If you can execute really well and do things the right way and stay above board and focus on partnership, you should be profitable.
Where you get into trouble is when you're not focused on your main thing and being a 3PL kind of becomes your side hustle even though that's in theory what you are.
Welcome, EcomLogistics Nation.Today, we have quite the treat for you.We're joined by Peter Davis, VP of Fulfillment over at WSI.
Peter is one of the best out there in the industry, and I'm consistently impressed by what he and his team continue to accomplish.This episode will spotlight for you a team-driven journey behind WSI's rise as one of the top 3PLs in the US.
now managing an impressive 13 million square feet of warehouse space.WSI's fulfillment business has grown 500% in the last four years, all while staying profitable and debt-free.
It's a case study in scaling right with smart strategic moves powered by people who are all in. This kind of success only happens when a whole team shows up day in and day out.
We'll explore how WSI's team-based strategies have fueled sustainable, profitable growth without a dime of debt.This isn't just theory.It's a playbook on real-world execution in logistics.Let's dig in.
Welcome, Peter.Thanks for having me on.
Peter, we'd love for you to start off by telling our audience a little bit about your journey so far, how you got into logistics, and what you've been doing at WSI.
Sure.My background is actually in law.I was working at a large law firm in Chicago doing mostly private equity M&A, which, extremely interesting job with extremely challenging hours.You learn a ton and met a lot of great people.
After probably three, three and a half years, I kind of got the itch to go into the business side.
Very interested in strategy of business, the idea of building something, staying contained within an entity versus going from transaction to transaction.
So I started looking around, and one of my great friends from law school, Matt Schroeder, who you folks know, reached out to me, and his family owned a large operating company, which was called a third-party logistics firm.
I had no idea what that meant, but he wanted to know if I had interest in helping them grow.They were looking to grow organically and through acquisition. There was a real estate component to it as well, and it sounded great.
It seemed like a great opportunity for me to learn and to build up a base on the business side and to get into something that was really new.And so I pulled the trigger and went with it.That was about seven years ago now, and it's been great.
I oversee a couple of our business units at WSI, one of them being fulfillment.
I also work with our chemical logistics and our transportation, and we are growing pretty rapidly, which is great, but trying to make sure that we maintain what got us here today.
The company is about 60 years old and sort of focuses on doing things the right way and making sure that we're very stable, reliable, world-class executors for our customers.
So Peter, how many years in the industry now?
Here's something I'll tell people.I actually go to Peter to get advice.Peter and the WSI team are some of the most open, honest individuals out in the market that you can have a conversation about and be like, Hey, what do you think about this?Right?
Like, does this make sense?And you're going to get like solid, absolute rooted in the business advice.And that all to say it's coming from a place where.
just because you've been around for a short time does not translate to you actually don't understand the industry when you are in the thick of the action.
I think you'd throw someone into a warehousing absolute startup for like one year, you're going to come out like seasoned on the other side.It's a crash.It's a crash course.Exactly.
Or you can spend 20 years just like talking about things and actually never going inside a warehouse.Then yeah, you're pretty much not going to know unless you have done it.You're not going to know.
And I think we also owe some of the inspiration for starting this podcast to Peter and his team, because I still remember the conversation that you had with him on a call.
And then after that, you know, we jumped on another call, which was to talk about, hey, should we do this podcast thing or not? And I think you were just so fired up and inspired from that conversation.
And I think that's what pushed us over the edge, Peter.So thank you for playing a role in helping us believe in ourselves and taking the leap of faith and putting this out there.
I have a very vivid memory, if I may say so, of that conversation was it was a regular call, 30 minute call on a Friday evening or Friday afternoon, late afternoon.I still remember.And it's Peter and Matt and, you know, started talking.
And I think at one point, you know, the standard conversation, it's like, hey, we might have to go early today.Right.Like drop off.Like that's how the call started.
You got to have the escape patch.
The escape path was already laid.And I was like, okay, cool.And we started having a conversation.I think it was maybe hour and a half later where we had to be like, yeah, we do be continued, right?Like that's how long that call ended up going.
And the conclusion of that conversation was I, at one point, or I think Dan at one point said, you're thinking about doing a podcast and some conversation came up like just as a joke.And,
both of them are like, we would listen to it if you guys just talked.Right.And it kind of got, got the things going.And then, you know, talking to her, she does like, I'm just going to do it.Right.
And I have to say absolutely the catalyst to the podcast was this conversation that we had with Peter, you and Matt, and then also with her, she's basically driving it.And now, I mean, I look forward to doing this stuff every single day.
Yeah, so I remember it too, and I was very convinced we were going to drop off after 15-20 minutes.
But we got on, and within five minutes, I think you folks had described to us the difference between a retail-focused order management system versus a purpose-built one for a 3PL, which very, very few people in the industry could do.
And it became just very apparent that you had the great mixture of operational plus technical background Which is great.
I would say the part that really differentiates you folks in my mind is that curiosity of spirit and then the generosity and desire to really share information, which is rare.
Thank you.We got the conviction of doing it.
Going back to what Nenad was saying, Peter, I think it's really interesting that you've come into the industry for about seven years now.You're bringing in a lot of your expertise and perspectives from outside.
What has it been like for you as someone who's had to go through that crash course?And are there things that you were not expecting or learning curves that you had to encounter?
Yeah, for sure.It is like drinking from a firehose even today, but certainly early on it's that way.
What's remarkable to me as I think back on my journey is, you know, my prior job and really my whole life, you're dealing with a lot of white-collar folks and it's white-collar problems and you have certain views on things that you don't have as much experience with.
This industry is amazing because I think it gives you exposure to people in all different roles, and it gives you appreciation for just how smart and capable people are regardless of what their job is.
And I think of warehousing, and to be candid with you, before this job, I didn't think of necessarily working in a warehouse as being a glamorous role.And that's true.It's a very hard, very hard job.
Every time I go to a warehouse, every time I talk to someone at our company, it really is amazing just how much they care, just how much they have to teach.You talk about What do you learn?
It's that you got to be humble, that you got to make sure that you're treating people at the company actually drive value with respect.
And it's making sure that over time you're progressing in a way that, that obviously works for the company, but it also works for your team members as well.And that takes a little bit of time and appreciation to understand.
And I'm still getting better at today.
That's so well put, right?It's the aspect of dealing with different people from different walks of life, right?And if you even talk about larger 3PLs or retail organization, the disjointedness even that exists, right?
Other than that one supply chain group that deals with the warehouses, most people in the offices are, you know, very white collar and that understanding of things just happen versus being a 3PL specifically like,
Yeah, you might have the corporate side, but all of your corporate side is just focused on the execution side.Right.And it's like, it doesn't matter who you are.
You might be the CEO and you are doing, you know, your gamba walks and you are actually on the, on the warehouse floor on a regular cadence doing things and understanding the nuances of the business and dealing with these people.
And I just want to call out like, and I don't even know how to describe this, but there is, There is this nuance as well inside the warehouse that you can spend.And I was in a role where I'm director of IT for a large warehouse.
It's, you know, total of over 3 million square feet.It's spread across Canada.And I walked through the warehouse every day, but I would not connect with the people that are out there.Right.And I'm just walking through and seeing everything in action.
And then purposefully when I decided to engage, you start creating empathy for the people that actually work on the floor and then go, okay, I get it.Right.It's a true life changing moment.
If you work in warehousing, but if you're not dealing with the frontline, Make sure you do.I'm saying purposefully go make friends so you understand what they go through on a day-to-day basis.
I think it's so critical for no matter what function you do in the industry and specifically if you are an outsider coming in, it's like one of the biggest pieces of advice that I can give is like spend time on the floor with the people.
Not just processes, right?
From an empathy perspective, but then also just from a selfish learning perspective, the amount you learn actually talking to people who are doing the physical work and seeing it in person and really understanding that allows you to supercharge the learning.
So it's absolutely super critical to do.The other thing that stuck out to me as we came into this space is just the importance of staying above board.
Not always perfect transparency, and there's always the opportunity to potentially pull one over on your customers, and they can pull one over on you.
But you keep the focus on staying above board, focusing on real partnership, and I think that it drives value in the long term for both you and your customers.
That's something that I would not say that I have seen across the board in this space, and it's something I wish there was more of.
I wholeheartedly agree, man.There is definitely a, there is, you know, the excitement will never go away in the 3PL space, right?
Like that's one of the best parts of this space is you will never actually get bored just because of the amount of action that's going on.
And then there is the equation of doing and trying new things and just philosophically saying, okay, fail fast, fail forward, right?If it doesn't work, we'll move on, but we got to do something different because it is noisy.
And I think that sets us up for something, you know, I do want to ask you, because if you roll back to, you know, pre-pandemic timeframes, the acquisition space, of course, you know, you've seen the likes of, you know, XPO and GXO and, you know, growth through acquisition is a pretty big play in the 3PL environment.
But what we saw was very unique during the pandemic timeframe was this, Oh, e-commerce is just going to keep growing all the things, you know, and of course it will continue growing.
If you ask people right now in the 3PL space, you know, the highest focus right now is applied to the 3PL environment.And you saw acquisitions after acquisitions.And sometimes these acquisitions, you would raise your eyebrows, be like, you did what?
And how much did you pay?What did you do?Right?Like the entire equation around that. And we have seen, you know, some really giant ones spending a couple billion dollars just doing acquisitions.
And you're not seeing that return, at least, you know, based on some of the numbers, Shopify being one of the examples of like $2 billion that's worth, I have no idea what right now, but pretty much assure you nowhere close to $2 billion.
But then you made an acquisition recently and that shipping tree, can you kind of walk us through that journey of like, what was that environment like? Why were people doing that?Why did you make the decisions that you did?
And maybe tell a little story about ShippingTree itself.
Yeah, sure.We actually made two acquisitions in the past year, so we doubled up on the fund.But sticking with ShippingTree, we've looked at probably hundreds of opportunities over the past five years.
As you mentioned, there was a very frothy market with very high valuations. What we started to see was valuations come down more in line with what we thought was actual value.
I think that part of the trouble, at least in this space, is that folks who are selling want to make sure that they're getting full value and they might see that, hey, you know, and to your comment earlier, Deliver got 2.2 billion.
They got a multiple on EBITDA or more likely on revenue of X. I want to make sure that I'm getting X too. We've looked at it pretty differently.Multiples are obviously a good proxy, but for us, a multiple is just sort of a comparable.
It doesn't say anything about what you're actually going to be worth to us.So over the years, we've really kept a focus on, hey, what's the cash you generate today?What do we think your opportunity for growth is?
And what's the risk associated with that? In particular, for smaller 3PLs, the challenge is growth.And you might have one or two warehouses, and you're growing really well today.
But to make that jump, to keep growing, you typically need to get more space, which requires a pretty significant investment, and oftentimes a bet-the-company type investment.
And so a lot of sellers in our experience just didn't really understand that point, or didn't appreciate that point, I should say. Over the past maybe year or two, it's come more in line with reality.
And so we've looked, and the valuations are reasonable.So now it's a question from a strategy perspective, what makes sense?
And speaking with Shippingtree in particular, what we knew ahead of time was that they had incredible technology, in particular on the order management side, this flexibility at scale, which is pretty incredible stuff.
And they had this great customer base and it added a little bit of scale in this area where we've already started to grow.And so it made sense.So we did the deal.I'll tell you, you have a plan going into the deal, which is great.
You need a plan, but you learned pretty quickly that the plan doesn't mean anything because you've A lot of stuff's different than what you expected.Some bad, and surely there are some processes that we need to fix.
Mostly good though, and the mostly good is the people.The people on their team, if you are willing to listen, which I think we've done a good job about, the amount you can learn from them,
the amount of value, the amount they care about the industry and about building a business has been pretty amazing.
And so that to me is certainly a go forward lesson on acquisitions is obviously you're looking at what's the accretive cash to our business, what's it going to do for our capabilities, but then really on the people side, hey, is this, is this a match?
Is this going to work on the long run? Because customers, you want to keep every customer that there will inevitably be some amount of churn no matter what you do.It's the team that's the core asset.
It's the team, the ability to build on a go-forward basis that really matters.
I mean, you make it sound simple, but that is extremely difficult, especially when you go through multiple acquisitions.You're integrating systems, you're integrating people, opinions.
How do you continue to keep that focus on having the people first approach while still trying to strive towards client retention, satisfaction, and increasing your innovation portfolio and continuing to thrive as a business?
Can you maybe walk us through some examples or give some tips to the audience as well?
Yeah, so I think it's a balance.It's a very hard balance, and the first key is to make sure that you're listening.And this is advice that's been given to me, and it's very hard, right?
Because you want to push on the accelerator and go as quickly as possible.
But the first step is really listening, making sure that you're hearing what the concerns are, laying out what are your objectives, making sure that you get alignment and that everyone's rowing in the same direction.
For WSI and ChippingTree, we, for example, we have a few warehouse management systems, and there's a question of, well, what warehouse management system makes sense on a go-forward basis?
And, you know, we have one WMS that's almost 20 years old at this point, and there's a gentleman in our IT department named Joe Trebitowski, he's one of my absolute most favorite people in the company,
And he effectively helped develop and build the older WMS.And I think initially he laid out some pretty good points of, hey, here are the concerns with going to a new WMS.Here's what you have to consider.Are you sure you want to do this?
And credit to him, he surfaced the issues. We talked about it.I think we collectively made a decision on what we want to do, and the decision was made, hey, especially for fulfillment-focused customers, we're going to move to this new WMS.
Joe, despite having concerns, also saw the upside.And not only did he jump in, but he's become one of the foremost experts on our team on the WMS.
And I think he's led the way in the IT org in making sure that there's obviously really good understanding around that system, but also a lot of enthusiasm around it.
So I think that was an important example for us because, again, we needed to understand what the downsides of doing this were, but also we needed to collectively decide, hey, what are we going to do?
And once we made the decision, making sure that we, again, had everyone rowing the same direction and moving forward.
That is such a important aspect of, and we observe this all the time out in the market is like, if you do acquisition and basically, first of all, say everything just needs to amalgamate into the way I operate because I just bought you, right?
And not listen to the people that, you know, there's a value to what you just acquired. There is so much that gets lost because of that particular reason.And that is from a people perspective, the people get demotivated.
People are like, oh, the big guys are in play now and they are making all the decisions, right?There is the aspect of, you know, the technology side, right?Like to very well put on that front, it's
There is a reason why you said we liked what was there in technology.And if you had not used that, then the value gets diminished.So it made sense during acquisition.But then how do you now do the integration?And are you going to make that part of
you know, you, you know, larger organizations have bigger machines and these machines are a little slower moving than something small that you might have just purchased.And it's like, how do I leverage what that small happens to be?Right.
That equation, how do you kind of like bring it together?
There's an element of a leap of faith when you're talking about, um, you know, especially with an acquisition and if there's anything that's proprietary, like there was in the shipping tree acquisition.
How do you make sure that those people who are really responsible for building them in the first place, do they want to be part of the new team?
If they are part of the new team, like we did in this circumstance, making sure that they have the right autonomy, making sure that there's cohesion between them and the existing team.
It's all an ongoing effort, but it's extremely critical if you want to actually extract value, if you actually want to get a good ROI on the purchase price.
And maybe on that front of acquisition, and we'll talk about other trends shortly, but like specifically around acquisition trends, what do you see Peter, right?
Like over the next year, year and a half, two years, like where do you see the market going?Are we going to continue seeing the level of growth?
Like, you know, one of the numbers that we have seen is like 15% year over year, you know, growth and like acquisitions that we have constantly seen in the space.And so it's, A lot of the smaller ones being acquired.
There is a lot of private equity based companies that are out there that are purely in the business of bringing together a whole bunch so that they can build something bigger.We all know some of the biggest examples of that, right?
Do you see that trend continue on or do you see some challenges or headwinds on that front?
You know, it's a great question, and I certainly don't know the future.There are clear benefits to consolidation that everyone's aware of.The scale in this industry is critical.
The ability to offer many nodes and reduce transportation spend and time in transit and just the ability to have slack is so critical in our industry because stuff goes wrong in operations.
And so if you have extra resources that you can deal with problems, it just gives you a huge advantage. I will tell you that on the counterpoint to consolidation, technology is becoming so easily accessible.
So having a good WMS, having a solid OMS, having the rate shopping, having the customer facing portal, it's not as expensive as it was even, you know, probably three, four or five years ago.
And what we've seen is that customers like the personal attention. They like the fact that, hey, I'm a really important customer to this 3PL.And so we do end up losing some potential customers because they want to have a true mom and pop shop.
I have seen a lack of discipline in the past.I wouldn't be shocked if that doesn't happen again, especially with interest rates being lower and access to debt being more manageable again.But I think it's going to be interesting to watch.
I think there are polls on both sides that could lead either direction.
Yeah, I think you kind of put it the right way, specifically on the interest rate side, right?There is a very high expectation we are going to see a slide down again.And that's like four days after the election or something like that, right?
Or something of that nature.So that's going to happen.And then there's going to be potentially another de-escalation of the interest rates, let's call it, potentially in December.
I mean, you know, we have been slow at getting back to the rest of the G7, G8s.So it's a catch-up mode and looking at the economy, it's probably going to go down.
And if that does, you know, there's, we are going to start seeing the transactions start occurring, right?Because I think there is also a pressure on how much warehouse space is available.
So sometimes it's also like, okay, let's just buy something that just makes sense.
Yeah, what I don't see going away anytime soon, at least is this emphasis on profitability, which has emerged really in the last, you know, 12 to 24 months.
And I think that there, there was a, maybe more of a focus on, uh, let's, let's just build out top line growth.Let's, let's frame ourselves as a technology company for an exit.
And what, what I have seen at least is that that's lost some of its luster.And there is, there is the focus on let's have great tech because great tech helps drive scalability.
But unless, unless your main thing is selling your WMS or OMS or whatever, and generating those kinds of gross margins,
If your main thing instead is being a true 3PL, you're not going to get those crazy gross margins and so you've got to be profitable and you're not going to get the multiples that they were looking at.
You're not going to get the valuations they were looking at from 3, 4, 5 years ago.
Your first principle is keeping your main thing your main thing and focusing on profitability.
Yeah.And if you can execute really, really well and do things the right way and stay above board and focus on partnership, you should be profitable.
And, uh, where you get into trouble is when you're not focused on your main thing and being a three PL kind of becomes your side hustle, even though that's in theory what you are.
I think one of the other things, at least from our vantage point that we've been seeing quite a bit of and around that mom and pop 3PL experience and how that's very specialized and different, that 3PLs are starting to provide that specialization to appeal to certain types of customers.
Is that something you were seeing as well?And what's your take on that?
Yeah, I think that there's certainly benefits and drawbacks to specialization.
So we have a bunch of 3PLs in the space who are really focused on apparel, and that's all they do, and they're dealing with bigger apparel providers where there aren't a ton of issues that arise that need sort of different perspectives.
I think that there are drawbacks to specialization as well that we've seen with our company.
An example is if you're trying to do fulfillment and there are, for example, chemical-related products, and you're trying to discern, hey, is this fitting the limited quantity exception, does it not?
Having the ability to bring in people from different perspectives and get that diversity of thought is, in fact, quite important.
So, um, for WSI more broadly, we, we do actually a lot of different things and that is in theory a weakness, but we view it as a strength because it's sort of gives you the very well-rounded approach.
But, you know, for obvious reasons, I think that specialization can certainly work for, for certain customers and certain brands, but it's really going to depend on what you're looking for.
Yeah, absolutely makes sense.I think, you know, one of the conversations we had yesterday was around how do you balance the need for driving sales and growing year after year, but at the same time, making sure that you're aligning yourself with
the true strategic long-term partnerships and also the message that you're giving out there in the market.
I think one of the things that we see with you and your team time and time again is just how much you prioritize people and being authentic in what you bring to the table.
Tell us what guides your philosophy on this and how do you keep your mindset focused on that long-term? especially when you're responsible for things like growth and sales.
Sure.To us, we think that growth and sales generation comes as a product of having a really, really good service offering.So you do a really wonderful job for your customers.
They say positive things, they serve as references, they provide stability to your broader organization. So we're very, very focused on being great partners and making sure that we're providing a world-class service.
How do you provide a world-class service?Well, certainly you need great tech, you need great infrastructure, you need great systems.But as we talked about earlier, you need great people.
We are very focused on making sure that our team members are happy, they're well-trained, that we're getting feedback from them, that we're making sure that any sort of improvement initiatives that oftentimes are driven by them are flowing through to the entire company.
During the sales process, you certainly are trying to get customers in the door, you want to win business, but if it doesn't make sense for your network, if it doesn't make sense for your people, you're best off turning it down because the worst thing that can happen actually is bringing in a customer that you can't provide a world-class service for.
that customer will churn, they'll be unhappy, there'll be lots of exceptions, it drags down everyone's time.It's not what you want.
So it's really staying disciplined throughout the chain to make sure, again, that your people, that your systems, that your customers are all happy.That drives growth.That drives what we're after in the long term.
I love that point.I think I'm going to reiterate it actually for the listeners.It is actually in your best interest in a lot of cases to say no, even if it is
know a sale that you're bringing in because if it if it's not a good fit in the long term there will be consequences right so Peter very well put you know there's going to be churn just the impact on uh that customer as well as your own team I I think that is uh wise words my friend so and then you you were going to chime in as well
Yeah, I mean, you know, the three things that you kind of called out, right?Like if you were to talk about technology, I feel that there's going to be a level of normalization we are going to reach and standardization, right?
Like to a point, if you have a good team that can actually execute on that front, You are not going to require very large teams going forward.And you're going to see just the general industry normalization.
So it will come down to uniqueness in your offering and then sticking to your offering and saying, okay, this is what I want to do.Also like keeping it focused on the sales side to say.
what makes sense for my business and can I actually do it, right?Not run after the shiny object.
So if you are in the business of having 500 little merchants and brands inside your warehouse, or you are a multi-tenant with, you know, four merchants inside your warehouse, or you run a dedicated environment, at the end of the day, all of those warehouses have one big thing in common and that's people.
Yeah. If you aren't connected to the people, like who they happen to be, right?The strategies of how you motivate people or make them feel part of the community.
If you do the same things you did 20 years ago, and you're still trying to do the same thing today, that's not going to work no matter what, because the generational changes are so drastic.We saw some numbers last week that
blew our minds right there was like a statistics that said that the total time kids play outside and this is kind of going to show these are the kids that actually come and work in our warehouses right like people the kids that played with their friends on average in the 90s was about 200 minutes a day
versus today, it's less than 40 minutes a day, right?Like that's kind of the amount of time spent with friends on an average day.That has been the reduction.The amount of people that said they have zero friends, right?
Like, so there was like a whole bar chart that said, how many friends do you have?In the nineties was about, you know, three to 4%.Right now that's close to 20%, even though in this hyperconnected.So these are the people that come and work with us.
the, you know, the community engagement, the things that people are doing, you use the word, the heart of the business, right?Like the heart of the people, right?Like that is really important.
I would want to hear from you on that particular aspect, because it's so purposeful to actually understand the people that you have.
Yeah, no, like, I think that the great tech is critical, having the right infrastructure, the right building network, it's all critical.It's necessary, but not sufficient at the end of the day.
That's that's sort of my takeaway that I've learned being in this business.Because stuff goes wrong, it's operations.And how do you account for that?
When, when the tech doesn't work, when, you know, there's an issue with the infrastructure, how do you account for that?It's hustle and energy and entrepreneurial spirit from the people on the floor, the heartbeat of the organization.
And so if you really want to be a world-class executor, how are you going to manage those exceptions?It's with a really, really great culture and a really, really great team.
And so if you're, if you're disregarding that, if you're just focused on again, Hey, what's my network, what's my WMS or OMS. You're screwed.You're screwed.
And it becomes quickly apparent when your customer's calling you to say, Hey, what, what happened?Why did it's great that you got 95% of my orders out, but how come the remaining 5% didn't, didn't get out?
Well, you know, people, people left, they didn't care.The WMS that directed put away failed.So it didn't work.No replenishment.
No, versus you contrast that with, you contrast that with the best in class warehouse where occasionally the tech's not going to work exactly as designed.
Occasionally you're going to get issues from the customers that's going to throw a wrench in the process, but people go above and beyond to get the job done because they care.And that's what makes the difference.
Absolutely.I'd love to maybe have you dive into this conversation around, you know, the evolution in the space.
Having been in the space for, you know, around seven years, I think you've had the opportunity to kind of see not just the customer expectations evolve, but also some of the technology that, you know,
your customers and their end customers have become very used to and they expect you to have certain things when it comes to the tech as a 3PL.
Can you maybe paint a picture for our audience in terms of what has that evolution been like in terms of technology and expectations?
I'll tell you some of the trends that we've seen and the requirements on the tech side. Certainly from when I started, even to today, there's really been a continued push from pure D2C into Omnichannel, which is great.
We love customers that do both D2C and retail and wholesale, but that puts constraints on our customers and it puts constraints on us to make sure that we're doing a great job to help them manage their inventory and manage their cash levels.
So pretty obvious examples that we deal with all the time are, you know, for customers selling to Nordstrom's and selling direct to consumer, and it's trying to put everything in one pool of inventory to reduce its spend, its carrying costs.
How do you make sure that you're managing orders from the B2B coming through EDI and the direct consumer might be coming through Shopify?How do you make sure that there's really good backorder management?
On the OMS side, that's where it's typically driven, making sure that it's smart enough to handle whether it's in a single pool or if it's in multiple pools. I'm pretty excited.I'm going to ask the question.
I'm curious to get your perspective on what AI is going to do to help be smarter on inventory calculations and forecasting to make sure that you're not overbuying as you're doing pools of inventory for retail versus direct-to-consumer
There's been a big push on how many nodes should I be in?There's the obvious benefit of being in multiple nodes where you're driving down shipping costs.But again, how can you forecast correctly?
How can you make sure that I have that right amount of inventory?The order routing orchestration isn't so complicated today, but making sure that that's done well is really, really important.
Customer service, I've seen this huge progression from what I would say five, six years ago, it seemed like the Ryanair model was in vogue, where it's just full self-service through a portal.Don't talk to me.
What we've seen with customers, even customers that might be small and love using the tech, they also want to have the ability to talk to a human or someone with human-like insights.
And so the need to provide really good tech layered with really good people is critical, because they want someone to pick up the phone.They want someone to respond to one-off questions promptly.
After the shipment has left the warehouse, how do you manage exceptions?
There's a bit of a coordination problem in the 3PL space, especially in the fulfillment area, where you have the customer, the 3PL, and then the small parcel carrier or the LTL provider.
And when stuff doesn't go right with the parcel carrier, the customer's asking the 3PL, hey, what happened?
So the ability to proactively understand, hey, something's gone wrong, the order's been delayed, the label may have been created, but it never got onto the truck, or they might not have scanned it, they might've lost it.
The ability to reship quickly so that the end customer never knows anything happened, versus three weeks later, the end customer's reaching out and saying, where's my package?
So I think that there's certainly solutions for these types of things in the space today.
I suspect that over the next handful of years, those solutions are going to be really ratcheted up because some of them require a lot of data and a lot of really good communication and integration to understand that at a granular level.
And so with that, yeah, I am curious to get your folks perspective being the AI wizards.What do you see as the future for those? issues.
I'll just give one small example and then kind of talk about it a little bit.I saw like a little YouTube video a couple days ago that was it's on this repository on GitHub that I can download and I can say, hey, here's my Claude AI's API keys.
And here's my key for, um, uh, opening ice keys, right?Because both of them are kind of like, they are good at one thing versus another.So like utilizing both of them and then this repository and it's an alpha.So it's not like accessible.
Like I had to like do a bunch of things to actually install it on my computer where you essentially tell it, I want to build a WMS that does a, B and C. 15 minutes.
That's how long it took to build a productionized application on my computer that all I needed to do was do a few tweaks and actually deploy.Again, can you actually run it inside a large warehouse?Of course not.
But this is just a sneak peek into the future.So if you are thinking about where things go, One of the best ways I think about it is I always imagine Amazon is the largest 3PL essentially, right?Okay, how do they do it?
It's all of that connection of saying all the way from commerce, right?3PLs have no business today in actually the decision making the customers making on the website.
What if that starts happening when that exposure of like what the customer sees is dependent on the availability and how you market and position.The more complex part is actually figuring it out all the way up top, how it kind of navigates down.
What inventory do I have?What do I have coming in? Um, most companies don't have access to the large scale, either a, the capital and the second part being like the, the, the tooling necessary to do the machine learning behind demand forecasting.
But compute is becoming so cheap now that you're going to start seeing almost every brand have enterprise level capabilities and yeah, enterprises are going to do more.What worries me is. that the larger the company, the slower they are at moving.
And now there is this amazing advantage at a smaller level to actually optimize your operations, optimize what you purchase, your procurement, everything, and this willingness to try more things that you are going to start seeing a bit of rebalancing.
I think you're going to start seeing that.And from a tech perspective, from a 3PL standpoint, you should be really looking at you know, how do we continue innovating and bringing new things into our network at all times, and specifically AI.
It's here, it's real, it's now.There is like real true functional execution type capabilities that are becoming extremely accessible.And I think those changes are going to have a really meaningful impact on how we execute.And I think
the next round of 3PLs or round of just logistics is going to be very, very heavily rooted in AI.And that's going to be across the board, across everything.
I don't doubt that, but we work in this space and I think it's going to be truly shifting how things are done.I genuinely believe that.
I think as an organization also we've gone down this path so many times truly because we believe in the potential and you know to be fair there is a hype around AI so keeping that aside I think to Nanat's point there's a framework that you can follow to truly think about how you can drive
actual value to your business rather than just having that check mark of, I used AI.I think where we are, how much we've evolved in this space for the last two years and where we are today.
I think, Nenad, we were just talking about the stat that we heard yesterday that blew our mind around, Google actually uses AI for 25% of their development.
I mean, it's here, it's now, it's democratizing a lot of the specializations that we did not expect it to.So I think in our space where, you know, To us, 3PL always feels like a race to the bottom because it is such a difficult business.
You have people, you have physical inventory that you're moving.There are so many processes and technologies.It is extremely difficult on any given day to run a successful, seamless operation and on top of that, make it profitable.
So there are many different opportunities within the warehousing space where AI can come in and not just, you know, take away some of the work that humans would not want to do because it's just painful for us to do, but also optimize and, you know, make things faster, error free, etc.
And I think within the logistics industry, there's a huge potential specifically, you know, when we take a look at
the type of technology that we already use, you know, linking IoT, for instance, with all of the amazing, you know, WMSs and OMS, and some of them are already fairly advanced.
And then layering on agentic automation, where you are bringing in the depth of that human expertise.So, I mean, humans are good at some very critical tasks and others that are just not the best for humans.
So I think just finding that balance and using it in a way where again you're supporting humans and not necessarily from the perspective of replacement.
I think there's a huge unexplored space and I think we've been making some strides in this and we love to see the adoption slowly going up in our space as well.
Yeah, well, I think especially from the multi-tenant 3PL perspective, there's a feeling maybe of burn from the automation trends over the past handful of years, because we, WSI included, like we love talking automation, but the reality is that in some circumstances there's an ROI, but in other cases, it feels like maybe more of a marketing push than a true ROI solution.
Hey, I think there's fear that it will fall into that same bucket though.I think.If you asked the leadership team, there's a lot of people who would agree with exactly what you folks are saying.Certainly there should be a benefit if.
a three PL is larger and has some scale should be some benefit because certainly it democratizes the tech, but you still need the infrastructure.You still need the, the, the real estate component and having scale.
But if it turns itself into the DMV, I think exactly what you said that you're, you're at risk of being disrupted and getting overwhelmed by a much smaller and nimbler player.So it'll be very interesting.
I can, I can tell you like, I've been staying up nights lately, uh, is because that's the time I actually, you know, educate myself just working through the day.
And, and it's because the amount of stuff that comes out on a daily basis, it's literally daily.I'm not talking about weekly.I'm talking about literally every single day, something new pops up out there.
And yeah, I'm trying to make the connection back into the industry and, Yeah, I feel like it's going to be absolutely humongous.And whoever's got the advantage is going to have the advantage.
This is, there is going to be that early adopter, first mover advantage.And the big difference between that automation hype, right?Like there was a capital side equation that came along with it.This one is just a people side equation.This is,
The cost is nothing to access a lot of this stuff.Between my subscriptions of everything AI is probably a couple hundred dollars a month.And I have literally maybe a little bit more.
But I have access to pretty much everything that I can have access to other than having the back end access to OpenAI itself, right?Like it's easily accessible to the teams and just that adoption inside the company.
I'll call this out for our company. 25 key results are OKR, three are related to AI, right?Like it's, it's, that's how important that we are made.It is like, what's the adoption rate?How are we going to do this?Right.
Our productivity from development.I'm literally setting a goal.I'm coming out and saying this right now.I'm literally setting a goal that I want to see a hundred percent with the same quality.
the amount of increment in the productivity of development, right?So software we write, I want to see 100% improvement and I think that's achievable.Maybe it's a stretch goal, but that's a goal.
So if a developer wrote 800 lines a day, I want to see 1600, right?Can we get to that?I think so.
It will be very, very interesting to watch, obviously, more broadly speaking, but certainly in our space, the amount of opportunities to innovate and to remove, as you were saying earlier, remove the need for people to be involved in areas where they don't necessarily want to be involved is quite apparent.
So I guess we'll see when we talk again in 12, 24 months.
Absolutely.Or six months, I'd like to say.Peter, I cannot believe how the time has just flown.Really appreciate you jumping on and sharing all of your insights and what an amazing conversation we've had.
I'd love for you to maybe tell our audience a little bit about WSI, how they can get in touch with you, keep up with you on socials, all that good stuff.
Sure.First of all, thanks for having me.WSI, we're a 3PL.We try to be the adults in the room.
We want to be really, really reliable, wonderful executors for our customers, obviously based on technology, infrastructure, all the things we talked about, but most importantly, it's heart and culture and making sure that we get shit done for our customers at the end of the day.
Yeah, we're looking for customers that need a little bit of flexibility and want someone who can help them scale and who are focused less on, again, self-service and more on someone who can layer technology with people and help strategize over time to grow.
LinkedIn, Twitter, look us up, WSI. You can hit me up on LinkedIn as well.I'd love to talk to anyone about anything, certainly Chicago sports related, pizza related, but anything more broadly.
And again, thanks for having me and it was a total pleasure.
Absolutely.Thank you so much, Peter.
Hi, I'm Nenad Acharya, CEO and co-founder of FulfillmentIQ.
And I'm here with Dan Kahl, CRO and partner at FulfillmentIQ.We're the team behind the Ecom Logistics Podcast.Our mission is to provide you with genuine insights from our work alongside logistics leaders to help you improve your supply chain.
In the Ecom Logistics podcast, we share the knowledge and the insights we've gained from working alongside amazing brands, retailers, 3PLs, and VCs, so you can make the most out of your supply chain journey.
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