Revolutionizing Logistics with Stretch

- Welcome toRevolutionizingLogisticswithStretch.I'm Shirley. Goh, your host for today. We have a special guest from Arvato, and we're going to be talking about Stretch's deployment there, what the future of the warehouse of robotics looks like, and what's next for Stretch in Arvato. And to kick things off, we have a short video for you. [VIDEO PLAYBACK] [MUSIC PLAYING] - Here at Arvato, we work closely with our customers to fulfill and solve a lot of the challenges that they have with their logistics and supply chain operations. We had a vision for completely automating a carton from loose loaded in a container, all the way to the outbound process. We already had the scanning and systematic pallet-building and sortation. Stretch was kind of that last puzzle piece that we were missing to have a true automated loose load, unload solution. Stretch can unload everything that we bring in in a loose-loaded form. It allows us to improve the back end, the sortation, with just a little bit of our logic change, and we're able to really achieve higher throughputs than we ever imagined. - Stretch is our mobile case handling robot. We're focused on inbound container and trailer processing. When Stretch goes in the container, you just press a big play button and Stretch starts unloading the container for you. It'll start picking the boxes, wirelessly communicating with the telescopic conveyor, saying, come closer, go farther away, as it picks boxes of different sizes, and places them on that conveyor belt. [END PLAYBACK] - Welcome toRevolutionizingLogisticswithStretch,if you're just joining us now, I'm Shirley Goh, your host for today. I want to also encourage you to put questions in the comments for our speakers if you have something you want to ask them. I wanted to introduce our speakers. We have over here, Mitat Aydindag, our President of the Tech Industry Vertical at Arvato. And Marc Theermann, our Chief Strategy Officer here at Boston Dynamics. Welcome. So, to start off, Meta, why don't you tell us a little about your role and your background. Sure. Thank you for having me. My name is Mitat. I'm 25 plus years in the industry, 23 plus years with a company. Started in Germany, warehousing and client management. Moved in 2008 for 10 years to Asia that mainly business development and solution design. Runs a region in Asia for a couple of years. And 6 and 1/2 years ago, I came to the US, run the country organization for Arvato, and two months ago, I took over the new role as a Global Tech Lead for the vertical tech within Arvato. - And for our audience who might not be as familiar with Arvato, can you tell us a little bit about the company, the industries it serves, the geographies that it's in? - Sure. Yeah, Arvato, German-based company, a fulfillment provider providing distribution and warehousing services and transport management services, actually, to mainly three industry verticals. So, one is health care, mainly in pharma and medtech. We do consumer products, beauty and fashion. And then the tech industry, operating in 100 facilities in 17 countries. And the focus definitely in the past was Europe, because it's a German-based company, so it grow stronger in Europe. But we made very good progress in the last few years in the US, and followed by Asia, clients like us because of our client-centricity, dedicated account management. We try always to provide innovative solution with our strong IT backbone and our global presence and truly global service offering. - And can you tell us more about the tech industry vertical? - Sure. The biggest was in Arvato, the biggest vertical was in Arvato. I personally started actually working for one of our major clients 23 years ago. I believe it's one of the most advanced supply chain industries, actually. Very exciting, and challenging, at the same time. They keep looking for change. You're working on challenges with the clients together to adjust, to adapt. So, it's a great industry to be in, actually. - And Marc, if you could tell us about your role and your background. - Yeah. Thanks for having me. My name is Marc. I'm the Chief Strategy Officer at Boston Dynamics. And for us, that means that I run our commercialization of our three robotics lines. I'm actually fairly new to robotics. I was an entrepreneur most of my life. And later on, I spent about a decade at Google. - So what spurred this move into robotics? - I think I've always wanted to be in robotics. And as a matter of fact, when I took this job, my dad said to me, it's about time. You've been talking about this since you were eight years old. So, it's a great homecoming. - All right. So, let's start off by talking about this campus in Louisville. It's a sprawling three million square feet. There's five facilities, Stretch is deployed at one of them. Can you tell us more about it and what went into the planning of a campus like this? - So, yeah, Louisville is one of the main logistical hubs in the US. So we started in 2006 in Louisville, and it grew. The campus concept grew, also. I mean, that was not initially as a concept there, but it developed over time. We invested more than $100 million our facilities. The majority went into logistical infrastructure automation, what you mentioned. Stretch is one of them, but we have normal conveyance, carton erectors and closers, tech labelers, palletizers, depalletizers, cobots, et cetera. The facility where we deploy Stretch went live in 2016. Extensive planning, obviously, from our engineers and operations. To bring it live, it's always the tricky part, obviously, the different components need to tick and they need to work all together. So, a lot of testing, troubleshooting. And then, obviously, to bring at the time, we brought in 300 colleagues, actually, to ramp up training. That's a focus. There's not only automation, obviously, we're ERP or warehouse management system where people need to get familiar with. So, was a quite project. But that's a normal development when you went live with such a facility. - Yeah, yeah, that's really interesting that the opening of this facility led to job growth in the area. What were your goals with automation? And how did you see Stretch fitting into that? - So, generally, automation, I would say, is we try to make processes easier for the colleagues on the floor. And on the other hand, we need to generate throughput. So not everything is possible with manual work, so you need some certain level of automation. Stretch is a special case, because back five years ago, was that main client in the facility. We decided actually we wanted to automate the entire inbound process. And we were successful in many of the steps, like the putaway we did with the AGV. We palletized with a cobot. We had an automated wrapper. But we always had this gap in the unloading of a loose loaded container. SHIRLEY GOH: Right. - And when I saw the first time the Stretch, I thought, that's it. It took, obviously, a while till we deployed it in Louisville, but we closed that gap, and that area actually was the Stretch robot. The second dimension on the Stretch is, unloading a container is really tough work. So it's difficult to get the colleagues, and especially in summer when the containers are like 120 degree inside a container, it's not too easy. So it's an excellent addition to increase our throughput and capacity. SHIRLEY GOH: Great. So Marc, Arvato has been with us since the early days of Stretch. What made them such an ideal partner? MARC THEERMANN: It's a good question, I think cutting edge automation is not for everyone, because our clients have to realize that they're making a trade-off between being at the leading edge of what's feasible today and leapfrogging the competition, and the reliability. Because these are brand new machines. So we visited the Arvato leadership team in Germany, and of course, [NON-ENGLISH SPEECH] So, we visited the Arvato leadership team in Germany and talked about that dichotomy of reliability versus being at the leading edge. And they decided to go on this journey with us. And it's been a fantastic partnership. So we think that clients that deploy these machines today will be at the forefront and will leapfrog their competition. So, these mobile autonomous robots are coming. So now is the time to jump in, even though the technology is not mature. - And I think that's an important relationship. Do you think there's a benefit to companies like Arvato in partnering with us in the earlier stages of our products? - Yeah, I think not only are you at the leading edge, but also, of course, you can influence our roadmap. And I think that's important, too. MITAT AYDINDAG: Yeah, if you look to the application today, Stretch is unloading a container, but who doesn't, I mean, why should it not pick up a box, also, right, and do picking in a wide aisle, for example? So we hope that we can work together, obviously, to enhance some of the application-- MARC THEERMANN: Yes. - --or bring some more application into it actually. MARC THEERMANN: Yeah, yeah. - OK. - And the hardware is prepared for that. We built Stretch in such a way that the hardware that you bought today, is ready for future applications. So, just like your cell phone is able to get new functionality by downloading an app to it, we think that the same will be true here. Through the download of new applications, all of a sudden, Stretch could maybe palletize, depalletize, order build, and in the future, maybe even load a container. - That's right. So, I actually want to take a step back now. Boston Dynamics is known for robots that mimic human and animal movement, and sometimes their form. And when we entered the logistics industry, we started with a robot name Handle, that people likened to an ostrich. And that evolved into Stretch. Just curious, Mitat, what were your initial impressions the first time you saw a Stretch in person and you saw this big box moving robot? - Maybe my image-- I couldn't imagine something like an animal, but what I saw, was just, I thought it was really pretty cool, actually, that there is a robot who can do that. I mean, there's a lot of intelligence which goes in there, right. The boxes are, we have normally clients, which has very standardized, homogenized boxes in the container, but still, to know which box to unload, et cetera, and in that speed, that was quite impressive. I thought it was pretty cool, actually. And I thought like we close a gap, which we were talking about for a long time. That was my first impression. - And Arvato really embraces innovation, but how do you decide? What makes the cut what gets implemented in your warehouses? What's the criteria for that? MITAT AYDINDAG: So, we have a pretty, so the process is quite structured. So we have an extensive engineering team, and we have a dedicated team, modern warehouse team, which are looking for automation, new technology permanently. We try to look whether there's a use case, that's the first thing. And then we see whether there is a business case behind it, actually behind the use case. And sometimes even if it's at the edge, but it's important to us to learn, also, so sometimes we invest also. Maybe the business case is not perfect. But we believe that there's along the way, there will be benefits learning for us, for our people, so we decide to implement. And other dimension I think what is important is, people availability is not always so simple, especially post COVID. There was challenges to get the colleagues in, actually. SHIRLEY GOH: Yeah. MITAT AYDINDAG: Plus, the cost. The hourly cost exploded, actually. So these things make automation pretty reliable, or pretty good solutions, actually. SHIRLEY GOH: OK. Well, let's get to the heart of it, because I think everyone wants to how did Stretch do at Arvato. We're in peak season now, but when I was there earlier in the year to film this video, I heard that Stretch exceeded throughput beyond your wildest dreams. I might be paraphrasing a bit. [LAUGHTER] MARC THEERMANN: Maybe. - So I was told that especially with multi-picking, and that Stretch's ability to both pick and place multiple boxes at once, two, three, four or more cases at once, that that really cranked up the throughput at the facility. But I'm curious to hear, in your words, your perspective. - Yeah, that was definitely one of the key elements why the business case became much better initially. We have also big boxes. It was only picking up one. The throughput was not there at that time. But over the last 12 months, you made the Stretch pick up two boxes or three, or four. So the throughput changed, obviously, and then the business case was there. A big topic for us, also, the throughput, obviously, during the peak season, it's important that we unload the container within 1 and 1/2, max, two hours, actually. SHIRLEY GOH: And has having Stretch around helped you with those fluctuations in peak season and out of peak season, or helping to keep up with demand? - So, Stretch, it's our first season with Stretch as an additional colleague or resource. It definitely helped. So, the people adapted quickly to Stretch. And you have always late inbounds. You need to be flexible. So we could operate the Stretch also outside the normal business hours, actually. SHIRLEY GOH: Right. - And unload the container and meet SLAs or customer requirements. SHIRLEY GOH: Yes. - So it helped us a lot. And it gave us additional capacity. And I mentioned before, getting colleagues who are really willing to work unloading containers today is really difficult. So, it's an excellent addition to manage the season. - Right, OK. - Same here. - So, Marc, in the past few years, we've seen a growth in e-commerce, rising labor costs, disruptions in the supply chain. How do you see robots being able to help alleviate those challenges in these areas? - Yeah, as a matter of fact, I think Boston Dynamics reason for being, is that we see a giant labor shortage coming, especially in physically strenuous jobs, which are, of course, in logistics quite a bit. So, as Mitat already said, it's these jobs are literally backbreaking. It's hot in the summer, it's cold in the winter, there's no windows. And so introducing automation into these jobs and tasks is very important. In addition, I think these robots as fully autonomous mobile systems, can bring functionality that a human cannot do. For example, our Spot robot has sensors that give him superhuman capabilities to hear things and see things that a human that would do security rounds or autonomous inspection rounds, couldn't even do. SHIRLEY GOH: Right, right. And can you speak a little bit to how Spot's being used in logistics? - So, Spot is our industrial inspection robot, so it's a fully autonomous four-legged robot. It looks a little bit like a dog. MITAT AYDINDAG: Yeah, yeah. - Very anthropomorphic. And there's two use cases in logistics. One, is the inspection of conveyance equipment, by inspecting the heat temperature of the motors that power, the conveyance equipment. Or the second one might be security rounds in the container yard. And we do have a handful of clients that actually have both robots deployed, which makes us particularly proud. SHIRLEY GOH: OK. All right, so Mitat, how has Arvato seen trends in consumer spending change during and since the pandemic? And how do you think logistics providers should be pivoting to adjust? - Yeah. Thanks to COVID, everybody knows now, supply chain and the challenges. SHIRLEY GOH: It's a buzzword now. - Yeah. I do believe that things have changed post COVID. So people are more careful where they spend money and what they spend. The inflation plays a massive role, obviously, as well. So clients, I believe our clients, and especially the industry we are operating in, they are looking for partners, which can provide a little bit more resilience in the supply chain. They're flexible, can adapt to change. And we tried always to be, mainly through technology actually, to be as flexible as we can and adapt. During COVID, we decided not to stop investments, for example. We kept investing in our cloud initiative, which helps us today, actually. We moved all our ERP and subsystem into the cloud, which helps us today. I do believe that the new administration will adjust tariffs. So, our clients are already looking what they need to do. So we are looking how we can already upfront adapt and be a partner, which can help them address these challenges, upcoming challenges-- --whether it's providing more storage space for them when they need to bring in inbound earlier or providing them free trade zone solutions to optimize cash. So it's through these concepts and solutions we hope we can help our clients. - OK, great. Now, you talked about the people at Arvato earlier. And I know that Arvato has what it calls, the human technology collaboration approach. I'm curious, how receptive have your associates been to assistive technology, and to Stretch in particular? - So we invested early on, very heavily in goods to person system, to make it easier for our colleagues, actually. So a lot of investment in auto stores and shuttles. So that the heavy work and the throughput can be-- the heavy work can be eliminated, and throughput can be generated, actually. But at Stretch, for example, I mean, our colleagues liked it immediately, because they face really problems on the floor to get the colleagues in to operate or to unload the container. And we didn't have any issues, actually. They were quite receptive to the Stretch. SHIRLEY GOH: All right. Also curious how the training and adoption went for them. When I was on site earlier this year, I heard this anecdote about training, about how they set up an obstacle course to learn to drive the robot around. Now, Stretch does work autonomously. You press a button on the console. It's basically a play button, and Stretch just goes and begins an unloading workflow. But you do drive it into place. And I did hear that to learn the driving part, that associates set up kind of an obstacle course of random big objects they found around the warehouse. So, just curious how training and adoption went in general. - So, yeah, not everything shared with me. But yeah, the training was very easy, right. Was in an hour, they could operate the Stretch, the supervisors on the floor. They are now, after a season, a couple of months of operation, they actually do the easy troubleshooting themselves. It's not a problem. So, it's going very well. And if we have bigger issues, you guys are pretty fast to help us out, actually. MARC THEERMANN: And I think that's a little bit different actually for Stretch than it is for our other robot, Spot. Spot takes a little bit longer to deploy. Of course, our deployment teams are always on hand to help with the deployments of Spot and Stretch. But Stretch is basically out of the crate operational and running the next day, right? - Exactly. Yeah. It was really as fast as that actually, was pretty fast. You guys were on site two weeks, support us or gave us hands in the different scenarios. But that was very, very quickly deployed. SHIRLEY GOH: That's great. And I think we try to make sure that it's kind of intuitive to learn and to use. And to that, Marc, I know that you have a human robotic interactive team that reports to you. How do they ensure that adoption is as seamless as possible? - Yeah. Yeah, our HRI team has sort of a couple of different functions. But what's so interesting, is when you introduce these new robots into your facilities, they are fully autonomous mobile systems. So that's a little bit like introducing a new species into your facility. And so, we are there to introduce this new species. We have usually posters all over the facility. We do some training on site. And one of our clients did something funny. They walked the Spot robot through the cafeteria at noon for about a month-- --so that everybody could take a selfie, everybody could ask questions, and everybody would get used to it. And once people stopped taking pictures, then they knew they were ready to let the robot roam around in their facility. So, I think-- - Smart. That's pretty smart, actually. - --that's kind of an interesting way to introduce the robot. But the HRI team in particular, also, of course, deals with human robot interaction on a technical level. So we noticed early on from the first interface of Stretch, that many of the operators are not native English speakers, like myself. And so, the HRI team created a very pictorial interface, meaning they used a lot of pictures, so that now you can operate the Stretch robot with almost no, by just clicking on different pictures. So, I think that's one important step. But surely in the next couple of years, natural language interaction with the robots will become a common thing. - Right. And I believe that our pendant, and that's the controller that used to drive the robot, is now, I believe the count is up to six languages that they now have that in. - Yeah. It's really cool. - Yeah. All right. I think that we can take questions from the audience now. So, I think that people are naturally curious, Mitat. Can you share how Arvato measures success, especially during a very busy peak season? - Success is always, one thing is, the judge is always the client, and the client's client. So as long as we have [? great ?] KPIs, [INAUDIBLE] SLAs, usually the clients are happy and that's success for us. The second element is always our financial success. So we have a very strong focus that we also are successful when it comes to our financials, obviously. SHIRLEY GOH: OK. And Mitat, in logistics, I think we've seen some shift towards greener spaces and practices. How has Arvato approached sustainability with the design of its newer spaces? - So, when it comes to sustainability, we have a very sizeable set up in Europe. And Europe has a different focus still, a little bit more focus on sustainability. All our own facilities have photovoltaic systems, control systems end to end, to measure electricity and tackle the areas. I even saw the first pallet wrapper, which is completely out of paper, actually. - Oh, great. - The first wrapper, which works really and generates throughput in Germany. So they are definitely a little bit advanced in comparison to US. But we also, we started here in the US, we have our first facility in California with a solar system. Spent a lot of time to educate, optimize packaging to reduce a little bit the transportation of air on the street. So this pass will go on. It's a big focus for us, as well, as a company to Arvato, but also to our mother company, Bertelsmann. This will definitely continue. - And Marc, I'm curious what you think, as well. How do you see robots as being better for the environment? MARC THEERMANN: So, there's two ways to load a container. One, is to put things on pallets, and one, is to flow load the container. Now, Stretch allows you to flow load containers and unload automatically flow loaded containers, without any fixed infrastructure. And that means you don't have to build wooden pallets. In the US alone, I think we're building about 500 million pallets per year, which is roughly 600 million trees. So, you don't have to cut trees anymore, you have to cut down trees anymore. And as you said, most of these pallets are currently wrapped in shrink wrap. So you also can get rid of all that shrink wrap. SHIRLEY GOH: All that plastic. - Yeah, all that plastic. - Yeah. MARC THEERMANN: And then, of course, flow load containers, as you said, are more dense, so you also shipping less air. - Exactly. - Right, right. So, Mitat, Arvato is such a tech-driven company, what do you think the warehouse of the future looks like for Arvato, and what role do robots and AI play in that? - So, at least at Arvato, we don't believe we will have a fully automated warehouse. We have too many fluctuation in orders, client requirements, which requires certain level of, or it's non standardized. So there will be always a level of non automation. But we believe labor intensive work can be automated, that we help the colleagues on the floor with that, and to generate throughput. In some cases, you just cannot get the volumes out if you don't have the automation. So it will continue in that path. So we will keep looking into these technologies, how it can help us. And the AI is just computer vision. What Stretch does, obviously, is definitely just a start. There will be much more coming our way. We partnered now with Microsoft on a project, how generative AI can help us actually to plan a warehouse, to plan a layout, to plan a material flow. It's all early stage, will take years till we really can say, OK, we have something there, but I do believe that this will help us to create also the best possible solution for our clients, actually. - OK. And Marc, I'm curious, what about Boston Dynamics? What do you see? What's your vision for the future warehouse? - Well, I think, and the New England sun is finally getting us. MITAT AYDINDAG: Yes. MARC THEERMANN: Our team has been so nervous all day trying to cover all the windows, but you know what? Funny enough, this actually one of the big reasons why I love living in New England. That even in this late in the year, you have this beautiful sun, right. You and I did not grow up with this. So, the future of warehouse robotics is certainly that there will be more mobile robots, for sure. And I think the Stretch robot will go deeper into the warehouse. We will do deeper integrations into the WLS system and empower the robot to do different tasks, such as palletizing, depalletizing, order building. And at some point, maybe even loading containers. Hopefully, there will be lots of Spot robots running around and inspecting the environment. And certainly, our humanoid robot, Atlas, will play a role in the warehouse. We think maybe in two-men handling jobs, where maybe even two humanoid robots could pick up very heavy objects, like carpets or maybe even washing machines. So, I think the robots are coming. - OK. So, kind wanted to get a little bit into your heads with this question. Mitat, what are you currently reading? - Oh. So, I have 11-year-old daughter, so we are onHarryPotter3. SHIRLEY GOH: That's a good one. - So, I'm reading and it's awesome time to spend. So,EgoIsTheEnemyis my book, what I have on my side table. SHIRLEY GOH: And what is that about? - Ryan Holiday. It's a bit more reflection about yourself and what's important, actually, that you should not take yourself as important. MARC THEERMANN: Yeah. - Yeah. It's a good reflection. - OK. And Marc, what's on your reading table? - So, I'm a very slow reader, so I switched to audiobooks a couple of years ago, and now I can get through half a dozen books a month. And I usually have a couple of things going on at the same time. Sounds like you, as well. I always have one self-help book, as well, trying to become a better human. Usually a thriller, maybe like Jack Carr or something, cheap like that. And then at the moment, I'm rereading maybe for the third time, Ben Horowitz'sTheHardThingAboutHardThings,which is a must read for any entrepreneur. MITAT AYDINDAG: Yeah. - All right. So, Mitat, I think people will be curious. Where is Stretch headed next with Arvato? - So we ordered the third Stretch now for an additional facility in Louisville, which people are excited and waiting. And now, we are looking into our West Coast facility, which Stretch would also make sense. And we have just our strong footprint in Europe, looking to applications in Europe, as well, to bring it there, actually. So that's a roadmap, more or less, for the Stretch robot for us. SHIRLEY GOH: Well, we're excited for that. All right, I wanted to thank everyone for attending today. Mitat, thank you for joining us, Marc, and thanks to all of you for joining us today. For the most up to date information on Stretch, be sure to follow us on LinkedIn and our other social media, or visit us at bostondynamics.com.stretch. Have a great day. - Bye. - Bye.