Name: Brainstorm AI 2024: Smart Supply, Smarter Store
Uploaded: 2024-12-10
Duration: 20 min 7 s
Description: Dave Clark, Founder and CEO, Auger Sanjay Radhakrishnan, Senior Vice President and Chief Technology Officer, Sam's Club Moderator: Jason Del Rey, Tech Correspondent, Fortune, Co-chair, Fortune Brainstorm AI

Dave Clark, Founder and CEO, Auger Sanjay Radhakrishnan, Senior Vice President and Chief Technology Officer, Sam's Club Moderator: Jason Del Rey, Tech Correspondent, Fortune, Co-chair, Fortune Brainstorm AI

Brainstorm AI 2024: Smart Supply, Smarter Store

Conferences

Dave Clark, Founder and CEO, Auger Sanjay Radhakrishnan, Senior Vice President and Chief Technology Officer, Sam's Club, Jason Del Rey, Tech Correspondent, Fortune, Co-chair, Fortune Brainstorm AI

I like it. Who was that? Oh Yeah, I like it a lot. When I hear supply chain, I do the same thing every morning, every morning, Dave, it's great to be on stage together. Now that you're out of a zone, you're, you're allowed to do this. I'm totally unburdened by what it's been. Make your, I'm a founder. I could say any kind of crazy shit. I feel like today. I mean, beside it perfect. And I said I, I come in the jacket and uh I have two great looking gentlemen, but in a little more casual attire. So whoever told me to wear a jacket, you're fired. Um Sanjay, great to meet you as well and have you up here. Um I guess we should actually talk about the content, right? So Dave, I'm going to start with you um over 20 years at Amazon most recently as we know consumer ceo um you've now raised $100 million and I think you're calling it the series a round for a new start up uh focused on creating an operating system for supply chain software. Uh Can you explain a little bit of what is going wrong in the supply chain space and how A I plays a role in solutions. Well, you know, there's been a tremendous amount of investment in this space for decades and especially through COVID, there was a tremendous amount of money that went into the space. But, and so you have a lot of interesting niche players that are there. Right. So most everybody runs an, er, P software and then they run a half dozen or a dozen other software that does demand planning and transportation management, what have you but they don't talk to each other. And so you're left in this world where everything you know, is sort of output an answer and they have to post process this in some form of Excel or Tableau or smart sheets or something uh with the teams of analysts to try to come up with an execution plan. And our intent is to basically go in and allow them to be able to connect all these systems in an integrated way. So you can actually operate the Indian supply chain uh in a longitudinal continuum as opposed to what they're doing today. And supply chains are always global supply chains, at least always difficult with uh circumstances arising out of your control, right? And sometimes uh political related uh other times, maybe a global health crisis. Now, you know, we have with the Trump administration coming in some questions of what tariffs might look like. Are there solutions? Out. Are you hoping that part of the solution that you're building is something where you take a little bit of the uncertainty or at least planning uh in a more succinct way? Well, I can tell you like, e every, every supply most, every supply chain professional around right now is trying to answer the question for somebody, their board or the CEO or somebody said, hey, if tariffs go to X, what, what happens to our supply chain? Like do we need to re do we need to change the who our supplier is? What does our, our flow need to look like? What does their inventory look like? What are the ramifications of, you know, country X putting another an alternative rule in place that blocks something else and you know, everybody's, you know, everybody's using chat G BT or something and getting an answer really quick and they wanna know why the hell their supply chain leader can't come back with this answer. Meanwhile, there's 50 people grinding out spreadsheets trying to come up with these answers. A and what we wanna do is try to is we wanna get all that data in one place so that you could actually ask those questions. And this is where the, you know, the larger models I think will really help us is getting the full data set together, which frankly most companies, you know, maybe Sam's Club excluded and Walmart, you know, outside these big companies with large technical infrastructure really don't have the ability to, to get their data in one place to ask those questions and to run scenarios with lots of alternatives in them, to get a better view of what might be in certain outcomes or what your decision choices could be given a set of potential out. So as part of your whole wish that you're, I, I know you're building the technology right now, but this would be a perfect time to launch. Well, the, the one thing about supply chain is that there's always something going wrong somewhere. So I'm not particularly worried about it. Like uh I've been a supply chain for 20 some odd years and every day is just another cluster of some kind. You can finish that term if you want. OK, you trying to be friendly. But the it is a, every day is some form of mess. It's just what is the mess and where is the mess and who created it? And how do you figure out how to get out of it? And uh you know, I, I, I've been in this a long time and know the pain that operators face every day. And we just, we want to try to find a way to make that uh a, a simpler, simpler uh set of choices for people. So they can really focus on the strategic outcomes uh as opposed to just answering, answering questions for the boss and Sandra. Um I know you have some supply chain background, but I wanted to shift gears a little bit to your role at Sam's. And I've always been fascinated with Sam's Club. I don't know how many people know, but Sam's Club is often the breeding ground for technology progress and innovations inside the Greater Walmart Company. And then often technologies go from testing in Sam's and then scaling to Walmart proper as I call it or the Super Centers Network, we've had a ton of talk about gen A I capabilities, but Sam's club is using different types of A I both in, in helping consumers sort of re reduce some friction in the stores. And also when your products do get through the supply chain challenges and get to your stores, making sure they stay there, they stay in stock. Can you just tell the audience a little bit about what innovations are working for you right now as in regards to A I powered solutions? Yeah, it's great to be here with all of you. Um What I'll say is that we as a company, we are a people led tech powered omni channel retailer. So at Sam's Club, we have over 600 clubs spread across the US and Puerto Rico and we have learned that to win over time, we really need to listen to our members and figure out how to use technology to anticipate and meet their needs. So, um we've been doing this for a long time, uh listening to our member feedback and figuring out how can we use that to make your shopping experience more frictionless in the, in the clubs? And what's number, what's number one on that list? Yes. So number one on that list, few years ago, we got feedback from our members that, you know, waiting in the checkout lanes with the cash registers with a huge pain point. So we delivered this mobile capability called Scan and Go. It's available in the Sam's Club mobile app. Our members can actually walk into the club, open the Sam's Club mobile app, just start adding items to the cart slide to pay and head to the door. Now, when they hit the door, they do have a friction point because you have an associate at the door waiting to check the purchase receipt. So we got feedback from our members that that's additional friction that they would like us to help solve. And so we have come up with this technology called Sas Exit. And it's essentially a combination of computer vision and artificial intelligence that kind of works seamlessly to validate our member purchases and then allows them to exit the club friction free. So for people who haven't seen it, can you just describe there's, is it an arch with cameras overhead or? Yeah. So if you, as you head to the exit of a Sam's club, you'll see an archway and the archway has cameras in it as you walk through that archway, the cameras are taking images of the member's car. Then our CD models kick in to identify items in the cart which is done through feature extraction. So we are looking for things like size, shape, color logos, brands and cross referencing it with our inventory catalog. And once we identify the items in the cart, then we are looking for the receipts from our point of sale system and trying to match the items on the cart to a receipt once we have that match, and this is all in how, in how many seconds it's all happening near real time, real time, right? So you can think about a club where you have the archway is right before the door. So you have a few seconds before the uh the member can exit the club. So in a matter of a few seconds, we do that real time validation and send a signal to the associates standing at the, at the door that, hey, everything looks good and the member walks friction free. This technology is actually rolled out across all of our 600 clubs. And we are seeing that our members can exit at a rate of 75% completely friction free. And it's a huge member satisfaction booster for us. Our exit experience NPS scores are close to a 90. And what it is also doing is it actually giving time back to our associates in the front of the store so that they can use that time and spend, spend it with the members and make sure that the shopping experience is not like I had one question about that because I heard the 75% number and that's more than half, that's a big number. I can do math up here too. And at the same time, that means it's not 100. Right. And so there's a staff member waiting. So I'm curious like when you think of productivity is that one, is that person doing other things when they're not, you know, checking out or they I'm assuming they're still standing by. So I'm just curious how you think about the labor dynamic there? Yeah, I mean, really the role of that uh associate standing at the end of the club, it's transforming to actually greeting the member, thanking the member for your service and, and telling the member that we appreciate the business, right? So the tech that we are deploying actually helps us in that journey because where previously they used to check every receipt now they are actually spending, you know, 75% of time back and they are using that time to actually greet the member and show them that we trust them and we are not judging them and we are creating a shopping environment that is actually more pleasant and trustworthy. I'm gonna come to the audience for questions. I don't know if we have any right now. Otherwise I'll come back. Otherwise I'm gonna, I have no shame in calling on folks that I know in the room. So, um maybe right here. Uh So I on the labor point and, and Dave, I'm curious for your take on this too. Um Obviously, when I, when I hear these discussions or taking part in these discussions, productivity, that word, I even used it. I'm surprised myself. Productivity comes up and automation comes up and there's a natural labor question, Dave, I'm I'm curious with the development of the operating system, you're talking about like how much as you start to talk to clients is labor something they want to solve for. Um And just how do you think about the impact of what you're trying to build on workforces of your, your end clients? And I think you get to look at companies that are always trying to take cost out of the system. Are you trying to improve service levels at lower costs and the big cost drivers for most companies? I mean, labor is a big chunk of that. But when you look at cogs transport, like there's a lot of other costs in there that tend to be bigger frankly than a lot of the the unitized labor costs. Um particularly when you start talking about things you can automate out. And so from for what we're building, it's much more about reducing the overall cogs in the system. So taking working capital out by improving terms, you know, getting cycle times faster, pulling inventory waste out of the system is a much greater sort of driver of bottom line impact to most organizations unless you, you know, unless you're really talking to wholesale fundamental uh sort of labor redeployments in some form. So for us, it's much more about working capital, lead time adjustments, transportation optimization. We think there's a lot, I think there's a lot more interesting dollars and in that space and right now than there is in labor, the robotics is gonna drive a ton of labor uh savings in that over time. But, you know, our focus is really about the much more of the working capital utilization and transport. And is that also what you're hearing from, you know, fortune 2000 companies or they, or, or maybe in public, they say that. But, you know, when you're in a room just with the chief supply chain of they want both. Like, I mean, everybody wants everything right, like, you know, everybody wants to give customers everything and extract the maximum cost out of the system. And so, you know, there's always this, you know, unfortunately, we've made productivity a bit of a dirty word and, and, you know, we sort of make these, you know, taking, you know, we've had productivity things in place for 100 you know, for a long time, we have humans and we keep finding new and better ways to engage the, you know, people and people's brains and what people do for a living. And I think we're gonna continue to do that. So I'm personally not, I think we, you know, there's too much hand wringing over that and worry about it. Uh But I think when I look at supply chains, the labor savings is interesting but the total end to end waste and sort of overproduction under utilization and transport. Um you know, lack of forecasting capabilities, all those things that both planetary waste, human waste and cost dramatically outweighs uh what the opportunities are and sort of front line labor safe. Do you have any questions in the room? I'll keep going. Nothing yet. I'm going to call on someone. I will. Uh Sandra I another technology I know you all are, are have been talking about. That's A I powered is um you have what, what I think used to be called scrubbers, basically um mobile robots that Queen Queen, the the clubs and attach them. Now, I think is it in some stores or all stores? Um Our cameras also and these are helping with sort of out of stock issues and just giving more knowledge to employees on inventory. Is that, do I have that Moly? Correct? Yeah, you have it right. So um uh Josh inventory management in a physical retail environment is extremely complex, right? Because things move around all the time. So a few years back, um we fitted our autonomous scrubbers with cameras and these scrubbers traverse the aisles of our clubs, taking pictures of merchandise on the shelf. We take an average of 24 million images a day and we have CV and A I models that actually extract information out of these images and convert them into insights and inventory intelligence that we feed back into systems that our club associates use in their handhelds and we use it to drive the next best action for our club associates. So for example, if our members Mark Peanuts is running low on the shelves, we can actually generate a signal to our associates to drive a restocking action. Or if the price sign is incorrect or if price sign has fallen down, we can drive actions to our associates to go fix it. We also use it to actually update locations of items so that the next time the associate wants to find that item, it's, it's much easier and we can send them to the right location. We have also added RFID readers to the scrubbers. So as they traverse the aisles, they are reading on average 180 million tag reads a day. And we can drive actions like if the small size of a T shirt is running low on the apparel rack. But we find that inventory is sitting in a box below the rack, we can drive a restocking action and ask the associates to go restock the small size T shirt back on the shelf, right. So using these solutions, these inventory management solutions with A I models and some other innovations, we have eliminated in excess of 100 million tasks from our associates lives in the clubs. And that's time back to our associates to spend with our members on the floor. I just want to make sure I heard you correct. 100 million, 100 million tasks. I'm I'm trying to, trying to think of how, how a role could have that many times or this across different roles in the club, across different roles in the club. Got it. Um One more, one more call for questions. No, you're my man. Can you tell us who you are and where, where are you from? Oh yeah. Right. Oh Yeah, right. Here in the front, we have a microphone, we can hand this gentleman, the mic runners gave up. Uh Yeah, yeah, we can. Do you, do you mind standing up? OK. What was the friction from your associates when you were employing this technology? Because there's always friction as new technology gets deployed, especially for lower skill workers. Yeah. What I'll say is um we've done this enough that we know how to roll and roll out and manage through the change management. So we have different um environments uh at the home office kind of lab like environments where they can simulate activities like this. And then we have smaller size clubs where there is like there are members coming in and shopping, but it's a much smaller scale club where we can actually start off and run the first pilot. Uh We also have the option to actually run some pilots on a couple of aisles. And so we have a mechanism to kind of kind of slowly bleed this in, test it out with our home office associates first, then take it to one club, a small size club, then take it to a larger club and then test it and then roll it out to scale. So change management is, is an issue. But we have done this for a while that we have uh uh you know, figured it out. Um on that, on that topic, I'm always curious how you go about and Dave maybe from Flexport or Amazon experience might have some thoughts as well. How you go about getting real transparent, sorry, real candid answers from employees about how new technologies are impacting them for better or worse. And there might be more, more willing to give the open uh the positive answers, right? But if there's a manager or several layers of management between them and whoever's receiving the answers. Um uh My, my experience with the opposite of that, which is usually you can get the negative feedback really quickly. The positive feedback started again, completely agree. Feedback is, I mean, our club associates know how to do their job. So when we uh give them tech that works. We hear about it immediately when we give them tech that does not work, we hear about it really fast too. So they are very open with feedback. OK. Change is bad, even good change. And so a a anytime you roll out something, I mean, this is in my experience, no matter how phenomenal you are rolling it out, it is always bad for a little bit. And so you get the negative very quickly I find and, and, you know, the hard part is I found is working through, keep pushing through it to get to what, you know, what is fundamentally broken versus what, you know, what's just learning pains and, and being able to sort the difference and the one path is to execute it over, you know, sort of do the matsa, you know, step it up over time now, something bigger the other is burn the boats and throw it out there and everybody fig, you know, you only have one choice but to figure it out. Well, next time I live in the ladder in the ladder, burn the boats. I think next time, next conversation we're gonna have us on burning boats. Um, we're out of time now. Thank you, Dave. Thank you, Sanjay.