Latest / Exit Algorithms / The Warehouse Whisperer: Fix Operations, Recover Margins & Scale Smart | JD Zapp (#49)
Transcript
- speaker-0: Welcome to exit algorithms, the podcast where we decode what it really takes to unlock growth, streamline operations and prepare your business for a high value exit. I'm your host Pete Vera. And today I'm excited to bring on JD Zapp. He's the founder of JD Zapp consulting and has earned a reputation in the industry as the warehouse whisperer. JD, so excited to have you. Welcome to the show. speaker-1: Thank you very much for having me. I appreciate it, Pete. speaker-0: Absolutely. Yeah, can you start off and share for listeners a bit about your background and yeah, sort of your business journey? That'd be great. speaker-1: Yeah, so I spent close to 30 years of my ⁓ my and ⁓ work like ⁓ running warehouses, doing implementations over the course of my career, working for different organizations and helping them grow and scale to make sure they're meeting their financial. their financial targets, you know, through the operation, right? You can have financial targets, but if you don't hit them operationally, ⁓ a whole different world, right? So that's a huge stretch to do. But yeah, I've been able to do that, gained a lot of experience, like ⁓ we call it of hard knocks, Just learned it, right? Like, yeah, just learned by experience. And then I found that I was able to take that experience and turn it into, you know, like, like, like helping other businesses out, right. And just providing like an advisor role and helping them with their ⁓ their operations. speaker-0: Yeah, that's awesome. How did you get the nickname, if you mind? Am I asking? speaker-1: I mean, it's, like in warehousing, it's like ⁓ everybody has like a sweet spot at what they're good at, right? And knowing a flow of a warehouse ⁓ and people that are responsible for the efficiencies, just ⁓ the and the flow of the facility, the technology that's reported, that they use to capture the. the tracking of equipment in the facility. ⁓ mean, so, ⁓ ⁓ all of that, right, is kind of like, you know, kind of gained that nickname, the warehouse whisperer, just because, you know, it's just, you know, I've seen a lot of really ⁓ ⁓ facilities. We've seen some really large facilities that were. that were actually pretty efficient, have all their KPIs weren't all aligned, right? And we just had to get, and that's a whole different challenge versus having a dumpster fire as a warehouse per se. speaker-0: Yeah, definitely. Okay. So it's your secret sauce. It got warehouse whisperer. Yeah. That's awesome. It's a, it's a good, it got her into it for sure. Yeah. So I'm curious how the process was kind of building, building out your, business. I thought, think I read you, started it kind of on the side. Yeah. Is that right? speaker-1: Yeah, exactly. That's exactly it. I started doing some advisory work on the side, you know, during my career. And then, ⁓ you I realized that I could actually do this, do this full time. And most of roles have been, you know, usually operational turnarounds where I've been hired for like as a, as an employee of the company, I've been hired to do operational turnarounds, you know, or ⁓ for specific implementations or strategies or by private equity accomplish their strategy. And so I've just learned a lot ⁓ what it takes of whole operation to make ⁓ the the health of the business operationally to successful. speaker-0: Definitely, yeah. love to get into that a little more. are besides obvious delayed deliveries, increased cost working capital, what are some of the of ⁓ a poorly ran warehouse? speaker-1: Yeah, so I think this is ⁓ one of the things that I think really gets missed when ⁓ talk about like a poorly ran warehouse or just warehouses that are just inefficient in general or just not firing on all cylinders is that it ultimately hits your margins, right? And like if you're and you're tracking your margins as any business owner should be, If you have like growth and it's, you see the, you see it like affecting your, your, your warehouse, you know, your logistics pieces, your transportation, whatnot. It trickles down into your profits, right? That's really where that's really where, and then, you know, and one of the big, you know, cost effective ways that you can save money is through labor. But a lot of times we see, you ⁓ like operators or. business owners wanting to throw labor at a problem and it's really not necessarily needed. I it might be a short term fix, but the underlying problem is you have to uncover the root cause of what's going on and ⁓ put proper fix in place. speaker-0: Yeah, is there a common theme you find by looking at lot of different warehouses? there a, you know, usually it's between a small, you know, select few root causes that just keep repeating? speaker-1: Yeah, mean, generally, tend to have the same, you know, they're not all the same, but they have a tendency to have the same type of root causes. ⁓ What I like to do is I have a workflow that I use to uncover some of these areas in ⁓ initial And it's really, it's based on, you know, like people, ⁓ the and the technology. we look at those, really those three things, and then we look at making sure that ⁓ we have identifying what the root causes are, getting aligned with leadership of the facility, making sure that they understand what that is. And then we work to ⁓ build a bridge to that. ⁓ speaker-0: Gotcha. Yeah. yeah, how long does that ⁓ process ⁓ or what does that, yeah, what does that look like? speaker-1: Yeah, so in most cases, you to see results pretty ⁓ immediate. you have ⁓ the fixes in place, ⁓ we to implement a process and then test it over the next week or two to see how the trickle down effect, how it downstream. And then ⁓ Yeah, I mean, really within like about 12 weeks, you know, you can see a significant improvement, right? I mean, that's not, it's not a hundred percent going to be fixed in 12 weeks, but within a 12 week period, you can, you can see that, you know, significant improvement. speaker-0: Got it, yeah. Yeah, you mentioned ⁓ targets ⁓ What are usually the main goals that, you the KPIs that will be affected by improving their warehouse operation? speaker-1: Yeah, think main goals, well, one is that you have to, a good warehouse, if not graded on KPIs your customer, you're not reporting on a weekly daily KPI back to your customer as some warehouses or operations do, you should have them internally, right? What's your internal standards, right? And then you hold yourself and it's like your own ⁓ accountability. ⁓ team inside your facility to make sure that you're hitting all your metrics that you've developed. Like every business is different, right? It's like a kid, right? They all have different personalities and different flavors. so yeah, I think that that does it. speaker-0: Got it, yeah. And I know you mentioned technology as one of main things to look at too. What you seeing as good practice as far as implementing technology in a small ⁓ business has a warehouse? speaker-1: Yeah, I think, you know, like having a warehouse management system, you know, in place to kind of help glue your processes together, right? I think that's you have your people and you have your process. You have to make sure you have the right people doing the jobs that you have identified. You know, their skill set might be, you know, one of the areas that might be, their skills might be in a different area, right? And they're just doing a job that's not, in their skill set or what their sweet spot is. So part of evaluating all that and then ⁓ the ⁓ making that all the processes are built, everybody's trained, trained and retrained in the processes. And then the technology really kind of like with a WMS kind of glues everything together and make sure that the facility is flowing in the right way. And not all warehouse management systems are are, it's not like a cookie cutter, right? Like not all warehouses need a half a million dollar system. of them can get by with something really, really light. And lots of cost effective out there for small businesses that ⁓ integrate with ERP, your QuickBooks, and with ⁓ your Shopify and different types of... WooCommerce, know, platforms where you sell online. yeah, there's several different ways. There's also other like integrations, you know, with like AI, you know, where you can use like AI as a customer assistant, you know, to kind of help manage your processes through. like it all depends on the business, ⁓ guess, and what they need. You know, a lot of businesses are different and they're built different and they have a different a different vision, different model ⁓ what they want, like the leadership or the ownership wants to see. And then we find the right technology to help them build to get there, right? To leverage that technology to help glue your processes in place and be efficient and successful. speaker-0: Yeah, no, it definitely makes sense. Do you recommend businesses build their own WMS or maybe does it depend on size? know, there's lot of popular ones like extensive, seem more accessible to smaller business, but I'm curious your on that. speaker-1: I've seen a few like home built ones. mean, long as they're like, whatever's ⁓ the fit for the company, right? You know, like if they have like a tech person that can build it and keep it integrated without many problems. I mean, there's some systems out that are really cost effective, right? They're really cheap, right? You know, and I don't mean like cheap is poorly built, but you know, for a small business, they would be really ⁓ you know, beneficial to use, right, in it, you you just don't have to worry about that headache, right, you know, just to make sure that everything's integrated and somebody's managing it on the back end. speaker-0: Yeah, yeah, that makes sense. It's not a, you know, a couple hundred thousand dollar operating, you know. Yeah. speaker-1: No, mean, yeah, you can buy some as cheap as, you know, like five, $10,000, you know, where you just get the licenses and you just pay like an annual subscription, right? You know, it's, yeah, so it's really some that are really, you know, that'll do the trick for it, you know, like a small business. speaker-0: Yeah, yeah, definitely. you touched on ⁓ a little bit. ⁓ curious, so you mentioned customer support as one of the big ⁓ use Are you seeing ⁓ it implemented in other ways ⁓ in industry? speaker-1: Yeah, I think there's companies out there will actually build any AI platform or a bot to do exactly what you want to do. So if you have an idea and you want to have something ⁓ being ⁓ like POs or dispatching invoices at a certain period of the month or something like that, or reviewing invoices, there are so many different platforms out there. that are available to businesses now. think that it's just, I mean, it's like going to the buffet, right? It's like, what do I wanna eat today, right? And every piece of technology is for every business, right? So I think that finding, that's part of why I say that the technology piece is because I steep myself in the business and the initial audit, right? And then learn like where they're... where their weak spots are, where their areas of improvement can be. And we try to find, we talk with the leadership there different ways that we can, different solutions that we can build and them put the implementation in to get them there. speaker-0: Yeah, I like that approach a lot. There are so many options out there. It's hard to pick which one. yeah, that makes a lot of sense. Find out what exactly you want to accomplish first, and then work backwards to find a solution with a software AI. speaker-1: Yeah. Yeah. Lots of solutions out there. speaker-0: for sure. Yeah, I heard recently too, you know, there's a, the bots are, you that can actually do warehouse work are becoming more and more accessible. I heard some are as cheap as like seven thousand dollars. Are you seeing that? speaker-1: Yeah, yes, am seeing that. There's also inventory managers that are like drones, drones that'll fly in your warehouse. It's just matter of programming it for your inventory ⁓ and uploading to a... to the cloud and that it knows what products and what location and it can fly around and do your inventory, ⁓ your cycle counts for you so you don't have to spend man hours on it. speaker-0: Yeah, definitely save time and yeah, and also be more accurate too. speaker-1: Yeah, exactly. speaker-0: That's exciting. Are you personally using AI at all in your consulting business? speaker-1: Yeah, a little bit. little bit. My itself is more of a hands-on, ⁓ boots on the ground, know, steepen the operation and get my dirty. But ⁓ yeah, I use a little bit. I try to, you know, to integrate, you know, when and where I can and find ways where I can ⁓ get better. speaker-0: Yeah, definitely. Yeah, in my research also, I saw you're going to be ⁓ moderating a talk at an upcoming conference, right? Home Delivery World. That's exciting. Yeah, I was curious. What do you think maybe some of the big takeaways will be from that event? speaker-1: I think just seeing like what solutions are out there, right? That's always the best thing you're ⁓ a show like that is one, ⁓ different people and seeing what options are out there and available for your specific business, right? And seeing what new technologies or new services are being, ⁓ so much that's happening, you can't keep up on it, right? ⁓ just ⁓ there's not enough time in the day to read every article. that hits your inbox or whatever, and just to see what's going to be out there. how fuel prices, right? The fuel price, everyone's talking about diesel and fuel and how the prices of freight is going up. ⁓ that's how we get our products, whether it's to the store or to our warehouses or to the user at the customers. homes or businesses, right? mean, there's, it's, it's, it's a trickle down. So like, it'll be interesting to see like how the industry is going to try to mitigate that. speaker-0: Yeah, yeah, definitely. Yeah, gas prices, they just went up about a dollar across the nation, right? It's crazy. Yeah, it's hard to plan with that so much variation in costs. Yeah, are you seeing ⁓ other like, you know, ⁓ a lot of talk of we're in a freight recession still. I'm curious your thoughts on that and speaker-1: That's crazy. speaker-0: how it's impacting the 3PL side as well. speaker-1: Yeah, one of the things that we do, we also do here with my my group is we do, ⁓ try to help businesses, small businesses, large businesses, engineer a ⁓ logistics program, right? it's kind of like taking, finding what they need and then bringing all of the different assets ⁓ to the table to what what's going to be the cheapest, how can we keep their down. You always have to get a little creative, right? You take one part from one company, another part from another company, to try to engineer a program. We've had ⁓ one case study we did a few years back where we were able to save. ⁓ over a million dollars in costs, right? Just because ⁓ just reframed the problem and we looked at it a little differently and we asked the customer to be open-minded and just kind ⁓ see it, right? And ⁓ saw it, ⁓ were able to see it with the price reduction of their delivered freight. speaker-0: Yeah, no, that's awesome. You're able to, you know, improve the bottom line. And that can counteract some of the ⁓ the outside forces like the rate recession or increase in gas prices. speaker-1: Yeah, so that's what we like to say. We're like margin recovery specialists, right? So we work on trying to get your margins back, Where the rest of everywhere else is trying to take it from you. We're finding ways to get it back for you. speaker-0: Yeah, that's awesome, JD. Yeah, it's been a really good insights that this this call I know we're coming up on time. I always ask guests if you could share one piece of advice business owners listening, wanting to improve their warehouse operations. What would it be? speaker-1: I guess just trust your one trust your gut. Right. You always trust your gut and your people are number one are your number one asset. The people that are doing the job for you. Right. And you find that ⁓ with just a bit of just a little bit of love. Right. And ⁓ just treat them like like they're that they're important. and they have a lot of good ideas, right? That their ideas are ⁓ right? They're the ones doing the work. If you put one of their ideas into place, ⁓ huge for them because they're the ones that thought of it, right? It doesn't have to be the boss thinking of everything, It's like a gold mine in their brains. speaker-0: Love that. Yeah, well said. Yeah, awesome. Where can listeners find you easiest, speaker-1: I think the best way is on LinkedIn. That's kind of like my own website that I have there. And we do random, post a few times a week out there on LinkedIn. And I think that's the best way to find me at ⁓ Jason's speaker-0: Awesome, yeah, I'll leave that in the show notes. Yeah, thanks for your time. speaker-1: All right, thank you, sir. Yep.