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yesJamie CondliffeNone
January 19, 2021
The autonomous car division of General Motors has secured new investment from Microsoft and further investment from Honda and GM as part of a new funding round, taking its valuation up to $30 billion.
Microsoft will work with Cruise to provide cloud and edge computing services via Azure.
Jamie Condliffe
Jamie Condliffe ( @jme_c) is the news editor at Protocol, based in London. Prior to joining Protocol in 2019, he worked on the business desk at The New York Times, where he edited the DealBook newsletter and wrote Bits, the weekly tech newsletter. He has previously worked at MIT Technology Review, Gizmodo, and New Scientist, and has held lectureships at the University of Oxford and Imperial College London. He also holds a doctorate in engineering from the University of Oxford.
Transforming 2021
The future of retail is hiding in an abandoned mall
The warehouse is moving closer to customers' houses as ecommerce eats the world of retail.
Microfulfillment centers could help retailers compete with the largest ecommerce companies.
Photo: Scott Eisen/Bloomberg via Getty Images
March 1, 2021
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
March 1, 2021
The American mall has been decimated by the rise in ecommerce. But soon, it may also be their savior — sort of, at least.
Long before the pandemic kept people at home in front of their computers, buying everything they needed to see out lockdown online, malls were on the decline and ecommerce was on the rise.
<p>"It's kind of that Amazon effect, where shipping used to take a week for your retail order," said Mitch Hayes, the VP of retail and ecommerce at Swisslog, a logistics automation company. "And Amazon has now said, 'We can get anything to you pretty much next day.'"</p><p>To get to a place where most retailers can reliably compete with — or even surpass — Amazon's delivery schedules, experts argue that products are going to have to get closer to the customer. But as the population density of the U.S. continues to <a href="https://www.statista.com/statistics/183475/united-states-population-density/" rel="noopener noreferrer" target="_blank"><u>rise</u></a>, getting close to customers means building fulfillment centers in smaller spaces, which goes against the giant outer-city warehouse model that retailers have relied on for decades. To get smaller and nimbler, retailers are having to turn to automation that fits anywhere — like malls. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="1">
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</div></p><p>And it's starting with groceries. </p><h3>Speeding up groceries</h3><p>A few years ago, companies started to realize that they could pay people to walk around grocery stores, pick up a week's worth of shopping, and drive it to a customer's house. Around the same time, retailers realized that, without too much rejigging of their stores, they could offer customers the option to buy products online from their local store and pick them up without even having to get out of their car. </p><p>Grocery orders tend to be fulfilled quite quickly, given that groceries don't typically like to sit around in unrefrigerated areas for too long. Even before the pandemic, e-grocery and curbside pickups were on the rise, but they <a href="https://www.businessofbusiness.com/articles/grocery-delivery-instacart-costco-whole-foods-data/" rel="noopener noreferrer" target="_blank"><u>skyrocketed</u></a> during lockdown. Because of the logistics of trying to move Instacart shoppers, as well as regular shoppers, through a store, most grocery stores can fulfill about 100 online orders, according to Steve Hornyak, the chief commercial officer at Fabric, a company that specializes in building automated fulfillment setups that can fit in small spaces, called microfulfillment centers (MFCs). The problem: "Their demand is five to 10 times that," Hornyak said. "And what they're doing is pushing customers' [orders] out or losing customers, because they're at full capacity."</p><p>In the past, the solution to a problem like this was to just build more distribution centers and get more drivers delivering to stores. But in most parts of the country, the available infrastructure means that there's still going to be a bottleneck on the roads to get truckloads of goods to local distribution centers and out to stores. This is part of the reason why companies have been investing in microfulfillment centers in recent years. The concept allows retailers to retool existing properties to more efficiently store goods, sell them, and prepare them for online orders all in one place. "The network is already built, it's called their stores," Hornyak said.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>"The inventory has to be close to the population in order to make money," Swisslog's Hayes said. "I'm in just north of Cincinnati, there's certainly ways that they could hold inventory in Indianapolis and still get it to me in a very quick amount of time — but it's going to cost an arm and a leg."</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY5Nzk4Mi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyODY0MTA4Nn0.Yvszojahby_U5fLOIAmKsUJwZbo9ZXbm3uLOc_KUEjQ/img.jpg?width=980" id="16a12" class="rm-shortcode" data-rm-shortcode-id="5e8704585b7ce22bfcff7ebe6f240548" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Swisslog's fulfillment robots in action.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Image:Swisslog</small></p><p>The answer instead is to rely on last-mile delivery options in urban areas, and use the floor space grocers already have. To do that, grocery chains are looking at companies like Fabric, Takeoff Technologies and Attabotics to better use the spaces they have. The back room storage space of many grocers holds their excess inventory, but is set up to move products onto shelves for consumers to grab themselves and check out. But a change is on the horizon: By taking all of that inventory and moving it into mechanized totes that can move through a three-dimensional robotic storage system, the backroom can transform from a holding pen to a fulfillment center. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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</div></p><p>These intricate, automated structures allow grocery store workers to call up everything they need for a customer's order. The totes containing various items move through the system, going to the worker picking the order, who can then place them all in bags and get the order ready to ship out in a matter of moments. And unlike a human who's walking through a grocery store for the first time that day, the MFC knows exactly what's in stock when it's time to fulfill an order. Fabric's Hornyak said that a 10,000-square-foot center could pick about 25,000 items per day, and that for small orders of about three to five items each, that's about 5,000 to 8,000 orders processed each day. "The order density is absurd," Hornyak said. "It's 5 to 10x what a traditional warehouse or retail location can do."</p><p>Swisslog announced late last year that it'd begun working with H-E-B, one of the largest grocery store chains in Texas. Earlier this month, Ahold Delhaize, which owns Food Lion, Giant and Peapod, among other grocery chains in the U.S., <a href="https://roboticsandautomationnews.com/2021/02/17/ahold-delhaize-expands-micro-fulfillment-with-swisslog-and-autostore/40785/" rel="noopener noreferrer" target="_blank"><u>expanded</u></a> its partnership with Swisslog to bring its concept to more stores and distribution centers. Hayes said that much of the rest of the year will be spent rolling out more fulfillment centers with clients.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY5Nzk5Mi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0NDMyMTIxMX0.GidEqRVIhfXkZBf6yB0zlIODeNneiN6JrgVY0hhp7ZE/img.jpg?width=980" id="74bc4" class="rm-shortcode" data-rm-shortcode-id="eb1830cc8ed44e6b1069d70bc5b673da" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">How Swisslog envisions a microfulfillment center adding onto an existing grocer's retail location.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Image: Swisslog</small></p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
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</div></p><h3>Coming to the rest of retail </h3><p>But for many other slices of the retail industry, stores either don't have the space to keep enough inventory to fulfill online orders, or the bandwidth to pivot to serve them. This is where Fabric comes in. The company recently completed a microfulfillment center in Brooklyn, and is working on another not too far away in Long Island City, as well as two sites in process near Dallas, and one for FreshDirect near Washington, D.C. For the Brooklyn location, Hornyak said it's working with a "global household name brand" (but wouldn't share which) as an "anchor tenant" to the facility. The center will be able to fulfill orders for a range of retail clients, and much like malls have anchor stores that take up more real estate, so will these fulfillment centers. </p><p>Hornyak compared the premise for these multi-tenant centers to AWS or any other cloud provider. "It is a pure services model," he said. "You pay for capacity: how many totes you're taking up in my system, plus the volume of orders and the configuration of the order." Fabric is working with all sorts of delivery providers — gig economy apps, third-party logistics firms, local delivery companies, and the major delivery companies — giving retailers the option to work with partners they might already have in place. </p><p>While microfulfillment has seen its earliest traction in grocery, the rest of retail seems not far behind. When consumers start to be able to get groceries delivered whenever they want within a few-hour window, they'll expect the same elsewhere. "The question will come from the consumer: If I can get 20 to 30 items, why can I get a shirt that I saw online at Nordstrom tonight?"</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
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</div></p><p>And recent events have shown the value of moving products closer to customers. Even beyond the barren shelves many experienced at the start of the lockdown last year, communities across Texas struggled with a similar bereftness when the recent snowstorm in the region knocked out power for much of the state. "In periods like this, everyone still has access to their cell phone," Hayes said.</p><p>Others in the industry agree that they expect 2021 to be a boom year, thanks in part to latent interest ramping up. "The market is becoming educated about the power of networked microfulfillment," Scott Gravelle, the CEO and founder of the MFC firm Attabotics, told Protocol. "Non-traditional players with deep pockets are actively looking to enter the space, both on the VC side and with large established companies. Our pipeline is full."</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY5Nzk3OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY1NzIzNDAyNn0.tH4KnuIuHJeh2uVkWwaQvMnzB0A9OcZcsn4vLoOoQyQ/img.jpg?width=980" id="095ee" class="rm-shortcode" data-rm-shortcode-id="dd95c5d80419c18fc21d67245c3ffba3" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">Walmart is working on a variety of automated fulfillment setups.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Photo: Suzanne Kreiter/The Boston Globe via Getty Images</small></p><p>"There's an inferno of same-day demand that Amazon's created," Fabric's Hornyak said. Fabric is working on bringing an MFC to a Walmart where there will likely be a glass divider between the robots and customers, so they can see their orders being fulfilled. "We'll be a giant vending machine," Hornyak said. "This is retail 2.0"</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="6">
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</div></p><p>Which brings us back to the mall. For those retailers that don't have the space for MFCs and don't want to be buying additional real estate, multi-retailer facilities like Fabric's can be the solution. In Brooklyn, a formerly industrial section of New York, there are many warehouses that can be cleaned out and in the space of a couple months be turned into a fulfilment center buzzing with robots. In other areas, that might be abandoned or half-empty malls. "Typically when you're talking about microfillfilment, you're talking about odd spaces," Swisslog's Hayes said. And there's a lot of odd spaces across the U.S. </p><p>And there's no guarantee that this will catch on. People are always going to need groceries. Retooling facilities or buying new real estate is expensive and time-consuming, and having too much demand for ecommerce is a far better problem to have than not enough. Parts of the retail industry, especially grocery, are slow to change overall. "Being able to deploy your human capital into some of your new business ventures, whether that's MFCs or self-checkout, has always been a challenge," said Curt Avallone, the chief business officer at Takeoff Technologies, one of the first movers in the MFC space. "Most retailers are keeping their best people in the areas that they're currently making most of their money."</p><p>But with giant companies like Amazon and Walmart managing to squeeze quicker delivery times out of an increasing number of products across the retail industry, finding ways to compete seems paramount. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="7">
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Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
Sponsored Content
The future of computing at the edge: an interview with Intel’s Tom Lantzsch
An interview with Tom Lantzsch, SVP and GM, Internet of Things Group at Intel
February 28, 2021
Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
February 27, 2021
An interview with Tom Lantzsch
Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corporation
Edge computing had been on the rise in the last 18 months – and accelerated amid the need for new applications to solve challenges created by the Covid-19 pandemic. Tom Lantzsch, Senior Vice President and General Manager of the Internet of Things Group (IoT) at Intel Corp., thinks there are more innovations to come – and wants technology leaders to think equally about data and the algorithms as critical differentiators.
In his role at Intel, Lantzsch leads the worldwide group of solutions architects across IoT market segments, including retail, banking, hospitality, education, industrial, transportation, smart cities and healthcare. And he's seen first-hand how artificial intelligence run at the edge can have a big impact on customers' success.
Protocol sat down with Lantzsch to talk about the challenges faced by companies seeking to move from the cloud to the edge; some of the surprising ways that Intel has found to help customers and the next big breakthrough in this space.
What are the biggest trends you are seeing with edge computing and IoT?
A few years ago, there was a notion that the edge was going to be a simplistic model, where we were going to have everything connected up into the cloud and all the compute was going to happen in the cloud. At Intel, we had a bit of a contrarian view. We thought much of the interesting compute was going to happen closer to where data was created. And we believed, at that time, that camera technology was going to be the driving force – that just the sheer amount of content that was created would be overwhelming to ship to the cloud – so we'd have to do compute at the edge. A few years later – that hypothesis is in action and we're seeing edge compute happen in a big way.
<p>The last 18 months have been a wild time to be in technology. We've seen edge compute come to life to help businesses adapt during the pandemic. At the same time, we are also seeing how 5G is going to drive up interest, especially from a networking perspective, rather than a use-case perspective. We also see lot of people that are focused on their data, but the <em>algorithms</em> that companies train with the data are going to be their critical assets. It doesn't matter what company or what industry; <em>this</em> will really become the differentiator for many companies.</p><p>And particularly amid the backdrop of the pandemic, we've seen how companies are using technology to either bring workers back in safely or <a href="https://www.intel.com/content/www/us/en/corporate-responsibility/covid-19-response-sensormatic-article.html" target="_blank">serve their customers in new ways</a>, <a href="https://www.intel.com/content/www/us/en/customer-spotlight/stories/brentwood-academy-customer-spotlight.html" rel="noopener noreferrer" target="_blank">educate children in new ways</a> -- all things that have accelerated the digital transformation that had been underway. I recently read a <a href="https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever" rel="noopener noreferrer" target="_blank">McKinsey survey</a> that reported on the "speedup in creating digital or digitally enhanced offerings. Across regions, the results suggest a seven-year increase, on average, in the rate at which companies are developing these products and services."</p><p>And based on what we're seeing at Intel, those are lifesaving and industry saving investments happening today – completely re-designing the way that <a href="https://www.intel.com/content/www/us/en/corporate-responsibility/covid-19-response-mic-article.html" rel="noopener noreferrer" target="_blank">patients are treated</a>, and businesses operate.</p><h4>What are you particularly expecting to see this year?</h4><p>What I find most interesting is the work that combines IoT with networking capabilities – and I think this is going to be a year of expansive exploration and working with our customers to put these two things together to solve real business challenges.</p><p>When we first started the integration of networking technology and operational technology capabilities and layered that across the industry verticals, we could count the amount of interested customers and opportunities on one hand. Last year, it was five times that many and this year we see that number increasing significantly already. So, we're excited to see the industry continue to build excitement to scale those types of deployments.</p><h4>What role does AI play at the edge and in what way is Intel involved?</h4><p>An AI use case recently grabbed my attention: employees in a restaurant being screened by a device that checks temperature while the employees are washing their hands – and provides a determination on whether they'd done it adequately before they report to work. I have seen other applications using similar technology in the <a href="https://marketplace.intel.com/s/offering/a5b3b000000TiMSAA0/using-ai-to-make-construction-site-safer?language=en_US" rel="noopener noreferrer" target="_blank">construction industry</a>, where an AI algorithm scans to see if employees have their helmet, goggles, vest and other safety equipment on properly to determine if they are ready to work. And the best part is – that the employer can see aggregate data on these interactions to determine if more training on handwashing or helmet wearing is needed.</p><p>At Intel, in addition to providing the fundamental base technology to enable these applications, we work with a lot of third-party developers to create these applications. And we help the developers scale them across multiple industries with our salesforce. So, we may not make the scan technology that determines if you have the right gear on, but we orchestrate that coordination across our ecosystem with all of our partners to effectively put it into a <a href="https://marketplace.intel.com/s/?language=en_US" rel="noopener noreferrer" target="_blank">catalog</a> so that if customers are interested in that sort of application, we can provide them with different parties to make that happen.</p><h4>Is there a problem with fragmentation in the market and how can that be solved?</h4><p>It's very fragmented. I gave just two examples of totally different workers coming to work in different industries and I can give you five more that are different again. Although the base technology that Intel creates to enable this type of innovation is very horizontal in nature, the reality is that bringing those to life must be very "vertically-centered" and very "use-case centered" – and must take into account, geography. The two employee use cases I cited look very different if you are talking about employees in North America, India or Germany. So, all in all, this is a holistic ecosystem challenge – and an ecosystem solution.</p><p>At Intel, we're in a unique situation to orchestrate these solutions. </p><p><cite class="pull-quote">People tend to think of Intel as providing the technical footprint that enables edge computing – but we also have the developer reach – and we can use our ecosystem and scale to help our end customers get access to the best solutions.</cite></p><h4>What sort of challenges do customers face when they're attempting to adopt edge computing?</h4><p>There are two common challenges. One is the technical question of 'Who can I work with?' A customer may have a chip focus but actually, it's a more complex question than a chip. We like that complexity, because we can be an adviser to them and <a href="https://marketplace.intel.com/s/partners-by-industry?language=en_US" rel="noopener noreferrer" target="_blank">bring to the table partners</a> that they can work with to solve that complexity leveraging our technical knowledge and ecosystem network. </p><p>The second thing that companies struggle with is the challenge of how to fund getting into this space – even if the business case warrants the investment. The world has changed. Companies don't want to write a big capital check for these types of investments – they want a pay-as-you-go model, like you see with the cloud. We've been working with customers to find a way to make that happen – and I think that is going to be a bigger part of the conversation moving forward.</p><p>You can see it across almost every aspect of technology now. We rent compute more than we buy compute. Evidenced by the success of AWS, companies can rent compute from Amazon instead of building their own data center – and there are many benefits to that approach. In the old world, even for this video conference that we're having today we would have installed capital to do this. Now it's just a service. And I think that edge as a service is right around the corner.</p><h4>Do you have an example of that?</h4><p>A customer in Mexico wanted to deploy outdoor WiFi and add security features into it. So, it was an edge-based computing issue that was part connectivity. But there was actually way more to it than just installing it. We not only helped to solved the technological challenge creatively and coordinated the <a href="https://marketplace.intel.com/s/partners-by-industry?language=en_US" rel="noopener noreferrer" target="_blank">ecosystem of providers</a> to solve this, but we also found a way so that the customer could get into this market with a service-based model without needing to outlay a lot of capital.</p><p>Other semiconductor companies would have a difficult time partnering on both sides of that challenge, but Intel can do it because we have the scale.</p><h4>How do businesses identify which functions they do want to perform at the edge versus in the cloud?</h4><p>It really comes down to a question of what you're trying to do and how you do it at the lowest cost, highest quality and standard in computability.</p><p>If you have an application and it can perform what you need it to do in the cloud, you'll probably run it there. The cloud is a great thing - there's infinite compute and lots of choice in a well-understood developer environment.</p><p>But there are many things you can't or shouldn't do in the cloud for certain reasons. Take the camera example from earlier. Say you have eight high-density cameras, and you want an action on them immediately. You may not be able to afford the latency that comes with going up into the cloud. Or it may be a financial challenge – that its actually more expensive to send that data to the cloud over and over again, and it makes sense to invest in compute at the edge. There are nuances in the decision-making. It really comes down to what you want the application to do, how quickly and how much it should cost.</p><h4>How does Intel help developers to learn, to build and then test their solutions at the edge?</h4><p>To enable what we know to be interesting and challenging use cases at the edge, required us to change our focus on who these developers are and what they care about. We learned that they <em>really</em> don't care about what hardware they're running on. The modern developers are fairly well extracted from the hardware – they just assume the compute is going to be available for them to do their work.</p><p>To make sure we can deliver on that, we typically target developers by specific capability. The most advanced case that we've been studying on the edge recently is focused video and specifically, video inferencing and AI inferencing. We created a tool called <a href="https://software.intel.com/content/www/us/en/develop/tools/openvino-toolkit.html" rel="noopener noreferrer" target="_blank">OpenVINO</a>, which was developed in a way that developers didn't have to care about the hardware it runs on. It's a model optimization technology that enables them to easily scale out to different hardware platforms. That's proven to be an interesting value proposition to these developers.</p><p>Our goal with <a href="https://software.intel.com/content/www/us/en/develop/tools/openvino-toolkit.html" rel="noopener noreferrer" target="_blank">OpenVINO</a> is democratize AI activity and inference at the edge. We want to make it simple -- to put these tools in the hands of non-data scientists and make it work. As a part of that process, we're also creating an environment where they can develop anyplace, anytime, anywhere they want to be. We're so proud of our <a href="https://software.intel.com/content/www/us/en/develop/tools/openvino-toolkit.html" rel="noopener noreferrer" target="_blank">OpenVINO</a> community and are constantly working to grow the community and release new features and capabilities to edge developers.</p><h4>What's the possible next breakthrough that you see for Intel in edge computing and the IoT space?</h4><p>I'm looking forward to the big breakthrough when we show integrated 5G, Virtual Private Network and the edge workloads all in one unit. More to come.</p>
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Saul Hudson has a deep knowledge of creating brand voice identity, especially in understanding and targeting messages in cutting-edge technologies. He enjoys commissioning, editing, writing, and business development, in helping companies to build passionate audiences and accelerate their growth. Hudson has reported from more than 30 countries, from war zones to boardrooms to presidential palaces. He has led multinational, multi-lingual teams and managed operations for hundreds of journalists. Hudson is a Managing Partner at Angle42, a strategic communications consultancy.
The Retail Resurgence
Why it's 'almost like Christmas every day' for the trucking industry
Logistics firm C.H. Robinson's CEO Bob Biesterfeld on the future of shipping.
"I don't mean to over-dramatize that at all, but there's so much volatility in the market right now, and I think people are really working to project what the future looks like in a really uncertain environment," says C.H. Robinson CEO Bob Biesterfeld.
Photo: C.H. Robinson
November 24, 2020
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
November 23, 2020
This year, so many people have been stuck at home ordering everything they need to ride out the pandemic. But once that "buy" button has been pressed on a website, it falls upon an intricate network of logistics companies to actually get orders to consumers. This year has highlighted many of the pitfalls in U.S. supply chain infrastructure, but what do the companies on the front lines make of the situation?
"It's almost like Christmas every day," said Bob Biesterfeld, the CEO of C.H. Robinson, one of the largest trucking and logistics companies in the U.S. The entire shipping infrastructure that supports the retail industry has been under strain — both for orders placed online and for the rolls of toilet paper people have been hoarding from grocery stores — and relies on logistics firms like Robinson. The company has been investing heavily in new technology, both to better support customers in an increasingly uncertain world, and to keep up to date with more digital-first entrants into the industry. No one is ever prepared for a world-altering event like a pandemic, but the investments likely didn't hurt.
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</div></p><p>Protocol recently spoke with Biesterfeld on what it's been like to manage through the pandemic and the changes that we may see as a result of this tumultuous year. </p><p><em>This interview has been edited for length and clarity. </em></p><p><strong>How has the pandemic affected C.H. Robinson?</strong></p><p>We've been dealing with the impact really since early January, in our business in Asia, and then subsequently in Europe and in the U.S. And as we've been thinking about this, from a business continuity standpoint, we've tried to look at this through the lens of ensuring the health and safety of our employees and our customers where we interact with them. </p><p>Secondarily, really ensuring supply chain continuity for the companies that we deal with — we deal with over 120,000 different customers, from the largest global corporations to the smallest mom-and-pop businesses on Main Street. I've been really focused on ensuring continuity for them in a time of disruption, which meant different things at different times, whether it was the shutdown of production in Asia early on, or the shutdown of businesses in the U.S. as state and local municipalities started to close to [tamp] down COVID. </p><p>The third piece was just around the economic health of our own people, and how we might protect them as we go through the unknowns of things. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>But in terms of what what has changed, we've obviously seen significant changes in global shipping patterns, the rapid deceleration of entire industries going into the second quarter — we're still struggling to see small businesses come back — to the underlying change in the consumer behavior, the mass shopping on consumer staples, this huge pull forward in ecommerce and what that meant to inventory levels for our customers, and the placement of an inventory and their ability to fulfill products on demand. It's almost like Christmas every day. </p><p>And you add to that the reduction in passenger airline flights, which carry roughly half of the world's air cargo — that caused all sorts of logistics challenges. In North America, you saw a number of trucking companies that went the route of "I'm going to take the Paycheck Protection Program versus working," which really drew down supply in trucking and caused some downstream effects there as well. </p><p><strong>About a year ago, you <a href="https://www.chrobinson.com/en-us/newsroom/press-releases/2019/09-17-19_technology_investment/" rel="noopener noreferrer" target="_blank">announced</a> a billion-dollar investment in tech. How is that going, and has it affected your flexibility in a time like this?</strong></p><p>So when we announced that investment in technology, we said at that point — which has maintained really to be true — there were three primary areas of technology that we were investing in. The first was around our customers: How do we build great software that our customers need and want to use? They needed an easy button for shipping. And so we invested a lot in the Freightquote by C.H. Robinson platform, which allows small businesses to literally go online and, with a click of a button, have products packaged and shipped, swipe a credit card and ensure that they've got guaranteed capacity and access to what we believe is the largest network of motor carriers in the world. That brought a huge competitive advantage for those small businesses trying to stay competitive through this. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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</div></p><p>And on the other side of that was these large global companies that we serve: The Microsofts of the world needed to think differently about inventory in this ecommerce-driven environment. So how do we provide them visibility to inventory both at motion and at rest in a way that they can have real-time global inventory visibility at the SKU level across their entire catalog [and] can ensure the inventory position is in the appropriate place to fulfill these changing and evolving demands? </p><p>I think one of the things that's evolved on the customer side, too, is just this need for connectivity and speed. A lot of the antiquated ways of shipping products involve picking up a phone or sending an email. We've invested heavily in ensuring that our software system, which we call Navisphere, is the most connected platform in the industry — whether that's a shipper being able to go out and get an API call for a truckload freight rate or an LTL freight rate, and have that automatically populate in their ERP or TMS, so that they can secure capacity. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
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</div></p><p>There's about 200,000 trucking companies in the U.S., and the average size of those businesses is five trucks. This is an entire industry of small businesses that are largely unsophisticated without technology. There's a tremendous amount of waste that occurs in that industry. For the small businesses, on average, about 20% of the miles they drive are empty, not revenue-generating, yet they're still generating greenhouse gases, but they're not getting paid. We've invested heavily in that carrier ecosystem to ensure that we can take waste out of that model. Because we have more freight than anybody else in the industry, we think about this technology. We're able to create this ecosystem for these carriers that can keep them moving constantly — whether it's multi-stop, or multi-load tours, or just the fact that they're able to go online and automatically book a shipment that happens to be next to where they're unloading another shipment — [and that] has added a ton of value for them in a time where there's where there's downward pressure on pricing associated with the pandemic. [The] third area of investment is really around our internal stability, scalability, reliability of our systems and just the infrastructure associated with that. </p><p><strong>What are your thoughts on a digitally native competitor coming into the market, someone like Uber Freight? What are your differentiating factors?</strong></p><p>It really is an apples and oranges comparison, I would say. You could compare Uber Freight to a very narrow section of what C.H. Robinson does. But if I think about what differentiates Robinson in the competitive landscape, and why customers choose to work with us, they respect the technology that we build and lead with but they also realize that the really complex supply chain problems they have can't be solved by technology alone. Our customers live in a global, multi-modal world; they don't just move trucks. They move parcels, ocean freight, air freight; they have customs needs, they look for supply chain consulting; they look for thought leadership to help them design better networks. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
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</div></p><p>So when we engage with customers, we're bringing all of that to bear under Navisphere. On a domestic basis, we're competing with Uber Freight and the other 20,000 third-party logistics companies that exist in the industry. Leading with being a digital native is interesting, but I'm not certain that it's important. </p><p>I would give Uber Freight and others credit for changing the conversation a bit around what digital means in logistics. But from a true, sustainable competition standpoint, what's been portrayed as a line between the digital upstarts and the legacy brokers, I think that progressive companies like Robinson have been investing to stay ahead of the curve, or at least on par with the curve in terms of technology that the digital upstarts are having. And a lot of the digital entrants that have come in and said, "We think we can automate everything," are realizing that in order to be sustainable, they have to be profitable, but they have to have people as well. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="6">
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</div></p><p><strong>What role do you think automation plays across logistics in the future?</strong> </p><p>I don't want to dismiss the reality of digital in the logistics space. I think that digital and automation are going to be huge themes that live on in the advancement of logistics over the course of the next several years. And they're just not limited to new companies that are coming in. If I think about all of the steps that occur in a truckload shipment or a partial shipment, there are tremendous opportunities today. It's the convergence of the power of compute going up and the cost of compute going down that allow us to think about how we solve these problems in exciting new ways. Leveraging artificial intelligence and machine learning to manage some of these processes I think are real opportunities that are going to help companies to drive yield. I think that robotic process automation inside warehouses is real, and there's opportunities to uplift efficiency there. </p><p>When I think about autonomous trucking, whether it be probably more in the near term, in contained environments like ports, or longer term, in point-to-point on the highway, I think there's huge opportunity for efficiency gains. [For] small trucking companies, part of why they have inefficiency is what I refer to as "the bias of the driver": The driver wants to go home. Yeah, human nature: At some point you want to go home. But if you are in that truly autonomous environment, and you're using drivers differently, more as local delivery drivers, the driver bias of where that asset goes somewhat goes away, which is a huge unlock in terms of productivity. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="7">
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</div></p><p><strong>As long as this pandemic rages on, what do you see as the biggest challenges on a day-to-day basis for U.S. supply chains?</strong></p><p>We're in this period of really a great unknown. I don't mean to over-dramatize that at all, but there's so much volatility in the market right now, and I think people are really working to project what the future looks like in a really uncertain environment. </p><p>If I go back to the second quarter, we saw an absolute collapse in all of the global logistics market: air freight, ocean, domestic trucking. In terms of pricing, capacity far outweighed supply. Now, you come to the third and fourth quarter of this year, and you'll see that ocean freight rates are up double what they were last year, air freight rates are up exponentially, and trucking spot market rates are up 40% to last year. But largely, it appears to be more of a supply constraint than it is a demand impact. Inventory levels at retail are at all-time lows. And the [Purchasing Managers' Index] is starting to rebound. We don't know if that's going to be permanent, but the PMI has a direct impact on shipping volumes. </p><p>I think people and companies are used to a more static planning mechanism where you look at things on an annual basis and say, "I'm going to lay out my 12-month plan, and this is how I think it's going to work." But there's so much volatility right now in the market. Smart companies are being challenged to take a different approach to execute in this environment in new and different ways in order to maximize results. And then you've got the undercurrent of just an incredible change in consumer behavior, tied to ecommerce, and how we all shop and expect immediate gratification.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="8">
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</div></p><p><strong>Are you expecting that trend to continue? I know that ecommerce retail has doubled since last year in terms of total sales, but it still only accounts for about 16% of the market.</strong> </p><p>I mean, double is still double. So my personal opinion: I'm 45, my generation and the generation that follows us, I know when my wife and I talk about Christmas, it's like, "Hey, where do you want to go for Christmas?" We're not going to get each other presents, but it's like, what experience do we want to have? Family experiences are largely off the table right now, and so that dollar tied to the services sector has shifted to consumables. </p><p>And so I think you're going to continue to see that influx into durable and consumable goods that used to be going to the services sector. And based on how we're all being either trained or forced to purchase things, that'll continue as a tailwind for ecommerce. And I think we're all learning that this experience is nice, I don't have to go to the mall, I don't have to go to my local grocery store anymore, it's pretty convenient for me to order these things and have them delivered and installed inside my house. And so I think a lot of that trend is going to be here to stay, not that it's going to maintain at the same growth rate, but I think it's real and likely has some legs to it.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="9">
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</div></p><p><strong>How much do you see those trends happening before they're reported on?</strong> </p><p>Given our position in the industry, we see things — both on a long term and a short term — probably pretty early on. One of the statistics that I talk about a lot is the shortening length of haul, The average length of a truckload from pickup to delivery over the course of the last decade: It's gone for us from 850 miles per load to somewhere just over 600 miles per load. And that exemplifies the change in what distribution looks like, placing inventory closer to the consumer. Are you in San Francisco? </p><p><strong>New York.</strong></p><p>So if you go order something online, they're not shipping it from San Fran anymore, they're shipping in from somewhere in New Jersey and some warehouse where they're importing it to the East Coast ports instead of the West Coast ports. Inventory just isn't moving cross-country the way that it used to.</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="10">
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</div></p><p>In the short term, I think we also get a bit of a bellwether view into things. I look at the shift over the course of time from small businesses and the rise of the big-box retailers. I think this pandemic has also had a pretty significant, longstanding benefit to some of these big boxes as well — you don't have to look much beyond the comp store sales of the Costco, Walmart, Lowe's and Home Depots to see that they're going to be clear winners.</p>
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Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
Transforming 2021
Blockchain, QR codes and your phone: the race to build vaccine passports
Digital verification systems could give people the freedom to work and travel. Here's how they could actually happen.
One day, you might not need to carry that physical passport around, either.
Photo: CommonPass
February 23, 2021
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
February 23, 2021
There will come a time, hopefully in the near future, when you'll feel comfortable getting on a plane again. You might even stop at the lounge at the airport, head to the regional office when you land and maybe even see a concert that evening. This seemingly distant reality will depend upon vaccine rollouts continuing on schedule, an open-sourced digital verification system and, amazingly, the blockchain.
Several countries around the world have begun to prepare for what comes after vaccinations. Swaths of the population will be vaccinated before others, but that hasn't stopped industries decimated by the pandemic from pioneering ways to get some people back to work and play. One of the most promising efforts is the idea of a "vaccine passport," which would allow individuals to show proof that they've been vaccinated against COVID-19 in a way that could be verified by businesses to allow them to travel, work or relax in public without a great fear of spreading the virus.
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</div></p><p>But building a system that everyone agrees with — and can access — is no small task. There are several companies working on competing projects to verify vaccinations. But beyond that, there are more than a few hurdles that could prevent vaccine passports from succeeding, from antiquated medical records systems to interoperability issues and privacy concerns. Here's how they could actually succeed. </p><h3>Competing projects, similar standards</h3><p>Pretty much since the first blockchain white paper, people have been looking for perfect examples of where a distributed, immutable ledger could be valuable. There's obviously the push to use it for currencies, and companies have tried to use it for things like tracking <a href="https://www.protocol.com/ibm-blockchain-supply-produce-coffee" target="_self">food production</a> and <a href="https://www.govtech.com/products/Blockchain-Voting-Debate-Heats-Up-After-Historic-Election.html" rel="noopener noreferrer" target="_blank">voting</a>, but there are few use cases that have truly taken off, at least so far. "We've been working on this since 2014; we never thought that health care would be the kind of the use case that we take this mainstream," Jamie Smith, the senior director of business development at Evernym, a company focused on using the blockchain as a basis for verifying identities, told Protocol. </p><p>Smith said Evernym had been discussing its concepts with automakers, retailers, telcos, governments, loyalty companies and banks prior to the pandemic. One of those companies was IAG, the airline group that owns British Airways, which had been interested in the idea of contactless travel based on a single identity credential that follows you from the airport check-in to your gate. With the pandemic, that morphed into thinking about ways to verify that passengers have had negative COVID tests, and eventually, that they've received a vaccine. "From our perspective, it was a really easy lift to see," Smith said. "We're doing contactless travel, and we just added verifiable credentials for test results."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="2">
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</div></p><p>It's a similar genesis for IBM's Digital Health Pass initiative, which leader Eric Piscini said started about two years ago as a way to store people's entire health records in a safe, accessible platform. It also relies on the blockchain for its immutable record of proof, and both Evernym and IBM are part of an open-standards group called the Good Health Pass Collaborative, which aims to bring private credentialed vaccine records to business and people around the world. Companies are working on their own implementations of the standards, but Evernym's Smith said the data is meant to be portable from one passport to another. </p><p>Most of the companies working on passports say their systems are private by design, especially given that they're mainly working off the same open standards. In most cases, the health information only ever remains on a user's phone, but where it asks to verify that the user's information meets a system's standards — such as whether this person has had two COVID vaccines and should be allowed into an office — that information is recorded on a blockchain. "You can, using blockchain technologies, verify that someone has been tested recently, without having access to the underlying data," Piscini said. "I don't know any other technology where you can do that."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="3">
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</div></p><p>Similarly, the nonprofit Commons Project's CommonPass, backed by the likes of Oracle, Microsoft and Salesforce, started out as a project to bring an analog to Apple Health for Android. JP Pollak, a senior researcher at Cornell and founder of the Commons Project, first launched CommonHealth to bring the sort of data and insights that Apple Health offers to iPhone owners to Android users. Last summer, the group started building an app that could take health data and privately share it with others — in that case, it was to help truckers stuck at the borders in <a href="https://www.newtimes.co.rw/opinions/digital-technology-re-opening-africa" rel="noopener noreferrer" target="_blank">East African countries</a> who couldn't easily prove they'd taken COVID tests. This morphed into vaccine credentialing, with the group now working to pull together the various data streams needed to get a project like this off the ground. </p><p>"Health care institutions, EMR vendors, retail pharmacies, state vaccine registries, all issuing people a digital verifiable credential of their vaccination record that they could then use in the app of their choice, to be able to get access to various kinds of services," Pollak said. CommonPass is also working with the Mayo Clinic, as well as Epic Systems and Cerner, two of the largest EMR vendors. </p><h3>Something for everyone </h3><p>With so many competing efforts to become the world's digital vaccine passport, it might seem that the country is heading for some sort of VHS versus Betamax format war for proving everyone has had COVID vaccines. But given that so many of the efforts are using the same standards, and in many cases, looking to embed their tech in someone else's app rather than their own, the race might be less about the best tech winning, and more about various approaches working in different situations. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="4">
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</div></p><p>"The intent is not to be the only company; we don't want to be the proprietary platform that everybody has to use because they have no choice," IBM's Piscini said. "That's not who we are right now: That's the IBM from 30 years ago, not the IBM of today."</p><p>For IBM, though, the selling point is that the company already works with so many other massive companies. Why look elsewhere for a vaccine passport solution if your airline booking system is already powered by IBM? "We believe our network is going to be more valuable than any other because of our scale and our ability to integrate the platform with CRM systems, building systems or stadium systems — we can do that every day," Piscini said.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY2NTc3NS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMTM1MjYyM30._ykxxCyx3_wDbZrYgCcmK0QT2Ue1tZFdP5pf60kOmPU/img.jpg?width=980" id="c81c9" class="rm-shortcode" data-rm-shortcode-id="3967636652192acfdaad341861263bc8" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">IATA's digital passport app.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Photo: IATA</small></p><p>For other companies, it's about securing new partnerships with major players in the hopes of finding that scale. Evernym, for example, is working with International Air Transport Association, the airline industry's trade association, on an air travel-specific app called Travel Pass. IATA is working with airlines and local governments to ensure it has the latest requirements to feed the app's rules engine. "It will say, 'Hey, you're flying JFK to Heathrow, you need a PCR test 48 hours in advance before you can land,'" Evernym's Smith said. "And of course, those policy changes are changing every day." Qatar, Emirates and Etihad Airways are all <a href="https://simpleflying.com/qatar-iata-travel-pass-launch/" rel="noopener noreferrer" target="_blank">expected</a> to start trialing the app in the next few weeks.<br></p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="5">
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</div></p><p>In other instances, the technology will live inside other companies' existing apps; why make someone download yet another app and add another hurdle to compliance? Instead, the experience will be rather like adding a loyalty account or TSA PreCheck number when booking a flight. Airlines and other venues restricting access will require uploading negative test results or vaccine records using one of these services. "You're going to be using the United or the Delta app, and they'll be using our solution or somebody else's, but you will do it via their app," IATA's Travel Pass lead, Alan Murray Hayden, told Protocol.</p><p>The World Health Organization is also working on its own offering, and recently convened the <a href="https://www.who.int/groups/smart-vaccination-certificate-working-group" rel="noopener noreferrer" target="_blank">Smart Vaccination Certificate Working Group</a>. It's built upon the WHO's nearly century-old notion of the "yellow card" vaccination record, which first was used to document that travelers had been inoculated against diseases such as cholera and yellow fever. Evernym Chief Trust Officer Drummond Reed is part of the working group; he said there should be more to share in the coming months. </p><h3>What could go wrong?</h3><p>It's entirely possible that as more people start to get vaccinated, vaccine passports start to become the norm. You walk to work — still masked, of course — scan a QR code reader in the lobby, and are let in. You go out for lunch, and your loyalty card app has a discount for in-store shoppers verifying they're vaccinated. Your concert ticket is also tied to health pass information that you shared earlier in the day with Ticketmaster. But there are more than a few hurdles ahead of the companies rushing to turn these concepts into realities. </p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="6">
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</div></p><p>First off, there's the … reality … of the real world that any digital system has to contend with. For anyone without access to the internet, digital vaccine credentials will prove difficult to acquire, though all the companies Protocol spoke with said they would offer a paper-based QR code for people who don't have smartphones. But there's also the issue of having to corral so many different stakeholders into one system, especially when some health care providers are still reliant on antiquated database systems or <a href="https://www.protocol.com/manuals/health-care-revolution/electronic-health-records-after-coronavirus" target="_self">even paper records</a>. "The amount of inefficiency in the system is tremendous," IBM's Piscini said. </p><p>But in the U.S. at least, all vaccinators are required to report COVID-19 vaccines to their state. Piscini said that even for people who just received a paper copy of their vaccine records, systems like IBM's can likely link up to the state's immunization registry and allow people to import records to a vaccine passport.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTY2NTc4My9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYzNzg3MTM2M30.RZtqR7F_FuXK1S24V6jVaqUZ0xOSG-gCwj00xU3fxcM/img.png?width=980" id="b0bd3" class="rm-shortcode" data-rm-shortcode-id="11d8002d92c0cd6ef39b12fc7b8dccf8" data-rm-shortcode-name="rebelmouse-image">
<small class="image-media media-caption" placeholder="Add Photo Caption...">How CommonPass's app shows your records. </small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Image: CommonPass</small></p><p>And states are willing to help out, Pollak said, adding that CommonPass has started working with Hawaii to roll out its offering for would-be tourists. "We're seeing a lot of state governments stepping up and doing a really good job with this," Pollak said. "It would be surprising if there wasn't a coordinated federal effort very soon." That being said, while <a href="https://www.cbc.ca/news/canada/north/iceland-covid-passports-canada-1.5904828" rel="noopener noreferrer" target="_blank">many countries around</a> the world are committing to working on vaccine passports, getting a straight answer out of the U.S. government on what it's doing has proven difficult. The State Department, which maintains America's traditional, analogue passports, referred me to Homeland Security, which referred me to the White House. The acting director and chief of staff of the White House's Office of Science and Technology Policy, Kei Koizumi, told Protocol that "OSTP can't discuss projects we are working on before they are publicly announced."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="7">
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</div></p><p>But even with systems in place at a federal level, there's still a fair amount of education that needs to happen before people will trust systems like these. "There's a substantial gap in understanding and knowledge of how these systems work, and people's views, in terms of who should get access to which data," Pollak said. </p><p>"We assume there's a Facebook Borg in the sky, monitoring every interaction," Smith said. "The emergence of verifiable credentials breaks down that mental model, where actually it becomes more like decentralized bits of paper that I can carry around, and no one's to know that I've been sharing this information."</p><p>"Our belief is that if you do the right thing, from a platform point of view, protecting your privacy, and giving you control and access to the platform to everybody who wants to use it," Piscini said. "I think those are very basic things that allow the core of the platform that we build to generate adoption by the individuals."</p><p><div class="ad-tag"><div class="ad-place-holder" data-pos="8">
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</div></p><p>Even with a system that works, there may still be holdouts to this potential new normal. "Some people are saying, 'I will never get vaccinated,'" Piscini said, "and I don't know if the airlines are going to say, 'Well, maybe you will never fly again.'"</p>
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Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
The Small Business Recovery
The technology that’ll help small businesses in the next pandemic
COVID-19 has accelerated all sorts of business transformations, but some just weren't quite ready yet.
Robotic deliveries are coming — but not in time for this pandemic.
Photo: Nuro
February 17, 2021
Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
October 2, 2020
The weather is turning cooler and you realize you really need a new coat and a warmer face mask. You open your favorite shopping app with retailers from around your neighborhood, and see a coat and mask you like. You stand in front of the mirror, wearing your AR glasses, and try both items on. You like them and decide to buy them. The app triggers a drone to have the items delivered to you from a local fulfillment center a couple towns over. They'll be there in about 15 minutes. While you wait, you order some groceries, and the robot that's sent to deliver them tells you a friend also purchased you an arrangement from the florist down the road that will be in the order with your groceries. She says the flowers are to celebrate your birthday at home, seeing as parties are forbidden right now.
As much as the prospect of another life-altering pandemic is likely the last thing anyone wants to think about as the current one still rages on, experts say it's entirely possible that another one could breach our shores in the near future.
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In the current pandemic, it's now become a trope that industries are being transformed years or even decades ahead of when many thought possible. Technology like cloud computing, mobile, contactless payments and advanced logistics software has managed to help many businesses stay afloat during this pandemic, even when they can't welcome people into their stores. But there's a host of technology in the works that just wasn't quite ready for prime time.
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Here's some of the technology trends that may help businesses through the next pandemic.
</p><h2>Autonomous delivery vehicles
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In February, just before the pandemic started to shut down life in the United States, NHTSA, the country's highway safety agency, <a href="https://www.protocol.com/bulletins/non-passenger-autonomous-vehicle-gets-the-green-light-for-us-roads" target="_self">approved</a> the first ever vehicle for U.S. roads that didn't meet its traditional safety standards. It's a small vehicle, maybe twice the size of a Little Tikes Cozy Coupe, but it could have massive ramifications on how goods move around the country.
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The vehicle NHTSA approved was made by Nuro, a 4-year-old startup founded by Jiajun Zhu and Dave Ferguson, two former researchers on Google's self-driving car program (which is now Waymo). Nuro's goal is to automate last-mile delivery for things like groceries, pharmaceuticals and other things you might pick up on your errands around town. Small robots like Nuro's could cut down on the number of short car trips people take each week, and reduce the number of large vehicles on the road; if there's no one driving the vehicle, there's no reason for it to be very big.
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And during a pandemic, Nuro's goal has an even sharper edge: It keeps strangers far more than 6 feet apart from each other. "The customer can use a touch screen or phone app. With the phone app, you don't have to touch anything. You just grab your groceries. It's truly contactless," Ferguson <a href="https://www.protocol.com/dave-ferguson-nuro-coronavirus-interview" target="_self">told Protocol</a> at the start of the pandemic.
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But in reality, Nuro is still just in the testing phase, operating primarily in the Houston area for now. If you happen to live in that area and signed up for beta tests with CVS, Walmart, Dominos and Kroeger, then you may well start to see what the future of home delivery looks like. But even then, it's still not benefitting local businesses that don't have the scale and budget to test out developmental tech.
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"It's much lower hanging fruit to begin working with a very large chain that already has website ordering," David Estrada, Nuro's chief legal and policy officer, told Protocol. Working with large companies that already have stores across the U.S. and partnerships with delivery companies in place makes Nuro's job easier, Estrada said. But the eventual goal is to serve any business that wants to get its products out to customers. The problem then is having to figure out how to make them discoverable to customers. "As we get further along the tail to local businesses, then clearly what's going to be needed as some form of website aggregation or a front door," he said.
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And this isn't just some concession to Main Street down the line; Estrada said it's core to the long-term viability of the company, given just how much commerce is done through mom and pop shops. "We're trying to address becoming a delivery platform that's the backbone of local commerce," Estrada said. "[If] we think about how big delivery is getting already from the likes of Amazon, still 90% of the retail industry is local."
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For consumers, the jump to online ordering during the pandemic has happened in what they've needed most: food. "Consumers really adopted grocery delivery pretty quickly," Estrada said. But the aim is to replicate the success seen <a href="https://techcrunch.com/2020/07/06/u-s-online-grocery-shopping-hits-record-7-2-billion-in-june/" rel="noopener noreferrer" target="_blank">in the grocery industry</a> for other sectors. "There's a giant future ahead that has yet to be addressed," he added.
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But perhaps this is putting the cart before the horse — or driverless vehicle. While NHTSA has approved Nuro's vehicles for testing on U.S. roads, don't expect to see them puttering around your neighborhood anytime soon. Only about 20 states have explicit rules around allowing autonomous vehicles on their roads, Estrada said, and the industry is still looking for a set of standards to follow. "A question is whether a standard will be adopted," Estrada said. "There's a lot of attention being paid to a new standard called <a href="https://ul.org/UL4600" rel="noopener noreferrer" target="_blank">UL 4600</a>, which puts together a pretty rigorous set of standards for being able to confirm that autonomous technology is safe."
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"Autonomous vehicles have been in production for about 10 years now, and there is not one single large-scale commercial operation of vehicles yet," Estrada said, but argued that the technology isn't what's holding back driverless vehicles from proliferating. "I think, because of our existing regulatory structure and legal structure, companies are actually acting very, very conservatively by not putting large scale operations on the road."
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Estrada said that the common line about wide-scale autonomous vehicle deployment over the last decade has always been that they're about five years away. But now with Nuro, he expects a much larger rollout on the horizon. "We're now at a place with the technology, the type of operation we want to conduct, to be in wide-scale operation much sooner than five years," Estrada said.
</p><h2>Drone delivery
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It's not just land-based autonomous delivery that would've been a boon during this pandemic. Companies like Alphabet's Wing, Zipline, Flirtey and Flytrex have all been running small-scale tests at various places across the U.S., which could have helped fulfill orders without contact, as well as get medical supplies and tests to people in more-remote areas.
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Wing has been working with small businesses in Christiansburg, Virginia, as well as larger chains like Walgreens, to help them continue to sell during lockdown. Two businesses that joined as Wing expanded in the area back in April, Brugh Coffee and Mockingbird Cafe, saw a massive jump in sales. In their first weekend of drone deliveries, Mockingbird sold 50% more pastries and Brugh twice as much cold brew as they would over a regular weekend, a representative for Wing <a href="https://www.protocol.com/alphabet-wing-drone-delivery-coronavirus" target="_self">told Protocol</a>.
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Earlier this month, Zipline, best known for autonomously delivering medical supplies in Africa, <a href="https://corporate.walmart.com/newsroom/2020/09/14/walmart-and-zipline-team-up-to-bring-first-of-its-kind-drone-delivery-service-to-the-united-states" rel="noopener noreferrer" target="_blank">announced</a> that it would be partnering with Walmart to deliver goods near its Arkansas headquarters. Days earlier, Walmart made a <a href="https://www.protocol.com/bulletins/walmart-drone-deliveries" target="_self">similar announcement</a> with Flytrex, another autonomous drone-delivery company, for Fayetteville, North Carolina.
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But examples like these have been piecemeal and at a small scale. The FAA has moved quickly to approve COVID-related delivery setups like these, but as of yet, there are no comprehensive regulations that allow companies to operate in every state flying autonomous delivery drones.
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Flytrex has been working with the city of Grand Forks, North Dakota, (one of the drone industry's <a href="https://www.popsci.com/welcome-to-drone-kota/" rel="noopener noreferrer" target="_blank">hot spots</a>) during the pandemic, along with its more recent Walmart partnership.
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"When we announced the Walmart partnership in Fayetteville, we were sure we were getting spammed by robots from the amount of people who registered for the service," Flytrex co-founder Yariv Bash said. "We didn't publish anything, there wasn't even the link to download the app."
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"The excitement level is huge," Bash said. "From the few customers that we've got, they're using it a lot more than you'd expect, we've got people standing in line waiting."
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Right now, the drone delivery services are trying to show that they can operate safely in one area before expanding. Bash said he hopes to be serving hundreds of homes across the U.S. by next year. Once the model works, it should provide delivery access to all sorts of on-demand options that are currently infeasible outside of dense urban areas.
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"Most of the U.S lives in suburbs, and they can't get on-demand delivery, it is not profitable for the food delivery companies," Bash said. "You're driving your 1-ton car, you have a courier that weighs 80 kg, all of that to deliver a hamburger."
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Bash envisions installing drone deployment devices at shopping centers around the U.S., where independent vendors and major chains could all load up delivery orders to be sent out to customers. But for the time being, it's likely that drone deliveries will be the domain of larger chains and restaurants. "The problem with small retailers is that usually they don't have their online stock availability," Bash pointed out.
</p><h2>Microfulfillment </h2><p>
One way that small businesses can more easily compete with the big players is to know their inventory like the Amazons and Target of the world, as Bash suggested. A novel solution to this problem, as well as one that can help cut down on supply chain struggles and generally reduce the number of people who have to touch a product before it gets to the end consumer, is microfulfillment.
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Even before the pandemic, companies had started investing in microfulfillment. The concept is simple: Most store chains operate on a hub-and-spoke model, where inventory is stored at distribution centers and ferried out to local warehouses and stores. Walmart stores, for example, tend to double as their own warehouses, but they're also massive; not every seller has that sort of square footage at every store. When a customer places an order, the product has to get from wherever it's stored to wherever they are, which could be the other side of the world, across the country or even just a couple dozen traffic-filled miles away. Moving the distribution center closer to the customer, especially in dense areas, to cut down on delivery times requires new ways of thinking about storage. Most warehouses, even <a href="https://qz.com/1664017/how-one-amazon-warehouse-prepares-for-prime-day/" rel="noopener noreferrer" target="_blank">highly automated ones like Amazon's</a>, store products on shelves, where humans or robots have to travel down long hallways to retrieve items for each order.
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Microfulfillment companies like Fabric, Takeoff Technologies and Attabotics are aiming to upend that paradigm, shrinking the fulfillment center into a smaller, three-dimensional space. Attabotics claims that it can reduce the footprint needed for storing products by up to 85%, with a robotic solution that sees bin-carrying boxes moving around a 3D cube that can be expanded or contracted based on demand. The company's CEO, Scott Gravelle, said that inbound interest has skyrocketed as a result of the pandemic. "Due to COVID, everyone's now taking this opportunity to relook at what business they believe they need to have and they'd like to have on the backside," Gravelle said.
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With systems like Attabotics', the goal is to be able to put a full fulfillment center closer to the end customer. To date, the Candian company has worked with larger chains, like Nordstrom, but as a result of the pandemic, new companies are seeing the value in storing products and filling orders with as few people as possible. "Distributing supply chains from centralized to decentralized, operating it as a holistic network and moving the goods closer to the consumer, to save time, transportation costs and packaging — none of that has changed," Gravelle said. "It's just being increasingly validated."
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For smaller businesses, much like with deliveries, the path to survival is likely going to be relying on shared services. To compete online, companies need to know what they have in stock and where it is — something usually only larger stores can manage. By using shared microfulfillment services and a delivery provider, a small retailer could fulfill an order online just as easily as Amazon or Target could. (Products like FastAF, which <a href="https://techcrunch.com/2020/09/17/darkstore-launches-fastaf-app-for-same-day-product-delivery/" rel="noopener noreferrer" target="_blank">recently launched</a> in Los Angeles, are aiming to be that marketplace for small businesses to compete with online.) "The back room of the store is not revenue generating, so is it possible, in a shared ecosystem, to create the inventory storage as well as the ability to fulfill on direct to consumer ecommerce orders?" Gravelle asked. "There has to be a fundamental change in the industry in order to keep small and midsize businesses relative and competitive in the market in the future."
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The problem, as Gravelle sees it, is whether solutions like these can roll out in time to keep these small businesses alive. Pandemic or not, Gravelle said that North America has been "over-retailed for a very long time," and condensing has been in the cards regardless. "Sears is a 100-year-old company, no one would have thought in the '70s that it was ever going to go anywhere," Gravelle said.
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</div></p><h4><a href="https://www.protocol.com/manuals/small-business-recovery">The Small Business Recovery Manual</a>:</h4><ol class="ee-ol">
<li><a href="https://www.protocol.com/manuals/small-business-recovery/small-business-recovery-after-coronavirus">How small businesses are using tech to get through COVID</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/etsy-mike-fisher-interview">How Etsy stopped showing beauty products to mask buyers</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/tech-highlighting-businesses-owned-by-people-of-color">Delivery apps say they're trying to boost Black-owned businesses. Is it working?</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/how-small-businesses-pivoted-to-shopify">Flowers, food and wine: How the push to sell online has permanently changed businesses</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/tcs-cmo-rajashree-ramakrishnan-profile">Why large businesses should think like small businesses</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/yelp-pivot-small-businesses-coronavirus">Yelp's pivot to helping small businesses during the pandemic</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/square-alyssa-henry-profile">How businesses can use tech to punch above their weight — even in the middle of a pandemic</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/roshawnna-novellus-founder-ceo-enrichher-interview">This startup is steering money to Black and women-owned businesses</a></li>
<li><a href="https://www.protocol.com/braintrust/smb-digital-transformation-next-steps">Braintrust: The next step SMBs need to take after going digital</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/small-business-fight-against-app-store">'Netflix for apps': Setapp's quest to build a better app store</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/tech-that-didnt-make-it-in-time-for-the-pandemic">The technology that'll help small businesses in the next pandemic
</a></li>
<li><a href="https://www.protocol.com/manuals/small-business-recovery/how-cloud-kitchens-are-dealing-pandemic">Dark kitchens are a light for COVID-struck restaurants</a></li>
</ol>
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Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.
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