Sitting around the Christmas table we uncover secrets never mentioned before…
Bread, water and alcohol. The three types of goods that became the building blocks in your career. Am I the only one seeing an analogy to the life of Jesus Christ?
– Not an obvious one, although he was also in the food distribution business. We’re not that spectacular, but it’s definitely worth following his standards.
He set the bar too high?
– He definitely had higher efficiency, although the scale he was working with was much smaller than ours. Christmas was always a great challenge for many of our clients. For several years the end-of-the-year period has been working towards the e-commerce boom we are now seeing in Poland. We could say that NAVIGAL helped Santa Claus switch from the traditional sleigh to a speedy intercontinental lorry…
Where did your paths cross?
– Let’s start with bread, because it has the most symbolic meaning of all the Christmas foods. You could say that we started with bread. In 2006 NAVIGAL – called IT PiAST at the time – was implementing Microsoft’s legendary AX Dynamics in a bakery in Nieporęt. Time was already becoming a very important currency for business. After dividing the products, they would freeze some of them.
So you were also involved in the bread miracle?
– This division of products before freezing turned out to be the start of this client’s problems. Frozen bread has a limited use-by date. The cooler was small, if you put 4 pallet racks inside, you immediately couldn’t access the first one. And the business was accelerating fast, this bakery was servicing dozens of thousands customers, which is more than during the first bread miracle near Kafarnaum. The problem of having to take the pallets out and then put them back in again was paralyzing the bakery’s workflow and that was our greatest challenge.
A miracle happened?
– No, although it did look like that from the client’s point of view. With AX-Dynamics we were able to work out a breakthrough algorithm, which sorted the pallets in a way that set the production line on fire. There was more bread but bread that was also as fresh as with a smaller production scale. The algorithms managed what humans had been struggling with.
This was a breakthrough not just for the bakery but also for us. We realised that by developing automation in the warehouse we are able to create something of a miracle. We were using the knowledge available to anyone on the market but went a step further by creating our own systems. Our starting point was Microsoft Dynamics.
In essence, we became Microsoft’s Certified Partner from the get go and a year later their first Polish partner to receive the Microsoft Pinnacle Award. We were using terminals which have only just emerged and perfecting more lines of code. That’s how NAVIGAL was born.
How is that bakery doing today?
– It generates 1.2 billion euro in sales a year and has 36 bakeries worldwide, employing 6 thousand people. They’re basically a global giant: https://www.lantmannen-unibake.com/en-GB/about/about-us/
My mouth is a little dry, could you pour me one?
– Sadly, I only have water. Water soon became another symbol of our success. We were coming up with solutions in larger and larger warehouses all over Poland, perfecting every single product and each time learning new things. For large food wholesalers, especially during heat waves water turned out to be the key factor. It was because of water that we understood that the essential part of logistics wasn’t the dispatch but the delivery.
Things were getting hot?
– We understood that water can’t sit in just one part of the warehouse. Because regardless of whether the shop is also ordering wine, vodka or crab sticks, water would always be part of each transport. This was the start of a large operation which we ran in warehouses globally under the name ‘Cutting the distance’. We started placing pallets with water in several spots in the warehouse, which meant that the forklifts were always picking up that most essential commodity known to mankind on their way.
That’s how we managed to accelerate the entire circuit of goods. We began to train algorithms in human behaviour. In AutoPartner warehouses, where we implemented our system, the average distance covered by an employee decreased from 16 to 12 km per day and their efficiency increased by 30%. Our WMS system became a new engine of the entire distribution, hence we named it SmartWMS. Today it’s our trademark solution.
Did clients immediately switch to it?
– Not all of them and not straight away. Ultimately they understood that this was the only way forward. And this is where we get to alcohol…
– …while running a business that at the time was only just gaining advantage on the market and today operates on several continents and is listed on the Warsaw Stock Exchange, we were still trying to fit good old Microsoft AX to the needs of dynamically expanding warehouses. They were methyl alcohol, used for industrial purposes. Aside from that they had many other incredibly useful prefabricates. The sales were going great but even when updated every day, the system would get stuck when financial documents had to be generated, such as sales and reports, invoices and fiscal files.
The company was gearing up for a stock exchange debut at the time. And when auditors knocked on their door it turned out that they were unable to present even the most basic accounts. AX wasn’t catching up with their growth. The management was facing an extremely difficult situation.
They reached for the booze?
– No. They bet everything on one horse and trusted us 100%. And we placed our bets on our very own SmartWMS. And that was one of the most important decisions, not just for that company, which is now a European giant. First and foremost it was a milestone for NAVIGAL. The new system could manage not only the sharp growth in the warehouses but was also communicating with the entire document workflow.
It turned out that we were able to immediately integrate with external accounting, HR and ERP systems. It wasn’t long until we had more businesses coming to us and asking for similar solutions. Today we develop our systems for clients in Chile, Kanada, Asia and Western Europe. In the meantime global logistics changed entirely and goods circulate the globe even faster.
Today we call it the e-commerce revolution. It’s how we organized online sales for dozens of companies in Poland and abroad. People are consuming more and warehouses are proliferating like bread during the miracle near Kafarnaum. But we think the real revolution is still ahead of us.
Algorithms and robots will replace humans in warehouses and logistics in general?
– Human efficiency is limited. Machines can run almost at light speed. It would be crazy not to be part of this shift. Those who want their businesses to be future-proof need to be prepared for it. We are.
What else is there to wish for?
– We are usually the ones to make wishes come true and it’s during Christmas time that we truly verify our capabilities. We haven’t failed once. So I simply would like to wish a very Merry Christmas to everyone at NAVIGAL and to all our clients.
Marek Osika, chemist by education, warehousing systems consultant by profession. Participated in key implementations by NAVIGAL since 2006. Currently Head of the Consulting Team.
Interviewer: Tomasz Lipko, author of the science fiction book on how artificial intelligence sets out to dominate the human civilisation: https://www.znak.com.pl/ksiazka/cisza-lipko-tomasz-205268