Running a fully autonomous drone operation without having to jump through regulatory hurdles is the dream of countless commercial drone operators. As many have stated, the technology to operate drones autonomously and beyond visual line of sight (BVLOS) is readily available, but actually doing so is more about process than technology. However, the indoor space is virtually regulation free and is an ideal place to demonstrate these autonomous capabilities while also unlocking the value they represent. Startups like Ian Smith and Joseph Moster’s full-service indoor warehouse inventory solution called Ware have been created to do just that.
Ian has been a stalwart in the drone industry for years now as an employee at DroneDeploy as well as the host of the Commercial Drones FM podcast. With the founding of Ware, he’s looking to leverage those insights in a whole new way by bringing attention to the value that drones can create for warehouses by saving money, increasing efficiencies and improving performances.
Commercial UAV News has connected with Ian on a number of topics about the drone industry while also further exploring numerous insights from his podcasts. Ware’s recent funding announcement provided us with the perfect opportunity to reconnect with him to detail how his solution is providing value for the indoor drone sector, how he recognized this opportunity, what it means to get started with Ware and much more.
Danielle Gagne: Given how much time and energy is spent talking about where things are and where they’re headed with FAA regulation, you’re going to have to tell us what it’s like to not having to deal with such limitations.
Ian Smith: It is awesome. There is no FAA at all indoors.
This is a really big point for me actually, everyone in drones has been constantly chasing automation, it’s that vision of having a drone that lives in a box on a construction site that wakes up every morning takes pictures, lands, uploads the data to the servers, the data is then processed, and insights are delivered. That's possible, and it has been possible technologically for the past five years or so. The problem has been regulation with rule making bodies, like the FAA, making this very hard to achieve, and that's why we don't see that a lot. We see a lot of companies showing the solution, but they are completely hamstrung by regulation.
So, a big reason this is attractive to us as well is that this is finally a time for us to prove to the rest of the world that drone technology can be automated and be useful like that. Regulations have not progressed as much as they should have for outdoors, so indoor applications are excellent showcases for people looking at the drone industry to show what's possible.
What's funny is we get requests to do stuff outside the warehouse as well. Warehouses are not all inside. They have logistics operations and stuff outside as well. Imagine all those trucks outside picking stuff up and dropping things off, there's a pretty big problem there as well that I won't quite get into here. But we have to turn them down because although we can operate inside the warehouse autonomously, as soon as that drone goes outside those warehouse doors it is in the national airspace system and is regulated by the FAA. At that point you need to have a human monitoring the drone and be able to control it at any point. We just don't see the value in that yet for the customer or us. Right now, they are getting their own pilots to operate their drones outside, but we are not touching that yet until the current and future administrations start making automation and beyond line of sight drone regulation a priority.
You obviously do see the value of staying indoors, so what can you say about how your experience in aviation, drones, and startups played a factor in the founding of Ware?
I started with flying helicopters. I then transitioned into the drone industry in 2013. I worked at a hardware company first, a startup called Delair, and we were building drones for outdoor applications. Then I went to DroneDeploy where I also started a podcast where I've talked to over 90 different guests about the way they use drones commercially... for flying outdoors. So, the common denominator here is that everything has always been outdoors, under the sky, all the way back to my aviation days flying helicopters. Ware is really interesting because it’s focused on this huge market for drones that fly indoors.
However, if you look at the drone market and how it has progressed, there hasn't been a time when the indoor opportunity has been unlocked. By creating Ware, we‘ve really seen over the past year that the technology is finally there to enable safe, scalable autonomous indoor operations. There’s an opportunity there that we’re looking to capitalize on and that has to do with solving this inventory tracking problem that warehouses and distribution centers have.
Can you tell us more about this problem and why you were drawn to developing a solution for it?
Between my co-founder, Joseph Moster, our Chief Technology Officer (CTO), and I, we have a combined total of 17 years’ experience in the commercial drone industry. When Joseph was investigating drone technology in the early days of the technology, he kept hearing about this inventory problem at warehouses. Recognizing the need was about a confluence of technology and opportunity, as we saw the problem and knew we could solve it with our own specific strategy.
To be honest, it’s actually a weird problem. It’s counterintuitive, because you'd expect a warehouse to know where everything is because everything all comes in and it goes out at some point, but this is actually far from the truth. There is extreme inefficiency inside warehouses. They’re losing stuff constantly and this affects the entire upstream and downstream supply chain.
Because we have already brought this highly regulated, complex technology into so many outdoor industries like construction, agriculture, mining, oil and gas, linear infrastructure, utilities, you name it, it’s something that is very much in our wheelhouse. It’s our specialty, really.
As you said, everything comes into and goes out of a warehouse at some point, so why is there is such a major inventory tracking problem in warehouses today?
Today, warehouses have a bunch of humans. Humans are great, but we are prone to error and we don't like doing boring repetitive tasks, especially dangerous tasks. These humans walk around the warehouse and they do periodic cycle counts almost every day. They only count a small section of the inventory each day and then gradually, over a week or two weeks, they will finally cover all of the inventory.
However, during those two weeks there’s stuff moving around in the warehouse. There’s stuff being added and taken away, so there are huge gaps between those two weeks or weekly period.
How does your warehouse inventory solution work and why do you think it’s an ideal solution to solve this problem?
There are three phases to understand how Ware works.
The first component is the data collection phase. Drones are stationed on nests throughout the warehouse. They wake up at a certain time, take off, fly around and capture all the data in the specific part of the warehouse that they are in charge of, and then they all go to sleep on the nest. While asleep, they upload that data to our servers.
The second phase is data processing. One important distinction to make here is we don't actually see ourselves as a drone company per se, we are more of an analytics company, leveraging AI and Machine learning. We collect the largest dataset of warehouse inventory and then apply our algorithms on top of that to extract all kinds of insights. This second part is arguably the most important, because a drone is just a camera that we can put in any X, Y, Z coordinate in the warehouse. Once that data is collected from the drones, it’s boiled down into a spreadsheet of text, like a .CSV file, that shows where the inventory is, what it is, how much of it there is, and even where inventory is not.
Finally, once we extract that data from those images with our algorithms and distill it into a spreadsheet, we import it into the existing warehouse management system, which is referred to as a WMS. They can use our data to optimize how they move stuff around and within the warehouse. They can find where stuff is and find out where they have space for inventory. As a result of all this, for lots of different customers and potential customers, we are able to solve the problems they have.
How are warehouses able to measure the value of this process?
It all comes down to utilizing a process that is repeatable and scalable every day or night, or even over the weekend—whenever the warehouse has fewer people in it. Being able to deliver that data consistently is drastically different from how they do it today, but what’s really important is that there’s really nothing they have to change in how they operate today. They don't have to install anything major and they don't have to change how they do things. In fact, they’ll be doing one less thing, which is counting inventory themselves.
There are a number of other ideas that range from ground robots to just sticking a bunch of cameras up in a warehouse that are thought to solve this specific problem. The value Ware represents is really associated with the opportunity to solve the problem at a much lower price point and without upending established procedures. Drones these days are a commodity.
What types of drone hardware are you utilizing for indoor warehouse inventory and how are you integrating it into your solution?
We are working with world class drone hardware manufacturers so that we don't have to build our own hardware in house. That is one of the key differentiators with us versus anyone else who has tried this before. There is no clear market leader here, so we stand a good chance of taking the baton and running with it because we don't develop any in-house hardware. Instead, we work with the world's best drones from a couple different manufacturers, and we deploy those in the warehouse with our navigation software on top.
These drones can already avoid obstacles by default. They already sense things that are in their way and can fly safely inside buildings without GPS around a bunch of metal that would normally mess with all the onboard sensors. That said, if you point at a map of the warehouse and tell the drone to go there, it wouldn’t have any idea how to do it because they don't know where 'there' is because we can't associate GPS coordinates with 'there'.
Our proprietary software allows our drones to define where ‘there’ is. We developed our own kind of indoor “GPS coordinate system” so the drone knows where to go and how to get there.
Besides losing track of their inventory, what are some of the problems warehouse companies have?
Obviously, a big problem they have is the cost of labor. This is a contentious point because people view it as drones taking jobs. However, with inventory, this is just one aspect of most people’s jobs, so they can actually be reassigned to do more valuable stuff like moving things around in the warehouse or getting other tasks done. This will help them focus more on the things that matter, rather than having to do mind numbing inventory exercises.
It’s also going to also help them reduce losses. We talked to one customer who lost just one box from one pallet that was full of wine, and it cost him $20,000. We are not claiming that we can completely eliminate losses—humans are still humans; they are not predictable—but when there is a theft or actual loss of something, we help stem that with a visual record of inventory on certain dates, and they can have that in their system to query.
Another thing to consider is the way inventory is counted today is dangerous. When you think of warehouses and how they’re evolving, real estate is always getting smaller and smaller in terms of availability, so warehouses are growing up more than they are growing out. When humans do inventory today, they either walk along the floor with a barcode scanner in their hands and kind of look straight up and try to scan product that is 30–40 feet above their heads, which is really inefficient, inaccurate, and difficult. What some people do to get around this is that they harness themselves to elevated scissor lifts. The danger to this is that they could just fall off. This is a serious issue, falls from height are one of the leading causes of workplace fatalities Using a drone eliminates this altogether.
What types of warehouses stand to benefit the most out of your solution?
The big thing to understand right now is the current state of warehouse technology. Our first market is focused on the U.S. specifically. If you think of warehouse automation, robotics, and digitization as a spectrum, on the very lowest side, we have people who have been running these warehouses probably for decades, and everything is still written by hand with no location-based inventory system. This means when someone is told to grab something from the warehouse, they get a handwritten note in triplicate stating something like, "bring ten of these pallets of this product to the front." They don't even have a way to know where those pallets are, they just use their memory. If one of these people quit, or someone is on leave, then you’ve just lost a lot of proprietary information because there is no central database. That is furthest end of the spectrum—the lowest tech side of things.
On the other far side of the spectrum, you have fully automated dark warehouses. By ‘dark’ I mean, everything is done by a robot. If you stick a human in the loop in a dark warehouse it is going to mess everything up. Amazon is not even at the point where it has completely automated dark warehouses. They are quite automated, but they have a bunch of proprietary stuff going on where humans are still involved in a lot of cases. There are companies out there that are trying to build fully dark warehouses, these are really cool but insanely expensive. The cheapest models available are currently around $50 million. These dark warehouses are at the other end of the spectrum.
There is a sweet spot somewhere in the middle closer to the low-tech side of things. This sweet spot is where customers have a WMS and the inventory is scanned by hand with very little automation. Their WMS is a location-based inventory system, meaning that every pallet in every rack has a location assigned to it, and acts like a map to the warehouse. That is the sweet spot for us. There is a huge market there, and that is what we are going after.
Our technology addresses the bulk of the warehouse industry, at least in the U.S., and presents the most value for us and for the customer. The bigger the warehouse, the better the value. The bigger you go, the more complex your inventory is going to get so the more people you need to track it, and the more money and time you spend on doing inventory. That is why we are super interested in 3PLs (third party logistic providers) with warehouses of 100,000 sq. ft and up, these are really great candidates for us. We are also looking at some warehouses that have 500,000 sq. ft and above, which are gigantic—these are excellent candidates as well. Also freight forwarders and air freight is big too, as well as the beverage industry, they have tons of inventory flowing around at all times, so that would be ideal for our solution as well.
If I’m a warehouse stakeholder that knows my inventory process could be streamlined, but I’m concerned that the effort to do so is going to be either too complicated or costly to fully investigate, what would you tell me?
We provide everything for the customer. We come in, we implement the localization system, which is pretty low tech and actually pretty cool because it isn't too complicated. Then we provide the drones based on how big the warehouse is and how often they want a full inventory count. If they want a count weekly we can use less drones, if they want it daily then we might have to put more drones in the warehouse to cover the entire area of the warehouse given whatever timeframe we may have to capture all that data, upload, process it, and load it into the WMS before the next day starts. Our solution allows them to have a full inventory audit every single day. We take care of everything: we integrate into their WMS and figure out which drones are best and how many are needed for specific operations based on the customer's needs.
They don't have to change their workflow or adapt to a new piece of software from us. They are going to do what they do normally. We just automatically capture the data that humans were already capturing and inputting into their systems manually.
A really interesting way of thinking about our business is to compare it with Amazon Go. Amazon Go is a store where you go in and just grab something off the shelf and you walk out, and it knows exactly what you have. What we are essentially building here is Amazon Go for warehouses. So that warehouse people, when they are operating and running their warehouse, don't have to worry about all the bookkeeping, record tracking, and accounting of all of this stuff, they should be able to just go in and move stuff around, do what they want, and just be a lot more efficient.
Essentially, it’s a full inventory solution. There’s a yearly fee and for that fee we provide the support, service, the boots on the ground, and implementation. Ware is there for you, if something goes wrong unexpectedly, we are going to be boots on the ground in the warehouse and will fix it for you.