Deidre Cusack of Dematic shares key lessons from business mentors, and how she sees automation and customer behavior evolving supply chain.

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Danny:

– Well hello and welcome to today’s IndustrialSage Executive Series. I’m Danny Gonzales, and today I’m joined by Dee Cusack who is the chief technology officer at Dematic. Dee, thank you so much for joining me today on the Executive Series.

Dee:

– Happy to be here. Thanks for inviting me.

Danny:

– Well the pleasure’s all mine here. I’m very excited. For the audience who’s watching, we had a very lively pre-recorded discussion that we’re going to wrap in, and I’m excited to get into it. For those who are unfamiliar with Dematic right now, who’s Dematic, and what do you guys do?

Dee:

– Dematic is part of the KION Group. Dematic has actually been in existence for 203 years, and we are essentially the engine that goes behind ecommerce. We do supply chain automation, started in the early years with simple machines like conveyors and racking and so forth. Today we really are a very complex solution provider, full integrator in the supply chain automation space with obviously a big impact on software and robotics and all the latest technology. That’s what we do.

Danny:

– Excellent. Well ecommerce has done nothing but absolutely exploded. It was a huge growth trend before this thing called Covid came along, but then certainly afterwards it’s just been this massive explosion. I’m sure that we’re going to get into some more of the insights and different things that are happening in the industry with that a little later on in the episode. Right now I would love to get to know a little bit more about you. I’d like to know more about Dee. Dee, tell me, how did you get into this space? Take me back. Is this something that you said, “Hey,” —maybe when you were a kid? “I want to go into supply chain; I want to get into the technology space.” How did this all come about?

Dee:

– I’d love to say that I had this vision when I was four, but that would be stretching it a little bit.

Danny:

– You were six. Okay, I got it.

Dee:

– No, but I started my career in R&D. I have a couple of engineering degrees, and I’ve always been interested in how to apply technology into markets, and particularly market niches to help a business grow in a rapid and profitable way. I started my career in R&D. I then went into business development, and then more on managing entire businesses, P&Ls that were global for a variety of different markets. I did that for about 20 years and decided to come back to my roots a little bit more. A friend of mine, a colleague of mine that I used to work with called me up and said, “Look, there’s this wonderful company that I’m working with called Dematic; we’d love for you to come in and look at some of the opportunities.” And so the opportunity to go and lead the technology in a meaningful way, particularly with the software that the company had and to really develop a strategy to help the company grow in a sustainable way but also bring our solutions to the next level was really compelling for me. As I started to learn more about the company and the industry, I started to get more and more excited about it. And just coincidentally, you said ecommerce exploding, I joined Dematic just about the time that the lockdown started with Covid. I can tell you, it’s been an exciting ride, really trying to keep up with the pace of the market but also the changing demands in the marketplace since being part of Dematic. I just can’t say enough good things about the industry, the company, and some of the path forward and what’s coming ahead.

Danny:

– Wow, it’s fascinating that you jumped on right before Covid. What a time to jump into a company like Dematic at that time because we know that trends were clearly pushing towards ecommerce and the need for automation, robotics, AI; all this technology was coming in. There was a need for it and a clear growth trend, but then certainly thereafter, I mean, nuts. It just went crazy. So lockdowns were in March; you started in February, March-ish?

Dee:

– I started in March; that’s right.

Danny:

– Oh, my gosh.

Dee:

– Just about the time that the lockdown started so as you said, a lot of the trends were present before Covid, but what happened with our customer base was that everything got accelerated. The need for, how do you work? Everyone was putting demand on ecommerce, and people were working remotely, so we had to figure out how to do a lot of things remotely that we used to do in person, at the same time enabling new capabilities for our customers so that they could then service their customers. It was a very challenging but very fun time to be part of the business. You had to be very agile, very nimble in terms of your thinking. I mentioned earlier, Dematic is 203 years old. We’ve been doing certain pieces of the business for a long time, but it was a very conservative business. Now all of a sudden you interject this crisis, and now people need to apply their thinking in a slightly different way. It was really exciting to see it come together.

Danny:

– Absolutely. Well, and slightly, and then in other areas completely radically different. As you mentioned, it was interesting; internally from an organizational standpoint, having that thinking shifted, and you mentioned–the whole work from home idea and how do we transition that? But at the same time, in an industry where your customers are—how do we shift that for them as well, and then also oh, by the way, I think the numbers were saying in 2020, ecommerce growing by 40%. You have segments that have never really done this, or they were starting to pilot programs, and then said, “We have to accelerate this.” Exhilarating to say the least.

Dee:

– It was; it was. But I would say one of the cornerstones of Dematic has always been an entrepreneurial spirit, so I think everyone approached it in the way of, well, how can we make it work? China is still closed to a lot of travel externally, so a lot of things that were normal ways of doing business, we had to find different ways to accomplish the same criteria. How do you lend expertise? Now you do it virtually. Now, people start seeing on the screen the same picture, but through virtual goggles. It was just a different way of experiencing it. It taught everyone how to be a little bit more creative in terms of how do you accomplish a task?

Danny:

– Absolutely. I love how you said the entrepreneurial spirit. That’s something that’s not—when you talk about bigger organizations, corporations they tend to trend opposite, actually the exact opposite of that. I think that’s definitely a great silver lining of something we’ve learned, but that was already part of the culture to begin with. There was a lot of insights and innovations that came because of that that was already instilled in the culture. I don’t want to dwell too far too long on the whole Covid change and everything. I’d like to learn a little bit more, too, about you and your background. One of the questions that I love hearing answers from executives is just the—throughout your career journey you’ve obviously seen a lot. We were just talking about, obviously, some big changes. Throughout your journey, typically there’s a lot of people that have big influences on your career, both positive and negative. We’re going to focus on the positive side. Could you share a story of somebody that has made a measurable impact in your career? I know there’s a lot, probably. Maybe if there’s just one, I’ll even say two that come to mind that you can share with me.

Dee:

– Sure. So many people have had an impact on me in a positive way, and I tend personally to always look at an experience and try to learn something from it. Even just sitting in a conference room, I’ll look at who’s effective and who’s not effective with what they’re doing, and I’ll try to learn from the people that are effective, but also from the people that aren’t effective. I think as this is going on, and I replay it later on–– which is, how can I apply some of those same learnings to me? One person that I’ll call out—and I could call out 10 easily without thinking about it—was a leader of mine. I worked for him while I was at ABB. I worked for him for a number of years. He was masterful at not only the way that he interacted with customers, but the way that he interacted with people in general. If you met him, you would say he just enjoys people, and he’s so effective at building teams and building common alignment around the people. He was such a positive influence with me, and one day I said to him, “Not everyone has your same gift to go up and to compel an audience with such ease. It just comes so naturally to you, and you’re just so good at it.” And he said to me, “Yeah, what you didn’t see is last night in my hotel room, I was practicing for six hours.” He basically taught me through a number of different lessons as I learned with him watching how he really helped align his teams. These were all pretty strong leaders that all had very unique ideas, but what he taught me was, this doesn’t happen—nobody gets there by accident. What it takes is hard work and alignment and really getting the right people and understanding how they can work effectively together. It’s a lesson that I’ve learned through playing sports as a kid and so forth. He really brought it home and applied it in also a corporate environment where, again, there are people who are good at it; he was masterful at it. He had a tremendous—and he also was the most giving person. I had a women’s network that I had started at ABB, and I had asked him to participate in this network a couple of times, being the only man then in the room. He was always so gracious with his time and his mentoring that, again, it was all about the people. It teaches you that your objectives are one thing, but you really need to invest in the people. I always watched him a lot and tried to apply that to my own self. Am I meeting the same standard? Would people say the same?

Danny:

– That’s fascinating. I love that, especially how when you were talking about how—maybe on the outside you said that it came across as just his ease of being able to instill that vision and out there, but yet he was saying, yeah, but here’s really what was going on over here. I think that’s actually really critically important, especially in today’s day and age. When you look at things like LinkedIn, for example. When you look at social, and you can say, that’s a Facebook and Instagram and TikTok thing, the same thing is happening on LinkedIn, on professional platforms. There’s these images that are being projected of people. There was really an interesting stat to connect this; the conversation’s going to have an interesting connection here. When we look at the pandemic and shifts that have happened, there was an interesting stat talking about mental health with executives. There was a very high number, actually, of executives that were struggling, and I think that because of LinkedIn and some of these different areas, we have to project that, oh, everything is great, and it’s amazing. You lose sight of, that’s what you’re seeing over here, but actually this is what’s going on behind the scenes. It’s not something that you just automatically turn on. You have to work at it. I think that’s interesting when you’re talking–hey, look, I was practicing this. I was going over this. This isn’t stuff that can happen overnight, and I think we all know this. But I think that there is this—sometimes you see different things, and you’re like, oh, my gosh. This person is doing this or that. The reality of it is to build teams, to build greatness, it’s sort of slow and steady. It takes, like you mentioned, hard work.

Dee:

– It does, and I think while people all work hard, it’s also getting that right—having a good team. You can be the best at what you are, but if you don’t have a good team it doesn’t matter because you get to a certain point in your career or in sports or whatever it is that you’re doing. You get to a certain point, and it no longer becomes about what you can do. It’s a collective. You can’t scale, so you have to be able to build that infrastructure and have those people empowered so that they too can build their infrastructures, and then that’s when everything can then blossom. Before that, it’s just little bits of sunlight coming in. You really get the whole spectrum when everything comes together and is aligned.

Danny:

– Absolutely. Oh, 100%. Outside of the hard work and making this alignment, what’s one of the—there’s a lot of things that you try to put into play with what you’ve experienced with him. Is there another concrete example of something that you try to implement in your leadership?

Dee:

– The other thing with him in particular was he was very bullish on, “The customer always has to be front and center.” For you to be a good leader, you need to have a significant amount of customer engagement because that teaches you not only what that customer and the market needs, but it also teaches you how to be humble. It teaches you how to listen. It teaches you how to then report back into your greater organization a pulse on what’s going on and the priorities that you need to have. I’ve often thought about him as I’m coaching and mentoring younger people in the organization. My guidance is very similar to his. It doesn’t matter if you want to pick sales or business development or some kind of service, but something that you do should have a customer component in it as you’re building your career because it’s such an important perspective to make sure that you always have as you’re conducting your business.

Danny:

– Absolutely, and you see this. There’s a lot of this going on right now for as long as business has been around, but even in the material handling and supply chain space you see this a lot. There’s a ton of money being poured in from Silicon Valley. You were talking about a lot of solutions. There’s a lot of challenges, and a lot of companies are coming in saying, “Let’s try to solve this.” We’ve seen a lot when you talk to product development teams and whatnot that there’s an excitement around the technology and all this stuff that’s happening, and you start creating solutions on something. You think, hey, this is great. Look what we can do. But you go back and say, well, what’s the voice of the customer? Is there an actual addressable need that we’re solving? Is this something that they say, yeah, this is a big problem, and we need help with this? A lot of times it’s, hey, we think this is great that we can do this. Then there’s a massive misalignment because we’re not, like you mentioned, we’re not getting close to the customer and listening and getting feedback.

Dee:

– Absolutely right. It’s even connecting with that customer when you’re talking about some of these new players in the supply chain automation space because there are a lot. The market grew so quickly during Covid that it became a very attractive market. I think there are things to learn from that as well. In fact, some of the lessons I take out of that even today are: if you were looking at the market with a fresh set of eyes, would you solve the problem differently? If you sit back and think about it, it can make you think a little bit differently about maybe some of your own blind spots, having been in the market for a long time. That connection with not only where customers’ issues are today and really listening hard to that for the here and now, but thinking about it, are those your issues today? What are your issues going to be a year and a half from now? If we sit back and we think about it collectively together, what does that look like? Because maybe part of how we can solve today also positions you for a year and a half from now or two years from now because a lot of these customers—not all of them, but a lot of them—have significant capital expenditures that they’re going to be making. If we can think about it in the way of, how do you phase this in so what you’re spending today isn’t wasteful when you think about where you need to be years from now. How can you integrate all of that thinking? That’s where, personally, I get really excited to think about things in that dimension because to me, that provides my customer value, but it also gives my R&D teams a road map that is cohesive over a longer period of time so we can think about learning along the way, but also elevating and transforming the way that the industry is operating today.

Danny:

– Oh, absolutely, and I love how you were talking about—especially I think we can talk a little bit about some of these challenges that are going on and then things that we’re seeing going out from now because certainly over the last two years one of the biggest challenges was that things have been changing so rapidly when you look at okay, ecommerce just exploded. Then trying to forecast anything was crazy. Supply chain disruptions, and from a retail perspective right now the story is that there’s too much inventory because we had to put all these orders in ahead of time, and demand is skyrocketing. Then oh, now we have inflation and oh, consumers are coming down. Now we’re sitting on all this. What do we do? It just seems like things are way out of whack. Automation’s exploding; do we continue to do that? I heard a story about Amazon coming in, and they’re starting to slow down on some of their automation investment going in there. What are some of these short-term, and then bigger, these long-term challenges that you’re seeing?

Dee:

– I think with the market—I don’t have the crystal ball, but from everything—

Danny:

– I was hoping to have the crystal ball.

Dee:

– I know, but I left that over there. From everything that I can see, the market is inherently strong. We are going through what I would say is a short-term correction of some sort. I think you hit it on the head with the supply chain challenges that there are and the inflation being what it is. I think when you look across most of the market, it’s harder for our customers, typical Dematic customers, to make their ROIs work because the cost of materials is up. It’s hard to get labor. The complexities, the timelines have expanded. You do see some companies taking a bit of a pause to say, is this sure enough that I want to continue on or not? In general, I don’t see the labor loosening up a tremendous—we’re still going to have labor shortages. We’re still going to have ecommerce being a major influence. And consumers haven’t stopped wanting their products in, if not a day, in hours, and in some markets it’s 15 minutes that they want—

Danny:

– Wow, 15 minutes? That I didn’t know.

Dee:

– I think those demands are here to stay. When I order something off of whatever website it is, if they say, well you can have it in three days, three days used to be fantastic. Three days, now I’m like, I’ll go somewhere else.

Danny:

– What is going on?

Dee:

– Exactly. What all of that does is say, look, the need for automation and in particular more of an emphasis on software is ever-increasing in the market. I don’t think that’s going to go away. I think as companies now are in a point where they’re looking at their ROIs a little bit more closely, they’re looking at their inventory a little bit more closely, I personally think that the way that we’re going to solve that is for not only increased visibility across a particular enterprise’s network, if you will, of locations, whether it be warehouses or retail store or whatever, across their whole network of operations, it’s not only having the visibility but it’s also being able to impact the supply chain. I think of it in terms of, today everything goes in sequence. It starts with the supplier; then it goes here; then it goes here; then it goes here. If you can have enough connectivity, then you can break the sequence and be non-linear, like take that linear network right now and go non-linear, then you can take a lot of waste out of the supply chain, not only in terms of building footprints but in time, in gas, in number of trucks on the road. It really does start to impact things, and that’s where I start to get really excited. I think the need for that, what I just described, a couple years from now you’re going to be sitting down saying, how did we ever operate without that kind of visibility and that kind of awareness because you won’t be able to hit the customer demand if you don’t have it. I think that piece of the market will grow much faster than even automating the manual warehouses because today only 20% of the warehouses are automated across the globe. When you think of it in those terms, yes you have the big giants like Amazon that are very automated, but the vast majority of warehouses today are not automated. The available market is very, very large.

Danny:

– Yeah, and I’m not sure if I’ve heard that stat about warehousing. I know certainly when we talk about smart manufacturing, for example, which is not exactly identified with that, but it’s still 100% part of the supply chain there. Similar stories there, and there’s big moves to digitization as we move into that. One question I’m curious about in your mind. When we look at total optimization from the supply chain standpoint, a true end-to-end visibility, what does that look like, and how do we get there? To really distill it down, is it like an ERP on steroids, if you will, that has demand forecast, and you have all your tier one, tier two, three, all of those suppliers and all of that connected into that? What is that for you?

Dee:

– I don’t know if you saw or not, but we just signed a strategic partnership recently with Google Cloud.

Danny:

– Yes.

Dee:

– In fact, one of the reasons why we were so keen to sign that strategic partnership with them and them with us is that we share a common vision for what that end-to-end supply chain looks like. I know it’s a term that people throw around a lot, but really having a digital twin of the network in my mind is really important. I don’t think that any one company is going to solve that by themselves. To me, it’s a platform that many people can put their data up onto the platform. Then that data gets used in different ways to help customers solve their issues that they have because they’re going to have issues every day. The optimization is going to have to happen every day. Even if you boil it down to a particular warehouse, I see that those warehouses are going to have to be adaptive in terms of how the automation happens because today you may be processing a certain mix of goods. If you don’t have an adaptive system today, all of a sudden you get unsynced. You have all this automation equipment that’s set up for a particular combination of goods going in and a particular combination of goods going out. In the future, wouldn’t it be nice, and probably essential, that that system adapts itself to the extent that it can so that when you—oh, well I now have to ship. Think about it in terms of, we had a large customer that bought a system from us pre-Covid. They said, “80% of what we process in this very large automated location is going to go to our retail stores.” We said, “Okay.” Well the average number of items per transaction then are about a dozen, 5 to 15 number. When Covid hit, that whole way of going to market switched for them. Then ecommerce became a much bigger channel than retail was. Now all of a sudden people are ordering one or two at a time. The way that the whole system was sized and the capability of the system shifted overnight just based on the way that the order profile demands were coming through. That doesn’t even change what they were buying. But if you just think about that one change, all of a sudden everything got tipped on its head. Well if you allowed your software to be more adaptive and could use things like robotics and mobile robotics in your solutions, well now all of a sudden you might be able to adapt without making large capital expenditures. You might be able to adapt more readily for the variations that you have in your business, and it would all be—if you tried to do it yourself or a person managing that plant couldn’t keep up with the number of computations and look at the possibilities. That can only be done if you start to apply AI and RL to your systems.

Danny:

– Absolutely. Obviously we know, big lesson learned, and there’s a lot of lessons. I think you touched on it a little bit before–– just the resiliency piece in terms of flexibility and, like you mentioned, being able to go from larger orders, smaller orders. I think the term micro-fulfillment comes to play. From warehousing, and you look at retail or grocers and ecomm, it’s a blend now. It’s turned into, the final mile is a mixture of a warehouse to a traditional brick-and-mortar where customers come in and interact. That now is really changing a lot of people too, present company included. Big behavioral change there. I can’t tell you the last time—I didn’t really walk into stores too much before, but now you need to go to the grocery store to get something unless you make that order, and you just pick it up: “I just saved a ton of time.” I don’t think we’re going back from that.

Dee:

– I don’t think we’re going back from that either. That’s why I said, the market might be doing a little bit of a correction right now, but I think the long term is secure. The long term has a growth rate that I think is more sustainable, too. A market can’t grow at 40-some-odd percent, year on year.

Danny:

– No, certainly not. And to clarify, when you were talking about looking at the market, are you talking specifically in the automation and warehousing space, or are you going more macro?

Dee:

– A little bit more macro, I think. The market overall is continuing to grow, but still in mind of what is automation, what is happening in the supply chain.

Danny:

– Right. I think the future is bright, and it’s very exciting as we continue to go. I think there’s a lot, to be honest, that’s been—there’s a lot of new things that are going to come at us that we haven’t seen as a result of Covid. I think there’s a lot of things that, as we start seeing demand shift and forecasts and when we look at people reshoring and near-shoring, I think there’s still a lot that we’re going to see down the track. I think that resiliency and that flexibility is going to be just imperative for organizations going forward. But I think that companies like Dematic, and there’s a lot of other players out there doing a lot of different things in many different areas. It’s exciting to see that innovation happen, and not just from an R&D perspective, but also from an actual implementation I think is fascinating to me.

Dee:

– I couldn’t agree with you more, and I think the future—what I think Covid did to a lot of industries—supply chain automation included—is really challenge some of the business cases that people were using ahead of time. When you think about some of the technologies that have been available for some time, how can you reapply them into different spaces? The core technologies weren’t developed overnight. Those technologies have been viable for a period of time. We’ve just now learned, as a community, how to apply some of those technologies to solve some of the problems of today. I think when we do that and we look at, oh, now we’re much more resilient than we were before because we had to make some of these adjustments that we couldn’t justify necessarily from an ROI previous to Covid, now all of a sudden we say, “Aren’t we better off now because now we have this level of resiliency?” I think that kind of thinking will continue a little bit too. I think there are a number of people that were in leadership positions that had never been in any kind of a downturn before or have any challenges on a very wide level. Certainly Covid being global was very disruptive, obviously, in a lot of ways. But it gave people a chance to think about things in a slightly different way. Now all of a sudden it was, let’s take this from a couple different perspectives. I think it made all of us more resilient, certainly the whole work from home. Just think about what that did to allow everyone across the globe to think about, how do you show up at work? It’s a different way than they had been showing up at work probably across the board for quite some time.

Danny:

– Absolutely, and I think we’re going to continue to see some of this. Maybe not at the rapid pace that we saw the last two years. Hopefully not anyways, but I think we will definitely see that. Dee, I have thoroughly enjoyed our conversation, and we could probably go on for another, I’d say two or three hours, easy because this is fascinating to me. But you’ve got a lot going on; we’ve got a lot going on, so we’ll have to wrap and maybe do a follow-up here. As we wrap, I’d love to give you the final word. What would you like to leave our audience with?

Dee:

– Well thanks very much, and I appreciate the time today and have thoroughly enjoyed it. I would love to come back and be a guest at a future time. I’ll just leave you with this. If you have any interest, please go to dematic.com and browse around the website, and please contact us if you have any questions or want more information.

Danny:

– Excellent. Well Dee, again, thank you so much for your time. I know you’re incredibly busy, and we’re just very thankful for your time with us and sharing your insights and your story as well.

Dee:

– Great, thanks so much.

Danny:

– Alright, thanks. Well that wraps up today’s IndustrialSage Executive Series. Great episode. I have lots of notes here, lots and lots of notes, and hopefully you do as well. So thank you for watching or listening if you are on one of the podcasts. Listen, if you are not subscribed, I highly recommend you go to IndustrialSage.com and subscribe so you don’t miss great insights like this and get a pulse on what’s going on in the industry. Maybe it’s directly related to what you are doing. Maybe it’s tangential, but there’s a lot of changes happening, a lot of innovation, and this can help keep your finger on the pulse of where things are going. So that’s all I got for you today. Thank you so much. I’ll be back next week with another episode on IndustrialSage.

 

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