Our Industry Innovators series interviews senior leaders across industrial technology industries, exploring the latest trends, upcoming technologies and pressing hot topics that are shaping the future.

We help business leaders in the warehouse automation and intralogistics markets grow their teams and I recently had the privilege of speaking to VP of Sales Automation Matthew Walker.

Matthew discusses various aspects of the industry and shares his insights and experience.

Watch the full interview here or read the full transcript below:

 

 

 

Thank you to Matt for taking part in this interview. Matt is the VP of Sales Automation at Phononic.

Phononic is essentially a solid-state cooling technology company that’s kind of disrupting the automation space and the grocery and pharmaceutical verticals. My background ‘s been predominantly in automation technology and grocery technology and operations, but previously with Dematic and selling MFC solutions into the grocery space during that crazy boom phase. And prior to that I was working with a variety of different ventures, both in North America and overseas.

 

Tell us about Phononic’s tech and what problems they aim to solve in the industry.

Yeah, absolutely. So, Phononic as I mentioned, is a solid-state cooling technology company, that’s a bit of a mouthful. But essentially for the geeks out there, it’s leveraging the Peltier model, which is basically principles of thermo-electric cooling and semiconductor material. And in the case of Phononic and specifically the intro logistics industry, what we’ve developed is a solution set in which we can chill and freeze temperature-controlled totes. And those totes, we are then leveraging into ASR / AMR q- based style solutions for the benefit of a host of different vertical markets. And really the driver there is just re-imagining legacy temperature control. So, historically automation providers have struggled to really solve frozen side solutions and some even still struggle with chill side solutions and Phononic has really entered the market very much a progressive alternative to re-imagining how we look at solving that problem by basically chilling or freezing the contents that go inside that tote. So, when you think of each level solutions each level picking that’s really where Phononic’s sweet spot comes into play.

 

I was in a conversation a couple of months ago with a 3PL called Americold and they have 300 odd distribution centres in America. And I think the main problem that I had in discussing with candidates was some of their temperature control facilities were ammonia-based. So, this cooling-based technology solves the problem of an ammonia-based technology. So, with that technology improving, surely that just means Phononic gets better and better?

And you know, it’s important to call out like our you know, our semiconductor technology and material looks differently than kind of what most people think of when they think of semiconductor chips, right? Those that are in phone or led bulbs, right? The material and some of the concepts are different and similar, but essentially at the end of the day what we’re seeing with the semiconductors we’re using specific for our industry, to get that cooling power, we’re seeing massive improvements in performance and reliability and quality which are just so fundamental to ultimately delivering a good product and you know, you hit a good point about kind of a ammonia-based refrigeration systems and what we just like to call HFC’s in general. And I think that’s another whole element to our solution set that’s really, kind of disrupting the space is solid say cooling specifically Phononic’s solution leverage C02 and water and sustainability and ESG goals are growing rapidly across the globe, and this is presenting yet another reason why it’s you know, companies are looking at Phononic’s solution is because they cannot only improve both the actual operation and how they freeze and chill products and solve those problems, but also how then we can help them achieve their sustainability goals, which is a huge boost.

The challenge is kind of temperature-controlled warehousing spaces is facing right now. I was just doing another interview with kind of like the frozen and chilled buyer, I think they’re a trade publication that focuses on kind of temperature-controlled logistics space and warehousing space. And it’s an interesting phenomenon going on there. Obviously with all things covid and post covid and supply chain, and then growth of certain products; frozen products and chilled products that warehousing space is just really tapped for availability right now. And the existing solutions that you know, that are deployed, the existing warehouses are quite aged. It’s a very aged warehouse the average age; I think JLL posted an article a couple of years ago where the average age was 42 years of these buildings. So, on one hand, you’ve got a restriction of available capacity, and these warehouses are very expensive, capital intensive to build out because of the size of the refrigeration systems and everything they’re having to put in. And then on the flip side, the spaces that are still available are becoming much more maintenance heavy, right? Operationally, they have a lot more downtime, they’re costing a lot more because of the age of them and it’s kind of this perfect storm going on for folks like Phononic frankly.

A point that we’ve heard a lot recently, is just the inherent flexibility of our solution because you can chill and freeze at a tote-level. And then we can deploy that tote to an automated system or manual racking systems or even on pick cards. We can really take any size organization and really grow with them as they go, they don’t have to go source that space from a centralized temperature-controlled warehouse outside of the rest of their facility, which creates its own logistics and shipping problems, downstream. And then they simply can just add more totes as they go. We even can offer them different models that best suit, kind of where they are in their journey from a commercial and financial standpoint and you know, I think that’s just spot on. It provides so much more flexibility to kind of how we’ve previously looked at solving some of these challenges in the industry.

 

And I guess what we’re talking about here is, there’s inherent challenge to any company trying to automate a frozen or temperature-controlled space. And we’re kind of briefly discussing here where Phononic fits into that space. But if you could kind of choose out a few points where you really feel, you can help a business that’s struggling to automate a frozen or temperature control space I’d love you to name your top three.

Yeah. I think that the main 2 that come to mind right off the bat, the first one is finding an automation provider that can handle frozen temperature zones to begin with, right? I mean, certainly that number has grown in recent years. I would say probably anecdotally, or you know, directionally that it’s probably maybe 50% / 60%, that might be somewhat generous, but you’re already limited if you’re an end customer going down that automation journey trying to get the most out of one of these systems, you’re already kind of pigeonholing yourself into selecting a provider that can deliver frozen solutions. And then that kind of piggies back into my other point, which is when you’re deciding on automation, like we all know at the end of the day name of the game and automation is throughput, right? You’ve got to feed the machine or feed the beast. And when you take out something like frozen from that portfolio that can fit in there, you’re inherently degrading the performance and output capacity of the solution for that end customer. And so, for Phononic the one that’s where we view our sweet spot is so we’ve partnered with solution providers who don’t have that frozen capacity and then we’re targeting and customers who can gain a lot of improvements to their ROI by going back to them and saying, hey, we can now incorporate frozen into this automated system.

Those are really in my opinion, the 2 biggest challenges. And then from there I think just a couple of knock-on ones that are somewhat icing on the cake, we talked about sustainability. Now, suddenly, you can say, hey, I’m hitting my sustainability goals. I’m not having to go source HFC based systems that are dangerous for the environment. And lead time is another huge element. You start deploying these large capital projects and these solutions and you want to start generating on the ROI as soon as you can and when you must build out refrigeration rooms and frozen rooms – the lead times because of some of those supply chain issues we talked about earlier, I’m hearing upwards of 70 weeks lead time on some of these facilities. And you know, if an automation provider can deploy an ambient solution and call it 12 months, they’re at 24 plus months to deliver a temperature-controlled solution and that’s a real impact to those end customers.

 

Yeah. The thing is with a temperature controlled or even frozen automation system is there is never a guarantee that it works. I mean, I know multiple 3PL’s that work in the cold chain space, and they always struggle with deploying automation systems. Because inherently the mechanical aspects of the products need to be spot on otherwise it’s a failure across the whole system.

Yeah. You’re spot on, the ones that can provide temperature controlled frozen rated solutions, the reality is they don’t like to operate in those conditions just because they can, doesn’t mean they like it. And so that creates ongoing additional maintenance costs and service costs, your risk of increased downtime for the operation for that end customer is higher than what it is if it were operating in an AB and only condition. So even in the cases in which they can select a frozen rated solution it’s not without its challenges.

 

This year, what I’ve seen is, obviously Amazon retracted almost a billion dollars’ worth of work last year, and a lot of companies really kind of, this year, have been in a bit of a hole in pain with projects getting pushed out due to economic political factors and such. What I’ve seen from the market this year, is a lot of companies have really doubled down on hardening their products and there’s been a lot of innovation this year. And obviously this podcast is called ‘industry innovators’, so, for you this year, what are your kind of top 3 automation innovations that you’ve seen on the market?

I might run the gammon in a little bit with this, just because I think all the way back to Promat in Chicago in March and coming from a warehouse background, I don’t like to look at just purely automation-based systems. But you know, two that are top of mind for me this year, you mentioned one of them earlier. URBX, I think they’re doing some interesting things. I think kind of the overall approach, not just from a hardware and software standpoint, but more just kind of how they’re viewing the industry as a whole – going up instead of out, urbanization is a very real thing across the globe and I think legacy warehouses and then therefore, automation systems were built very far away from centralized populations because that’s where they could get the real estate they needed to build them out. And I think URBX is kind of flipping that on its head and I think you know that coupled with what they’re doing on a technology front is quite impressive.

Another one for me that really kind of had their coming out party at Promat but is present in Europe as a company called Bright Pick. I think they’re doing some interesting things. Re-imagining the totality of the picking process. Oftentimes historically we’ve thought of automating systems on each pick level of going well, if I can pick 800 units per hour out of automation, then I’m getting this great ROI. But the reality is you have upstream and downstream processes from there that if they’re not also automated or at the very least optimized, your actual blended pick rate is nowhere near that 800 units per hour that’s being marketed, and I think the way Bright Pick is handling or integrating their robotic arms and completing the pick. So, they’re going picking the items and then putting them into that same order to and then completing that order pick on an outbound basis, when you look at the system, I heard from a lot of people was while it just seems slow. It might look slow, but the reality is when that order is done, it’s done. And that’s something that a lot of other players in the space can’t say and I think you know; they’re doing some interesting things.

And then the last one – they’re not new, but I think they’re growing rapidly, and I’m now seeing them enter other vertical markets, which is quite interesting. And that’s a company called Exotec, which I’m sure not people aren’t necessarily not familiar with. But I think they’re ones that started out very much focused in kind of apparel and e-com, but now you’re starting to see them pop up in other vertical markets, and I think that’s a testament to the stability of the system. I think that’s it’s a testament to the performance of the system and maybe not an innovation for this year, but I think just their growth is great in their introduction into other vertical markets is an indicator that they’ve figured it out, right?

 

3 great picks. A tradition that we have on the podcast is basically at the end of every podcast, we say what do you want to know? The last conversation I had was pertaining to, how do you get over your internal technical solutions to offer the best solution for your customer? If a third party is offering a solution.’ So, its completing question, but I’ll hand that over to you.

Yeah. I think I think there’s a lot to unpack with that one, right? Kind of when I hear that, it’s like it starts the bridges gap of like if you have your own solution, but you’re also working with third parties, integrators, distributors to offer that solution to an end customer, how do you kind of work all of that together? And I think for me where it first starts off is you’ve got to view those partnerships with those integrators, those relationships with those integrators as, frankly, an extension of your team, right? And when I say an extension of your team, I mean that from all elements, whether that be product roadmap and how you’re you know, going about developing your roadmap, your integrator should have influence on that, they should be participating in those conversations – reviewing that, when it comes to aligning your KPIs and your incentives and your goals on the commercial side there should be skin in the game by both teams, and a willingness to really look at how do we offer that best solution. And then from an ongoing service and support standpoint how do you make it as frictionless for that end customer? Because at the end of the day that end customer they might work with an integrator, but you know, if they’re buying the solution from a different branded – the actual manufacturer of that, they’re going to associate your brand back to their experience and you’ve got to make sure that service and support package is as frictionless as possible. And for me it’s kind of starting at the beginning with product and roadmap and development, and then how do you sell and solution and build those incentives and those measurable outcomes together. And then once you have successfully deployed that solution that you’ve worked on in that roadmap together, how do you service and support that end customer in the best way possible. And like I said for me, it all kind of comes back together by saying you must view them as an extension of your team, right? Just like, sales and marketing work together in most organizations you know, to deliver solutions and product and engineering work together, those third-party channel distributors or integrators should be just viewed as an extension of your business area.

 

Yeah, great answer. So now I flip that back to you for the next interview, what do you want to know and what do you want to ask of If your fellow supply chain executives?

Yeah. I think for me obviously, I have a huge commercial and sales-oriented focus with what I do at Phononic, and I’d be curious to know from the next person you have on the podcast, how have they been given the macro-economic conditions, political conditions, how have they seen the buyer journey and the sales journey shift. Have the decision makers kind of categorically shifted? Are they seeing more elongated sales cycle, which is a bit of a softball – I’m sure most people would say yes to that. But just kind of how they have seen that sales journey and buyer journey kind of make some changes, because certainly we’re seeing it on our side, and then and I’d be curious to learn more about how someone else has seen it from their perspective.

 

 

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