Earlier this year, Nextmv founder and CEO Carolyn Mooney interviewed Charu Thomas, founder and CEO at Ox, and Alex Torrey, founder and CEO at The Rounds, about the role decision automation plays in their technology stacks.
The Rounds is a two-way, last-mile logistics network operating in 4 US markets and growing. They focus on circular logistics (moving goods from point A to point B and back again) to deliver items sustainability and efficiently.
Ox (short for “operator experience”) builds wearable human-centered automation technology for front-line operators. They currently serve enterprise and mid-market retail grocery and third-party logistics company around the world. Their mission is to change the cultural relationship humans have with automation.
The following captures portions of a longer conversation, and has been edited for length and clarity.
Carolyn Mooney: Logistics and automation are really core to both of your operations. Can you tell me more about the role it plays and why it's critical in the context of your business?
Alex Torrey: As a two-way, last-mile scheduled service, automation is absolutely critical. We are vertically integrated. We operate hubs, inventory, and what we call NRC's (neighborhood refillment centers), which is our last-mile dispatch. It’s critical for us to be able to have the right tools to be more efficient and more durable. What I mean by “efficient” is that it often comes from efficiency in fewer miles and less packaging and just good design. In our opinion, good design is design that minimizes waste. We're building a big business, and we need it to be very durable and very scalable, and make sure that we are optimizing how we work. Automation has two paths. There's process, and there's decisions. We all need to use it for both of those paths to conduct our day-to-day business.
Carolyn: I like that distinction between process and decision making as well. Charu, can you give a little bit of insight on how automation plays into your business?
Charu Thomas: In our context, automation isn't about replacing humans, but rather augmenting their capabilities. The operators that we serve can be anyone in the front line — whether it's warehouse pickers, couriers, or freight operators. We give them a wearable technology interface across any device: smartphone, smart watch, smart glasses, or any other device that they can put on their bodies.
I really like what Alex said, about the combination of process and decision making. We have a very similar approach where we talk about people, processes, and technology. In our go-to-market, we come into the facility, and we take a look at the as-is state with those three factors. And then we layer in human-centered automation to figure out what the facts-not-feelings business case is that automation could provide in a real environment. That's how we think about it.
Carolyn: I think the reality is, most systems that we deal with are human in the loop. There are humans that are making some of the strategic calls, etc.
Tell me a little more about how you started. Was it all manual? Were you in spreadsheets? Did you use simpler tools? Did you start right out of the gate with what you wanted to do?
Alex: We think of it as first, second, third gen. First gen was manually plotting points on Google Maps, flexing Google Sheets to the extent. Then we moved onto a tool, Onfleet, and that was helpful for us to optimize individual routes. That was the second gen. Third gen is being able to optimize the full day, and gain a lot more power in how we are optimizing on the route optimization side. We've been very lucky that the business has grown quickly. But when you're managing that pace of growth, you're always behind. Without being able to get the right tools in place, we would not be able to do the core business of getting people what they want accurately, on time, or reliably.
Carolyn: It must have been a little bit different for you, Charu, especially with the human-centered technology piece and wearables. How did you all approach that automation?
Charu: My journey into the field of automation started many years ago. My first role was actually servicing a third-party logistics company that served McDonald's North America, and since I left they've also grown to Chick-fil-A. My responsibility was to deploy large scale automated storage and retrieval systems — like giant vending machine-style robots.
The big takeaway was that those forms of automation are really efficient. But they're also incredibly expensive and take many years to deploy. It prompted me to consider: Are there lower infrastructure forms of automation? Can we leverage emerging technologies like artificial intelligence, augmented reality, computer vision, etc. to improve operations through software? And that's what led us to human-centered automation initially.
Carolyn: Alex, what do you think about trusting the goodness of automated solutions? Especially as you're thinking about a network of logistics where you're covering a whole city, and you have operators that are on the ground only seeing a portion of that system.
Alex: It starts with the idea that it’s not automation for the sake of automation. Instead, how do we apply the 80-20 rule? What are the 20% of tasks that will get us 80% of the benefit? That alone makes the area of tasks that we need to have trust in smaller because there's specific things that we will want to manage and apply more of the tools to automate those tasks. It's making sure that we have the flexibility.
As a startup, you don't have the challenges of scaling that you have in mature businesses. What you do have with a startup is uncertainty. Our business model changes. We're experimenting. We have the flexibility and the power to test things. Our business touches cities. It's in the real world for us and outside of a closed, controlled environment. We know what's happening in our facilities, but as soon as a bag gets put on an e-bike, and it gets sent into the world, we lose control over what's happening. So there is the need to make sure we're really being good about the flexibility piece.
If you break it down quickly, it’s about the two-way last mile. One-way forward logistics? That problem has been solved. Where we’re innovating is in coupling our physical infrastructure with software, automation, and being able to operate in an efficient way to do the reverse logistics, and then put that whole two-way last mile network together. It's about understanding where we want to apply the most calories in terms of getting the best result from the tools that we use.
Carolyn: How does automation technology really impact the individual’s success? We just talked about the system-level success with automation. How do you see that impacting an individual user?
Charu: One of the original, immediate value propositions that we have for the individual is in training. In about 15 minutes, operators are trained on our devices, and then they're able to do any task within the four walls. This is compared to the traditional six-plus weeks of onboarding time that it typically takes. And in the environments that we're deployed in, there is high turnover. On average, the US Bureau of Labor and Statistics approximates that 54% of operators turn over every 12 months, and for some of our customers it's as high as 90%, which is mind boggling. So you need the tools and technologies to really be able to bring people up to speed quicker, but also to reduce their physical strain.
Another capability that we offer is with our intelligence, which ensures that with a minimum number of steps, you're fulfilling as many tasks as you possibly can. That also mixes types of tasks as well. Operators are generally walking miles on a daily basis. If we can decrease the amount of distance, that's only one part of the equation. When we think about human-centered automation, it's not just intelligence. It's not just wearables. It's not just experience. It's not just visibility. It's how all of those components come together and make a more efficient operation. That's the immediate benefit for the individual operators.
Carolyn: I agree with your earlier statement about how automation isn't really replacing jobs, it's changing them in terms of how much an individual can do or how efficiently an individual can operate machinery or complete a task.
One of the main reasons that automation is becoming so critical right now has a lot to do with sustainability. It's natural to talk about the trade-offs as a business between efficiency and sustainability or eco-friendly policies. Alex, I know this is a core topic for The Rounds especially. How do you think about those aspects of your business playing a role in ways you expected or haven't expected?
Alex: To me, efficiency is good design and waste reduction. The areas that make us more efficient and make us a better business are also the areas that allow us to hit our sustainability goals and drive the impact that we want to see from a waste reduction point of view. That is the sweet spot, and I think any misconceptions come from the idea of automation as a competitor. I think automation is something that augments what we're currently doing, and it comes back to process versus decision. When we're automating our process, we want to be able to flag problems sooner, be able to bring the problem to the human, and build the system. We want to build the process in a way where our team can be as efficient as possible. As the business grows the team grows, and it's been proven that this is what allows us to be more efficient and go upstream with the types of problems we're solving with our teams.
Carolyn: I like that definition, that efficiency is fundamentally waste reduction. We talk about optimization as decision-making technology, and people have the misconception that it's about profit maximizing. That's actually not true. Most of these decision models are cost reduction, and that cost can be on road miles, it can be steps taken in the warehouse, or it can be other factors that are leaning into sustainability. My anticipation is that we're going to see that more and more as regulations become critical in sustainable systems. I think that's a good thing. We can have systems that are deciding on sustainability factors, instead of just pure cost factors.
Alex: As these systems improve for us, it opens up entire categories. We now offer composting and fresh produce. We would not be able to do that on our older models because of the impact that those new categories have on our system. That's where you see the whole pie getting bigger.
Carolyn: Looking back so far, would you do anything differently in terms of technical or software choices, or how you've made that progression? Everybody here is at a stage where we have full tech teams, so how have you made those decisions? And would you invest in anything sooner?
Charu: To some extent, all of the decisions that we made led us to this point. From that perspective, I don't regret anything. That being said, the way we approached it was to start with something very familiar, cut as much as possible, do the bare minimum, and then over time, add more infrastructure. Over the past year or so, we've been upgrading our backend system to handle more scale. And that also has to do with CI/CD and automated testing and building the infrastructure. In the past, it used to be maximizing velocity: How quickly can I get new things out? Over time it's also become that balance of velocity plus stability. We’re not just building new things, we’re also making sure that the things that we build don't break what is already in production. Again, I don't necessarily regret it, but taking a look at some of that infrastructure a little bit earlier might have been helpful. Pairing it down at the engineering level is probably the best approach because you don't want to over-engineer it either.
Carolyn: Alex, if you had to do it over again, would you make any different choices?
Alex: Absolutely. I think there's a lot to be learned from the process. One thing I’ll add, that is a little more philosophical, is the concept of working in the business versus working on the business. Being able to balance that is hard. It's a good problem to have when the business is growing, but it takes away the balance of being able to have part of the team that's really working on the business. The classic what-would-we-do-differently-question, would be to move through those three generations faster. At times we were taking 10 human labor hours to do something that takes 10 minutes, and it's something that we would do every week. It starts to make sense to automate that part of the process. When there's no slowing down, that balance of working in the business and on the business can be challenging. Not coming in with a solution, just flagging that that is an area that I would encourage companies, certainly in the early days, to be very mindful of.
Carolyn: Last question. What do you think the next automation opportunities are for your companies?
Alex: We're building the circular economy. We believe it's the future of retail and commerce. There’s no way to get there without automation. It's a whole other level of efficiency in the system to operate two-way logistics. The opportunities are absolutely massive. This is similar to the railroad; creating and building the actual rails that will power a circular economy will require a ton of automation, so I'm fired up. We have a lot of work to do.
Charu: For us, it's also at the middleware infrastructure level. Making sure that we have the capacity to go live quicker than we can today. That's what we're working on and what I'm really excited about.
To learn more, view the whole conversation from our recent techtalk, or browse our full collection of techtalks and videos.
