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April 18, 2024
April 18, 2024
Sean Henry’s fascination with the logistics of supply and demand began at age eight when he started selling products on eBay. His interest along with a passion to transform the status quo culminated in his co-founding of Stord, a cloud supply chain company, where he is also CEO.
Before studying business at Georgia Tech with a concentration on operations and supply chain management, Sean amassed valuable real-world experience working in manufacturing facilities around the world. “I was working in the very physical world of manufacturing and logistics,” he said. “And I was experiencing the pain points first-hand. I was looking for the intersection of technology and the physical world, and logistics and supply chain felt like they were ripe for disruption.”
Sean co-founded Stord in 2015 with Jacob Boudreau, and the company now employs 600+ people and is valued at over $1.1 billion. Stord provides a unified cloud supply chain platform which fully integrates physical logistics, including warehousing, freight and fulfillment, with cloud software.
Around the world, supply chain issues continue to dominate news cycles, as the impact of the COVID-19 pandemic on workforces and on supply and demand has revealed the brittleness and lack of agility of many logistics operations.
We sat down recently with Sean to discuss the current, somewhat parlous, state of the global supply chain and his expectations for the future. What follows is an edited version of our discussion:
How did you first become interested in supply chain operations and transformation?
I homeschooled online for second grade and so had unique access to a computer. I started selling products on eBay’s early e-commerce platform. I had to fulfill all the orders myself and it was very frustrating. Early in high school, I started a small e-commerce website selling specialty automotive parts and then launched a few failed apps.
The summer before my freshman year at Georgia Tech, I went to work for Huehoco, a manufacturing company in Germany, one of the companies from which I’d bought parts. I had a really interesting experience there, working in a factory and essentially doing lean management, shadowing workers to find out how to make them more efficient. I saw how making the smallest changes, like cutting a few steps out and batching different processes together, could turn into tens of thousands of dollars of cost savings.
I then started digging into how to reduce inventory levels in order to free up working capital. At that time, Huehoco had 21 factories in 19 different countries, complemented by 20 warehouses which were all run by different third-party logistics companies operating on very disparate platforms. Some warehouses sent us data from their local warehouse management system, others sent us spreadsheets that we had to then clean and audit, and many of them phoned and emailed us all of their orders.
The two roadblocks we kept running into were the massive fragmentation of logistics and the separation between physical and software logistics, which we needed to be inextricable from each other. When you open a new warehouse, it should already be part of your order management system rather than having to rebuild your order management logic and then integrate it to the new facility.
<split-lines>"I saw how making the smallest changes... could turn into tens of thousands of dollars of cost savings."<split-lines>
What kind of year do you expect 2022 to be for supply chain operations?
I don’t see a lot of the current problems going away anytime soon. I think it will easily be 2023 before many of the port issues around clearing out the backlog are solved. As a result, brands will continue to be largely displaced in their supply chains in 2022. They will grab whatever capacity they can, especially by hoarding warehouse space. They will keep scrambling to try to avoid out-of-stocks, to sell across more channels and to meet customers in more mediums.
With brands mostly selling online, they will continue to compete based on their logistics, so all the way from sourcing and manufacturing through to delivery. What makes a consumer keep coming back to a brand is how fast they can get an item to you and how much you trust them. Most brands are very far away from actually solving these issues.
Today, if we went to buy a product from 20 different websites, all 20 will probably show up on our doorsteps on different days and our customer experience and visibility into each brand’s supply chain will be different. With Amazon, it's the same experience, no matter what we order. In the next few years, we’ll see a lot more innovation happen as brands strive to provide consistent logistics and e-commerce experiences for all customers.
"What makes a consumer keep coming back to a brand is how fast they can get an item to you and how much you trust them."
Where are we in the digital transformation of supply chain and logistics? Which other industry’s evolution provides a good model to follow?
Many brands are still trying to manage supply chains on their own and piece together disparate tech and logistics stacks. The more advanced early adopters are already centralizing and partnering with full-stack providers. On the overall maturity curve, the supply chain is probably still in its early adolescence.
I would look to emulate the cloud computing industry. At one point, every brand dealt with its own hosting, data storage and computing needs until they realized that they’d never be the best at scaling servers themselves and so found someone else with that core competency. In the supply chain, we’re probably where the cloud computing industry was in 2011 so we have a few more years to go before a full transformation.
<split-lines>"On the overall maturity curve, the supply chain is probably still in its early adolescence."<split-lines>
Consumers today are much more aware of the supply chain due to ongoing media coverage during the pandemic. Is that a good thing, and if so, how is it helpful?
Yes, it is definitely more prevalent than ever; there were nearly 2.2 million tweets mentioning ‘supply chain’ in Q4 of 2021, according to The Wall Street Journal. I think it's a good thing. People are beginning to understand the interconnectedness of all these systems and networks. Consumers are starting to realize the implications of ‘I want it right now’ and what that behavior does to all these systems and networks, and they’re understanding e-commerce competition. Ultimately, this awareness is going to help the customer tell brands what they want versus brands trying to think for them.
<split-lines>"Consumers are starting to realize the implications of ‘I want it right now’ and what that behavior does to all these systems and networks."<split-lines>
What do you think Amazon, the logistics behemoth, does well versus not-so well?
Amazon is scaling infrastructure well and keeping their overall unit costs pretty stable. They’re super proactive and are one of the most advanced organizations at planning. They're building capacity better than most. They are dynamic and willing to make rapid changes pretty quickly, for instance, when COVID-19 broke out and they decided to ship limited SKUs. A lot of brands would take many quarters to make those types of decisions.
I applaud Amazon for building such an impressive logistics and courier network, but the tech behemoth certainly puts a strain on other logistics providers competing for warehousing space, racking and talent. It’s a hard balance because while having an Amazon in the market can be detrimental to other actors in the space who don't have their size and scale, it’s also usually better for consumers.
Which emerging technologies will play key roles in supply chain transformation?
A lot of people are pushing blockchain as a potential way to track inventory through the supply chain to drive more trust, less fraud and less counterfeit goods.
There's going to be a really huge push towards automation and robotics over the next few years in logistics operations. At Stord, we are partnering with Locus Robotics to use its autonomous mobile robots (AMRs) to help our warehouses and human staff double fulfillment productivity.
As a way to augment physical labor—potentially due to shortages, inefficiencies, etc.—the number-one thing to look at is robotics. It costs tens of millions of dollars to outfit a facility with world-class automation or hundreds of thousands of dollars for a bit of automation. The biggest brands can make those investments, but smaller ones will be challenged to figure out the ROI model and will have logistics providers do it for them instead.
