Using Data And AI To Power The Brain And The Brawn Of The Warehouse

For one of his first assignments early in his consulting career, Alex Ramirez was given a task in warehouse operations, and the client was a retailer called Walmart.

From this auspicious beginning, Ramirez — now CEO of warehouse management platform CognitOps — has been working on and innovating in an essential-but-underappreciated part of eCommerce, bringing data and artificial intelligence (AI) into the infrastructure and logistics space.

“I had a warehouse operations company before this one, and we set out to explore the pain points that we felt as software technologists in the warehouse,” Ramirez told Karen Webster. “And our previous company was another silo inside of a warehouse. So, think of warehouse management in which you have a lot of equipment and islands of automation. We were one of those islands. We were running software, but we were certainly an island.”

“When we look back at our clients, they were big companies that should have had sophisticated operations, but what we found was that they were constantly struggling, balancing all of those different islands of either software or hardware,” he added. “And we felt that we were guilty in really exacerbating the pain that these individuals felt.”

CognitOps is part of Ramirez’s redemption from that experience. The best way to explain what his current company does is to look at its two products: Align and Execute.

Both are based on data and AI and make up what the company terms “warehouse management.” Align uses data from warehouse operations to sense the condition of a company’s warehouse in real time and automate labor, inventory, demand and equipment decisions. Decisions that it helps with include the amount of staff needed, the placement and amount of inventory and overseeing order replenishment.

But while Align is what Ramirez calls the “brain” of warehouse management, Execute is the “engine.” The product allows robotics to work within a warehouse’s system and controls its routing systems. In short, Execute automates the warehouse.

“Think of Execute as a Ferrari engine being put on the chassis of a Pinto, which is the warehouse, but only accelerates to the point where everything before it is balanced,” Ramirez said. “Warehouse execution software to date has been one of these systems that has failed because it gets plugged in, and it just automates what it wants to automate without any consideration of what’s around it. So, if you make a bad decision, you’re trying to make magic out of that bad decision.”

He added that a company’s downstream constraints can also choke a firm’s ability to process orders. But Ramirez said that by “starting with the brain first and then injecting a system that will do the work in concert and in context with everything that’s adjacent to it, I think it has to be the next wave warehouse execution software. And that’s what we’re building.”

Of course, that’s how things should work in theory. In practice, CognitOps has begun by simply taking manual warehouse procedures and automating them.

For example, one of the firm’s biggest eCommerce clients had been assigning staffing using what Ramirez calls “tribal knowledge” — Excel spreadsheets with static inputs, plus monthly sales forecasts. By contrast, CognitOps’ Align solution made staffing recommendations using historical and predictive work rates. The staffing allocation was also done using siloed views of each department’s current work volumes.

Ramirez said that’s better than just relying on robotics.

“Everybody loves robots and the notion of putting more capital equipment inside the warehouse, but the window is gone because these capital projects have long lead times and we’re the middle of a pandemic,” he said.

Instead, Ramirez said that question is: “How do you adapt this old legacy system — the entire network of buildings — in your supply chain? How do you introduce resiliency without having to spend a lot of money or really have people on site deploying these projects?”

“That’s where we step in,” he said. “We can plug into data and really start driving a lot of these insights to ultimately lower cost per unit, which is what everybody wants.”

The company’s innovation and data-centric approach was rewarded last week with a $3 million round of seed funding. CognitOps plans to use the money to expand new products and accelerate its go-to-market efforts in a bid to take advantage of strong demand from the pandemic and the business world’s related shift to Digital 3.0.

The COVID-19 outbreak has exploded interest in two use-cases for CognitOps. The first involves contact tracing for the coronavirus. If a worker comes down with COVID-19 and has to quarantine, CognitOps’ platform maintains a history of the person’s travels and touches within a warehouse and can see who else might have been exposed.

The second use-case is, of course, eCommerce.

“All of a sudden, you’re finding yourself taking a facility that was designed back in the ’80s that was all about store replenishment, and now it has to be 100 percent eCommerce,” Ramirez said. “We can come in and say, ‘Look, you have capacity, you have this order pool that’s very kinetic and changing. There are certain things that you can do to adapt without a single … change to your workflow to pump out as much as you can.’”

“There’s always a limit,” he admitted. “But being able to tap into the space between what the building was designed for [and] what they need right now is the sweet spot for CognitOps.”