Tompkins Robotics: Mike Futch

IndustrialSage

Tompkins Robotics CEO and President Mike Futch returns to the Executive Series share how the company has changed and adapted in the wake of the pandemic.

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Danny:

– Well hello and welcome to today’s IndustrialSage Executive Series. I am joined by Tompkins Robotics, their CEO and president, Mike Futch. Mike, thank you so much for joining me today on the IndustrialSage Executive Series.

Mike:

– Thank you for having us. Very happy to be here.

Danny:

– Well I’m excited to talk with you yet again. I think we had you on maybe about a year ago or several months ago. My train of thought from time is just completely changed with Covid.

Mike:

– Yeah, I think it was early summer of 2020 right when we were in the middle of everything and all the uncertainty.

Danny:

– That sounds about right. It sounds like we’re still in the middle of stuff with a lot of uncertainty. But hopefully it’s getting a little bit better. But we’ll jump into that in a little bit here. For those who aren’t familiar with Tompkins Robotics, maybe if you could just give me a high-level on who you guys are and what you do.

Mike:

– Certainly. Tompkins Robotics is really focused on using a fleet of AMRs—autonomous mobile robots—that we use for primarily sortation. So think about anything from the size of a penny or a business card up to a meter by a half-meter and 30 kilos or 66 pounds. We have different models that can sort small things, medium-sized things, large things, and we’re using those robotic sortation systems to take the place of traditional material handling systems that have been around for, quite honestly, decades. We’ve got a really exciting portfolio of products. We’ve really had some interesting things happen in the last 12 months, so to speak. We’re starting to work with other robotic firms where we combine our technology with other robotic technology. Think about goods-to-person AMRs. Some people say the old Kiva-style system of moving a shelving pod. Think of pick assist AMRs like a Chuck from 6 River. And think about a goods-to-person AS/RS like an AutoStore. We actually have installations where our primary system tSort is bolted to an AutoStore, and the automated storage and retrieval feeds a pick board where the items are placed on our robots to sort out to 500 or 1000 orders.

Our systems are unique compared to traditional conveyorized systems in that everything you see in our system typically is on wheels which makes it portable, mobile. It’s very scalable and modular. And all of that drives a lower cost, higher flexibility, and has really been a game-changer for our customers. We deploy our systems throughout the entire arena, both retail doing ecommerce, store replenishment, returns, shipping. We are doing manufacturing, postal, a lot of different areas. Anywhere that you are sorting individual items for orders or packages to go to a home or business. We even have a micro-fulfillment solution, believe it or not. We just recently had a customer sign up, and the primary reason they signed up was because we could sort eggs with a watermelon behind it, and the eggs are not damaged. And so some really exciting stuff going on there.

Danny:

– Well quite the varied applications there. Yeah, I could see that being an important thing to be able to make the distinction and handle properly watermelon versus eggs right behind it. That makes a lot of sense. You mentioned earlier on, you said those are some of the changes that have happened. Was that one of the changes since we last spoke last summer?

Mike:

– Oh, yes. Some of the things like the micro-fulfillment solution which now has actually been sold to several different customers, and others are seriously considering it, we just had the idea when we talked a year ago about doing micro-fulfillment. We hadn’t figured out exactly how we were going to do it. That’s all come about in the last 12 months. We’ve also had some other things that have happened in the last 12 months that have been pretty exciting as well. For example, I mentioned partnering with AutoStore. We’re not an AutoStore distributor, but we partner with some key folks like Bastian Solutions and Kuecker Pulse Integration. That’s the merger here recently. I think it’s been about maybe two months ago. Pulse Integration and Kuecker merged together. Working with them, we’re doing AutoStore and tSort collaborations. We also have a relationship with GreyOrange where we do the goods-to-person AMR delivery to a tSort system. Obviously there’s robotic pick-in-place clients that we work with.

Then we have a new product that is called xChange. This is something we may have mentioned to you last year, but we didn’t really have a good plan for it. xChange is a machine that will come after the four items for your ecommerce order are sorted into a container, or the 40 items are sorted to a store replenishment aisle of less than case quantities to replenish the store shelf. And when that carton is full or that order is complete, imagine if you will, a robot that comes and picks up that completed order, takes it away, and puts an empty back in place. Now what we’ve done is automated the exit side of item sortation. That’s really exciting, and that’s a collaboration we’re doing with IAM Robotics where we’re using their technology and working together to develop a solution to bring to the market in 2022.

Danny:

– Well it sounds like you’ve been very busy over the last 12 months. How much of this was in the works pre-Covid versus a response to Covid?

Mike:

– Well I’ll tell you, the xChange, I had a couple of guys at the office wrote a patent on that in ’19, so that’s been percolating for quite a while. It was not Covid-driven. I think the biggest thing that was Covid-driven for us was the micro-fulfillment because when Covid hit and everyone was talking about buy online, pick up in store, and the retailers were struggling, both the grocery chains and other types of stores. We had a little time on our hands because, quite honestly, to be perfectly honest there were a few customers who cancelled or delayed some orders. We looked around and said, wow, micro-fulfillment seems to be something that’s here to stay. It’s grown by leaps and bounds, or at least it looks like it’s going to grow by leaps and bounds. What can we do that’s different from the AS/RS solutions that everyone else offers? The Alerts, the Fabrics, the Takeoffs, the AutoStores, the Dematics, all the AS/RS suppliers for micro-fulfillment, is there a simple, less expensive way to use tSort to get some of the bang for the buck?

We came up with an option driven by Covid and everything that happened in the spring and summer of 2020 using our tSort system to sort the items. So you could batch-pick 100 people’s orders. So you’re going down an aisle picking everything for those 100 orders. I’m going down another aisle picking everything for those orders. We don’t have dedicated inventory like the AS/RS micro-fulfillment solutions. But now I go to the back room to a tSort, and I batch-pick at a 5X the rate of what I get if I’m doing individual orders picking. I use automation to sort it out to the individual order. And so now I’ve got a system that quite honestly is a tenth of the cost, a tenth of the space, and a tenth of the lead time of an AS/RS solution that could go into certain stores. Let’s face it; not every store is going to be justifiable to put a 3 to 5 million dollar AS/RS on the back of it or even at every cluster of three stores. And so we think there’s a market segment where our solution that’s store-based could be applicable for at least certain stores for most chains.

Danny:

– Yeah, absolutely. Micro-fulfillment obviously—if I had a dollar every time I heard—obviously that was a big challenge that everyone was seeing. Relative to some of these changes that you seem to have experienced, relative to the market, and also maybe even internally from how you’re handling workforce, work from home versus people coming back, of those changes that you’ve seen, what do you think, going forward, that is going to look like? Do you think they’ll stay intact? Is it going to roll back? What are you seeing?

Mike:

– Well I’ll tell you, I really had high hopes—all of us did—that before the Delta variant came out that things would get back to normal by the end of this year. Now all bets are off, so to speak. So where I really hope this goes is that we can eventually get back to where travel is no longer a problem because the travel restrictions have been a real—let’s just put it bluntly—a pain. Our deployment that we did in Auckland, New Zealand as you can well imagine with the shut-down they had in that country, the folks we sent over had to do the full two weeks couldn’t leave their room except for the little courtyard one hour a day. It was really onerous requirements to get those folks on the ground over there to be able to take the system to a go-live status. So we really want to get away from that.

As far as in-office staff, when we had Covid hit, obviously everybody started working from home except when you had to be in the office. There’s certain things you have to be there because we are a manufacturer, and we have to test systems and do things. But we’re still in the mode right now where you’re only in the office if you have to be. I don’t know for certain if we’ll ever go back to where everyone’s in the office, every day, all day long. I’m not sure that we’ll ever do that again. It may be a new situation that is a mix of in-office and at home, and maybe a few days in, a few days out in a given 10-day period.

The bigger concern for us right now for our business are travel restrictions and accessibility to get to sites and be able to deploy the solutions that our customers are buying. With the Delta variant and the recent developments, I’m really not sure where it’s going. I’m worried that 18 months from now we’ll still have certain restrictions because of folks not getting vaccinated and new variants that may come out. Who knows what might pop up around the holidays? There could be a different variant.

Danny:

– Yeah, we talked about it earlier about just the uncertainty of everything. We were thinking, hey, at this point that we would be there, all clear. Obviously that’s not the case, and it’s anyone’s guess at this point as to what will happen relative to all the different variables that we’re looking at.

Mike:

– One other thing on that too, what if a variant comes out that the vaccine doesn’t protect you against? We’re back to square one.

Danny:

– Yeah, exactly. It’s interesting. We’re starting to see some of that play out a little bit. We’ll see what the future… how that all pans out. I’ll ask you this question. This doesn’t necessarily have to be Covid-related specific or not. But if you had a magic wand—I’m giving you one. What’s one thing that you’d like to see improve or change within the industry?

Mike:

– Well if I had a magic wand to do anything, Covid would be gone.

Danny:

– Alright, so here’s the second wand.

Mike:

– Yes, so that wand doesn’t have anything to do with the industry, so to speak. A magic wand for the industry, there are folks out there that are leaders at firms that have 20, 30 years of using older technology, traditional material handling systems that have been around for decades. And a lot of those leaders have not embraced cutting-edge technology, AMR technology, robotic solutions, et cetera. If I could get those guys to just embrace this new technology, this new frontier, because quite honestly when you think about it, a traditional put wall which many people in the supply chain have used for decades, if you have a system that takes less space, can deploy faster, costs less, and is four times as productive, why would you use the older technology? The same way about traditional sortation systems, whether you’re talking a tilt tray, a cross belt, a Bombay, a slide tray, if it’s less space, more upside capacity, lower cost, higher savings, faster ROI, and by the way with our system, it’s completely portable. You could pick it up and move it to another building. Why would you not embrace the new technology?

At this day and time you would think more people would have embraced robotic technology than have. And what we’re seeing is the people who have an imperative, either through their management has decided that they’re going to lead—and think of people like Walmart and Target for examples—or firms that get between a rock and a hard place because they just don’t have a good solution that they can mass-rollout quickly to adapt to Covid and everything else that’s going on. Those are the ones that are adopting this technology more so than anyone else. A lot of traditional firms that have been around for 50, 100 years even, they’re still doing things the way they’ve done it in the past. And they’re slow to adopt the new technology. So if I could get them off the dime, that would be my magic wand.

Danny:

– Absolutely. Well that makes a lot of sense. Have you seen—you mentioned in your answer there, but just relative to Covid that’s helped accelerate things a little bit more, at least maybe not even they’ve pulled the trigger, so to speak on these solutions, but just say, hey, you know what, we really do need to look at something else because we’ve got too many operational issues or because of the demand and fulfillment needs have risen exponentially? Has that helped further that conversation or even explore new ways?

Mike:

– Yeah, it has. Before Covid ever happened, we were already transitioning to more of an each-handling environment, fewer full cases going to stores and being shipped to more onesy, twosy type of operation. And when you’re doing and you’re handling an order that has single items, your labor content goes up exponentially. And then Covid just threw JP-4 jet fuel on the flames and made a maelstrom of hot need for ecommerce to lift fulfillment which has higher labor at the same time you had lower labor availability. It was like the perfect storm. And so the firms that are really trying to get ahead of it out there, they’re trying to adopt to robotic solutions that allow them to scale quickly, roll out across their network very quickly, and adopt to this new reality of life. Some of the customers that we had back in ’18 and ’19, they’re now on the path of rolling out an additional 3, 10, 20 sites and cookie-cuttering out our technology even though the technology doesn’t have to be cookie-cuttered. They just rolled it out across their networks. And that’s really driven a lot of our business.

The business that we’ve seen that really started in the summer of 2020 when the phones started ringing off the hook and there was a flurry of activity about what am I going to do; can you help? That’s driven into a phenomenal 2021 for us, and it consists of new customers, new applications like the xChange and the micro-fulfillment and then large customers rolling out en masse across a lot of sites. And so our year in 2021 will be our best year ever, our biggest year. We actually turned a profit in 2019, so just turning a—we’ve already been turning a profit, but we’ll turn more this year. Given where we are right now, we’re projecting that we’re going to double or better every year for the next three years.

Danny:

– Wow.

Mike:

– We think the market is that hot.

Danny:

– Well it definitely feels hot; that’s for sure. Congratulations on it. That sounds great. Hey, who would’ve thought? Obviously with ecomm, it’s pushing. It’s crazy. You mentioned that jet fuel was poured on thanks to Covid. One question that I’m kind of curious about for those who maybe are a little resistant to change or adopting some of these new technologies—I’m assuming that most companies say, hey, we want to toe-dip into this approach. They’re going to do some sort of pilot program. What does that look like generally overall? I know that probably depending on the application, there’s many different variables. In general a company comes in; they want to do a pilot program at one site before they roll out. From a timeframe perspective, what does that look like on average?

Mike:

– Our typical first install is six months from contract signed to go live. If you look at the system running over my shoulder here in the background, it consists of these platforms that the robots run on. It consists of induction stands where you put the items onto the robots. And then the robots sort into chutes, into containers where the items are sorted to. And those could be packages, or those could be individual items for an order going to your home. It’s about a three-month lead time to manufacture and deliver all the componentry. There’s about one month at the beginning just doing detail design to make sure everybody’s on the same wavelength. We’ve got our IT blueprinted out, and we know exactly what messages, all that stuff. Three months to manufacture and deliver, and then we install it, and we turn it on, and we’re walking out the door after six months. We’ve done systems in less time, but that’s typical for the size systems that we’re doing these days. Now once a system has been done, we can roll a micro-fulfillment site out as long as the orders are going one, two, three, four, going down the line, you could install a micro-fulfillment system and have it live in two weeks.

Danny:

– Wow.

Mike:

– That’s after all the IT integration is firmed up. You ordered it, so when you knock on the back door, here I am; let me in. Two weeks later you can leave, and the system’s operational.

Danny:

– That’s fantastic.

Mike:

– That’s for a small micro-fulfillment, not for a big, large, million square foot distribution center doing 35,000 an hour.

Danny:

– Yeah, wow. Again if I’m a company that’s sitting there saying, yeah, I need to jump on this, from a lead time standpoint, from a production and installation standpoint is there a backlog right now? If I were to come in and sign today—again, relative to how big my facility is and what I want to do; obviously I know there’s a lot of different variables—is there some sort of standard lead time we need to be looking at? You mentioned three months there initially, but from today?

Mike:

– It’s just like I said there. You sign a contract with us, we’re typically live and walking out the door six months later. When we’re doing a larger-scale program—we’ve got a program that we’re working on with a customer that’s going to be, the plan is to do 18 sites. The first site took six months. Every site after that is planned to go live one per month—

Danny:

– That makes sense.

Mike:

– One right behind the other. That’s the speed at which they want to move. We could do it a little faster if we needed to. These are actually sites that are regional facilities across the country for a retailer.

Danny:

– Okay, that’s good. Good to know. Obviously it doesn’t sound like it’s a super long time to get something installed and moving and rolled out. That sounds pretty cool. One random question—it’s not a random question, but I like asking executives these questions. We get a lot of different answers, and I love hearing this. Obviously you’ve had so much going on. Being an executive, CEO, president of an organization is very demanding and very stressful to begin with. Then you add a pandemic on top of that, and you add all the issues between labor and supply chain and increased demand, all this stuff that’s going on, having to make tons of decisions without having all the information. What are you doing to stay on top of your game?

Mike:

– Well that’s an interesting question. There is so much uncertainty right now, it’s hard to really know exactly what you think is going to happen six months from now maybe doesn’t happen. As far as trying to keep our business moving forward, you’ll notice when I talk about all the different models like xChange and partnering with GreyOrange and Right Hand and IAM and AutoStore and Bastian and JPI, all that stuff, and then the new models like our, we came up with a mini. We came out with a tSort Plus, so we expanded our sortation portfolio. We are expanding our software as time goes on.

We do research, and we try to think about the real world: what are the problems that people who are running supply chains facing? Obviously there’s the labor issue. There’s also the segmentation of workforces now. It’s nice to have your workers in one area of the building not touching workers in another area of the building in case someone in one pool gets infected. Then the whole building doesn’t get infected. There’s worker segmentation; there’s labor issues. There’s scalability, rapid deployment. There’s a lot of different things, and then there’s combinations of technologies and new inventions like our xChange system to try to automate more steps. And so we do a lot of research and product development trying to think about where the future’s going to be and where could we, with our goal posts and what we’re trying to do, add value to our customers, our shareholders, and to the marketplace? We try to keep on top of that, work very hard to think about where we’re going and what we want to do. And what we’ve accomplished since 2016 is pretty impressive, in my opinion.

The other thing that I try to make it a thing to do is, I think it was Ronald Reagan that used to say, “Surround yourself with a lot of smart people” because a lot of people said he wasn’t that smart. Now I don’t know whether he was that smart or not. I try to surround myself with some leaders and some people who bring some fresh thinking, that help with our growth and our projection of where we’re going and help us stay relevant because you can’t grow a business and double or better every year for four years running and one guy be in control of everything. We’ve got to expand our leadership team, bring new blood in, and grow this thing as a joint effort because it can’t all reside with one person.

Danny:

– Absolutely. That makes a lot of sense. I don’t know if Ronald Reagan said that or not or—sorry, rather you said you weren’t sure if he was the smartest guy in the room or not, but that makes a lot of sense. Surround yourself with smart individuals, people you can get a different perspective and different thinking and outside the box, stay relevant. I love it. That’s great. That certainly has served you well, certainly over the last several months that we’ve had to deal with this and then some. Mike, I really appreciate the time that you have given us to be able to sit down with you and ask some questions via Zoom. For those who’d like to learn more about your products and your services, they can go tompkinsrobotics.com; is that correct?

Mike:

– Yes, sir, and Tompkins has no H because sometimes people put an H in it, and you won’t get to the right spot.

Danny:

– No H, that’s good to know. No H; the H is silent and not present. Okay, but again, thanks again for your time and sharing some insights and just sitting down with you just to chat.

Mike:

– Well thank you very much. It’s always a pleasure to talk with you guys. I’m looking forward to speaking again, maybe a year from now.

Danny:

– I think we’ll have to do that. We’ll do a little—we’ll see where things are a year from now. Alright, well great. Thank you. Well that wraps today’s IndustrialSage Executive Series with Tompkins Robotics. I was talking with Mike Futch who is the CEO and president. Kind of picking up on the episode that we did an interview about a year ago. So it would be kind of interesting to go check out the previous interview, see where we are today, a lot of great things, obviously.

If you are an executive who is not subscribed to the Executive Series, I highly recommend go to IndustrialSage.com right now if you’re not there already, if you’re listening or watching on some social media channel. Go there; subscribe because you’re missing out on some great content like this. That’s all I got for you today. Thanks so much for watching and/or listening. I’m Danny Gonzales, and I’ll be back next week with another episode on IndustrialSage.

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