In this Leadership Insights video interview, Amanda Razani speaks with Frank Kenney, the director of industry strategy for Cleo, about drones and the last-mile delivery process.
Amanda Razani: Hello, I’m Amanda Razani. And I am here with Frank Kenney. He is the director of industry strategy for Cleo, a former musician who turned to technology, and a former Gartner analyst. And a current strategy director widely credited with the term “managed file transfer,” and the first to write about it. And I’m so excited to be here today. Frank, can you share a little bit about yourself and your past history, and the companies that you work for?
Frank Kenney: Got a lot of that – most of that right; only thing I would change is that I’m still a current frustrated musician, as opposed to former musician – current frustrated musician. I spent half of my life in the music business and I transitioned into technology. One of those things when you own a studio and you start to move into doing things with computers and it glows up; spent over a decade at Gartner as one of the lead analysts on integration technologies. And so that dipped very heavily into supply chain, and how business to business integration and how companies needed to communicate. And that led me to Cleo, and Cleo is an ecosystem integration vendor. We can talk about that, but it’s just a nice way of how do I get all of these different pieces of technologies and people in companies that I rely on, to make sure that I’m making money and the things that I’m building are selling, or the services that I’m providing are selling? How do I connect all of those pieces of my ecosystem to help me be bigger, be better, and to digitally transform into things that I can only dream of being. And we see that happening in a very organic way. And Cleo’s mission, specifically to the supply chain, is to help companies connect and leverage those connections to transform themselves into bigger and brighter, and hopefully more profitable, things. That’s the goal that we have here at Cleo with our technology solutions and services.
Amanda Razani: Fantastic. Thanks for sharing. That’s a perfect Segway into our topic of discussion today, which is the last-mile delivery landscape of the supply chain. So first off, I want to ask you to explain a little bit to our audience, what does that mean? What is involved with last-mile delivery landscape?
Frank Kenney: You know, we talk about, so often, the ability to get economies of scale, and using technology and efficiencies to really make the time that a product comes from its raw form, gets turned into something and then gets shipped, delivered. And we talk about this process, from a perspective we can make it better; we can make things faster, we can build things cheaper, we can be more efficient, we can be more everything from economically viable to ecologically viable – very, very critically important. But the piece of that whole process that continues to befuddle and just really frustrate everyone in the supply chain, is that portion from that distribution center to the end-user, to the customer. And the interesting about that, Amanda, is that it is probably the most important part of the supply chain, because it is the part that the customer is most exposed to. And I’ll give you a perfect example. I say this to my Uber drivers all the time. I’ll take a long flight and the flight is absolutely horrible. It’s bumpy. The person next to me spills something on me, there’s probably kids running up and down the aisle – just horrible, absolutely horrible. Flight’s late and everything else like that. When I land at the airport, I’ll get into an Uber. And when I get to the hotel, when the person at the front desk says, “How was your flight in? How was your trip in?” I don’t think about how bad the airport was. I don’t think about how bumpy the flight was. I don’t think about all of the people and just all of the hassle. What I think about is that 10-minute drive from the airport to the hotel in the Uber. If that is a pleasant experience, guess what Amanda, I say, I had a great experience. Well, it’s the same thing. If I order something, and it gets delayed in the building, or it’s out of stock, or it’s a little bit more expensive and I have to go back and I have to figure out where it’s at – when I get that notification, and it says it’s leaving the distribution center, and you’re going to have it tonight – if I get it on time, particularly if I get it within a timeframe that’s been promised to me, then all of a sudden, that just makes up for the entire experience. I am buying from that manufacturer again. So that last-mile delivery is incredibly critical. And what we’ve seen from retailers and manufacturers is that getting that last mile right, in terms of getting to you faster, getting it to you in a way that’s more governed and controlled – don’t just leave it in my mailbox, and even in front of my door (that might be a little tougher) right? If I can start to be more predictive, more governed, more structured with that, then you’re going to have happy customers and happy customers, happy consumers, tend to consume more. But the last-mile has just been incredibly frustrating. Because for the most part, it still very much depends on some guy in some truck or some car, working his way through traffic, working its way through the neighborhood, getting out of that van or car, running up to your front door, dropping a package, taking a picture, and then running back to their truck because they’ve got 80 more of them to do; and vendors, retailers, distributors – they just haven’t been able to crack that nut. And so what I’m excited about is that the technologies that we are starting to see enter the last-mile, drone technology specifically, now we’re not talking about six-hour delivery or overnight delivery or you order it at night, then you’ll have it on your doorstep at four or five o’clock in the morning. We’re talking about delivery, sometimes within 30 minutes. And you know, my wife says I don’t need, you know, a toothbrush delivered by a drone. And my response was, “Yeah, but if my computer breaks down, and I have a session, as you can see in my studio in the back, I need a new hard drive. So I’m going to tell the artist to do me a favor, and go grab something to eat for half an hour and I’m going to order a replacement drive from Walmart, and then all of a sudden it gets dropped off on my driveway or on my lawn. Well, that’s incredibly beneficial. And that has meaning to me as as an owner of a studio that’s providing a service.” So the idea that we’re starting to think about ways that we can make that last mile more efficient. And we’ve done that for a while Amanda. What we’ve been able to do is we’ve been able to do better scheduling, better technology, better predictive technology that says if the van makes this right turn, he can knock off three houses on this block. And if he makes a left instead of making a right, he can also be in position just to run down and get out of the truck on the right side of the road. And so there’s been a lot of advances on the efficiency of that final mile in terms of what types of vans can get through what types of traffic; that’s why you see the the Amazon vans getting smaller and everything else like that. But the reality is that the big leaps that we’re making, where we’re starting to say 400 feet above someone’s roof – that entire airspace is now primed and can be navigated; the nearest Walmart to me if I drive, it’s just about three miles but driving as the crow flies is less than a mile. And that is absolutely exciting for the future of last mile and it’s more of a reality than I think people are giving it credit for.
Amanda Razani: It’s amazing to think that is what our future looks like that. As you said, you could need something immediately, and it could be possible in the future to click a button and have something delivered within an hour via drone – it’s just mind blowing. So let’s talk about that a little bit more. The technology is there. You talked about drones. And we hear a lot about autonomous vehicles as well. So how are companies leveraging technology right now? How do they go about implementing it to improve this process?
Frank Kenney: I think the interesting thing, especially when it comes to drones is the conversation between autonomous, right? Which implies these things are flying by themselves, there’s sensors everywhere, or they can pick up that there’s, you know, a dog in the yard – so don’t drop the package on the dog please. The difference, and I’ve seen that there’s been some difficulties of, is that a lawn or is that a pool? So that becomes a little difficult. And so you’ve got some of the bigger companies that are using a lot of machine learning, a lot of artificial intelligence, to kind of start to get that right. By far, the most successful deployments that we’ve seen for final mile have not been necessarily autonomous, but have been unmanned. And the difference is, there is someone that is watching. There is someone that is actively managing cameras, there’s a human element that is actually stopping above, you know, a lawn, being able to look down, being able to drop within 300 feet, as in Walmart’s Drone Up partnership and service offering, and then dropping that cable down, and being able to watch all of it and then successfully navigate home. That’s where we’ve seen that success. And the most interesting part about that is you can set up that type of environment at your local Walmart, in the corner of a parking lot. And so there are websites you can go to, to see if Walmart drone delivery is available in your area. If it is available in your area, I would say I would recommend to all your listeners, go out there and take a look. And you’ll see this control tower. And you’ll see this launch pad. And you will see Walmart employees actually launching drones and launching these packages and these drones just flying away. And it really is just such an interesting thing to see. Because that – it’s not we’re looking to see that happen tomorrow. We’re seeing it happen today. And at our local Walmart, right across right across the street or right down the block. So the autonomous piece is far more difficult. Not so much from a technology perspective. But more so from, I believe, a consistency and making sure you get it right, because you can’t get it wrong. But there’s also political and societal implications. Do I want unmanned things flying through the air, that a computer is just flying and making a judgment call that I would really feel comfortable if there was a human, you know, dropping off packages; there’s that type of question. And that carries over to autonomous vehicles. And we’ve seen it, you know, we’ve seen all of the great YouTube videos where some of the baby boomers, they get into the back of an autonomous vehicle and they drive around town and they’re just blown because there’s nobody driving – that kind of stuff. But we’ve also seen some of the other sides of it, where the cars have not so good outcomes. So there’s always a fear. I believe that there’s the opportunity, there will be the opportunity. Before we step into autonomous, we step into a world of unmanned, which means that there is an incredible job or skill set that is missing from supply chains now, of people who are FAA Part 107 certified, which is the unmanned vehicle certification that you’ve got to get from the FAA. And it is, like flying a plane, you’ve got to know weather patterns, you’ve got to know airspace, you’ve got to know all of this stuff. There’s a skill gap that’s there. The same way that you’re going to need someone that is probably CDL trained to sit behind a screen that’s looking at an unmanned truck to be able to drive it and get it to where it needs to be or an unmanned vehicle. There’s probably going to be, I think we have a big part of our future, that is going to be that. And I’m excited about that, because the truck drivers are not going away. They’re just not traveling as much. They’re just not under that massive amount of stress from just being out there; now the stress is going to come because I’m staring at computer screens all day, the stress is going to come because I’m sitting in a darkened room that is a container that has been turned into an Ops tower. But I do believe that the future of last-mile is going to depend on individuals and newer entries into the workforce that are trained on flying with computer screens. And having that same comfortability and providing that same level of security and comfort to the end-user that they’ve gotten with the guy that’s running 35 miles an hour in a residential zone, because he’s trying to make the deliveries on time. I believe that when we get to that point, the next step is to say, is anybody really watching? Or is that just a computer flying? Right? We’re not going to get there until we get to that first step. And then I think that first step is going to be tectonic, it’s going to be a shift, it is going to introduce into the supply chain a younger generation. You know, you have to be 16 to get a 107 certification. So now there’s a line into the supply chain for younger people who get the proper certifications. And I’m just really, really, really excited about what those opportunities are.
Amanda Razani: It really is exciting. And I think it’s key what you said, because a lot of people think, “Oh, the more technology the more autonomous we get, we’re losing jobs.” But it sounds to me like what you’re saying is this technology is assisting humans, but behind the technology, there are still humans and new jobs being formed. So it’s actually opening up a whole emerging job landscape.
Frank Kenney: Absolutely, I think we spend a lot of time when we think about unmanned drones, for instance, I think we spend a lot of time thinking about the companies like DJI, for instance, that develop these things. And we think about the engineering and we think about the fabrication and we think about those things. But we don’t think about the pilots. So for instance, for the Drone Up program, you actually have mission planners – whenever you fly a drone in a professional setting, it’s called a mission. So you have mission planners, you have the pilots, you have the visual inspectors, and then you have a quality assurance person. That’s all involved in that. So we’ve just taken, you know, a single guy in a truck and we’ve turned that into four technologists that can really scale and start to scale out into these big teams that are doing massive amounts of deliveries, and remember, the Drone Up – to buy from Walmart’s Drone Up program or their their drone delivery, it’s a $4 surcharge. It’s just a $4 surcharge. And clearly when it comes to supply chain, Walmart knows where the margins should be; they know anything – they know where the margins should be. So for them to decide that this is four dollars, they’re seeing that this is the future and the scale of it, and the scope and the demand is going to be such that it really supports this new way of doing things. So, you know, while I always recommend some form of higher education, for self sufficiency. You know, I can tell my son what to do until he’s 18. But when he’s away at college, no one’s waking him up for that first class, that kind of thing. But there also is this lead-in to very high paying opportunities and ways into last-mile and ways into the supply chain in a very new, rich and exciting way for a younger population that has grown up with controllers, because it turns out that most of those controllers look the same thing, look the same way. And it’s just so incredibly intuitive. So that’s why it’s not even a – from my perspective, it’s not you been a question of, we have to retrain a whole generation of people. I mean, I think that there’s the opportunity to do that; the fresh blood with the fresh perspective, and solving problems on the most critical part of the supply chain journey, is what I’m absolutely excited about. Because certainly, my son is 17. He’s thinking about this fulfillment challenge in dramatically different ways than his father, who has been doing it for 30 years has.
Amanda Razani: Absolutely. And that’s interesting, too, that you say that, because you’re right; this younger generation, my son included, this is nothing new to them – this is simply utilizing their skillset that already exists. So essentially, we’re really just adapting and opening up jobs that are going to be best suited to this younger generation. And I see a lot of changes being made in the school systems, in fact, where the middle schools and the high schools have virtual pilot tracks and classes, and coding and cybersecurity and all this. I’m seeing it more available, which do you think is just going to be more and more available and eventually be across all the schools as we pivot this direction?
Frank Kenney: Absolutely. And I’ll tell you why I feel so confident about that. We’re seeing it in local community centers. And so it is filtered through the school system into local community centers, where you have professionals, and folks that have their licenses, that are teaching and sometimes volunteering to pass that knowledge along. And so you see a ton of 16-17, but you also see the 21 to 22 year olds, because in that generation, the generation that was born in 2000 to 2003; and for the 10-15 years, that generation has come up with video games, and it’s a way of life. They’ve come up with using screens to experience life, using screens to help manage life. I can’t work an Xbox controller to save my life. I had to give up on Minecraft with my son, just because I couldn’t figure out anything. But he’s grown up with it. And so to watch him make the natural shift to drone piloting, and then watch him make that shift into, oh, I have to take what I know but I have to follow these regulations. So let me see what the regulations are. Just to see him naturally gravitate to that, as opposed to gravitating to some of the things that we talk about – medicine, some of the things that we talk about like software engineering, software design – all of the STEM stuff that we’ve thought about, well there’s an element of STEM that is all about understanding what something can and cannot do physically, what the rules are. And it is just a natural evolution from the games that they’ve been playing. And it is real life. So again, I’m just incredibly excited. Because we can see, certainly in our industry supply chain, we can see this amazing opportunity for the next generation, you know, the next 10s of millions, if not hundreds of millions of children – this next generation have something that’s very tangible, that’s different, that is very native, digitally native to them, and that is going to be the future. How old is your son?
Amanda Razani: He is 13.
Frank Kenney: Okay, so you tell him, so if you want, if you want to see him have a look on his face that you’ve never seen. Call him over tonight, open up your iPad and do a job search on Indeed or any of the job posting sites, and do a search for drone operators. And when you see his eyes open up at how many opportunities there are – there’s always going to be military, military complex, government and everything else like that. But when you find out that Disney is looking for people with media backgrounds who can fly drones, every real estate company is looking for people who can fly drones. every retailer is looking for people who can fly drones, every construction or maintenance or organizations like FEMA are looking for people who can fly drones. And in fact when you look at the job description, sometimes the job description is where are the hang ups in the supply chain; send a drone out over that flood area and let’s see what roads are open. And let’s automatically start to reroute our trucks or start to reroute our supply chain around this. And when it opens, we’re going to be able to see that it’s opened. So what happens when Walmart starts to become predictive about its routes? It’s the same thing that I’m sure we’ll see rail get to where drones are used to just do rail inspection, and making sure that things are working before trucks go out. And so this massive amount, this scale, this efficiency, that we’re going to get all throughout the supply chain, it’s just really going to come to a head when we start to bring people, and it’s the people who leave the Yelp reviews, it’s the people who leave the Google reviews. It’s the people who interface with the customer support, and it’s the people who are going to see that incredible satisfaction. And that’s what’s going to drive the market. It’s an incredibly exciting time.
Amanda Razani: It really is. Thanks for bringing up those use cases. Because really, there’s just so many use cases for drone technology. It’s amazing. Like you said, when there’s a traffic jam, or some kind of natural disaster, trucks and vans traditionally wouldn’t be able to get through. But if we’re utilizing drones, those are not going to be problems in the future. So I want to thank you, again for coming in and sharing your insights today with us, because I think we learned a lot about the last-mile and this future technology, and it’s looking great.
Frank Kenney: It’s been absolutely my pleasure. And thank you for everything that you and your organization, your team, continue to do in talking about this technology. It’s something that I hope every parent of a teenager gets excited about, whether or not they understand supply chain, but really get excited about just the breadth and depth of opportunities that are opening up for our children.
Amanda Razani: Absolutely. Thank you.