Mister Beacon Episode #138
Superpower for Pallets - How Returnable Transport Items Can Help Save the WorldApril 05, 2022
This week we are joined by Mattan David, the UK Managing Director of Digipal, an innovator in the next generation of plastic pallets. We discuss how sustainable plastic pallets - as well as trackable ones - are game-changers. Years of coping with the limits of RFID tracking - clumsily monitoring movement as pallets enter and leave storage facilities - is being replaced by the superpower of Bluetooth tracking? Learn how this newer technology will transform the way Digipal - and others - keep track of their pallets and prevent loss or theft of goods.
We’re rapidly entering a new era where returnable transport items are never lost or held up in transport.
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Steve Statler 00:00
Welcome to the Mr. Beacon podcast. This week, we're speaking to the UK managing director of a company called Digi pal, who provide plastic pallets, but they also provide the digital systems that help manage those. So this may sound a little obscure, Arcane niche, but it's not. These kinds of systems are like the tendons that connect the bones of supply chain infrastructure to the muscle of the cloud. The implications are really profound in terms of sustainability efficiency. And we're really tapping into something which I think represents a lot of the potential of IoT and something that Mr. Beacon has been focused on right from the early days of the beacon technologies, but which is this digital physical convergence and how when these things come together, they can change everything. So how is it that plastic pallets and the cloud systems and the Bluetooth tags that connect them can change everything? Why is it that it will extend shelf life? Why is it that will save a lot of money? Why is it that this will spearhead the IoT revolution? Well have a listen to Mattan David is incredibly knowledgeable on this subject, and I found it to be a really educational opportunity. So I hope you enjoy the Mr. Beacon podcast is sponsored by Wiliot Intelligence for Everyday Things powered by IoT pixels. So Mattan, you live in Coventry. Is that right? Yeah. And Sunny Coventry, UK,
Mattan David 01:59
originally formed from Israel, but moved here about 16 years ago. Ah, okay. And so why did you end up in Coventry? Because when most people think of England, Coventry is not the first place that they think of, I see someone that actually lived in Coventry as a small child. So I'm familiar with the weather, which is typically raining. And, and the environment, which I think has improved since I grew up all the time. We still had like, damage from the war. There's a lot of bombed out buildings and the cathedral famously got bombed and so forth. But so why so why Coventry? In the name of love, to be honest, I've ever went after after a few years, when I lived in the UK, I met my current wife, and she works in Coventry. And that's where we met halfway to closer to her work and close to my work as well. And I live in Coventry. Nice area, but of Coventry. But yeah, a lot of people asking for Santa Israel to gloomy, Coventry.
Steve Statler 03:07
It makes sense. It's right in the middle. So maybe that's handy. And I guess, given Digi pals business, maybe you're close to manufacturing areas that I don't know whether it works out for you or not.
Mattan David 03:17
Yeah, I mean, generally, the center of the UK is is brilliant for for meeting customers, you know, some of our customers or suppliers into supermarkets, either based in the north or basic south, some of the supermarkets in London, some of them in the middle. So generally, logistically, it's it's very convenient to do warehousing, but also to live.
Steve Statler 03:40
And how did you what so what is your role at DiGiCo?
Mattan David 03:44
I'm the managing director of UK and Ireland, in charge of the commercial side, the sales team, the operation, and showing that we hit the growth targets that we have rolling out any new project.
Steve Statler 03:59
And how did you end up at digit pal? I think I mean, you started off. Looks like you got a couple of degrees. You got a first class honors degree in business.
Mattan David 04:10
In business. Yeah, my BA in business. And then I've got MBA following that. See? Yeah, actually started my career in it. Was it manager moved into supply chain project management, customer service, and I really enjoyed the commercial side of the business. So build my expertise there. And hopefully, the operation side that I did for many years as well, helped me helps me with that. Very good. And so what was the previous company that you worked at? Before did the previous company was polymer logistics? So it's in the same industry, the industry is very small. And that that's why I moved to the UK and went to work for polymer logistics. But following the sell to Tosca, We opened digital and created a new company. Okay, so were you were you technically a founder or co founder? Yeah, I can say that, when we started was only a handful of customers in the UK. I was the first employee in the UK as well. It's a global company. We've got presence in, in Central Europe, in the UK and in America, but many of the business countries in the UK. Now we grew. And we have a bit of a team, small, small customer service team and sales team. So it's very exciting. It's challenging and exciting. And how long has it taken you to get to where you are at the moment held? It's about a couple of years since we started digital. And that's it. Yeah. And it's, it's, it's a small company, but with great ambitions. Very good. And, you know, for people that don't know, what was, what is polymer logistics, now part of Tosca? Yes, it's a good question. So Polymer was pulling company, of basically manufacturing of crates and pallets. Were they give it to rent to customers in the supermarket supply chain. But normally, the company the same as digital, we own our own assets, we rent it out to customers, they put the, you know, the carrots and lettuce, on it's on the by the pallet and send it to the supermarkets, and then we collect it and send it back to the customers. The unique thing about digital is that we were taking this asset to trucking, as we say, or asset management, which is very important to ask this, it's our own asset, and installed a lot of technology on it, whether it's IoT RFID, even even down to QR codes, and just to make sure that we're not losing our assets. So for most people are just saying, you know, that they don't not know the industry, they go and buy their carrots or the eggs in the supermarket. But there's a whole industry behind it, actually getting it to the supermarket. From the farmers down to the supermarket shelf. Interesting. So what's the elevator pitch of, of Digi pal? What? How do you explain what your your company does? Just a minute or two? Yeah, that's my problem. So the business route to market is split into two. And one of it is the manufacturing and rental of our plastic pallets. That's our main focus is pallets, whether it's small pallets, or large 1200 by 1000 Euro size, we invest a lot of innovation into new kinds of pallets that can possibly save space, save transport costs. And the competitors are mostly wood pallets. So we go from an environmental angle, hygienic angle. And the other side of the business is the asset tracking and the traceability. So, you know, we because we know how important it is for us not to lose our assets. And we've got about 25 years of experience now of making sure that we don't lose our assets, we decided to dedicate half of our business to outsource this kind of service. So anyone that have their own pallets, roll cages, loud containers, anything that they want to track, we even have someone that truck pump trucks, you know, the warehousing, anything that they've someone wants to truck, they come to us, because at the end of the day, whether it's a pallet or a roll cage, it doesn't really matter, then an asset is an asset. And we want to make sure that it moves fast. It's reducing capex to the customers, make sure they don't lose anything that everything that they use us a lot. We call it sweat assets. So this is the main the main couple of things that we do in the business as pallets, and then after trucking.
Steve Statler 09:06
So we sounds like you will track other people's assets. So you sell pallets, but you'll if someone buys pallets from someone else, then then you'll put your own sensors on there and track them.
Mattan David 09:19
Correct. Yes. So in a previous company, the strategy was IoT is an enabler for our own products. So only only affiliated on our products and making sure that we are customers don't lose our assets. But we very very fast also in digital, that there's many people on assets that not even as I said even not even plastic pallets Why would we constrain ourselves just to do it on our own assets. If we can start outsource our expertise and make sure that you know everyone gained from from our from our knowledge we partner with different suppliers In a way that is one of them, and other IoT suppliers, and we are basically integrators. So instead of the suppliers have to go and talk to 50 different customers, they go and talk to us. And then we talk to these customers, we integrate the, the legit, the hardware, we integrate the platform, take the data together, because a lot of the customers will have data coming from not just from US data coming from telematics, which is tracking for trucks, it could be from eco systems, which is what's actually gets sold in the supermarket. So all of this data we take and we consolidate into one platform, as well. So are you what the industry calls a pooling Pula pooler of assets? Yeah, so that's actually well, well, I put a plastic polling company, that's what our little industry will well, we will classify assets. But we will take our expertise and outsource it, as well.
Steve Statler 11:03
And so what is if you're a pool, or I thought, a pool owned all of the assets that were being pooled, and you essentially operated it as service, but if you're working on rolling cages, which you don't make, then how does that work?
Mattan David 11:20
If you're so so we create the enclosure for the IoT device, or we purchase the Bluetooth tags, if it's if it's a more like Williard. And then we go to the customer and build with them, how, how are they going to install it on the on the roll cage, how they're going to put antennas? What do they need in a platform, we will do all of this because if you remember that if someone owns a roll cage, and let's take for example, a i supermarket, for example. And they have their own roll cage, they are not a polling company, they they have roll cages, they know they need to move it between A to B, but they the case is not in the polling aspect of the business. So we would rent them the either the sensors or we just give them the service, you know, some customers want to buy the sensors, and or labels, and we will just give them an annual fee for the platform. We're very, very much open to how we will deal with our customers and what our commercial model is. We don't we're not tricking ourselves to just just one just commercial model. It's part of our culture, to be honest, so we're very disruptive. We like to, you know, go into like that with a wood market to go in and offer plastic pallets to go into the traditional, you know, here's an is a platform. And staff pay us a license, we like to do that with a different angle to make sure that we fit what's the service that we that the customers want.
Steve Statler 12:52
Okay, so we'll get into the technology in a bit but you basically put these IoT sensors could be Bluetooth could be something else. And you're operating this and it could be so am I understand it correctly? If I say I, we need to outsource this pooling, we're just gonna get everything from Digi power you'll provide the pallets you'll provide the the tracking service. And the whole thing will be how do you sell something like that? If I need a million pallets? What does that deal look like? If I don't have the pallets at the moment or I have wooden pallets and I decide I want to have something that's more sustainable, that's valid.
Mattan David 13:36
Okay, that's, that's it. I'll give an example. So you know, one of our customers in the UK, it's a poultry manufacturer, they used to use wood pallets, that many hygienic problems with the pallets, that customers actually demanded that they moved to plastic. And so they came to us, we specified with them how many pilots they need in the fleet. We manufacture the pilots, we gave it to them on a rental basis. It's almost like a leased car. You know, here you go have a pilot hold it for three years. You can renew it after that or you can be a pilot back. But on the on the traceability points, what's the unique you know, because everyone can go and say Here we go have a pallet what we have is that we have this capability of actually tracking the pallets without devices. So normally if the customer wants a pallet and they want it on a rental they will be very worried about losses and we're very willing to do they have enough pallets so we offer the option to actually truck this pallet and make sure that they don't lose them. But then there's other customers that want to buy a pallet and might not even buy it from us which is fine. But again, it's the same boy cat you know why do we need to do to make sure we don't lose the pallet? What do we need to make sure that you know Site A doesn't hold the palette and don't send it to the site B and then we don't have enough pallets. Now it could be as I said Roll cages as well. They don't have to be anything they you know we are not very precious about customers buy it from us, it can be bought from from third parties. Okay, and as far as making sure they have enough pallets whose decision is that is that your decision or theirs or some combination. So, on a pulling basis, it's us, you know, we we get information from customers, what's the forecast for the year, what's what they think they're going to be their cell sells into their customers into the into the supermarkets. And then we build up a forecast for the next, let's say, 12 weeks up to six months. And then we make sure we have enough enough in our fleet, we know because of technology, we know how long a pallet stays at the customer, how long it stays in the supermarket. So we can calculate how many we have in the fleet and how many we need in the future. If it's a, if it's a customer that have it's on their site, and just moving from A to B, and it's both of those sites, so they it's like a captive system, then we will talk to them, and we will decide with them, you know how many pilots they need. But on a pulling basis, it's us, you know, the they, they just want to make sure that there's enough pilots out there, and then they can send to their customers.
Steve Statler 16:15
Okay, so one of the problems you solve is essentially capacity planning to keep the pool going, you have the information about where all these pallets are. And from that, then you can make sure that they don't run out. And presumably, that keeps the products flowing and means that there's no delays or any other kind of capacity planning issues that might hold the business back and presumably are making sure that they don't have to put too much money into pallets. They don't have to buy too many, you kind of get it just right, hopefully. Do you? I mean, do people ask you for some kind of SLA because, you know, presumably, there's an interest in spending as little money as possible on a smaller pool as possible. But at the same time, no one wants to be accountable for delays in shipping or produce going bad because there's no pallets to put it on. How do you how do you work that out with your customers?
Mattan David 17:20
Yeah, it's yeah, it's a good point. Because it isn't one of our main KPI internally is is this cycle times to make sure that the pallet is moving fast, and it doesn't stay in one place. And this is the same, exactly that reason, because we don't want to run out of pallets. But at the same time, we can't invest more than what we need. Because as you said, the customers want a lower price, right? Especially in the in the supermarket industry. I don't know how it is in America, but in the UK, it's very, very, very competitive supermarket industry, which means everyone wants to the lowest cost for the best service. And you know, to do that, it's very you need robust forecast, you need as much information as you can. And this traceability piece of technology gives us that extra information that we never had before. That visibility, we call it supply chain visibility, make sure that we can see all this dark area as well. You know, someone might abuse our palette and not not send it back or use it for for anything that they might want to use it which is not supposed to. That's that's the main the main challenge as far as this cycle time to actual assets move fast. And how do you know if someone's using the pallet for something they shouldn't be using it for? Well, So traditionally, it was about just someone goes into a stock account, balance it compared to what we have in the system and say, you know, we're supposed to have 500 pallets, you have 600 pallets, you know, why is that. But in the modern time when we've got IoT, we just see it as we get information from the pallet. So I can put maybe 10% of my pallets with Bluetooth or, you know, Wi Fi devices. And, and I know where the pallets are with whether you know whether somebody is holding too long or not. That's that's the beauty of the technology nowadays.
Steve Statler 19:21
And you talked about just a percentage of the pallets being connected. How does that work? Do you? Do you have do you sometimes just like sample and sometimes you track everything and how do you decide what to do? What are the essential? Yeah,
Mattan David 19:39
depends on the need, isn't it? So? Normally, we'd say it depends depended on the the budget of the customer and what if it's our pilot or if it's not a pilot, so if the need is telling me what my losses are, you don't need to track 100% of your assets to know that. You know you can do 20 Send 20% And you statistical information, you know, big data, all of this good things that you know that we have in our in our arsenal to make sure that you understand how many what's your, what's your losses and where they are. Because normally, if you if you have a leakage, as we say, you know, imagine it's a bucket that got the leakage of water, if there's one pilot that leak from the, there's probably another five next to it, right? Right. So you don't need to tag all the five pilots, because we'll give you the same amount of information. Same, you get to get to the same results. I have some customers that come to us and say, Hey, we know we want to know, on the morning, six in the morning, six o'clock, how many how many pallets or roll cages I have in my warehouse. But that means I need to take 100% of the assets, I can't use statistical information for that. And for that perspective, we need to put a device or a label on every asset. And then connected the budgets, you know, if someone's got enough budget, everything will be public, a GPS tracker, which is the top of the range, you know, most information, you know, with a battery, if someone ever low budget, because the assets doesn't cost a lot, we will go to RFID or Bluetooth labels or you know, William tag, so etc. So and this is what we do we go use expertise with our knowledge from from an asset management point of view. And from a technology technological point of view, and find the right solution for the customers.
Steve Statler 21:32
So you talked about if someone wants to know absolutely how many pallets there are, then you want to track them all. Are there any other benefits to having that kind of continuous visibility of? of the pallets? Absolutely. So I guess there's two dimensions, one is like, what proportion of the pallets are being tracked. And then the other dimension is, are the pallets being tracked continuously or not, because presumably you could track the pallets with a QR code. But that requires someone to go out and take a snapshot. It's like a batch processing. It's like punch cards and paper tape and processing. It's, there's an operator involved. And then if you have, presumably a GPS device or a WM tag, then you can potentially continuously monitor that wherever you have the infrastructure, or the coverage to do that tracking. So what are the problems that you can solve? What Are there any other problems that you can solve when you have 100% and continuous visibility?
Mattan David 22:40
Yeah, so this is where it gets interesting because most of our customers and we can get very efficient philosophical discussion about adaptation of technology in the supermarket supply chain. I've done a dissertation on it, by the way. Okay.
Steve Statler 22:57
All right, stand by.
Mattan David 23:02
And normally, you tend to start the commercial discussions or you open the door with losses or inventory, as I mentioned before, because these are the pains that the logistics team or the operations team feel on the day to day because it's real money that they spent capex on it's real money that that they that they need to go out and do some stock counts. And they never know what how much stock they have. And they're getting phone calls at seven o'clock in the evening what they'll dinner with a family of 10 o'clock at night diffidence, pain, you know, and kind of trying to understand, you know, what, what's going on the next stage, that's, you know, that's my belief after that is you know, temperature control, on shelf availability, you know, if every pallet for example is is tagged, and the case on top of it, so every box of carrots, for example, six buckets of water, if everything is tagged, then you can start talking about how much I have on the shelf, stocker and what's my stock at the store, you know, supermarkets for example, they spend millions on the most sophisticated sophisticated supply chain systems, ERP systems, making sure that they've got on time in full deliveries to the stores. But at the end of the day, you have a person normally in the UK with a cardboard cut cardboard part goes and say, Okay, I need five boxes of crisps and five bottles of water bring from the back to the front. Now the cost of someone doing it and moving it from the back to the front, as is is immense. It's big, isn't it? There's large costs, it's probably the biggest cost that they have the supermarket is the labor. So, you know, this, this technology that can actually form moving forward the beginning to last as an inventory and actually give an A all this extra visibility in supply chain suddenly can open up a lot of opportunities for, for entrepreneur visibility for for supplying to the store for visibility, it's keep going back to that point. But it's that
Steve Statler 25:14
you're going from this supply chain that was in the dark to suddenly you have maybe a flashlight, and then you have a you know, complete lighting system and seeing where everything is. And you're talking about on shelf availability. What does that what does on shelf availability mean? I mean, I think I understand it, but can you make it a bit more explicit? Yeah.
Mattan David 25:34
So it's the biggest the biggest KPI for supermarkets is, on fact, on shelf availability. So it's making sure that as with a toothbrush, or the toothpaste on the door demands that on the shelf, I actually don't find out the worst nightmare for supermarket is that you as a shopper go to the shop, you want that specific item, and it's not there on the shelf, it's empty. Because someone didn't bring it from the back of the store, it wasn't delivered to the store, it was an order from the supplier, you know, going from from the end to the to the beginning. And normally how it works, when you shop at the shop at the tail, if you get down to a certain stock at the store, and order placed automatically to the Depo, the local distribution center, and then another order is placed in the supplier supplier. However, there's a lot of problems, you know, down to human interaction, you know, this stock is not on the shelf, it wasn't delivered to the right store. And it wasn't order from the suppliers. So this extra visibility can actually tell you more accurately how much stock you have on the shelf, or how much you have in the back of the store. And then with that you can start begin to get all this data and know when to place an order. And speaking to one of the biggest brands, you know, in just for just for my studies, and he said it was after the beginning of Corolla was after the beginning of March 2020. And in the UK, we had big massive panic buy of everything, you know, you would go to the shop in March, and there would be nothing there'll be no frozen food, there will be no toilet paper, or be no eggs or meat shots will be completely empty. Now, okay, this is once in a lifetime, you know, shock to the system. But this things can happen, whether it's peak time, or whether it's anything that's happening, you know, in the world. And in the last five years, that's happened quite a lot of things in the world to be honest, and can affect the supply chain. And this extra visibility can can make your supply chain more resilient, it can make sure that you've got better focus and make sure that you that you can react better to any anything that's happening down down on the ground. And you don't have this disconnect between the store and the suppliers.
Steve Statler 27:58
It makes sense that if you have much better visibility of where these pallets are, then you can spot if things are not as they should be in order to avoid that out of stock on the shelf, which is bad because the customer is frustrated. Maybe they go to another store. If you've got a challenge on loyalty, you're losing sales. And presumably you might even be paying for the inventory and it's sitting somewhere. And so you've you've got capital tied up in something that's not productive. So that totally makes sense. What are the but I suspect there's more to it than that. It's not just okay, I can see everything and therefore I'm no longer going to have any out of stocks. What are the if you kind of double click on that and drill down? What are the alerts that you can throw? Presumably you have a dashboard that that people can see how do you flag the underlying issues that prevent those out of stocks? Like for instance products in the back of the store versus the front of the store? Does the the pallet ever go to the front of the store? How do you know that that something's not in the front of the store
Mattan David 29:14
nurse sample has to go to the front of the store some pallets will stay at the back. But this is not only for the pallets, right? So the traceability can be down to the case side. And when I say case it's going to be a glass of chocolate, it's going to be a box of water or anything like that. You can put a tag with a willya tag or RFID tag on these cases and forget about the pallets. It's it's that that can you can connect their cases down to the supermarket's. Okay, so your your cloud software can go beyond the palette down to the case, correct. Absolutely. Okay. Absolutely. Yeah. The powerful use cases is one the pilot has actually talked to the case. So you might have a Bluetooth label on the On the case on the pilot, you might have like a Bluetooth reader, and they can actually talk to each other and that you might know, if someone removed the case was not supposed to. That's theft, you know, if you can, he can prevent that like that. Okay, but generally, it's quite expensive to do that. But you know, it depends on what you're moving. So if you're moving razor blades, for example, are quite expensive, and there's quite high theft on them because the packaging are quite small. So it is still all there was another case. Not in the supermarket industry, actually, that's in a postal parcel, where part and parcel company was moving totes of total crates of mobile phones. So the the crate itself cost maybe 10 pound, but inside of it 12 $12 on how much it is nowadays, I don't know. But inside of the crate, it's $50,000 of iPhones. You know, you want to know if somebody moved that Tote from from the pallet, right? Because, you know, because it's really expensive.
Steve Statler 31:08
What is a tote?
Mattan David 31:09
It tells us is a crate society, British it's a crate of plastic crates that you put stuff inside, it's got a lead on top of fates. And when you use it,
Steve Statler 31:20
okay, yeah, I've heard that term use for car parts as well. So, I mean, what what's your what's your perspective on the adoption of reusable transport items? I guess that's the generalized term for all of these things, whether it's a pallet or a crate, or a tote or one of those big containers for liquids. They're all RT eyes. But the point is they're reusable. How? It I've experienced conversations with companies where they're like, No, we're not going to bother with reusability. We're gonna have cardboard boxes instead. Where are we now in terms of the retailers and brands moving from disposable containers to to reusable containers?
Mattan David 32:12
And, yeah, so first of all, I would add, it's not just using cardboard, it's a challenge that I've personally faced before is people say, now that we're making money from the cardboard, we were selling the cardboard recycling. Now, I think it's very old fashioned in knots. That is not how people should look it into into that perspective anymore. Because moving recycled cardboard is also cost carbon. It's cost money. The fact that you're making money from selling the cardboard doesn't mean that that's the right thing to do for the planet and for from a cost point of view. And
Steve Statler 32:52
so I was so fundamentally inefficient, isn't it? Because you're that, I mean, this is the circular economy theory. It's like, keep the assets in the same form for as long as you can for as many cycles as he can don't spend the money on melting the glass to make new bottles make a high quality bottle that can stay in its same form that's ultimately going to be more efficient, right. Yeah. Yeah.
Mattan David 33:19
And so I think there's more and more adaptation of RTI. I think one of the challenges of RTI ti had before is is this thing with the losses you know, I would say customers would be willing to invest it because you know, pallets, roll cages, especially the big containers for liquid as you mentioned, the expensive items and if someone wants you know, a pallet it could be anything between 40 to 60 pounds which is you know, it's quite it's quite expensive investment if someone needs 510 20,000 pallets when you compare that to you know, you talked about cardboard, I'm going to talk about wood because in my opinion wood is not circular as much as plastic is even though wood company or wood pulling company will say Well hang on you know, pallet is going through the system the same as yours. Well, mine can last 10 years if it breaks I'll make a new one from it because I can grind it and recycle it the wood pallet will last about four or five cycles until they've been making offenses out of it maybe or something something else. So it would pallet will typically will be 20% of the cost to buy compared to plastic pallets. So same as the cardboard that you mentioned compared to a plastic crate you know, masala might say in the wood is more, it's cheaper for me on the short term. I'm going to use that. So there's a lot of education that we we deal with our customers, whether it's through PR whether it's through marketing, to make sure that they understand that it's short sighted, you know, you need to look at the long term. Plastic pallets will be maybe a bit more expensive. To purchase, but, you know, the overall running cost of it is lower, because you don't pay some money. So.
Steve Statler 35:09
So in a sense, this connectivity that you offer is really key to people being able to have the confidence to move forward and invest in a better quality RTI to go from wood that falls to pieces to plastic that can last for a decade. Yes, it's going to be more expensive, but ultimately, it'll be a lot cheaper if you can do the tracking and tracing and make sure that you spot the leaks in the, in the system. So that's interesting. So plastic pallets have been around, but the ability to connect them at low cost to the cloud is relatively new. And so hopefully, this is a step forward in terms of environmental savings, is that fair to say?
Mattan David 35:55
It's absolutely it's completely right. It's it we managed to go down with a price you know, if we issue a pilot out to a customer down to where the woods pilot will be, just because we are more efficient. And we're more efficient because of the technology because of the visibility that we have in the in the supply chain. This is obviously unrelated to the discussion about about the onshore availability and all the extra extra information we get this is just the the efficiencies of pulling or rental or anything that we do with our pallets that allow us to compete better because of the visibility because as you said it's if it's too expensive, and people might not want not want to invest if they don't have the security to make sure that they don't they don't lose the assets.
Steve Statler 36:48
Very good. So how mature is this market? Where are we in terms of adoption of continuous connectivity for these RTX eyes? Is it are you know if you had to I know you're not an industry analyst although you live in the industry so you probably have at least could have used industry analysts what percentage would you guess of plat pallets today are a plastic and be connected plastic
Mattan David 37:23
roll and I would say the connected pile of plastic pallets is very low percentage and it we're talking about you know handful of percentage of of pallets I would say single digits Yeah, exactly. And then plastic compared to the wood pallets or you know, I would say maybe 10 15% of the usage into supermarkets Okay, and is very small this is new this isn't here it is digital in the UK and Ireland is the only company that does large pallets into supermarkets. And as I said we are two years old and also even though our expertise is 25 years old, you know the company is quite new so we don't want to do it into the supermarkets followed by 1000 Because we only the one only one that can run it in a cheap and cheap way compared to the wood pallet. Now you do remember that especially with pallets we're trying to disturb wood pallets industry which has been in the in the go to palette for 6070 years. You know a lot of it is there is the legacy of World War Two with a lot of parts left overs. A lot of factories that were converted to, to manufacturing that needed pallets. You know, there's this is not a commercial for Coca Cola, but if you if you see the Coca Cola factories across across Europe, it's basically well the Americans had that basis and then converted to to go to cola factories in the and the pallets you know needed after the World War Two that we needed to be able to move all the load to do all the logistics following the following the war. Now if you go to any warehouse nowadays, it's all set up around with pallets, which makes it harder sometimes for for different innovative pallets to come into the into the into the mix can give example that you know one very highly automated customer you know our pallets at the beginning didn't work on the line because they had 400 senses just looking at the pallet making sure the pallets are not broken. There's no chip so out of them now, because they're using wood pallets and there's quite a lot of damages the court a lot of fallen wisdom. So there's 400 sensors. Yeah, so our pallets because it was a bit different as broken and something is something different than kicked it out. So it's almost like the problem with that you have with a wood pallet with a legacy, you know, culture of using this wood pallets if you want to call it like that. Sometimes, sometimes it stops us from from able to actually introduce our innovation.
Steve Statler 40:07
So amazing. And because that technology infrastructure was built into the facility, which, which I guess is inherently limited isn't it means that you're, you're kind of, you've got a lot of fixed costs or lack of flexibility. But if the, if the intelligence is in the palette, then you can start to extend the visibility a lot further than just in the receiving bay of the of the pooling system. Can you tell us a bit more about the technology, then? Let's actually start from the users perspective on the cloud side, who is it that is using your cloud service you have, presumably you have dashboards, screens, consoles that are accessible on the web, who is looking at those things.
Mattan David 41:00
So when we talk about the adaptation, you know, why why people aim to change, and it's mostly the losses on all the inventory. Because of that the main users, our customers who own assets, either use our own or use their own assets, but they own assets. And their job is to make sure that they don't they, they cycle the ISIS or they determine and, and pull themselves, basically their own assets. So it's logistics people, its asset management, managers, operations, etc. And this is going back to that adaptation. This is why it's hard to penetrate into the visibility into the stores or visibility into the back of the store, because their ROI or return on investment that the customers are looking for, is very, very limited to what the scope is, which is, you know, just the assets. And they don't think
Steve Statler 41:59
they're not caring so much about freshness of the produce or anything like that. Which someone else that's a different department, someone else's p&l Maybe Exactly, exactly. That's that's a challenge. Yeah, I
Mattan David 42:13
think that's exactly how do
Steve Statler 42:14
you how do you bridge that gap? If the person that's paying for it is only because I'm assuming that kind of the savings from lower leakage, I guess, enables you switch to plastic, which is good, you probably care about that. But how do you overcome that siloed ROI issue?
Mattan David 42:31
So it's it's mostly commercial decision? You know, and looking into the long in the long term? Do we go with a very low margin, just to open the door and making sure that we get our pilots Oh, IoT, in the, and then we start, hey, by the way, you can also do that, you can also do that, let's talk about that. And then, you know, get licensed from the platform license from the US on, and this is our plan, this is our strategy. How to do it. And, yeah, because because as you said, even the person you were talking to the person, which is the decision maker, he's got the PnL, all he or she cares about is I don't want to lose our asset, I need to reduce my capex, that's it. Now, some of the solutions are, they can give more information than that. And because of that, they are more expensive. So from a financial point of view, it's hard to sell these solutions, because if you just look at losses, and that's not enough to, for the customer to actually adopt the technology, but if you look at everything, you probably suddenly talking about the cost of the technologies is ago again, handful of single digits of savings. You know, if you look at, you know, the stability, the freshness, as you said, temperature control, everything else that comes with it. But yeah, that's it, it is a challenge. I mean, IoT is quite, it is not, it's not new, really. But I think it's commoditized enough nowadays to get into this low cost operating places. And and introduce it there. So we hope it's gonna be it's gonna be big in the next few years.
Steve Statler 44:12
So I guess you're in a fairly, very interesting position because you can potentially subsidize the cost of the crates or the pooling service. And then you know, you sell the the razorblade handle, and then hopefully someone else that that's really just the start of the sales cycle and you can so who you sell, selling two days of extra shelf life or one day of extra shelf life, probably one day of extra shelf life on produce is worth a huge amount I'm thinking because it means you're wasting a lot less produce. So less right off of inventory, it's probably more attractive, it probably tastes better, it probably lasts longer and people's homes, which means you might even start acquiring more customers if people know that grocery store X has fresh approach produce and the one down the road, personally, I'd switch is like, so how do you Who who are you selling to with that value proposition?
Mattan David 45:15
And so that's that's that question is related also to the, to the solution and about what extra value that the solution gives. The benefit is with the supermarket and with the supplier, right? Because the supplier sells multiple supermarket, a supermarket sells more to the customers, to the end customers. And really the benefit, especially when you're talking about the example you gave, I'm sorry, is about the planet, right? You know, that extra freshness is mean less waste, less food waste? Yeah. Which is a big, big deal.
Steve Statler 45:52
It's a huge issue. And I mean, the statistics I keep on hearing are anywhere between 30 to 40% of the food is wasted before we even get on our plate, you know, irrespective of whether Johnny finishes his dinner and that's astronomic, I mean food, we make a lot of food, the whole production of food is entirely inherently carbon hungry. So this is an amazing opportunity if we can if we can.
Mattan David 46:22
Exactly. Exactly and I would say it's from an sustainable point of view. Definitely that's the problem. You know, every every Corrado every lettuce, spinach that you create, you know, it's got a carbon footprint to it. But also it's, it's fun, it's almost like an ethical, isn't it? Because people are hungry? And we know we're wasting food. So you know, it can? It's, we should we should do something about it. But you know, back to your question, who was we actually selling to? Nowadays, the suppliers will know what they have, you know, the stock of the lettuce, or the stock of the pallets or the crates of the of they have in in the supply chain. When they sell it to a to a customer to supermarket. They know what to deliver to the Depo they have no visibility what happens until it gets sold in the tail. As I said this is in the UK, there's an ecosystem. And they know how many cows they sold on the tail. But between the depots and the and the store, there is no visibility for the supplier for the supermarket point of view is the other way around. They have no visibility what's happening at the supplier. But supposedly they know what's got the Depo and the stores. Now once the way we approach it, and I really like to do it in the in presentations to either suppliers or supermarkets when I talk to because the pallets or the crates go through the supplier down to the Depo down to the store. This is not this is no longer just a logistical item. This is not just a carrier of carrots carry off lettuce, it's a data now the data is a smart pallet or a smart crate. And it can give you that visibility to both the supplier and the supermarket what's happening in both sides. Now, culturally, it's a difficult thing because a lot of suppliers don't want the sort of medicine or what they have. And so they don't want lots of suppliers. But you know, if we manage to break down this barrier of trust or you know, of working together, still the same for the same goal. Everyone gain right in the cliche win win win, but it is what it is exactly that. So I believe that the suppliers and the supermarket's will gain from it. And this is these are people that we should, should sell to. But really, the end goal is is the end customer, right is the people that shop at the supermarket that will gain from it. So I get the win win, you know, suppliers if I'm a farmer, or I'm representing a pool of farmers, it makes sense that I want that produce to be in the best shape and minimize quality issues and and so forth. I you saying that potentially the funding of the service can be both from the supermarket and from the the growers or the brands that are producing the products in a setting. Was that a step too far? Well, in a sense, it should be. But the way that it works already, it's really the again that it's the end customer that pay for it right? And when you buy your tomatoes, tomatoes, or you buy the cucumber and you pay for everything that was in the cost of the supply chain before that. So if you charge if I charge the suppliers, they will just charge the supermarket and they will charge the customer. Right So okay, so I think it's semantic I think that at the end of the day that it's that customers that pay for it, but normally at least in the UK, the supplier will pay for the extra service and then charge the supermarket Okay, so you're not sell it. So you're Helping the so who pays for the pooling, the supermarket pays for the pooling and the producer pays for the value added service supply paid for the pooling the supermarket don't tend to pay anything
big and mighty.
Steve Statler 50:15
Right? So that's um you know, you're running a pooling service and let's say you're selling to Sainsbury's so what you're saying is Sainsbury's doesn't pay anything. Does that mean you but Sainsbury's have to be part of this right? How do you sell something like this?
Mattan David 50:33
Yeah, so, so we sell to a supplier, so it will go to lettuce or again a produce or meat customer, they will pay certain amounts for let's say $2 for the pallet, then there they will send that pallet to the supermarkets, they will use the pallet and and make it valuable for us to collect. Now, we don't charge the supermarket's they've got the the LaVale role to make sure that they don't misuse our pallets to make sure that they stack them you know in a safe way make sure they load the Vic our vehicles when we come and collect, but the payments for the let's say the $2 for the for the pallet the supplier will charge it in the price of meat or in the price of athletics right. So, this is part of the packaging cost. And because of that also the way I see it, also the technology that the traceability will be part of the packaging cost unless you start talking about the real benefits of the supermarket's will start getting you know the actual sustainability the food waste all the time then the sub the markets not only need to pay they also need to lead it right because once once supermarkets can have hundreds of suppliers you know it's easier to just sell to the supermarkets and then they need to go and talk to the suppliers to do it if it benefits is with a supermarket
Steve Statler 51:52
but you know what's the persona that you're marketing to I get the someone who's got Operations Director for pallet pooling in the supplier that seems to but who else the you trying to get in front of to
anyone that would listen to these high level right? Kidding
Steve Statler 52:15
me to listen but I'm not sure that placing any orders
Mattan David 52:23
It traditionally we go to the to the logistics of the operation people because these are the people that see the benefits you know, they said before about the losses about that and they they hold the key for it. And if you go to a buyer for example some of the buy bananas and tomatoes and cucumbers they will send you the logistic people to talk to them even though okay, even though some of the benefit is is receipts with with you know with his buyers with a commercial with a finance, it's the gatekeepers have normally the logistics and operation people.
Steve Statler 53:04
Yes, I guess if the platform is not there, then the buyer really can't do anything about it. So they're gonna say Oh, this sounds great. But But But isn't the buyer someone that's working at the supermarket? Yeah. Maybe different p&l?
Mattan David 53:22
PNL different Scofield, as I said, as I like to call it that supermarkets out such a big competition, big corporate companies on so it's really hard to penetrate to the right person. But yeah, that's that's a challenge and we believe it for the logistics and operation people.
Steve Statler 53:47
Okay, that makes sense. So let's get back to the technology. So what so you have it what is the user interface for this? Is it are you delivering messaging systems to the warehouse or what does it look like from the customer's end?
Mattan David 54:09
And so the customer will log into our platform and we'll see where the assets are, they will see where the assets have been before so what's the history they'll see temperature in home? What's What's the temperature of the where the assets are placed? Some customers care about its customers don't care about it. There will still kind of reports analysis on you know, how long a specific sites have those hold the pallet for how long you know, until until it comes back. You know, what's the service levels is you know, they all the full loads of 700 pallets to actually get 700 pallets and all this information on on on the day to day that the will receive not from a technology point of view. The benefit of us and digital is we are not we're not Technology manufacturer. So we are not married to a specific solution, you know, we go to a customer and say, What is the problem what we're trying to fix, and then we tailor the right solution. It could be as you know, we mentioned before QR codes with a, you know, very big limitation of someone needs to take a picture of the QR code up to, you know, to willya tags with antennas and bridges, to sell a lot trackers, you know, with no, with no infrastructure. And it depends on the solution of what the customer wants. But at the end of the day, we are supplying a platform that, you know, whether use different technology, you get the same results, you get information on whether what the assets are, where the leakages are, where the blockages are. And you know, temperature control, this, these are the main we get, we get to that a different different way.
Steve Statler 55:59
So, our paths crossed because you were working with whether or not so, when I think people that are following this podcast can can look and find out of how to Williams if they want to but what about other technologies? Are you working with? RFID? Does RFID have a big presence on? On pallets?
Mattan David 56:18
I think I think so yeah, we do have a large implementation currently, actually, I'm going to, to fly in next week for being implemented on RFID on our pilot as well. So the challenge with RFID has always been the cost of infrastructure buy it is the fixed cost at the beginning, the running costs are really low. But if you go to especially in the supermarket industry, you go to a supermarket, they can have 6070 probably double undocked in America and a big depo of dock levelers, you know, where the where the law is, aka old trucks coming and parking in the back of the truck and getting loaded and unloaded. Now, if you want to track every asset that comes in and out from this dock, levelers or bays, you need 150 gates, right, for every one for every gate for every dog. And even then you will only know on that specific gate, what can be in and out, you will not know where your pallets are in the inside your warehouse, you won't know how they stuck at the back of the warehouse, or in the racking, you will know any of this information. Right? You don't a typical RFID guy, it can be anything from $10,000 to $20,000. So, you know, multiply that by 150 70 250 gates, just one depo. You know, so so your your fix your fixed assets on your capex at the beginning is really big. But where will you go into a warehouse might have three or four gates, that's perfect. And they only want to know what came out and where it went. And when it came back. They don't care about the visibility at the customer's or the other depots. Just under specific devil what came in and out in and out. It's really good, because RFID gives you a very, very reliable information of what goes through the gates if you can, if you got the financial for that, that's great. Now, someone wants to know what assets all inside the warehouse, then we've got the Bluetooth labels like like the weight tags, you know, what's the infrastructure is a lot cheaper, the usage is a lot cheaper. And it's more you know more, you're able to roll it out around the warehouse easily. Now, Bluetooth antennas or bridges, just like little phone with the headphones that I have now, you almost don't know, if I'm standing, you know, five meters from here to the left or five meters to the right. You need another antenna five meters to the left, and I'm closer to you. If I didn't know that. Okay, if I didn't know I'm held. But the Bluetooth will you need a bit more antennas and infrastructure for the Bluetooth? But it's really cheap. Yeah, it's
Steve Statler 59:06
yeah. So with Bluetooth bridges, you can they're like a point of interest. So if you decide you want to know whether an asset is in a given place, then you start dotting these local bridges around and that's how you do the reading. That's very good. What so what was your dissertation on?
Mattan David 59:26
It was about adaptation of IoT in the supermarket supply chain, and in specifically in the UK. And it was exactly what we talked about is
why in a way, we
Mattan David 59:38
managed to have so much success on tracking on pallets. And so much extra benefits by the supermarket's don't use it. I mean, nowadays, I think in the UK, there's only one case of a trial in IoT and it's in a supermarket supply chain where the supermarket is the customer That's, you know, it has been around for for a few years now. So you know what, why is that and it goes back to these gates, you know, this, this Ri and the gatekeepers, the logistics person that only looks around where they are, and don't see the big picture. So that was mostly the dissertation and, and then on top of that it was about some calculation about financial calculation about proving that it is actually viable from a financial point of view. But like any other dissertations, yeah, again, you know, this professional journal, it ends up with more research needs to be done. So, if I wanted to read it, is there any way I can get it other than just sending an email asking for a copy of it from someone? No, I can send me an email. It's not published, because some of the interview is it was confidential interviews. So all the names, or the names are anonymous. There's only initials. I'm not even mentioning the companies there. So I can send it I can send it out to births. Yeah, I can publish a model. Okay, I might be able to publish I never tried.
Steve Statler 1:01:10
All right. Well, I think maybe you should have a look at that. I think you'd be doing everyone a service. But I'm sure you're pretty busy. Anyway. So let's wrap up. Now. It's been a great discussion, but we can't end without our Mr. Beacon tradition, which is to ask you about three favorite songs or three songs that mean something to you? What are that? We've been talking a lot. So can you remember what the three songs were?
Mattan David 1:01:33
I was hoping we're gonna finish it off. It's okay. What songs so? I kind of can you you mentioned you mentioned that question in advance. And it's a really interesting question, because you'd never sit and think about it. So think about it quite a bit. And you know, what is meaningful in my life? Is the family is number one, is it work? Is it a certain event in my life that's happened? So it was quite interesting, outside of this, this interview, it was quite interesting to sit and think about it. And, you know, a bit a bit, you know, tradition, not traditional, but a bit out of this out of out of out there. I thought that about specific Nirvana songs, you know, Smells Like Teen Spirit. Now. It's not so much the lyrics that that that are meaningful to me, but mostly the connotation, you know, because like food, like music, there's a lot of connotation and he can remember where you heard it first time or things like that. It reminds me and that's gonna be I guess this is a podcast for geeks so it's fine. But it reminds me when I used to sit when we're really young boy when I was eight years old, with my five year old sister and we used to play Dungeons and Dragons with my older brother. And we used to put the sound in the background it was before Kurt Cobain killed himself nathless a lot longer time ago. And this we used to have a little banner in the background. And every time I hit him advances them it reminded me this time, just me my brother and my sister sitting in fitting playing Dungeons and Dragons together and it really warms my heart actually, to hear about that. That's awesome. So are you counting that as three or have you gotten please thumbs up? That's it. No, yes, I will say this is one and another one was that I thought about and debated myself is nothing else matter by Metallica and you can see not on the rock person by the by the by the two choices because you know the first song was about a very happy and had a you know, comforting a and nothing else matter reminds me when I moved to the UK you know it was a bit it was hard the location a bit at the beginning you know, it's moving from a country that is very standing it's very open very warm, both both between people and and move to you know, to different country. And it was daunting you know, I thought I know English but I landed in in the Black Country, which you know, if you live in the UK in the UK, you know, that's a different dialect officially. Thought I know English. Don't live in the UK. What is the Black Country there? Okay, so, so the Black Country is if anyone watched Peaky Blinders on the BBC, this is the area that it's been filmed. It's it's around the west side of Birmingham. It's a very industrial cultural place back in World War One World War Two used to make anchors used to make coal mines. It was very, you know, working class back then. I don't actually know why they call it come from soon because we because of the coal mines.
Steve Statler 1:04:58
I'm assuming to
Mattan David 1:05:01
But the culture, and it's generally in the UK for every region got their own accents. And sometimes you can go down the streets and there's a different accent between between different areas. It's a very dominant culture, and I love that culture. But landing into that culture was very different, you know, the dialect is different, the words are different. And I kind of wanted to move to the UK, and maybe a different status was very hard. And the Metallica song was in my head all the time, because I need to focus, I need to understand what they're saying. I like to be good at my job. And I'd say, because this is a good move for me. And I had to just focus on it. And it worked. Excellent. What's the Why did you want to move to the UK? I asked you why you wanted to be in Coventry. But is it different reason for coming to a different reason. So I'm looking to the UK I didn't really want to. And so I was like, I didn't, I didn't want to it just happened. I worked for for a company that gives IT services. I was a system administrator. And one of our customers was with a company with head office in Israel. But they had a branch also in the UK. They had problems with the servers, some issues with computers, I was sent over to fix it. And the company said, Do you want to stay? And I said, No. Well, that sounds great. I was 23. And there was no the whole life in front of me. I had no connections, you know, when our family apart from my own family, obviously, but no kids or anything like that. And I just move that select let's have a go 16 years later, I'm here. So there's not that Coventry would be like Hotel California. Yeah. And then yeah, the first song, a bit similar to the first one. I'm, I'm Jewish in my culture. I'm not a practicing Jew, but I'm Jewish in my culture. And that is, if you're from Israel, there's a lot of holidays. Every holidays involve a lot of food. And a lot, a lot, a lot of family time. So the song is called Hard meal there. And it's it's a Passover song. And Passover is the time that you sit with your family. And it's it's almost as ritual as Christmas for the Christians. It's the biggest holiday and you sit in you eat lots of food again. And it's one of the final songs of the evening. Traditionally, it's well the kids normally fall asleep. But the song is is is ask a lot of questions. And again, it's fair was the first song from the Vanna it reminds me my family and sitting together around that table and seeing that song together and being married and happy, half drunk, or more drunk. And just enjoying time together now. i That song reminds me of that time, of course, I moved to the UK. My whole family's still in a trial. So I miss them a lot. And yeah, that song reminds me that that. That's awesome. Will you send us a pointer to that on YouTube? I'm assuming there's a there's a Yeah. Yeah. We'll include it in the speaking. It's very good. Matana I really enjoyed this. I've learned a lot. You've been incredibly eloquent and helpful. So thanks. Thanks so much for joining us. Thank you for inviting me. It's been a pleasure.
Steve Statler 1:08:31
So that was all podcasts you have been Thank you for listening. I really enjoyed this one. Because, for me, it was just a learning opportunity, tremendous amount of information, technical business, and I think a bit of a crystal ball into the future. This is an area that's really just starting to expand rapidly. So I hope I hope you agree. And once again, appreciate your loyalty and staying to the end. And as a loyal listener, then please do rate us and recommend us and most importantly, come back next time thanks