[01:00:04.570] Well, hi, Jonathan. How are you?

[01:00:06.430] I’m great, Raphael. How are you? It’s great to finally get together.

[01:00:10.450] Yeah, it’s good.

[01:00:10.630] We’ve been looking forward to this.

[01:00:12.240] Yeah. Well, thank you for taking the time to talk to me today. We just wanted to discuss a few things, all things logistics, regarding what we do here at LIDD in terms of supplying or helping our customers with their supply chain questions and what you guys at North American Steel in terms of your racking solutions and the services you provide. Maybe if you want to go ahead and introduce yourself, Jonathan.

[01:00:39.840] Sure. My name is Jonathan Hirst. As you know, I’m the Vice President General Manager of North American Storage, which is the Western manufacturing arm of the North American Steel Group. As a Pallet racking manufacturer for many, many years prior to us being in the building code and whatnot, it was almost like a commodity I have something on the floor that I need in the air. So we designed something to put it in the air. Now, with every year, the integration of the whole supply chain and the role that our products play in that, in consideration of the whole spectrum of services of that supply chain beginning to end, is becoming very complicated. It’s becoming very dynamic with the introduction of AI. It’s really interesting Justin, you got to bounce some ideas off you because you have such great visibility of all aspects of the supply chain that we’re trying to fit into.

[01:01:38.530] My name is Raphael Laiter-Cortésia. I’m a director here at Lidl Consultants. Lidl is a supply chain consulting firm specialized in the infrastructure of the supply chain. At a very high level, what that means is that we help our clients with decisions regarding their digital and physical infrastructure to get going. I had a few questions for you, Jonathan, so I’ll go ahead with my first question. Sure. How early should clients engage a racking vendor in their racking projects or their construction projects?

[01:02:07.890] The sooner the better is my answer. Up until the point when clients are still considering properties when they’re still considering greenfield locations and distribution routes and whatnot. We like to get it at the very ground level from the structural engineering side to make sure the soil is good, the seismic activity is as considered when we’re building the racking. We want to make sure that if it’s an existing building, that they can have an efficient layout. Essentially, they’re either building or buying a warehouse to store their pallets. Our job as a service provider is to say, are you getting and will you get the maximum amount of storage capacity and density in that facility? And is it provide a growth opportunity for you? Can you go higher? Can Can you introduce automation down the road? Is it flexible enough for your growth needs? So the earlier, the better. We’ve certainly been called at the last minute, but our highest success rates are when clients are calling over a coffee to say, This is what I’m thinking of. From those conversations, great things happen.

[01:03:21.210] Okay. Yeah, that makes a lot of sense. I think it’s similar for us as well. I’ve had examples of clients reaching out to us, but the project was at a point where we couldn’t bring a lot of values, for example, or limited amount of value, I could say, because we run our analysis and we tell them, Well, we think you need a 200,000-square-feet facility, but they’re already They have started construction and permitting for a 100,000-square-feet facility. At that point, it’s a bit late. So yeah, you can try to mitigate the problems and the risks. But it’s similar on our end. The earlier, the better. It can only lead to better outcomes.

[01:04:00.060] What does that process look like for you? If Lid is called in to perform maybe an operational audit, say I’m a client and I’m thinking of moving or maybe automation is right for me and I call you, what does that process for you look like when you come to visit?

[01:04:19.110] Lid does for a client a vast array of services, but sometimes we help our client give a direction to their project. Sometimes our clients know something is how it should, but they cannot really figure out why. In these operational audits, what Lid will do is we’ll go on site and we’ll assess our client’s current operation in terms of processes, of technology, and in terms of equipment as well. We’ll try to identify gaps or where they might be falling short in any of these areas. Really, the first element is assess and identify gaps. Once we did that, we have a much better understanding of their operation, the constraints within which they operate. Then we can suggest improvements or recommend solutions for them. Really, these can be quick wins. Add a packing line, add a production line, or try to automate this process, or it could be more involved in the sense that, Well, we think you should move. What you need is a new facility. Really, the recommendations can vary greatly depending on what we see on site. But that’s usually how we go about it. And once again, anything that relates to equipment, operations, or technologies, that’s where we really assess our client’s operation and ultimately suggest recommendations.

[01:05:43.040] I think you should come and visit me. That sounds amazing. That sounds amazing. It’s interesting. It’s such an important service because when a client asks us, what are the principles that we have to consider when building it? A lot of it is feeding off of that information that you guys are uncovering. What equipment are you using? And what type of equipment do you anticipate using? What’s your workflow like? What’s your workforce? What’s your accessibility to people in the facility? And we then work on those layouts, and we make sure that the systems that we provide are accessible, they’re protected appropriately, they’re positioned appropriately to to work with whatever pieces of material handling equipment they’re using, or again, conveyors and automation. And you know what? That’s not necessarily inherently known to a lot of our clients. Clients are experts in their business. They’re not experts in emerging conveyor trends and wireless connectivity for warehouse management systems. It’s great that companies like Lid and us can collaborate with a client and try and get them into a direction that’s going to see them grow.

[01:07:00.660] Ultimately, when our clients are out of capacity, many options can happen. Either you expand, you move to a new facility, but sometimes the best option, the best course of action is actually to densify storage within your current footprint. That’s when a collaboration between a company like Lid and you guys at North American Storage becomes relevant because if you can limit important investment, let’s say, in building out a new facility expanding your current facility, well, there’s a lot of value in there. It’s really worth when these problems are identified to make a proper assessment of the alternatives that are out there to find the most cost-effective solution, right?

[01:07:46.760] Yeah. Optimizing your existing facility. I mean, even if it’s just an interim step while you wait market trends or whatever, there’s nothing wrong with getting more out of what you’ve got while while you’re getting ready to move to the next level. Are you hearing as much as we are about AI and how it’s now becoming more popular, more prolific in warehouse management? I mean, we’re We certainly look at it from the manufacturing side. What are you hearing? Where are you seeing AI making an appearance in your industry?

[01:08:25.300] Well, if we talk specifically about warehouse management systems, I would say that it’s still in the periphery of it. We hear more and more about it, definitely. But a lot of our clients are not necessarily up to date on the digital side of things. They don’t have proper ERP systems, they don’t have proper WMSS or even clean master data. Talking about AI without having this foundation, this solid digital foundation, can be tricky. But with the easier access now and lower cost of implementing such systems. Now what we see more and more is that, yes, the discussion is growing towards the AI, and there are relevant applications in warehousing within the four walls. If you think about visual recognition for quality insurance. You can have a label on your case that’s perfectly scannable, but the case is damaged elsewhere. Everything in terms of visual recognition, there are a lot of applications that we see there or even inventory tracking on that side of things. Even outside, let’s say, the WMS function of the warehouse or the four wall of the warehouse, just to have better predictive analytics and understand consumer behaviors, We also see a lot of applications on that field.

[01:09:49.660] To understand, let’s say, consumer trends to ultimately have better buying practices, better marketing, know when to put an item in promotion and whatnot. Those are a lot of areas where we see actually more and more discussion about AI. But I think for us to see it more and more, I think there is a step first of companies getting their digital infrastructure into place.

[01:10:15.470] I would agree. We’re not seeing AI at the forefront at this point, but it’s coming in around the edges, and it’s coming hand in hand with a lot of automation. Amrs and AGVs and these types of things. We’ve done warehouses that are lights out. There’s people on the dock and there’s nobody beyond the staging area. It introduced interesting new procedures and policies. Typically, we will go in, we’ll do a layout, we’ll engineer, we’ll design, we’ll permit a warehouse. Then we also do… We’re not just there for the big day. We’re there every day after. We do health and safety safety group training on how to inspect rack and how to check for damages and document it and building these programs. And as we move into this age where now you don’t have operators driving up and down these aisles, well, now you’ve got to make a purposeful inspection program to walk up and down those aisles and look to make sure that there is no incidental damage, there’s no bottlenecks, the pallet placement that was maybe set for an AMR eight months ago is still correct pallet placement on the rack, things haven’t settled. It’s a whole new world.

[01:11:41.780] Whereas before, we just say, Here’s what to look for while you’re doing your job. Now we have to create these opportunities and these inspection interactions. It’s new and it’s really exciting.

[01:11:55.070] To piggyback on that element, would you say that your customers, usually speaking, what you see in the country, do they have a… How would I say it? Are they thorough in terms of rack inspection or they’re still treating it as it’s just an equipment and there’s no, let’s say, line in their budget for racking maintenance? What do you usually see on that end?

[01:12:16.430] It does vary by location across Canada. Because the provincial safety regulations on rack inspections are provincially governed with provincial oversight with provincial inspectors. You have different requirements in different provinces and different levels of focus. So you’ll have some areas where you’ll have inspectors coming by all the time. There’s a very high level of understanding with the clients. They know the inspectors coming, what they need, here’s the list. And then we have other areas of the country where it’s just furniture. And as long as it’s this tall and this wide holds a pallet, it doesn’t matter. But what we’re seeing slowly is as pallet racking is now part of the Canadian building code, jurisdictions that formerly had no reason to be interested in pallet racking and ensuring that engineered capacities are posted and ensuring that there’s a health and safety program in place to monitor damage. They’re now calling us. They’re now asking other provinces, or we have inter provincial clients that are introducing these standards into new municipalities saying, No, this is what we’ve established in our Montreal and our Toronto warehouses. So that’s what we’re going to do in Regina. We’re going to do it safely there, and we’re going to do it safely everywhere.

[01:13:46.850] So there’s a lot of influences coming in. And as I say, a lot of places, and it’s not uniform across the country. Many places are just coming to the realization, and they have some markets, BC, Ontario, Montreal, where it’s a mature market now. There’s an industry of inspections and repair replacement programs. You could be answering questions from a very experienced client that knows all about RAC inspections, or you could be receiving a phone call from somebody saying, I’m a new Health and Safety, Joint Health and Safety Committee representative, and I need to learn about RAC. Where do I go? So we try and direct them accordingly. It was a pleasure. Have a wonderful day. Thank you so much. You too.

[01:14:33.030] Bye-bye.

[01:14:33.640] Okay, bye.