Bin Packing with James Malley

Unknown Speaker 0:15
Well, this is George G. And the time is right. Welcome. Today’s guest strong and powerful James Malley. James. So you’re ready to do this. I am so ready, George. All right, let’s go. James is the co founder and CEO of path accurate. They’re the only patented carbonization solution that optimizes for transportation cost directly. So you can have the right boxes and control how they are packed. James, tell us a little bit your personal lives more about your work and why you do what you do. Sure. So I’ve been in logistics tech, since 2009, mostly on a freelance basis, in the beginning years, kind of working on the projects that nobody else wanted to deal with. My, my now co founder, and I kind of carved out this niche of, of taking, I wouldn’t say necessarily the hardest, you know, projects, but definitely the most annoying ones. And so we got kind of burnt out of that after a few years. And it was around that time that we were looking around for something that we could own, you know, it’d be our IP. And it just so happened to be when FedEx and UPS started penalizing shippers, you know, ecommerce, and otherwise, for poorly packed boxes. And so, you know, carbonization is kind of the term for determining what box to use for any given shipment. And it’s not, it’s not a new concept, but we thought we could do a better job than some of the legacy solutions out there. And that’s why we started pack urut.

Unknown Speaker 1:47
Nice.

Unknown Speaker 1:49
So 2009, you’ve been at it? How did you get into that in the first place, just a passion for logistics, James, oh, man, I you know, supply chain is really funny, because like, everybody kind of falls into it. And then they just stick there. And they don’t know why. And they can’t explain why they, they become like huge supply chain nerds after, you know, doing doing a short amount of time. But I actually went to theater school, for college. And by the time I graduated, realize that the you know, all the websites that I had been making for theater companies for beer money, I enjoyed that a whole lot more. And then so I got in touch with Pat, and who I actually went to high school with, and we started just working on freelance projects. And then you know, once you kind of get pulled into one supply chain tech project, suddenly, you know, that’s your market, because everybody knows everybody. And we just kept getting recommended to other kinds of vendors there. So that’s kind of how we found our way. And but I don’t think we are, I’ll speak for myself only not Pat, but I don’t think I really found my passion for for the space are, you know, our approach to it today? Until pretty late, you know, it’s kind of just a job for for the first years. Yeah, well, I certainly appreciate that. I think a lot of people can identify with that. So I’m sure if you are a problem solving kind of a person that you’re you’re on the right space. I mean, I know very little about it, but it seems like there’s bottlenecks and mistakes and balls that are dropped at every step of logistics. Absolutely. I mean, it’s it’s fantastically complicated. It’s one of the like, the thing that makes well there’s there’s a couple of side effects of this. One is like supply chain, people have a lot of pride in their supply, supply chain knowledge. And so you kind of have to be respectful of like very seasoned supply chain operators, because they have a pretty firm grasp on, you know, the complexities. But the other kind of side effect is that it’s actually, you know, pretty fertile ground for disruption. Because there’s so many little niches you can you can improve.

Unknown Speaker 4:10
I mean, it’s almost endless in terms of opportunities for entrepreneurs, regardless of how much experience you have in supply chain. Yeah, well, that certainly makes sense. So you mentioned I don’t remember the date that you said, but there was a time where these big shippers, these legacy shipping companies started charging more for poorly packed boxes. Tell me a little bit more about that. Sure. I think this was around 2016 2017. They, they they may have started a little earlier, but this is when they kind of cranked up the heat.

Unknown Speaker 4:42
They have basically historically FedEx and UPS and the other carriers have always charged mostly just based on weight. And maybe there’ll be an oversized charge if you’re trying to ship a piano or something.

Unknown Speaker 4:55
But they realize like this isn’t really working. You know, we’re shipping too many boxes.

Unknown Speaker 5:00
With a tiny thing jangling around in the bottom, and it’s taking way more trucks than we need, and there’s, you know, serious capacity issues with that. And so rather than say, Okay, we’re switching to, you know, do a combined a combination of dimensions and, and weight, they came up with a kind of a word, dimensional weight. So it basically gave them the option to charge for either the actual weight, or this kind of fake weight that incorporated the cubic volume.

Unknown Speaker 5:34
So without going to down the rabbit hole, that’s kind of how they went about it. And suddenly, you know, all these shippers that didn’t really take packing too seriously, they were getting absolutely hammered. You know, margins are, you know, overnight, almost going away.

Unknown Speaker 5:50
And so, you know, that’s, that’s kind of why we got interested because we develop these relationships with shippers. And they said, You know, I tried the carbonization feature in my warehouse software, or, you know, we tried to build our own, it’s just too hard. It’s a weirdly deep problem figuring out how to put things in boxes. Can you build something? And so we just said, why not? And that’s how we kind of get into it. Got it. All right. So maybe walk me through a case study or two. So I’ve got this widget, I’ve got, you know, storefront with the big warehouse in the back, and I’m shipping stuff all over the place.

Unknown Speaker 6:31
What does it look like? Yeah. So

Unknown Speaker 6:35
in practice, you know, the Packers, it’s usually a packer at a PAC station and a distribution center. Occasionally, it’ll be in stores, if they’re shipping from their, their stores.

Unknown Speaker 6:47
But typically, there’s, there’s not much in the way of direction. For those operators, it’s just, you have to get all these orders out the door and onto the truck, by the end of the day, or else, there’s, there’s always been like a huge emphasis on speed, especially, you know, during the pandemic, when ecommerce was going crazy.

Unknown Speaker 7:06
But with this kind of these new fees, and rising costs, and speaking of the pandemic, all the other costs, all of a sudden shot up, like the cost of the actual cardboard, the film, material, transportation, labor, all these things. So suddenly, this, this sort of

Unknown Speaker 7:24
underappreciated step and fulfillment, because most of the robotics and really whiz bang stuff, innovations are happening elsewhere in the warehouse, this packing step suddenly became very important. And so what we do is we generate packing instructions with a 3d visual of how a shipment should be packed into a box or boxes. And we show it on the screen and they they pack it up and scan it and send it off.

Unknown Speaker 7:54
And you just figured out, like computer program, or what based on the size? Yes, and the thing. Yeah. So

Unknown Speaker 8:04
the the, the category of math problem is called bin packing. And 3d bin packing is not even that new of a concept. You can find examples in like MIT thesis papers, or there’s like a really great Air Force, white paper about it, actually.

Unknown Speaker 8:24
But when you apply it to a production, kind of parcel shipping scenario, you know, theory, kind of wilts and foreign of practice. So the engine that we had to build, you know, having some awareness about what actually goes on in the warehouse, and what kind of costs are are there to be dealt with? It’s more of kind of a cost reconciliation engine. So, you know, being able to do like a 3d Tetris that plays itself is kind of the baseline. But then you have to decide, you know, are these items fragile? Can they peep can a battery be put in a box with, you know, oatmeal or whatever it is.

Unknown Speaker 9:05
And then, you know, FedEx and UPS have all these sneaky little incentives based baked into their rate tables. So we’re also like going over those and saying, Okay, does FedEx want us to split this up, or consolidated into a box. And so you can really kind of go down the rabbit hole into stuff that a human led packing operation would never be able to deal with, especially in a time crunch.

Unknown Speaker 9:29
Yeah, that makes a ton of sense. Fascinating. So all these different variables, the actual thing itself, if if it is,

Unknown Speaker 9:38
if it’s a unique thing, like a battery that can’t go in with foodstuffs, or it is a fragile item, or it’s super heavy, or whatever, and then you throw in the extra variable that each one of these other companies has some kind of a game that they’re playing or whatever, they’re they’re they’re rewarding behaviors and penalizing others.

Unknown Speaker 9:57
And how often are you or is this something that you’re kind

Unknown Speaker 10:00
Definitely updating and constantly tweaking are

Unknown Speaker 10:04
the sort of underlying tech itself. I mean, we kind of, you know, always kind of improving it and adding more features for different use cases. But the kind of underlying core has has stayed pretty stable.

Unknown Speaker 10:19
And so what it’s kind of allowed us to do is build applications on top of it, that don’t require integrations and things like that. So we just released something we call PAC simulate, which you just upload a spreadsheet of the last few months of orders, for example, or shipments, and then it kind of runs on the engine and says, Okay, these are actually the carton sizes you should buy. So, it’s a much more kind of, like straightforward application to a fairly simple but common question. And that’s, that’s kind of what we get excited about what other what other ways can we leverage this technology that we’ve built to to make certain tasks easier?

Unknown Speaker 11:00
And I would say, you know, we were about nine people now, we raised a seed round, early this year. And I would say the team is, is extremely motivated by the sustainability implications of, of what we’re doing.

Unknown Speaker 11:17
The and those are kind of not something we even really thought about very much. When Pat and I started the company, it was more once we finally got data, like one of our first big customers was Crate and Barrel,

Unknown Speaker 11:31
being able to see the actual impact on you know, acres of cardboard, save, like hundreds of truck trips, saved from the distribution center, that’s when we said, Whoa, this is a, this is actually kind of a special problem. It’s a niche problem. But it’s special because your costs

Unknown Speaker 11:50
and your emissions are basically the same. anything regarding parcel shipping, if you’re a shipper, you’re basically paying to pollute in some way. So any any kind of even incremental improvements you can make there. It’s really just a kind of a win win.

Unknown Speaker 12:09
Yeah, that is a that is an awesome, awesome, sort of secondary benefits to all of this. That was something I was curious about is what what kinds of monetary savings are are possible or or have Have you seen? Yeah, the average tends to be around 15%.

Unknown Speaker 12:28
If you already have kind of a, you know, super advanced 3d carbonization system, the floor tends to be around six or 7%.

Unknown Speaker 12:37
Which doesn’t sound like a lot, maybe. But to you know, large retailers, it is actually quite a bit a few million dollars, usually.

Unknown Speaker 12:46
And so that’s just on the transportation savings. The you know, cardboard, which I think everybody kind of took for granted, it’s just become, you know, it’s spiked all time high, like really fast during the pandemic, and hasn’t really come down that much. And it’s not like price gouging or anything, like everything that goes into making the cardboard boxes that show up on your doorstep, like the resin inside them has gotten a lot more expensive, due to supply chain issues and all these things.

Unknown Speaker 13:16
So suddenly, we will have companies coming to us just looking for that. Not really even thinking about the transportation necessarily. They’re just like this, the stuff that we used to just, you know, throw away, you know, this is just the cost of doing business. Now it’s well wait a second, it’s kind of eroding our margins by itself. So we typically when we engage with the shipper retailer,

Unknown Speaker 13:40
we’ll we’ll get we’ll try to get a handle first on what’s important to them. And kind of highlight that and whatever initial analysis engagement we do for them. That makes sense. And what is meant I’m sure that you’d love to have Amazon as as a customer, and perhaps you do or perhaps you will, what is on the smaller or the lower end of that scale. Like small customer wise, yeah. Yeah. Well, one of our first customers that we hold near and dear to our hearts is Lionel trains. If you’ve ever played with model trains as a kid, they’ve been around for 100 years, incredibly forward thinking for a company that old. And their use case was kind of simple, but fairly common, which is, as you might imagine, more people buy model trains for Christmas than they do for in summer. So heavily kind of seasonal operation, seasonal workforce. So there’s no you know, expertise really in the warehouse and how to package these things in a way where they won’t get damaged or have a customer complaint about a massive box with a tiny accessory rattling around in it.

Unknown Speaker 14:49
So it was you know, kind of super straightforward, kind of easy to prove that we could make that not a problem anymore. Just kind of put some complexity in the way that they fulfilled these

Unknown Speaker 15:00
I put some consistency rather than the way they fulfill these things. And they’ve been a great a great partner ever since. Got it. But for somebody, and and for somebody who’s listening, and they’re thinking, well, maybe I’m too small to be thinking about this kind of thing. I say, Yeah, I mean, our kind of lowest tier pricing is around 100 bucks a month. So at that rate, it’s worth it. If you ship one or 2000 packages a month, you should at least save a few $100 on on shipping, any smaller than that, and typically, you have the time to kind of look, look at these things. It’s not a high pressure fulfillment kind of scenario. Got it?

Unknown Speaker 15:42
As as you

Unknown Speaker 15:45
what are your thoughts on on on Amazon? That’s a huge question. What was sort of rattling around in my head is obviously they they move a lot of different products all over the all over the world. But now you can just bring an item to a drop off location and just hand it to them without even packing it. What is the wisdom in that?

Unknown Speaker 16:06
Well, I think, you know,

Unknown Speaker 16:09
it’s kind of impossible to without being inside Amazon to accurately assess what they’re doing. And in some ways, they’ll probably never be a customer of ours, because they optimize for completely different things. So we optimize for, you know, costs based on, you know, public carriers, like FedEx, UPS, DHL, regional carriers.

Unknown Speaker 16:34
And all the costs that are common to every retailer, besides Amazon. And Amazon optimizes for speed, above all else, it’s kind of central to their brand.

Unknown Speaker 16:48
And so, you know, we have like, you know, speed controls where some of our customers put a kind of costs to labor so that, you know, our algorithms not going to tell a packer to pick 20 boxes, just because it might be slightly cheaper, because there’s labor costs, but Amazon is completely different, in turn, like they almost don’t care about how much air is in the box, at least not

Unknown Speaker 17:14
not as a foundational concern. Yeah.

Unknown Speaker 17:19
Yeah, that’s a whole.

Unknown Speaker 17:22
That’s get into the weeds on that. But back to the conversation about sustainability and efficiency, my, my goodness, the amount of waste that that must take place when you are putting a small item in a box and all those balloons that the kind of show up inside, but anyway, ya know, it’s brutal. I mean, you know, there’s what I often say, because we get asked this question a lot about Amazon, because that’s everybody’s frame of reference for for packing, which, in itself is probably not a good sign for them. But, you know, what I usually say is, there are, I’m sure, plenty of excellent reasons, operational and well thought out reasons that they shipped this way. I just don’t care. I think it’s terrible. And I think that they’re going to be in trouble when scope three emissions reporting comes down. And suddenly, we find that they’re using, you know, 30% more trucks than they need to, or maybe even more, because these these things scale really one to one. So if we can shrink the average size of a carton and operation by 15%, a company is going to use 15% fewer trucks from that location over time. So I mean, you know, speed, speed is important. It’s what you care about when you shop on Amazon. I’m not hoping for something to show up in three weeks. I want it tomorrow or today.

Unknown Speaker 18:48
But I think, you know, once this once consumers get some more insight into this, the impact that that has, where we can’t pretend, or we can’t ignore that this this decision to ship fast. is polluted, polluting.

Unknown Speaker 19:04
I think there might be an interesting reckoning to be had there. Yeah. That should be interesting. That’ll be the

Unknown Speaker 19:13
that’ll be at right there. Like, do I really want to put my money where my mouth is? Exactly. And say, Do I care more about the earth than I do the pure convenience of getting what I want when I rent, right? Well, to Amazon’s credit, they, they have done experiments where they offer slower shipping, because slower is always more sustainable, like pretty much in 100% of cases.

Unknown Speaker 19:39
But they didn’t get a lot of traction. And, you know, I think, you know, maybe other opportunities to explain what that meant in line when you’re checking out but I thought it was you know, looking at it at the time, I thought it was clear enough. But when you’re like I said when you’re at amazon.com You’re not like oh I need to like I need

Unknown Speaker 20:00
As toothpaste right now, like, I’m not trying to, you know, schedule something for weeks away. But I don’t want other retailers to take that as a sign that they shouldn’t do it. Because when I’m shopping on a different website, I might not have that same kind of urgency, I might be more willing to kind of like share the pain of a more sustainable ecommerce experience by waiting longer. Yeah, I appreciate that. You referenced a level three or something like that, talking about the scope three, scope three. Yeah, I’m gonna dig a little bit deeper into that I’m sure that a lot of people who are listening will be curious about that, too, because I’ve never heard that term before I can, I can give a quick primer. Great that. So there in terms of carbon emissions, there’s sort of several classifications, there’s scope one and scope two, which are typically the emissions that come within within your four walls. So

Unknown Speaker 20:59
you know, anything that you’re, you’re creating and releasing into the atmosphere, scope three is anything that you cause to happen outside of your four walls, it could be the material that you buy, or it could be the FedEx trucks that you cause to hit the road.

Unknown Speaker 21:19
So you know, cardboard, and those trailers, those trucks, they would fall under a shippers scope three emissions, even if those trucks are scope one or two for FedEx.

Unknown Speaker 21:33
Excellent. And so the the big thing that, you know, everybody’s panicking about is it’s in Europe, scope three reporting, which is almost out of sight, out of mind for a lot of American companies. It’s been a, you know, the law of the land in Europe for a long for a while now, to report on those things. But that’s coming here. And so you’re starting to see some, some corporate entities scramble a little bit to figure out what that means for them.

Unknown Speaker 22:04
tuned on that one. I love it. Thank you so much for coming on. Where can people learn more about you? And how can you engage with accurate?

Unknown Speaker 22:12
Sure, yeah. So I spend most of my time Well, now, most of my time, I spend a lot of time on LinkedIn kind of talking about these issues. So you can find me on there.

Unknown Speaker 22:22
You can also go to pack your.io. And if you’re technical, you can sign up for an API key and start playing with it in 30 seconds. It’s pretty fun. And yeah, that’s that’s all love it. If you enjoyed this as much as I did, sure, James your appreciation and share today’s show with a friend who also appreciates good ideas. Certainly anybody you know, that is shipping at least 1000 things a month opportunity to save money and be a little more sustainable. Go to PAC urut.io. That’s P Accu R A T e.io and then find James Malley on LinkedIn. I’ll list all those notes the show. Thanks again, James. Thanks, George. And until next time, remember, do your part by doing your best

Transcribed by https://otter.ai