Advance Storage Products: John Krummell

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John Krummell, President of Advance Storage Products, discusses the industry’s journey towards increased automation– and how COVID has affected that.

 

 

Danny:

Welcome today’s Executive Series interview on IndustrialSage. I’m joined by John Krummell, who is the president of Advance Storage Solutions. John, thank you so much for joining me today on IndustrialSage.

John:

Thank you.

Danny:

For those who are unfamiliar with us, tell me a little bit about your company, Advanced Storage Solutions.

John:

Yeah, we’re a material handling system supplier, so our main business is we build pallet racks and push rack systems for warehouses selling into the grocery industry. And then we have a new business that’s growing very very rapidly right now in automation, we’re building fully automated storage and retrieval systems for warehouses, focused really around a unique product we built called the Rack Rover that we’re rolling that out right now.

Danny:

Excellent, so now tell me a little about your story. How did you get your business started? Is it a family business? What’s the background?

John:

Well, I started my career working in Anderson Consulting; I was in computer and systems consulting work, and I was moving from them going to graduate school, and my dad called and said, “You want to come and help me out for the summer while I have this big project? We sold one business, and we’re growing a new business.” And so I went to work with my dad for three months 30 years ago. So when I came into the business, he had sold a prior business; we were starting up into the rack push rack business, and I think we had about five or six employees in a 1500 square foot office up in Carson, California. And now we’ve grown it to about 300 employees and two factories, and the new automation business is growing as well. So it really was just, I had never planned to work with a family business, but we got in and I enjoyed it. I had never planned to work in the pallet rack business, but once we got into it, we learned it’s a fun business, a lot to learn, it’s always changing, and it’s been a great opportunity to grow and to build a nice organization.

Danny:

So how long did your dad have the business before you jumped in?

John:

Well, he started the business in 1958, so my dad was really sort of an entrepreneurial guy, and he had at least five or six different businesses. I mean, at one point he made furniture, he had a moving business, he had an electronic workbench business, he was doing all these different things. And I joined in 1989, and at that point, when I came in, I’m not that creative, and so we really just focused in. And we started out in the push rack business. At that point, it was a growing segment in the rack industry. And so we had some unique designs, and then we went and we got some patents on the deeper systems, and started to grow that business. And initially we started out not in manufacturing, we tried just being an engineering business with a contract of manufacturing.

And then in the mid, let’s see, I have to go back to the time, but the mid-90’s we realized we really have to go back into manufacturing. And so ’cause the business was growing and the subcontractors couldn’t keep up with demand. So we went and we opened up our first factory in Rockmart, Georgia. At that time we were in Carson, California and we had a factory in Georgia. And really it was just a logistics decision that most of the material handling markets on the east coast, and so we wanted to put the manufacturing closer to the markets. And in Georgia, we found a facility that met our needs for the time, and so we opened up out there, and I got a lot of frequent flyer miles. And then we ran that facility for about six, seven years, and outgrew it very quickly, and then in 2004, we moved into our current plant in Cedartown and went from a 20 to 100,000 square foot facility, and really went from being just a push rack only supplier to being a full rack system supplier. In about three years, we almost trebled the size of the business. It was a huge risk and it was pretty pretty hairy at that time. But by the time we came out of it, we had really established ourselves at a very very nice place in the structural rack market.

I’m a pragmatic optimist that, it’s like well, if other people can do it, we can do it. And so we kind of looked at the rack business and said, well criminy, we’re making push rack and doing pretty well at it. And the rack market is a much larger market so we can get into it, and of course we didn’t realize how difficult it was going to be and how competitive, but it took us a couple of years, and then we got ourselves well established. And at this point, we’re definitely one of the larger players in the industry. So same thing in Salt Lake; it was really time to go national. We’re working with all the major Wal-Marts of the world, and they want one source, and so we really felt we needed to be able to service the whole country. So that’s really what our throw is to open up the Salt Lake facility.

Danny:

Yeah, that makes sense. Do you have some early memories from your childhood? Maybe of your dad working and doing this, does any of these stand out?

John:

Well you know what, my dad was a workaholic, and so we didn’t see a lot of dad growing up. But we were always in the plans, so I worked summers in the factories, and realized I didn’t want to be a factory worker at that time. And I was always doing something around the business, so I don’t think I really ever said I wanted to be an entrepreneur. And I’m more of a let’s build something, and then let’s build out, versus, oh my gosh, I’ve got this idea, let’s go out and do something. And I’m kind of a problem solver, and so as we grew up, it was more, boy, we want to keep growing the business, that’s interesting, I don’t have a lot of desire just to stay steady. What do you have to do to grow a business? And then that’s when you start taking kind of the entrepreneurial risks. But for me, it’s much more calculated than, oh my gosh, I’ve got this idea, we’ve got to just do that. And I’m definitely the person in the organization who’s going, yeah, we can do that, yeah, we’ll figure it out. No, we can’t do it. No it’s okay, we’ll take some risks, and they find we do the first hype of this project whatever it is, the first customer, and then it doesn’t go so great the first time, but then we get better at it, and then pretty soon it becomes part of the routine, so I’m definitely the one who’s always trying to push the organization out of the comfort zone, and go onto the new whatever sort of new thing. I don’t like a lot of routines, so I get kind of bored in the day-to-day. So I’m always kind of trying to be out six months, a year in front of the business, and say, what can we do that’s a little different that’s cool, it’s fun, it’s interesting?

Danny:

Yeah, I’m the same way. So you know, besides your dad, or maybe him, that may be the answer, but is there anyone that, throughout your career, has had a really big impact? Or maybe it’s a moment that has really really impacted your career, what is that?

John:

I’ve been very very fortunate that I’ve had a lot of really good advisors and help throughout my career. So we’ve always had an advisory board in place. And at different points, different members on the advisory board have helped me at kind of different, ’cause there are a lot of step functions in growing a business, and in each step function, I kind of tried to reach out finding different people, so I’ve been very active in the Young Presidents Organization, and that’s been a phenomenal resource for me, and say the Lean journey, all the resources I’ve gotten of taking us on the Lean journey have almost come out of YPO. And my dad is just the guy who, he was a fabulous engineer, and the guy in the first going into business, I mean, he knew how to run a business, and I really learned the basics of running a business from my dad. Five, six years ago, we had one of our board members, a fellow named Dan Wilson had been president at the Interlake, and he had retired, and I called him up and said, “Hey Dad, want to be on our board?” He’s like, yeah. Dan was a great mentor, and I think he kind of helped at this transition where we’re at right now where we’re going from being a mid-size to a larger size business. And for me, having transitioned on the building management team and bringing in a much stronger set of leaders and not having everything run through me the way it used to. So I think along the way there’ve been different people that have kind of helped push, and I’m always sort of trying to reach out and get new coaching, and how do we go and sort of move to the next level of the organization?

Danny:

Yeah, so you mentioned that you took a really big risk on opening the second plant.

John:

The first plant was a big risk. Really in the Cedartown plant we really bet the business ’cause we had gone from, in three years, we tripled the size of the business, and we were running out of cash, the plant managers couldn’t handle the volume, we didn’t really know how to make wrath, we weren’t as smart as we thought we were, and it was really really harrowing. I mean, it was hard. At that time, too, my dad– talk about having some, he was in his early 70’s and put his entire network at risk for that, too. At that point in my career, I wouldn’t have let my son make that decision I don’t think. So it was a tough tough time going through that. And truthfully, I left the business for three years after that. Just kind of my dad and I kind of got at lager heads and so I went off and worked in another business for a few years, and fortunately we had good, strong, professional management for the business and the business ran very well in my absence.

Danny:

Yeah, that doesn’t sound fun at all. It sounds actually really stressful and very challenging. So what would you say that would be one of the big milestones of your career? Or what are these moments of success that really stands out for you?

John:

Well, I’ll tell you one. A very good customer of ours, H-E-B Grocery, we’ve worked with them, they’re a large Texas grocery firm we’ve worked with for almost 30 years. And we just completed a 15 million pound project for them. And this project went in, it took I think 450 truckloads of material, installing over seven months, two crews, and we were late by three days. To me, that is just the cumulation of 30 years of work that we can be running that major project shipping out of two factories, and it was routine. And also the rest of our business is running along regularly, too. We’re still shipping to hundreds of other customers at the same time. And then it just finished up a few months ago, we finished so early because they had put contingency in assuming the building would be open late.

When the COVID crisis opened, they were able to go on and accelerate the opening of the facility by three months, and in like a week, they were able to ship two or three hundred truckloads of material a day out of this facility. So just our ability to be such a key part, and I was figuring, the facility, it’s 150,000 pallet positions, I mean it’s massive. And just the ability of us to handle that very much in the routine, without me having to really be personally involved in it, I just thought was fabulous. So that kind of, to me, that’s sort of the pinnacle almost at this point in the rack business of 30 years of work, and to see that the team is handling it, and that we’ve got a super loyal customer, we’ve got a team that just knows what to do, and it’s routine, and that to me is great. Even through the crisis, I mean, we’re kind of running business as usual. So for the customers that are still able to keep their projects going, we’re still shipping and installing, and producing for them. And it’s very much, we’re a relationship-focused business, so we’re typically not the low bid. We’re typically, we’ve done the work on the front end, we’ve worked with the customer, we’re very price competitive, but we get the work because they’re saying, “We really want to work with Advance for X, X, and X reason.” And that’s the part, to me, that I enjoy and that just seeing that we’re building just a good, reliable, trustworthy type of business.

Danny:

Yeah, that’s huge. So you mentioned that the coronavirus really isn’t impacting your company as much, but how are you seeing it impacting your customers?

John:

I think from us, we’re shipping into warehouses, so we have some projects where we’re in operating warehouses, and for example, we’re taking a row of rack out and putting another row of rack in. Those customers are saying, “Don’t stop,” because all their plans are geared around this dance that we’re doing with them, and if we interrupt the plans, it’ll throw the warehouse into chaos. And so those customers are literally, please don’t stop, we have to keep running. I think for the projects where they’re in process, they very much want to finish them up because again, they just don’t want the interruption. Warehouses are scheduled to come online at a certain point, but they don’t want to change those schedules. We are seeing some projects get pushed out now. So we aren’t seeing cancellations, but they’re saying, well, you know, let’s start it in the fall rather than right now. We’re seeing some of that, and we are seeing some decisions pushed out, where they’re saying, nah, we still need to do the project, but let’s wait a couple of weeks until we kind of know how things are coming out, and CFOs are starting to exert their control saying, no, we need to preserve cash. So we are starting to see some decisions deferred, and it’s hard to say eight weeks out what the world’s going to look like. We have a very strong back log, so fortunately I think we’re in pretty good shape, and I think our core industry is going to be, if anything, we’ll see growth because people are eating in more. But I think there’s still a lot of uncertainty out there. So we’re just going to have to keep, we’ll know a lot more I think in eight weeks when they start to ease the restrictions. And then I think companies kind of see this is what the post COVID world looks like.

Danny:

So yeah, what do you think will become as a result of the virus? What have you guys learned from this whole situation so far?

John:

I think that in the offices, it’s going to be interesting to see how we’ve been working remote, and are we going to go to more of a blended office remote set up? That’s going to be kind of interesting to see as we go forward what people want to do. We’ve traditionally had a lot of remote employees, but we were just about to do an expansion on our office in California, now I’m thinking, boy, maybe if we just have more people kind of work from home part time, do we really need to do that. So I think there’s going to be a change on that. And the social distancing, I think that’s going to go on for a while. And so my guess is that we’ll see people wearing masks in the factories for quite a while and job sites, we’re going to see the masks everywhere for quite a while as people kind of get comfortable with it. But long-term, it will get past it, and there have been a lot of things where the end of the world has been predicted, and it typically doesn’t end. So I think we’ll see some short-term impacts, and I think that you look at the use of Zoom and like I just tested this afternoon with my sales manager, yeah, I can just click on the little button and get a video call with them on Teams. Boy, that’s cool. Things like that where there’s capabilities that I think a lot of the younger companies are using, and an older company like us isn’t as facile with, and we’re trying to sort of understand some of these technologies, and how we can better use them.

Danny:

Yeah, those are some great observations. So what are some of the really big industry challenges that you’ve seen that have been around maybe before COVID or maybe not?

John:

People. It’s just, the people challenge is going to continue to be one. We’re a domestic manufacturing business, and we need people that are skilled welders, and machine operators, and things like that, and it’s challenging to get people who want to do that kind of work. And then it’s challenging, I mean, in our automation business, we need programmers and controls engineers, and design engineers and project managers. And then for us, we’re going into these sites, we’re putting these automated facilities in all over the country. we’ve got one going into Canada, and getting engineers who have the ability to go and be at that job site and commission a system is a challenge with the labor pool the way it is. And now with the COVID, just physically getting there, we were just having a big discussion about whether to fly a project manager who lives in Atlanta to Washington to a job site to start out a project, and is that safe or not?

So I think the people are going to really continue to be the big challenges that we have. In the field installation for the rack systems for us, getting enough guys who can go to a job site and stay on the ramp And as they start to sort of limit the immigrant population and those sorts of things, it’s tougher to get the folks who are willing and able to do that kind of physical work that still needs to be done. So I think the biggest challenges here for us are going to be, again, as our businesses are growing, is getting the right skillset of people into the businesses that we need. I do think, right now, the warehousing market is still hot, but in 2009 the industry collapsed and our business went down 40, 50% in a year. And if that happens in our market, then that’s a huge challenge too because then we’re getting into how do you get the business side to survive in that kind of a downturn? A lot of people are really facing that in other industries, not so much in our niche, but in other industries are absolutely facing it right now.

And I looked at booking a flight on Delta the other day, and I think that there were three seats reserved on the plane. So yeah, I think that there’s going to be, you know, there’s going to be some pretty seismic changes, and the certain businesses are going to, I mean, they just dropped off the face of the earth. Our restaurants supply customers, their business is off 50, 60%. So the guys who are selling directly doing food service are getting crushed right now. And then you think about it, say with the restaurant segment, who’s going to want to go to a restaurant in three months? Folks won’t even leave the house right now, even if there’s really not any appreciable risk, and so I think there’s going to be a tail on this one on a lot of industries.

Danny:

Yeah, the future’s definitely going to be very interesting. So as far as my last question goes, how are you guys really standing out and just staying ahead of the game, ahead of the curve from your peers?

John:

Well I think in our business, two different businesses. So in the core rack business, the designs are relatively standardized at this point, and so really the competitive advantage is operational excellence, and it’s just running the business in a more lean, organized, systematic manner. It’s the investment in the software systems, and the investment in the design systems, the investment in the factories. And then how do we tie everything together so that we just do the operational side of the business with less effort and better results? So it’s almost the Toyota model of business where it’s just, they’re an operationally excellent business, their products historically haven’t tried to compete because of product differentiation, it’s just quality, and service, and supply. And that’s really kind of where I think we’re focused on the core business, but the growth part of course is the automation side, and we’ve been investing for seven years now in developing the Rover product, and really what we’re looking to do is that if we do see a slow down in the core business that we think we can fill that in with the automation business growing because the world is automating. I mean, virtually all the major companies are saying that they have an automation initiative of some sort or another. And then we made the decision to develop the technology in house. And so we’re not just buying something and reselling it; we developed the Rover, we developed all the software, we built the capabilities in the team so that really it’s an advanced product that we’re selling, and that really I think we’re just starting to see the fruition of the investment on that come to. And that’s actually growing up as a whole subsidiary.

Danny:

Yeah, automation was a huge push that we saw in MODEX this year. Have you seen other companies making that same push as well?

John:

Yeah, yeah, well, and I think it’s just that’s the huge push right now is E-commerce because they just can’t physically pick the products in the warehouses to get that thing to you in a day the way Amazon is doing. And the number of robots that Amazon’s put, I don’t even remember the count, but it’s staggering of what they’ve done with the Kiva business. And then all the goods to man, I mean, the grocery guys, they’re all looking at some sort of a goods to man type automation to put out in the field so that when you drive up, your grocery bag can be filled with the stuff you want. It’s common; there’s just…

Danny:

Oh, yeah.

John:

I think I’m really glad we’ve got the product at the point where it’s really ready to go and start catching that wave.

Danny:

John, well listen, this has really been awesome, and I really appreciate the time that you spent with me here today on IndustrialSage. For those who’d love to learn more about you, what’s the best way of checking you guys out?

John:

Well, I think go to our website advancedstorage.com and that you can learn all about our rack systems, you can learn about our automation, if you need to get in touch with us, there’s plenty of ways to get in touch with us through the website. Or send me an email, and I’ll be glad to talk to anybody who wants to reach out to me directly. It’s John Krummell, thank you.

Danny:

Excellent, well, John, thank you again so much. This was really awesome. All right, well, there you have it; another IndustrialSage Executive Series with John Krummell who is the president of Advanced Storage Solutions. Hey, thank you so much for listening or watching. If you are listening on any of the podcast stations, we’d love your review. If you are not on our email list, highly highly highly recommend that you go to industrialsage.com, get on the list because you’re missing out on a lot of great content that we’re sending out every single week, like manufacturing news, obviously this executive series, and a lot of other things coming down the pipe. So that’s all I got for you today. Thank you so much for watching or listening. I’ll be back next week with another episode of IndustrialSage.

 

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