff feeds the customers it’s kind

of a double-edged sword one thing I think is interesting we we talk about it a lot it’s I mean culture is culture is a funny thing in companies and and I mean we feel like we have a strong culture here but that’s most everybody together and So, it’s easy to, you know, walk to somebody’s office and check in and do th do those sorts of things. Is that something that you guys manage or deal with or feel like is something you think about regularly? Yeah. Um especially I I would say especially with just a focus on our implementation teams um who travel essentially constantly to customer sites to do deployments to do checkups to do

audits right the culture in that team surprises me more than anyone else. You know everyone else is in an office right doing their own thing. Oh funny enough the implementation team is tighter than all the other teams. Maybe because they travel together more time together. Yeah maybe. What does an implementation team look like? uh you I mean we have the the support team and implementation team. So you’ve got some subject matter expert. So if we’re doing a WS, right, we’ve got a WMS implementation expert um who goes in, knows the system back to front, knows the challenges, knows how to figure it out before we even get to that point, it’s all the back end,

right? All the integrations, making sure everything’s running, all the data is flowing before we even step foot on the site. Then we get there, right? We have the implementation. After implementation, it’s support. Then it’s the support team. So the implementation and support teams kind of cross over. That’s where I put them in the same category, right? Yeah. Yeah. Maybe that’s true. the people that spend the most time together just naturally kind of maybe they just drink more together. I don’t know. Yeah, that might be a part of it. That that could be. Uh, have you ever been involved in implementation that went wrong or some rogue thing that you had to overcome? Yeah. Or maybe

Tom’s team didn’t build the right I’m sure that didn’t happen. Never happens. Never. Nope. Uh I I would say one of the most serious obstacles we overcame um wasn’t even part of our team. I mean external forces always get in the way but this one especially we built the robotics whole implementation sortation system. We’re about 70 80% of the way there and they say hey um we had an issue with the lease. We got to move 25,000 ft of robotics. That you’d already built 70 80% built out. Yeah. We’ve been building for four or five months already. And they said, “We got to move.” I said, “Okay, let me make a plan. We can get

it done in 10 weeks, right? I have my my crew that can get it done, right? We can tear it down, make sure we track everything, put it on trailers, get it moved. You have five weeks.” What? All right. Here we go. Let’s clean up. Get your boots on, boys. We did it. So, we got out of there. What? Okay. What I think this is a really interesting opportunity here. What are the lessons that you learned from that experience? What are the things that you had to figure out? The things you had to do in order to meet that difficult timeline. Well, one just on a personal level, understanding where everyone’s boundaries are, right? When

you’re working under that kind of critical of a project, you get to understand people a lot better, right? The stress, the pressure, the timeline, the long hours, right? I’m not saying it breaks people, but it pushes them, right? And you really get to understand I was on the manager side of things, right? So, I got to understand the team a little better. Um, but from lessons learned, I mean, there’s nothing we can’t do really. That’s, you know, the bottom line, push yourself, you can do it. Um, learn a lot about communicating with external parties, right? That that’s a big thing you don’t think about when you’re very technical thinking about, oh, this is the product,

this is the system, this is the robotics, we’re doing this thing. It’s very nuclear. There’s you have to realize you’re sitting in a bigger operation. You’re just a piece of the puzzle. Um so understanding that on a larger scale I think that that’s something we learned for sure in that project. Yeah. Uh did that give you did does that give you some sort of confidence that you can manage? Yeah. Any kind of situation I mean going through something like that not any right. What was some what was something you learned about yourself? If you were in a managerial role, your critical difficult time period, what what did you learn about yourself? Long hours don’t have

as much of an effect on me as I thought they would. Oh, yeah. Yeah. I think I I was able to stay composed, you know, stay critical about the project and put my emotions aside, right? Everything else that is out of our control, don’t worry about it. Yeah. Um, a lot of times I think, oh, but I overthink things, right? Oh, this is going to happen and this is going to happen. Oh, this could happen. this could happen and this guy could say this and this guy could say that. That’s noise, right? Put it aside. Focus on the work. You can do it. Got it. That’s what I learned about myself. Yeah, that’s interesting. Is

there is there a project that you look back on that you think, “Oh man, that was amazing. That was the best thing that we’ve ever done.” Actually, when I first started with the company, I I started July 5th. By July 8th or 9th, I was at the customer site deploying software. Yeah, new customer. Never knew anything about it. I was stepping into this role. Remember a junior, right? I had no idea what the company structure looked like, what was expected of me. No idea. But somehow it all worked out. Yeah. We we put it together. We rolled out the product. I mean, everything thankfully everything worked out. What do you remember about that time? What

were you thinking about? I mean, three, four days after being hired, you’re on site. Yeah. Implementing. Yeah. Implementing. I obviously knew knew everything. So, you when you come into a company, you have no idea what to expect. Yeah. Coming back from that implementation trip, I was like, everything is great from here on out if it’s based on that, right? I mean, that much pressure, that much, you know, critical nature of a project right from the get-go. everything’s easy compared to that in my head, right? Three years later, I don’t know if I I agree with that statement anymore, but that was my thought process, right? Okay, this is this is the most that is going

to be demanded of you. Awesome. Let’s do it. What more can we do? Yeah. How important is it like as we’re talking about some of the ch overcoming some of these challenges or interesting projects that you’ve you’ve done? How important is it to have uh the you know a team a team that’s all aligned mo you know all moving in the same direction? Yeah, it very important. But I would say sometimes it gets it gets tricky to make sure that it’s not just the team aligned, but it’s everyone understanding what each other are doing. Um I think that’s even more important than being aligned on what the goal is, is understanding what work is being

done, what’s being put into the project, right? Where do we stand from the work being done perspective, right? It’s not just high level. Okay. Well, we we met these milestones and we met with the customer and we did all this. We’re aligned. Aligned. Mhm. But we have to understand what goes into that, right? I think that that’s more important um than the alignment. But that falls into the same umbrella. So alignment almost one of the most important things in the project. Yeah. I like that other thought on it though is team the teams understanding contributions. Yeah. and and what everybody is is doing. Same same as the robotics, right? I mean, it’s a team, right?

Each one has a specialty. They have to know what’s going on outside of that. Yeah. I think that’s one of the most challenging things is we is I am even looking over e-hub and and what we’re doing is I think we we’re thoughtful about that. We try to do that. But even those are things that can fall through the the cracks between departments like understanding what development is doing and why that is meaningful for partnerships and how that affects sales and how marketing is going to take all of these things in time together for the for the customer. So yeah, I think that’s a really interesting take on it is is internal communication, understanding what

each team is doing relative to the right to the overall goal. We’re all working for the common goal, right? But it’s so easy in a team where the technical team is working with the sales team or the technical team is working with the implementation team. It’s so easy, so quick for each of those teams to be like, “Oh, they’re not doing anything. We’re doing most.” Oh, yeah. Yeah. We’re carrying the team. Absolutely. But until you understand what is going into it from all the different teams Mhm. I don’t know. It’s very easy. It’s still pretty slow to do that. Yeah. Yeah. Well, I mean, just take it back to the soccer analogy again. Everybody has

to have an understanding Yep. what’s happening on the back line and how that affects the front. Yep. And if everybody works together, you know, can figure out how to score a goal. Yeah. as you look at as you look at uh what you what item is doing currently and well let’s talk about that what are you seeing in the market what are you seeing in the logistics market what are some of the what are some of the factors that you consider as you’re building the product or continue to innovate the product sure yeah I mean I mentioned before right AI AI is starting to break into the industry um as different software providers and um

service providers are using it. Um I haven’t seen much of anyone building um in the logistics space but AI empowered systems are just as valuable right and that’s that’s kind of where the entire industry is heading right using leveraging AI in their systems training it on their systems to give the customer a better more optimized more efficient order pathway right I mean that’s the goal is making sure that you have the least amount of touch points possible and increase that efficiency, speed up your order delivery, speed up how quickly you can get things in and out of the warehouse. That’s what we’re seeing a lot a lot of not just WMS systems, systems across the

board, even e-commerce, right? Using AI to analyze the order data and where they’re coming from, where you should manage more inventory, where you should hold um overflow, right? I mean, the whole market is now starting to leverage that. Do you work with how many dozens? How many robotics suppliers do you work with? Uh integrations and working with I would put in two different categories, right? There are a lot that we’re we’re assessing their technology. We want to make sure that they’re not just a proof of concept. We want commercial products. We want products that have at least 10 15 deployments. that might be a stretch but for larger operations we want to use those guys

right they’re they’re proven their system works um but between the two of what we have already integrated in our system and uh ones that we’re assessing ones we have talks with about 15 20 I want to say yeah and we’re it’s not just robotics that we’re calling ourselves a smart marketplace right it’s different hardware options right different PDA scanners long range scanners There’s uh cameras, um even the robotic dogs, right? Things that you wouldn’t think of that necessarily fit into that smart warehouse. 100% they do. Okay. How does a robotic dog fit into the warehouse? Outside of uh getting people to take my business cards that I put on top of them uh and we

take them to trade shows. No, we use them uh we use the the dogs in to do a yard check, right? So cycle count of the trailers in the yard. Um, all the trailer is fitted with RFID tags and it’s RFID scanner on the robot. It’s just GPS coordinates, right? Real time. It can do security checks in the perimeter all the way around. Um, has a little dog house. No. That’s hilarious. Yeah. [clears throat] Uh, but you can do it in the warehouse too, right? In the warehouse cuz it’s a little bit more level. Um, we prefer to use AMRs. It’s a little cheaper than the robot dock. Uh, but you can’t put those little

MR AGV little Roomba robots outside in the yard. It’s gonna get run over. It’s gonna fall. It’s going to get stuck on a little rock, right? That doesn’t work. So, someone going to steal it. Enter the dog. Yeah. The dog’s pretty big. It’s like probably 150 lbs. Is that right? Yeah, it’s pretty big. So, these dogs aren’t I mean, when I’m thinking of dogs, I’m thinking of the dogs that are like sniffing around for illegal substances in the warehouse. No, these are uh That’s not the dog. Um, I’ll call it military minus dogs. They’re the ones that you see from Boston Dynamics with all the guns and everything on them. Um, I think the company

we use Deep Robotics and then we have Unitry um, smaller one. Um, yeah, we we just do the the R&D to fit everything on there. How long before someone tries to take a robot dog on an airplane with a service animal coat on it? Have you seen that yet? I’ve seen Yeah. I mean, I think as long as they take the battery out, the airline wouldn’t carry. [snorts] Just carry it. as you look into uh the the future of logistics and what you’re doing, uh what are we what are we going to what’s going to happen? Are [clears throat] we going to see full robotic warehouses, no human interaction? Like where are we headed with

this with this whole automation AI from from a technical perspective? I would hope so, right? I hope smart warehousing becomes what it should be like it is in other countries, right? We have a partner in Japan that it’s running rampant because they’re limited space. They don’t have 1.5 million square foot warehouses like we do here in Arizona, right? They don’t have that kind of space. They’re on an island. They’re building up, right? They’ve got maybe 30,000 square feet, six levels. They got the spiral going up, right? That’s where robotics is king. Sup super me. Yeah. So I I see that I see us leveraging a lot more robotics in smaller operations in the US. Tricky

part is that hurdle of the price tag, right? Which is where that robotics as a service hopefully can bridge that gap in the industry. We’re really hoping that that’s something that people have an appetite for. Um as we connect all these various robotics companies, they’re interested in that too, right? They’re looking to break into the US market. US companies, smaller companies want to get into automation. They don’t want as much overhead as they’ve been having. That might be the gap that we can bridge. Is there a specific spot where you can determine the yes or no? Like, yeah. Okay. Now, it’s time to go volume. Package volume. Package volume. It does it is it strictly

volume or is it does dimension or weight or anything else come into play that plays a role in deciding which robotics application is best um but not as much is really volume right how much do you need to get in and out of here and how fast do you need it right um many of these operations have storage too right they’re doing fulfillment with storage overflow they don’t have the space they maybe have 10,000 square feet to hold and stage and process and if they hit peak they need to expend 25 30,000 you don’t have that space. Instead of moving buildings, bring in a robot. So, what does that look like? I was going to

ask you that exact question. You already brought it up, but uh so incorporating robotics into the warehouse could help you maximize the the space that you have 100%. Available. Yep. Yeah. Um I mean, the racking robots for the smaller tote ones Mhm. You’re looking at foot and a half rack spacing. You don’t need to fit a forklift through there. The robot goes maybe with the bigger ones, right? You got bigger bins. You got 3 ft. Okay. Compared to 8 9 ft. Yeah. You need to get a forklift in there. Yeah. Or a bendy, right? Yeah. Narrow. H. Maximize how much you can fill in. Even if you put it in four or five different bins,

if you have a small enough product, it’s not a problem. What what’s the most sophisticated warehouse automated warehouse in the US currently? I think by and large Amazon. I was hoping you would say something else, but I had a sneaking suspicion it was going to be Yeah. Well, Amazon has has the capital to put in to invest and maybe even build their own. Um, but they they do a lot of robotics with conveyor systems. Ah, that really is where I think the the best of both. If you’re talking about hybrid model in a warehouse, you have the people with the conveyor, the robot. That’s the best you can do, I think. What would be your

ideal scenario if you’re for for you to walk into a space? What is your ideal scenario to implement all of your stuff? I think you’re asking for what does a worst case scenario warehouse look like? I didn’t say that. I think that’s what you’re asking. U So, so is that what it is when you walk in and you’re like there’s if this is a blank everything is on everything is on paper. Everything’s on whiteboards and chicken scratch on paper. Hey, you make you’re you’re saying that now, but that still happens. It does. You’d be surprised. Absolutely. Yeah. Especially it feels like in Well, we call it freight, but you probably call freight everything. But when

when we’re talking about freight uh like um Yeah. Yeah. putting stuff on an you know 18 whatever. Yeah. Like we have been in scenarios recently where all that stuff is like they’re still writing it out. They’re writing notes on the back of the B. Yeah. I’m like what are you doing? Yeah. Yeah. So you want Yeah. If everything’s on paper, if they don’t have racks, if they’re if they do have racks, they’re facing the wrong way and they’re having to run all the way around the warehouse to go get them. Staging areas all in the way, no location signs, they don’t even have mobile phones to scan anything. I mean, that’s our ideal solution, right?

We Hey, uh you want to take your take your business to a totally new level, right? And this is just basic industry knowledge, right? that that we have that I’m not everyone else also has that knowledge right we have very similar platforms but it’s the application right how easy is it to come in how easy is it to roll it out for a small operation like that we can get it done in a month right yes we can give them recommendations and and how to structure the warehouse but just from a systems level we can take over very quickly very very quickly and for somebody like that who’s not willing or can’t really spend that

much on a system, we can kind of help them in that in that department too, right? I mean, it’s very SASoriented build as you build, right? Use our system as you grow. We can talk about we can talk about the next level. We can scale it. Yeah. Is there a number like what if I said what is the minimum that you could spend on some automation? Is there a number is is does that exist? There’s a lot of follow-up questions, but it can exist. Yeah. I mean, if we let’s just do baseline, right? 10,000 square ft. You need to do sortation. Mhm. Right. Basic sortation. Um, you need 50 locations. You could do it under

half a million if you want to buy it. Yeah, it’s possible. Now, not necessarily recommended, right? That might be the cheapest option if that’s just something you want to get it to get in the door. Awesome. But you could do a third of that. See if it works under the the RAS model, right? Rent the robot. See if it works for you. If you want to scale it, let’s do it. Right. That’s that’s kind of the same model as we have for our software, but for the robotics. You know, I might challenge you. Actually, maybe I won’t challenge you, but I’m going to offer you a a different I think this might be near Irvine,

too. Is uh the Elron Hubard Church of Scientology. Are you familiar with all of this? They have a huge warehouse. Do they? I want to say it’s in Irvine. Okay. Maybe it’s in that area. Okay. It’s in that area. Let me call Tom Cruz. We wouldn’t go get in there. That’s good. Oh, so we went and visited this warehouse once upon a time. Okay. And I this was a long time ago before robotics and automation were really a thing. But to this day, that is the most high functioning, well-managed, cleanest warehouse I’ve ever seen in my life. Really like not a speck of dust on the floor. Everybody in uniforms, stuff moving around, rat like

it was like beautiful walking into this. It was like a heavenly It was the heavenly Yeah. the church of warehouses. The warehouse. And then we got a we got the the tour through his old well they’ve replicated his office and some other stuff and which was also fascinating. Yeah. Um, but yeah, I don’t know. May maybe there’s an maybe there’s an opportunity for you. I don’t know if they’ve incorporated robotics. They’re so efficient as they are currently. Yeah. Well, efficiency with humans might mean might mean some cash. Mhm. We’ve noticed that too, right? I mean, when you’re talking about optimizing a warehouse and you’re talking about bringing in robotics that cost money. Mhm. You’d think

you want to get rid of your highest earners first. You shouldn’t. They’re the one with the ones with the most knowledge of your operation, the most knowledge of your system. You want to leverage them. You want to use them as part of the system. Treat it like a a further investment into the robotics cuz any part of the chain that the robots is missing, you need somebody that knows. You don’t want somebody that just started a month ago. That’s really right. Yeah. Maybe you pay them the least, but it’s not necessarily the most cost effective to get rid of them because you’re going to be training them. You can’t train a robot and a person

at the same time. Yeah. Then you’re the trainer, right? Yeah. Well, and that that’s a hard thing. I mean, not this is no knock on on anybody working at in a warehouse. That’s like that’s super meaningful work and it’s good work and there’s high productivity associated with it. But I I would say that, you know, in that scenario, the the the person packing the box or putting on the label or whatever isn’t necessarily incentivized to make the most efficient decision relative to a box and the product and how everything is placed and and so you can you can help overcome that, right, with some automation, but you still want to keep the guy with all

of the tribal knowledge around if that’s it. Yeah, that’s really systems can go down and when it does you don’t want to be left with no know people who don’t understand yet. Yeah, that’s really interesting. Yeah, I like that. Okay, so if you could create uh the platform of the future, what are the things that you’re thinking about? What are what are the things that item is thinking about as they continue to innovate? Yeah, I think completing the the vertical chain, right? Everything associated with logistics, we want to have some kind of solution or be integrated with some kind of solution. Um whether we have that technology already or we leverage partnerships, right? We want

to be a place where it’s easy to run an operation. We want to have the tools available for everyone. Yeah. Not not just for the big enterprise guys that are, you know, using their ERP and their on SAPs, WS, right? I mean, those are also great candidates for robotics, right? Different pieces in the puzzle, but not for the whole chain, right? We want to empower small businesses that are small now to grow and we’ll grow with them, right? We have the tools to get them to where they want to go. We support where they want to go already. So for them to get to that point, I think there’s a lot of opportunity there of

having that that we talked about allin-one, right? I don’t want to call it allin-one, but it’s it is one place where you can get most everything you need. Yeah. Yeah. Do you and you do you call it a marketplace? Do you refer to yourself as a marketplace? It kind of feels like that. We have an agent marketplace, right? And we have the robotics marketplace. Some marketplaces. I mean, you can [snorts] I like to call it an ecosystem in terms of the modules. I like that better too. Yeah. But within those modules there are marketplaces. Gotcha. Yeah. Okay. So you said earlier that it’s kind of volume based and that that helps you determine when is

the right time to Okay. So what at what type of volume should a warehouse be thinking of contacting item? I don’t think it’s a matter of how much volume in terms of the number of packages, the number of orders. I think it’s more tied to their current operation. What’s what volume would break them is what I want to know. What volume would make them hire five more people, right, to handle the operation consistently through the year, not just at peak, right? They want to grow, too, right? So, they’re hoping that number grows and they can find bigger space and they can get more more warehouses. But when that number is going to break the their

operation, that’s where as an alternative to going the traditional route of buying more warehouse space and getting more trucks and getting more warehouses and getting more right more and more more of the same we’ve seen. Mhm. Optimize what you have now. And then if you still need it, then have a a release valve, right? Go somewhere else, right? But really make sure you’re using your space that you’re currently paying for, which probably you’re paying less than you will when you change. Mhm. Use that to its full capacity. So I guess those would be two markers. One is, you know, what volume is going to break you in terms of labor? Yes. Adding more people. What

volume would make you would force you to move into into a bigger larger facility? Is that something that could be managed through some automation? Yep. Well, and not just for the robotics automation and the warehouse operation piece, but the system too, right on the back end. Yes. What number will break your system? Whether it’s you need to now get a higher tier of whatever platform you’re using or you need to switch to something entirely different or you’re going to try to use the same thing that you have and it’s going to break the system. Right? We’ve seen that happen. Yes. That that threshold is what we’re looking for, right? That’s where we can say, “Hey,

you can scale it any degree. talk to us, right? Let’s figure out what works for you with what we have now. Start small, smart, start however you want to start with your current operation with a new business, right? You want to sign a customer or two just to test it out, right? See how that goes. We’ve all had that sales cycle, right? Oh, let’s try 5,000 packages here. Let’s try 10,000 10,000 here. See if it works. Instead of making your current system run all that, yeah, try a new system, too. Why not? You’re trying a new customer. we might as well try a new system. Yeah. And lots of different avenues to target. Yeah. Well,

it’s a it’s a great company. Uh I I love your focus on partnerships. We feel the same way like there’s multipliers and partnering with the with the right people. And so we’re we’re excited about the opportunity to to work with you guys as we as we move forward. And really appreciate you coming and telling us a little bit about it. Uh where can people find you? And uh are you gonna be at trade shows this year and where? Yeah, we are uh supply chain shows coming up. We’re doing Real Link in Orlando on the I believe that’s the 2nd or the 1st of February. Um and then we’re doing Manifest in Vegas and then Modeex

and other shows to be announced that we’re still booking. Will people find you find that on your website? Yeah, item.com. Item.com. Okay. And then where do they find your profile? Well, I mean, I’m sure be fascinated with you after this, I guess. So, I don’t know. You might be bored after talking, but Okay. What was the before we let you go, what was the most valuable lesson you learned from your parents growing up? From my parents, never stop learning. Oh, that’s a good one. It’s kind of a foundational. It is, you know. Yeah. I mean, I go back to it all the time, right? Anytime I’m feeling stagnant, you know, I’m feeling like I hit

it hit a ceiling, I’m like, what haven’t I learned from what I just went through? What can I learn more? How can I grow? How can I Yeah. Lack of a better term, how can I wear more hats? Right. Yeah. What do they say about comfort? Comfort is the death of innovation or some something like that. Yep. But you get comfortable and then it’s easy. It’s really easy. Yep. To kind of take a step back. Yeah. Well, it’s easy to keep learning in a company like this. I’ll tell you that much. Well, we appreciate you being here. Best of luck future great success. Thank you so much. Leo Alvisida.com. Thank you. Thank you. Thank you

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