Adam Torres and Lee Rector discuss productivity and labor cost.
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Show Notes:
What does it take to measure labor productivity? In this episode, Adam Torres interviews Lee Rector, CEO at Embassy Data Logistics. Explore Embassy Data Logistics and measure labor productivity.
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About Lee Rector
With over 25 years of experience in supply chain operations, consulting, and IT, Lee is the founder and CEO of Embassy Data Logistics Inc., a company dedicated to creating simple, SaaS-based solutions for the supply chain industry, offering small fees and significant benefits. Embassy’s first tool, Warehouse Kommand, is a SaaS-based labor productivity and cost system launched in August 2023, set to revolutionize the warehouse management market.
Before founding Embassy, Lee served as the president of eMPower Data Logistics, a universal platform that provides comprehensive visibility from the first mile to the last mile for companies in the supply chain execution and visibility market. Previously, Lee was the executive vice president of Americas at mantis.group, where they led the growth of the client base of WMS users in the Americas and Asia, spanning most vertical markets and platforms.
Throughout their career, Lee has played a pivotal role in spearheading brand initiatives, developing national business plans, coordinating alliances, and penetrating new markets. They have also been involved in two successful exits in the past five years, generating significant wealth for those organizations. Driven by a passion for transforming brand visibility, expanding market footprints, and delivering measurable results, Lee is committed to creating value for clients and partners.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of mission matters. My name is Adam Torres. And if you’d like to apply to be a guest in the show, just head on over to mission matters. com and click on be our guest to apply. All right. So today’s guest is Lee Rector. He’s CEO over at embassy data logistics.
Lee, welcome to the show. Thank you, Adam. So, so Lee, we got, we got a lot to talk about today. So we’re going to talk about productivity. We’re going to talk about labor costs. We’re going to talk about measuring it. We’re going to talk about how you’re helping businesses. But before we get into all this, we’ll start this episode, the way that we start them all with what we like to call our mission matters minute.
So Lee at mission matters, our aim and our goal is to amplify stories for entrepreneurs, executives, and experts. That’s our mission. Lee, what mission matters to you? Well, for us, we’re actually trying to change the way people look at labor inside their operations, whether it’s manufacturing or warehousing.
And typically we’re doing that by providing our labor, we’ll call it AI enhanced software platform, you know, with our platform, we’re actually trying to change the market dynamics of high cost, high implementation services to something that’s. accurate, it’s affordable and it’s inclusive and inclusive by means of that we can support the small, medium, large, extra large and global clients all on the same platform, all at the same cost which is entry level and we’ll call it applicable to anybody that’s in the operations marketplace.
Wonderful. And great having you on. I love bringing mission based individuals on the line to share what they’re doing so we can all learn from it and we can all grow together. So good to have you here. And I guess Lee, just to get us kicked off here like how did you, how did you get interested in the, in labor and, and kind of what you’re doing now?
Like, where did that start from? Well, I’ve been in the Supply chain industry for, you know, well over 30 years. Mm-hmm . And being in the software side of things, we’ve always been in that high cost enterprise type solution. Yeah. You know, six, seven figure type implementation. And as we’ve changed since COVID what I’ve seen is an increasing gap between the haves and the have nots.
Mm-hmm . You know through my time in the period where you know, I saw the the ability or the the emerging markets as really and again, I They’re going to be the factor in success for all of us going forward So whether it’s a small family owned shop or southern sourcing to south america these these nodes of transport and warehousing and manufacturing across You We call it North America and Asia.
They’re going to be extremely important in our success as continuing on. And so getting involved in this for me was the fact that a education wise, we wanted to support them by creating resource materials that they could use. And then more importantly, providing them with a platform that. You know, they could use on a day to day basis to use for critical operational planning.
Tell me a little bit more about the platform. Like tell me a bit about the platform. Well, the platform itself comes from we’ll call it many years we’ll call it research and pain, with our clients And so what we’ve done is we’ve actually built the only we’ll call it marketplace industrial average database of elements that’s that’s available.
So essentially, whether you’re stepping on a fork or stepping off a fork in South America, Asia or North America, we basically take an average of that and say it’s 1. 6 seconds that we build that allowance up. And our database of hundreds of elements allows us to figure out what the standard should be inside of an operation.
And it’s unique to that operation, taking into consideration all the variables that are in there. So that’s what our software is. And what it does is this essentially tells you what the performance is of your operation, measuring the productivity of the people. And then it also, from a macro level tells you, Oh, maybe I should, Use this type of equipment or put my product here, or shrink my travel within the business to enhance or increase the throughput of my operation.
At the same time measuring the productivity of the people. Yeah. So why is this so important? Like what are some of the benefits when pe when businesses have access to this data and have access to these dash, this dashboard, essentially? Like how, why is that so important? Well, if you look at, for the most part, 98 percent of the companies on the market today, they’re still generating, or they’re still using 50 to 55 percent of the cost of their operations is in people.
Wow. So you know, there’s a big push on automation, a big rush for automation. The majority of operations on the planet are still using automation or sort of standard labor. So the benefit for our customers is to actually. optimize and get the right number of people inside of their operation. So whether it’s increase in productivity or it’s a lower labor cost, the benefit usually ends up at the bottom line for them finding themselves between five and 15 percent increase in profitability or reduced costs in labor.
Can you give me an example of like, what that could look like or, or, or that those percentages could even be found? Lots of opportunity. You know, we have one small client, it’s a family owned business. They’re in the Grocery side of things in, in produce. And they have, you know, a relatively large operation with 30 people.
And they were struggling to actually make a profit inside the organization by using our solution. And, you know, within a couple of days we outlined and they pinpointed three or four key areas. That they were actually not getting the productivity out of their people, whether it was for management issues, but more than likely it was just design issues.
They were to wrap, be able to increase their profitability. By about 8 percent within, we’ll call it eight weeks of turning on the solution for them. That’s significant for a 30 plus person operation. That’s pretty significant. And for the owners, their value in that is, you know, getting, you know, a hundred times their ROI, more importantly, getting it very quickly.
Which is, you know, part and parcel of why companies benefit from our solution. And it can be that fast. Can it, because like the example you just gave, I mean, I, I feel like once you have, and I think in different, different ways in, in a way, Evolutions of business, whether it be when somebody went from like spreadsheets or fraud to another form of accounting or an ERP or like all these other things, and you have now access to more data and you can make more informed decisions, this seems to me like that same type of opportunity for those that use it to have more insight so that then they can make better decisions as well and maximize.
Cause like what you’re saying, the 8%, like that’s no small amount. Like that’s pretty, that’s significant. my understanding this, ri sure I’m, I’m, I’m framin Absolutely. Absolutely. U largest clients, which is dollar organization. Because data is always th The big catch in the, in the phrase is that people get lost in the data.
And so what he’s told me is that he spent millions of dollars over the last couple of years finding out what they’ve done, but they spent no money. And that’d be like research, right? Like they’re doing market research. Like how does somebody spend millions of dollars? Cause they’re digging, right? Like they’re hiring, like they dig into their own operation and they say, this is what we’ve done.
This is our performance we’ve done, but they haven’t spent any money on what they should have done. So what’s happening is we use historical data to actually use it for predictive in the future, not knowing whether or not my historical operation was actually even performing well. That makes a lot of sense when you just worded it that way.
The light bulb just went off for me. It’s like, oh yeah, you did a lot studying what went wrong so you could try and fix it. But then also thinking about how you’re benchmarking, you now have insights into what everybody’s doing or whatever the population of individuals that you have within your benchmarking, like your data, right?
Correct. And, and benchmarking is a great term. Mm-hmm . Most companies don’t have a benchmark. Yeah. They don’t know where they are in performance wise. You know, measuring productivity on equipment is very simple, you know, if I think that a machine supposed to run 10 miles an hour and I’m doing eight miles an hour, I’m saying I’m operating at 80%.
Yeah, but when somebody is actually picking a box or moving a carton, we actually don’t know. That’s interesting. Extensive engineering to figure out what they should be doing. And that’s exactly why I built this software so that you can measure the performance of your people. So now let, let’s just go further.
Along the line of that, the first story you mentioned about, let’s, I think it was a produce produce place, 30, so employees, they turn on, they turn, they turn on the, the the software, they start implementing it within eight days, they start. They they have, or I think you said it was eight days roughly they have, you know, they, they found a certain percentage of productivity that they were able to increase.
Like, what goes from there? Is there more learning? Does this get to, does it, how does, how does, how can this look as the continuum of like improvement increases over time? Like, how can that look? Cause I feel like there’s more, that was just, what was the low hanging fruit? Pun intended. Can I get one Lee?
Nope. No, absolutely. Absolutely. So typically what we call that is the macro side of things. So we change design, we add automation, we do something cause they get a big bump on that, but the people, the labor still is running at a, at a lower productivity. So measuring it on a day to day basis where our solution would say, Oh, today you’re doing this much activity.
You need 105 hours. And during the day you would want to know. Oh yeah, we’re supposed to have 105 hours of activity today, but I have 53 percent of my activity left. I only have 48 percent of my time left. So I either have five hours of overtime or I’ve got 15 hours where I don’t need today. Do I get, do I send those people home?
So what happens is they continually ratchet up. Their operation because now they’re measuring thing So the old adage that if you don’t measure it, you can’t manage it is so true with labor and by just giving visibility people play the game If I use the analogy you know I’m driving from new york to chicago and I go on to one of the mapping solutions.
It tells me it’s eight hours Now if you’re like me I’m always trying to beat that eight hours. Well, that’s just the pedestrian side of things. I want to do it in seven hours and 30 minutes. And I continually monitor my progress. Through the day. So other people refer to this as gamification, but essentially what we’re trying to do is continually give you visualizations on daily, weekly, or monthly performance.
So you can actually perform that. And. You know, go from Chicago to LA or Chicago to New York in seven and a half hours instead of eight, even though eight is the standard target. And the reason why we don’t use historical numbers for this is that on any given day, if I’m driving from New York to Chicago, yeah, I could do it in seven and a half hours, but if I’m going I 80 and there’s a 15 car accident on I 80, I’m not, I don’t have a chance of making seven and a half hours.
I haven’t changed my route. And so this is what happens, we’ll call it in the noise of the data. It, it corrupts things. Mm-hmm . And so what we try and do is we, we try and take simple data and using our ai, we actually focus it for people to get very simple solutions without getting into, you know, millions and millions of records and mm-hmm
And data processing and having engineers on staff for, you know, six months at a time to get to the same number. You know, accuracy over precision, how, let’s talk a little bit about the employee side of it. And I’m glad you brought up that word gamification, like how, when, when you implement the system, obviously, you know, you have to, there’s a management level.
And then there’s also the the individuals that are being measured that are, whether they’re in the case of one of your examples in the warehouse or otherwise how, how does that side of things work? Like how, how do they normally take it? Or what’s that? What does that look like? Yeah. So again, depending on where you are, we’ll call it along the, the line of labor management or planning for the most part, most companies don’t measure at the individual level, the productivity of one individual, specifically in today’s market.
It is very difficult because I have an employee that’s operating at 90 percent of the standard. So they’re operating 10 percent lower than everybody else for me to actually send them home and, or to discipline them. I may lose that employee and the problem with the environment right now is that we’re already short 300, 000 jobs people for those.
So it’s better to have somebody and train them up than it is to use it for discipline. Yeah. So typically that’s what I thought, by the way, I just wanted to make sure we got that out there like that, that we got that side of it. Like this is about like them having a safer environment as well and having a job, right?
Like if the company’s not profitable, like long term, like your fruit company example, like who knows, right? Well, exactly. I mean, and we’re already. You know, we’re projected to be 2 million jobs or two minutes, 2 million people short by 2030 in the warehousing and manufacturing market for touch labor. Okay.
So it’s not getting any easier. We’re aging our population. We’re pricing out our, our labor profile. So you have to get better at it or you won’t be profitable. And if you’re not profitable, you’re not going to be in business. But at the same time, most people that work in an operation. Are loyal to the operation and they want to do what’s best for the operation And you know if they want if they work a little bit smarter And they work just a slight bit faster then you know what that’s in a benefit to the operation Right.
So we talk about the labor paradigm that that exists in almost Every operation on the planet, whether you’re, you know, you’re one of the top grocery store chain companies in the world, or you’re one of the top e commerce operations in the world, or you’re the top beer manufacturer in the world. Yeah. If I look at my operation and on Monday we do 5, 000 units and on Wednesday we do 8, 000 units and Friday we do 4, 000 units.
If I’m the manager on Monday, I look out on my floor doing 5, 000 units and everybody’s busy. And then on Wednesday, we do 40 percent more. I look out on the floor and everybody’s busy. And then on Friday, I look at on the floor, we’re doing 4, 000 units and everybody’s busy. And this is the labor paradigm that people know, and they speed up on Wednesday because they don’t want to do a lot of overtime and on Friday, they slow down so they don’t get home, sent home early.
Wow. So this it’s, it’s somewhat collusion. It’s not bad because what happens is. It means people are actually in tune with the activity of the operation. What we don’t want to do is have the work effort mirror the activity. In other words, on a slow day, you shouldn’t be slowing down. You should be working at the same speed.
So by, by measuring that we can get people working at the same speed every day, regardless of the activity. And that’s the goal of our software is to highlight the difference between, Oh, Monday’s speed or Wednesday’s speed. Yeah. And the and you mentioned this once, but I want to go a little bit further in there, you mentioned that the that this can be anywhere from, you know, for a small business to enterprise, maybe go a little bit into that.
Again, you know, we built the software and when you start looking at. You know, the small family business, you know, they don’t have a lot of dollars, so they don’t, you can’t afford a big investment either on the, on the solution side or on the services side. At the same time, the sophisticated multi million dollar companies, you know, multifaceted international organizations, they have all the technologies that’s available to them, but what they don’t have is the intellectual capital, which is built into our database.
So for them to do that, they’re spending eight figures to get that up and running, but they’d rather use the same solution that we’re offering to mom and pop and a small family business and getting the same results. The differential is being trying to be precise in an imprecise business versus being accurate and getting making manageable decisions.
And I think that’s where we’re moving towards. Specifically, you know, with the, with the process of a AI, AI allows us to really to focus in and get much more accurate. So if I’m within 2%, I’m already 20 percent more efficient than what I’d been doing before using spreadsheets or just historical data.
So by being able to get to within 2%, I can make manageable, actionable decisions. Without spending millions of dollars and I can get things up and running very quickly. So you know, one of our largest clients, you know, global brand bought our software on a Friday morning at eight o’clock in the morning called us at 10 o’clock saying, Hey, listen, I’m having a little problem.
Understanding some of the terms cause they weren’t calling from North America. They’re calling from Europe. We spent 15 minutes on the phone with them, help them focus their models. By 11 o’clock, they had their calibrated model out. Wow. Finding, you know, 14 percent gap between what they thought they were doing and what they were actually doing.
And by lunchtime actually had a corporate decision to start rolling this out. Since that time, we’re now in 18 countries for them. From somebody just logging on to the system on a Friday morning. Wow. If you’re, you know, essentially if you’re running a business out of your garage, you can do the same thing at the same value.
Man, Lee, this is a great story, one that I’m happy to bring to my audience. I just have to ask, like, what’s next for you? What’s next for you? Embassy data logistics? Like, what’s next? Well, you know, it’s a great question. As we roll out our AI piece we’re actually going through a, a new product. So we’ll be announcing that labor AI in January.
And as we grow the company, we’re growing our partners in significant markets, we’re building we’re building a new platform that will interface directly with, you know, the SAPs of the world and enterprise solutions to make things faster and more efficient on the data transfer side. So that’s what we’re doing inside the product and inside the company.
We’re opening up new markets and new partners on our plan next year would be to be within 40 countries. But in the next year, so I will get my my frequent flyers miles. As I was going to say, you’re about to be traveling all over the world, huh? And, and we’re looking forward to the challenge and through the growth of the operation.
And more importantly, the feedback that we’re getting from our existing clients. And, and the enthusiasm that we see from our clients. Amazing. Lee, if somebody’s watching or listening to this, and if they want to follow up and they want to learn more and connect with your team, how do they do that?
They can go to our website at embassydl. com. So they can contact us there. We actually have our LinkedIn page as well. Always free to contact me directly So that we can provide them with any information they want and if they just have a question, we’re always happy to help that One other aspect they could always look at Is we’ve published a book called warehousing 101 Which is a resource material warehousing industry that simplifies what’s going on on the floor for them so We’re happy to do that and that’s available through amazon as well Perfect.
And for everybody watching, just so you know, we’ll put the links to the website and all that good stuff in the show notes, so you can just click on it and head right on over. And speaking of the audience, if this is your first time with mission matters and you haven’t done it yet, hit that subscribe or follow button.
This is a daily show each and every day. We’re bringing you new content, new ideas, and hopefully new inspiration to help you along the way in your journey as well. So again, hit that subscribe or follow button and Lee, man, we finally did this. So for coming on today. Yeah, I appreciate it, Adam, and good luck going forward in the future.