EPISODE 020: HOW NEXT-DAY SHIPPING WORKS

DRINK INFORMATION

Every episode we drink a different libation – so what are we drinking this episode?

Tom’s Drink – End Of Days Barrel Rested Gin

– A surprising drink for Tom (as he is a Scotch man) but was a gin he enjoyed with lots of floral notes

Ian’s Drink – Russell’s Reserve Kentucky straight bourbon whiskey

– A Kentucky Bourbon that Ian bought on accident, but turns out that he likes and will likely buy again

Alden’s Drink – Woodford Reserve Double Oak

– A smooth whiskey with a surprising smell of cherries

*Visit our “Tasting Room“

TRANSCRIPT:

Ian Robertson
Welcome back to Drinking With Tom, everybody. Today on we have a guest, we actually have somebody willing to come on the show and talk with us.

Tom Kubiak
It’s exciting. He heard about our podcast and he wanted to come on it with us.

Ian Robertson
Well, we forced it upon him.

Tom Kubiak
That’s true. Yeah, the power we have over people.

Alden Fischer
I got ambushed.

Ian Robertson
We have on today, Alden Fischer, logistics master. And..

Tom Kubiak
Asset protection.

Ian Robertson
Asset protection.

Alden Fischer
Asset protection. Yeah.

Ian Robertson
There’s a lot of jokes that can happen here. But this is a G rated show. So..

Alden Fischer
Absolutely. Let’s let’s keep it clean. Now, I had a question that I wanted to ask. All right. How do you guys decide what you’re going to wear on the podcast? Now I know Tom came out of the womb with a collared shirt on and just changes like the dance and things. But like, I was like, do I need to dress up? Do I need to wear a t shirt? Like is this I don’t know. And then I even saw Tom, if you guys behind him, I’m gonna give it away. He’s got three pairs of glasses on a table behind him to swap between.

Tom Kubiak
Those are my reading glasses, my computer glasses, and my normal distance glasses. I’m old.

Alden Fischer
Oh, okay.

Ian Robertson
And if Tom takes off his shirt, there’s just another collared shirt underneath.

Tom Kubiak
Exactly. I have 350 of these shirts.

Alden Fischer
Okay.

Tom Kubiak
And that leaves, you know, a few days a year where I wear something different.

Alden Fischer
Gotcha, okay. And then Ian, it’s just a t-shirt, it’s whatever?

Ian Robertson
Yeah, pretty much my fashion design team works on it throughout the day. And then they usually decide on if it’s a blue or a green t-shirt. Yeah.

Alden Fischer
Gotcha. Okay. All right. Just you know..

Ian Robertson
It takes a village to dress me.

Tom Kubiak
Good question.

Ian Robertson
So today, we’re not talking actually about what we’re going to wear. Although you both look fabulous. We’re actually going to be talking about I’ve always wondered how I order a package and they say your package is in Arkansas. And then somehow, I have it the next day, 11 hours later. I’m like..

Tom Kubiak
It’s crazy.

Ian Robertson
I don’t know how this stuff happens, or I see big warehouses. And so we’ve known Alden forever.

Tom Kubiak
Literally.

Ian Robertson
Literally. And he has worked in this industry for how long Alden.

Alden Fischer
Yeah, it’s been over a decade now.

Ian Robertson
Yeah. And so you know this industry well, how these things actually happen, the logistics of it. And you also told us before the podcast began, how you think eventually, Amazon is going to take over the world.

Alden Fischer
Yep. Oh, yeah.

Ian Robertson
I’d love to hear your thoughts on that. But before we dig into the subject, which you know, at first you think man like warehouse logistics and shipping. I’m fascinated by this, because I really want to know how this stuff happens. But what’s everybody drinking, Alden, you’re the guest, you go first.

Alden Fischer
So I totally forgot that I needed to get a drink. So I went out to the store and bought…

Tom Kubiak
That’s the name of the podcast, is Drinking With Tom.

Alden Fischer
Well, here’s the thing. I have liquor to drink, but I needed something new that I hadn’t tried before.

Ian Robertson
Okay.

Alden Fischer
So I found, it’s a Woodford Reserve double oak bourbon whiskey.

Tom Kubiak
Sounds good.

Ian Robertson
What does the double oak mean?

Alden Fischer
So it gets aged again in a barrel in oak barrel, a new oak barrel after the first time for about a year or so to give it more of a oak flavor, which I think is a lie based on the smell that came from it when I opened it up, which wasn’t a bad smell. It just was not an oak smell.

Tom Kubiak
So tell us, what do you, what do you..Do your taste in front of us.

Alden Fischer
So when I first opened it, it smelled, my kitchen smelled like cherries. Just cherries all over the kitchen.

Tom Kubiak
Really? That’s interesting.

Ian Robertson
Okay.

Tom Kubiak
Did it have anything to do with the cherry pie sitting on the counter?

Alden Fischer
I will have you know that I am on a diet and I have not had pie in months.

Tom Kubiak
That’s right. Because there’s a dress you have to wear.

Alden Fischer
As someone else put it, I am shedding for a wedding. So thank you for rubbing that in. I appreciate it.

Ian Robertson
We should talk about shedding pies.

Alden Fischer
I can’t help you on that. Those are magic, just shows up one day.

Ian Robertson
All right.

Tom Kubiak
Are you getting cherries?

Alden Fischer
Now the cherries are gone. Now it’s oak.

Tom Kubiak
The cherries are gone. Okay.

Alden Fischer
It’s very, very oak.

Ian Robertson
Okay, and he’s drinking. I’ve always said the best thing we could do for an audio platform is to taste things.

Alden Fischer
Yes. So it actually is, I usually prefer this as a smoky taste. It is very smoky. A little bit of a hint of cherry.

Tom Kubiak
Oh, okay.

Alden Fischer
Yeah, definitely oak at the end. So it starts with cherries, and then a very smoky oak finish.

Ian Robertson
That’s odd. I wonder where the cherries come from.

Tom Kubiak
Yeah, cherries is not something you normally would get with bourbon. I wouldn’t.

Alden Fischer
Yeah, definitely. very smoky. So, two thumbs up. I don’t know.

Tom Kubiak
Nice.

Ian Robertson
Okay.

Tom Kubiak
Two thumbs up. That’s good.

Ian Robertson
It’s a win. It’s something you’d buy again.

Alden Fischer
Oh, absolutely.

Ian Robertson
Okay, good, how about you, Tom, what are you drinking?

Tom Kubiak
So I’m off the, as you know, I’m a single malt scotch person but tonight I am drinking a small batch gin End of Days barrel rested gin.

Ian Robertson
Wow.

Tom Kubiak
Because in the past couple of weeks when Ian has drank something with with a gin I kind of said I gotta do this. So this is a North Carolina small distillery that was given to me as a gift. And it is really herbal. Like it’s lemongrass, and just tons of herbs like I’m not getting barely any juniper. I’m getting floral notes, so..

Ian Robertson
Well, a lot of modern gens now, they pull away from the juniper, they just add it as a token.

Tom Kubiak
Yeah, but I am getting bitter when I drink it.

Ian Robertson
Oh, really?

Tom Kubiak
Yeah.

Ian Robertson
Like a good bitter?

Tom Kubiak
Like a, I’m getting the juniper taste.

Ian Robertson
Okay.

Tom Kubiak
But not the aroma so it’s definitely in your mouth it’s gin but, but in in your nose it’s not. So yeah, good. Drinking it straight. Neat, not even an ice cube.

Ian Robertson
And you’re drinking it straight? So Alden’s was a bourbon.

Tom Kubiak
I think it would benefit from an ice cube.

Ian Robertson
No, you gotta maybe mix it with some club soda. Just a dash.

Tom Kubiak
Oh, yeah. Or tonic water. In my case tonic. How about you? What are you drinking tonight?

Ian Robertson
So I actually got something an accident. So I’m like, You know what, I want to get another New York whiskey and see how it goes on. They had this whole display. And then I grabbed something from the display. But I think I must have like, not been paying attention and gone to the shelf over. So I accidentally got Russell’s Reserve Kentucky straight bourbon whiskey.

Tom Kubiak
Oh. Okay.

Ian Robertson
Yeah. So it’s obviously not New York because it’s Kentucky bourbon, but it’s 10 years old. I haven’t tried it yet.

Tom Kubiak
Oh, that’s that’s a long time for bourbon.

Ian Robertson
It is a very long time for bourbon. And you know, it’s interesting. You can tell it’s quite a bit more complex than the average bourbon. Yeah, definitely a little heat on the back end of that.

Tom Kubiak
Yeah. It’s gonna be higher alcohol content, probably too.

Ian Robertson
No, it’s still the same alcohol content. It’s like 45% alcohol which is, you know 40 to 45 is pretty typical. But it’s the corn in it, it’s straight bourbon. So it’s, this is interesting, very caramelly after the burning stops, very caramelly.

Tom Kubiak
That’s good.

Ian Robertson
It’s not a bad burn. I’d get this again. This isn’t bad. I’d give it a six or seven out of 10. I like this.

Tom Kubiak
Nice.

Ian Robertson
Yeah.

Tom Kubiak
Gin and two bourbons. I should of, if I had gotten the show notes ahead of time, I would have done bourbon too. But..

Alden Fischer
Could we change the show to two gins and a bourbon or two bourbons and a gin?

Tom Kubiak
There’s a song. It’s a country song.

Ian Robertson
One bourbon, one scotch?.You know, I feel like the guy got it sick at the end of the song, he drink a bourbon, a Scotch, and then the beer. That sounds like a, that’s a disaster pants situation. You know.

Alden Fischer
I thought it was beer before bourbon.

Ian Robertson
Oh, yeah, you’re right beer before liquor never been sicker.

Tom Kubiak
I think no matter what order you drink them in..

Ian Robertson
Everything goes to the same pot. But now that we’re all starting our journey down our individual liquor lane. Alden, so you have been in the industry for many, many years. So explain to me in less than two minutes, how next day shipping works and the entire industry if you could.

Alden Fischer
Oh, the entire industry? You said next day shipping and then the entire industry? That seems like…

Ian Robertson
No, no, no, I’m just kidding. No, I’m just I’m just joking. So we’ve known Alden since he was little. So we’re gonna make fun of him a lot.

Alden Fischer
It’s true.

Ian Robertson
So I’m the typical American. I go on Amazon, and I say, oh, there’s a weird shaped pillow that I’ll never use. Still kind of want. And I started drinking some Russell’s reserve. So I’m not really paying that great of attention. And I click order now. Whether it be Amazon or Target or Walmart or wherever, Wayfair I think is something my wife gets faucets from.

Alden Fischer
Oddly specific.

Tom Kubiak
How many faucets do you need?

Ian Robertson
How many does Wayfair sell?

Tom Kubiak
Subscribers.

Alden Fischer
I forgot to cancel my Amazon faucet subscriptions. Again, this month for another $30 on the faucets.

Tom Kubiak
They just start piling up.

Alden Fischer
I got a faucet room now.

Ian Robertson
I have a faucet collection. Look at this faucet. Vintage 2019 faucet.

Alden Fischer
This over here on this side is my liquor collection. And this is my faucet collection. This is what I’m most proud of.

Ian Robertson
Listen, it’s the epitome of great American culture to accidentally order more faucets than you need.

Alden Fischer
I have worked in logistics now for over a decade, and I don’t think I’ve ever once shipped a faucet to anybody ever.

Tom Kubiak
The thing is, I mean, we have gotten to a point where we are, it’s normalized that we can go online and expect that whatever whatever we want, no matter what it is, can be at our house and in a day or maybe two days. And that, it’s really amazing. And that’s really happened in the past. I would say probably five years, maybe I don’t know, I don’t know, you could correct me if I’m wrong. What’s the, how did the industry change? In the time you, just the past decade.

Alden Fischer
Ian and you brought up two different things, how Amazon does it, and then how companies like Walmart, Target do it, which they’re both a little bit different in how they ship things.

Ian Robertson
Okay.

Alden Fischer
And we could talk about how Amazon’s gonna take over the world. I can just segue right into that topic. Amazon’s strength is they are generally not a direct shipper. If you order something on Amazon, they are a third party, they are selling for a third party so they’re basically a storefront. So if you’re ordering from Amazon, you’re not necessarily ordering from an Amazon store. You could be ordering from a party who’s selling things on the Amazon store.

Tom Kubiak
How do you know the difference?

Alden Fischer
So sometimes, if you notice, if you go when you’re looking, typically if you go to buy something, Amazon, if it shows you that two day Prime shipping, you’re buying it from Amazon, if it shows any other shipping option, typically you’re buying it from a third party, Amazon’s generally going to recommend their item first, just because obviously, they want to make money. But a lot of times they’re shipping somebody else’s stuff. That’s kind of why they got so big. They did eBay better than eBay did.

Tom Kubiak
Oh, ok.

Alden Fischer
It wasn’t a bidding war, you just sold it. And you bought it. Stores like Walmart, Target, they do a little differently. So they do have their distribution centers. So you get things, order something from China, I want another pair of glasses sent to me. I ordered them from China, China imports them to a warehouse, they get sent to a distribution center, the distribution center, they send to a store. And a lot of these places now use their stores, kind of as mini distribution centers. Some of these places only have I think Walmart has maybe 100, I think Target’s closer to around 50, 60 distribution centers, they can’t get everywhere. But if you ship from a store, most of these places have 1000s of stores.

Tom Kubiak
Oh yeah.

Alden Fischer
Then they can ship it on from there. So that’s why those stores manage to get it so quickly, because you’re ordering it and it’s probably coming from your store, that’s an hour, two hours, three hours away.

Tom Kubiak
That happened to me with, I bought some clothes from Joseph A. Bank during the pandemic. And you know, I put it in one order. And I got it maybe had 10 items in it. And I literally got 10 packages from five or from 10 different stores. So I was thinking, I didn’t realize that that happened. I figured Joseph A. Bank had a warehouse someplace with all the all of the, you know, clothes that I was ordering. But that wasn’t the case. I was ordering it from you know, one of them came from the store in Saratoga, the other one came from the store in Albany, you know, because they’re they’re doing some kind of internal inventory management, but the inventory is actually in the store, it’s not in a warehouse.

Alden Fischer
Right.

Ian Robertson
So let me ask you then Alden. So you say it’s an advantage for Amazon then, I would have assumed the opposite. I would have assumed that because Walmart and Target have all of this infrastructure, that they would have the advantage because now they have not only storefronts, they have storefronts that are also distribution centers at the same time. Kind of like, you know, Amazon tried to create storefronts, and it just kind of flopped. I think there’s still a few kicking around, but never really worked out really well. So why is it an advantage for Amazon?

Alden Fischer
So biggest thing, overhead. If you think about it, Amazon does not need to pay for employees for a store. They don’t need to pay for retail space, they don’t need to pay for storage space. It’s you know, closest if you see any Amazon warehouses, typically they’re kind of on the smaller side, they do have a handful of larger ones. But most of them are tiny, smaller distribution centers, it’s a lot easier for them, because they don’t have to pay, you know, $5 million a year in taxes on owning a property because they don’t have as many large distribution centers. And if they’re shipping, from smaller locations, all they’re doing is getting a fee, getting paid money to just sell someone else’s stuff in their product. So that would just be like me saying, hey, Ian, you have a website? Can I sell my things on your website, and I’ll give you, kick you 40% of the cost. And that’s it.

Tom Kubiak
And that’s all the only cost they have is the hosting of the website, basically. Yep, exactly. But they do have some pretty large distribution centers, like near my accounting office, there’s, there’s an Amazon distribution center, basically across the street, maybe, you know, a couple 100 yards down the road and it is mammoth. Like it’s gotta be a quarter of a mile. Seems like…

Alden Fischer
So yeah, that that is but the other thing that Amazon has an advantage is they have a lot of contracts with USPS and UPS for priority service. So if I’m a delivery service, and I know that I’m going to get a boatload of money for making sure I prioritize these packages, I’m going to get a boatload of money for prioritizing these packages. I’m going to make sure hey, that Amazon package, that is way more important than your Time Warner Cable subscription. Hey, do you need to upgrade email over a package you’re gonna make way more money off of with contracts.

Tom Kubiak
And so the post office does actually change their delivery schedule for, you know, Amazon, they’ll deliver amazon before they’ll deliver maybe first class mail.

Alden Fischer
Mhmm, occasionally.

Tom Kubiak
Wow.

Ian Robertson
Now that’s interesting, too, because before you worked in a warehouse and distribution for these companies, you also worked for the mail system.

Alden Fischer
That is a correct statement.

Ian Robertson
You have like the most amazing combo for the subject. You’ve seen how the sausage is made from beginning to end, you herded the cows and then you ground them up in the sausage. This is a weird illustration.

Alden Fischer
And now I’m hungry.

Ian Robertson
Okay, next day shipping has to work so that whatever I’m buying is close enough to me. But there’s been times where I have bought something within several hours. So I, my area recently just said on Amazon, and Walmart that I can have next day shipping, was only within the past year, there have been times where I’ve ordered something. Three hours later, it was at my house.

Tom Kubiak
Yeah, that’s freaky.

Ian Robertson
And I’m like, you cannot get this, they had to have had it in the package. Somebody had to put it on, the label on, the guy had to have driven directly to my house from wherever it was, it was within three hours. How does that happen?

Alden Fischer
So, Amazon especially has now also really invested in their own delivery service. So I don’t work for Amazon. But the warehouse I do work for logistics is right across the street from like an Amazon smalltime facilement. And they have to have at least 100 cars, drivers that drive Amazon vans that leave that place and start delivering. So now they only not only have the post office delivering their things, FedEx delivering your things, USPS delivering your things, or UPS rather, now they can deliver their own things. So now, if you order something, Amazon can go okay, well, FedEx is going to take me three days to get it there, post office is going to take me two days, and a UPS, maybe a day. Oh, wait, there’s a fulfillment center right next to Ian’s house, it’s only an hour away. Yeah, that’s how we’re gonna send it. And that’s gonna be the quickest way it’s gonna get to you.

Ian Robertson
That’s so freaky.

Tom Kubiak
So they take it by trailer to the fulfillment center and then load it onto individual delivery trucks based upon the local delivery routes.

Alden Fischer
Yeah, so a lot of fulfillment centers, too are going to take, forget the term we use for it, I think high velocity items is the word, they use their objects that come in and go real quick. It’s going to be in the warehouse, and it’s going to be out of the warehouse almost immediately. So any sort of small fulfillment center is mostly going to have things that you can get super quickly.

Ian Robertson
So I imagine, even if Amazon is using their whole reseller setup, you still have to have a mammoth, like stock of items, because not only do you even if it’s with the seller, so say you’re selling something on Amazon, Alden, and you still have to keep a stock of hey, we you could have 500 orders today, or 50,000 orders today. Do they have any kind of like requirement for you to have so much stock because for Walmart and Target. I imagine, okay, we’re just going to keep a warehouse of 975 couches in this corner, another warehouse will have the same couches and they’ll have 832 They kind of project how much they’re gonna sell.

Alden Fischer
So that has actually changed dramatically over the past few years where warehouses they don’t want to hold. So I don’t know if you guys heard the term of just in time ordering and process fulfillment. A lot of companies now keep just enough on hand to fulfill orders. Which if you guys saw during the pandemic, there was a lot of things we ran out of almost immediately because it was because of just in time shipping. So just in time shipping is a great idea in theory. I know looking at forecasts, or what I’ve sold over the past 10 years that I average selling 100,000 a year, increase that by roughly five to 10% a year. COVID blew that out of the water. Right your mom and pop shops can’t ship that fast. One company, you have a hang up, I need for example use the toilet paper.

Tom Kubiak
Yeah, toilet paper. Good example.

Alden Fischer
Everybody was buying toilet paper like crazy, couldn’t keep on the shelves. But like if you went back to the warehouse like the warehouse I’m in. We have about a football field area size that’s usually full of paper towels and toilet paper. It was barren.

Tom Kubiak
Wow.

Alden Fischer
For three months. Anything that came in immediately went back out. So back orders, right? I’m not holding as much on hand, the vendors are only holding as much they have the producers only producing as much as they think they’re gonna sell. And suddenly that just as soon as any hiccup happens in that chain, it snowballs. Yeah. Now the advantage to that originally was right, I don’t have to spend as much money storing all this stuff, because I’m only going to have just as much as I’m going to sell. However, demand skyrockets. Yeah, and now I don’t have enough to sell anymore.

Tom Kubiak
And that was exaggerated in multiple industries. So you have not you know, and toilet paper was the example that you know, everybody recognizes. But I have a picture of us walking in the in the beginning of the pandemic in a store and the pasta aisle was empty, like there was in a in an aisle that normally has 1000 boxes of pasta, there were five, like, same exact thing, like, you know, some chink happened. And it cascaded the whole problem. And it could have been the pasta, but it also could have been the box, it could have been the glue.

Alden Fischer
So that was another big problem we ran into because we do what’s called single unit shipping. So say we get a box that has 10x boxes in it. A store only needs five of them. We’re not going to ship them the whole box, we’re going to ship them five, however, we would have to repackage those. Our vendor who brought us the cardboard was completely out of cardboard for months.

Tom Kubiak
Wow.

Alden Fischer
So things like that. If we think about like the auto industry. Yep, auto industry whipped. You know, things like that. So like, just in time shipping really like yeah, it would save us money. But now like even now supply chains are still struggling to recover from that, because now they’re finally catching up on the demand, but the demand is gone. So now you’re having the opposite problem where you’re over supplied, and overstock and most of these companies rely on forecasts for previous years.

Tom Kubiak
And those are out the window.

Alden Fischer
2020, 2021, 2022. You can’t look at those years.

Ian Robertson
You know, it was funny, when during the pandemic, you guys are talking about shipping toilet paper. I remember going on Amazon and I took a screenshot. And I’m like, oh man, I found toilet paper. And it said zero used or zero new, five used. I’m like, is this what we’ve become? It got got pretty rough. It got pretty rough.

Alden Fischer
Other industries, other things I understood, toilet paper. I never got the demand on that like if it was that bad, but if it was that bad, just take a shower. We have a solution that has been around for so many years like before toilet paper, you just bathed.

Tom Kubiak
What about leaves?

Ian Robertson
Yeah, exactly.

Alden Fischer
Just don’t use anything like poison ivy or something like that.

Ian Robertson
The psychologist explained it, he said that it was some sort of mini psychologists explained that it was panic buying. Yeah, you bought things not that you necessarily needed, but gave you comfort for the life that you think you were losing. And oddly enough, that translated into a few people at first and toilet paper. And then when other people saw it, it had a cascading effect on it.

Tom Kubiak
I totally agree with that. Because you know, my wife and I we have Subscribe and Save, you know, toilet and paper, toilet paper and paper towel thing. So we always are, you know, months ahead just because we let it you know we have a storage area, we let we save it up. But even with that, even though we had a lot when I saw it in the grocery store, I would buy it, I’d buy a roll, a package, you know, because you think what if I run out.

Alden Fischer
I just, I bought a bidet, solved my problem.

Tom Kubiak
Good idea.

Ian Robertson
I just hooked the hose up in my bathroom on the toilet, used twist ties.

Alden Fischer
There’s this struggle I just did not understand it.

Ian Robertson
Well, I went to the store the beginning, we’re going to go off too much on this, but I went to the store at the beginning of the pandemic. And all the toilet paper was gone. And I turned around and all the facial tissue is still there. And I’m, so I look around and I’m like I mean it’s paper. Did nobody think of this? So I started walking away with like armfuls of tissue paper. I’m like, looking at people I got a runny nose sorry.

Tom Kubiak
Very funny.

Ian Robertson
I got another question for you though. Shipping question though. I order Tic Tacs. And they come in a giant box surrounded in paper.

Tom Kubiak
Oh I know, that drives us crazy.

Ian Robertson
What is, what is the reasoning on that? One time I couldn’t fit the box in our door. So we’re unpacking it outside. And what we ordered could fit into one hand. And I’m like how did this even happen?

Tom Kubiak
I’ll give you an add in, before Alden answers the question, I’ll give you an add in. So Paulette ordered, my wife ordered some like facial wipes or something like that. And they come in these little square packages. And she ordered 10 of them to get a discount. And she got like eight packages, eight of them had, or seven of them had one each in each one of them, and one of them had three. Like, why are you doing this?

Alden Fischer
So I can give you two reasons, you want the serious reason or the funny reason? The funny reason is, I just thought it was hilarious to put a pair of socks in that giant box. What is this guy gonna do? Like, so my first thing when I started working Logistics was loading a trailer by hand and there was nothing greater when you’re lifting heavy boxes all day, and you got to use your extra strength to lift up a box and you realize it’s just full of socks, and you nearly throw it across the trailer. Like imagine how funny that is like just across the spectrum, as you know, you bend over to go pick up those Tic Tacs, you think it’s a heavy box and nearly throw it.

Tom Kubiak
You did it! Just one Tic Tac.

Alden Fischer
The serious reason..

Ian Robertson
Hang on, for a funny reason. Do people actually do that and say this is gonna be hysterical.

Alden Fischer
I can’t say I’ve ever done it. But I could totally think about doing it. Like if that was something. Yeah, why not? The serious reason is usually just because that’s that’s what they had. That’s the box they had, that’s all they had. We get in my warehouse, we get freight that comes from a different type of warehouse. And oftentimes, like it’ll be a pair of socks in a box, that’s probably three, four feet long and two feet tall. It just and you’re just like, really, but it’s like that’s, that’s the only ship and we had to go there. And so we had to send it. So here’s your box, your giant box of socks.

Ian Robertson
So it all sounds very. And this is probably just stating the obvious. very wasteful. Yeah, the whole operation.

Alden Fischer
So I’m gonna I’m gonna talk to you something about we call it in our business, DPMO, defects per million order. Okay, so you have a goal, ours in our building, and I think it’s anything below 10,000. So you want 10,000 defects for every 1 million orders you send out.

Tom Kubiak
Is that 1%?

Alden Fischer
About 1%. Yeah, now.

Ian Robertson
Good mathing.

Alden Fischer
Here’s the thing. My warehouse alone sends anywhere between one to 1.5 million orders a week. So if you magnify that across all supply chains, for any business, the amount of defects and errors and screw ups and mistakes you get, like that’s why everybody has a horror story. Like you think that number is small. But like, how many things do we order nowadays? Like we’re gonna screw some things up.

Tom Kubiak
Yeah, that’s true.

Alden Fischer
So my job now with the asset protection, it’s two types of shortage, we have operational shortage. So and theft shortage which theft obviously, we know what that is. Operational shortage only exists because people cannot count at all. It is amazing how many people can look at a box that’s 12 by 10, and go, that’s 1200 pieces on there, you’re like, what, no, that math does not work out at all. And so you send an order in, you think you have 1200 sitting in your warehouse, and now you have 120, and you have an order that needs to go out for 150. And you’re like, ah, whoops. But also, when we screwed up that order for 1200. We just paid the vendor for 1200.

Tom Kubiak
Really?

Ian Robertson
Happy vendor.

Alden Fischer
If you want to talk about wasteful, but like these types of things, like are so common in supply chain that you’re just used to it like, because the next order, someone’s gonna do the same math of 12 by 10 and go, just 20 boxes on here, we’re good to go. And they’re going to short the vendor by a massive amount, like the amount of waste that goes into this simply because people cannot count is just staggering. I wish we could do basic math.

Tom Kubiak
Aren’t there checks and balances to stop that? And the reason I ask that is because I worked at an a production facility a long time ago, where we mailed out periodicals. And after the periodicals were printed, we had a scale that we calibrated to be to the weight of one periodical. And when you put the box on the scale, it would tell you oh, there’s about you know, if there were supposed to be 350 in there, the scale should say 350. And if you counted wrong, the scalar caught it.

Alden Fischer
So yeah, because you have somebody inside who’s doing your math, for us most of the time the math is being done the way for somebody outside so I’ll give you another example. There was product that we had, and this is something so before I was in this role a few years back I was a inventory analyst. So going through and trying to find issues with our inventory and let’s say for example you’re selling let’s go back to socks. We’ll go to socks again. Think of our brand like Fruit of the Loom, alright, they’re gonna send you socks. And Fruit of the Loom puts a UPC on theirs, a number to identify it, but any fulfillment center, any warehouse is going to put their own identification number on it. And now I’m Fruit of the Loom and I decide man, I don’t like this packaging I’m using for my socks, I’m gonna put some new packaging, which creates a new UPC, which creates a new identification number in our warehouse. And now weights are way up. So I’ll give you an example something I was looking at, we had three different setups that we were allowed to accept at our warehouse. So let’s say they’re supposed to be 12 units in there, but they’re supposed to be broken up a certain way. So like I, unit is going to have 12 total and then broken down to three units each in the box. But apparently, we could also now accept 12 with four, or 12 with five, or six. And now when someone is sitting there looking at it, they scan it, according to them. This is what it’s supposed to be, they put it in the system, it’s wrong, what’s another one I looked at, there was three different setups, and the setup count of units inside was the same, but the weights were way off. So one setup was allowed to be 25 pounds, one setup was allowed to be 19 pounds, and other setup was allowed to be seven pounds. Now if there’s supposed to be 12 socks in there, there seems to be a huge difference between 20 pounds and seven. Yeah, yeah. But nobody’s looking at that because the person who’s receiving it is just gonna scan it, whatever the system tells him it is. Accept it, accept it and go. Alright, looks good to me.

Ian Robertson
Okay, so what percentage of your, what did you call the types of errors that you talked about in shipping, operational error?

Alden Fischer
Operational shortage and theft shortage.

Ian Robertson
Operational shortage. Well, what percent of the operational shortage happens at the fulfillment center versus at fulfillment? So like, just a wild ballpark guess because, you know, obviously, I get wrong packages, and then I send them back, or I get something damaged. I had one time, they shipped me a lawnmower with the oil and gas inside. And I’m like, they’re like, enjoy your complimentary oil and gas. And they leave it in my driveway and this big oil streak. And I’m like, oh, like the guy delivering it must have looked at this and said, oh, man, this doesn’t look right, and just left it anyways, because he had to have been covered in motor oil. We store oil in our warehouse. And one time, we have to put a label on every carton that goes to the warehouse, and we sent a bunch they were all labeled upside down and put in a storage rack. Every single box, it was like 100 boxes, and I’m like..

Tom Kubiak
Leaked.

Alden Fischer
None of them leaked. But it was just one of those like..

Tom Kubiak
Oh, they didn’t.

Alden Fischer
This is motor oil going against like an automated system like, this is gonna go bad in 100 different ways.

Ian Robertson
So what percentage happens operationally there versus operationally when it goes to the consumer?

Alden Fischer
Operationally, it actually most of it hits from the vendor side before it even gets to us.

Ian Robertson
Okay.

Alden Fischer
So most of it happens before we even because realistically, if you’re really receiving a million cartons, you only have I think my warehouse employs 1600 people. Like, they can’t realistically open every single box that comes through. So they look at the box, they go, looks like socks to me, slap a label on it and set it on their way.

Tom Kubiak
Well, okay, so taking that down another path. How often do unscrupulous vendors use that lack of checking to their own benefit?

Alden Fischer
Constantly.

Tom Kubiak
Wow.

Ian Robertson
Okay.

Alden Fischer
It’s, yeah, there’s, unfortunately like with the amount we in supply chains and things like that, that we do. Like, it’s just the amount of times we shortchange the vendor and not pay them enough versus overpay them like, basically, at the end of the year you go, it’s a wash. Because you’re so big, and we waste money. You’re an accountant. Just write it off.

Tom Kubiak
Yeah. Wrote off.

Alden Fischer
I lost $20 million. I mean, if you’re looking at a multibillion dollar company, $20 million is the equivalent to…

Tom Kubiak
It’s a drop in the bucket.

Alden Fischer
I left 20 bucks in the wash.

Tom Kubiak
Yeah.

Ian Robertson
Okay. It seems like an odd way to view things. But I guess when you’re that big.

Tom Kubiak
Another question I want to ask is what happens to all the returns? So, you know, I mean, with us, it seems like Amazon recently has not been asking for stuff to come back. So like if we, if we get an error, they just say just throw it away, give it away or you know, they don’t ever ask for it to come back. But I know that that’s gotta happen. And I’ve seen YouTube videos where people buy like pallets of stuff from from these merchandise. Does that actually happen?

Alden Fischer
So Amazon is just so big. I think they’re the second largest employer in the United States like they’re just, they’re huge. So once again, like to just say that we’ll send you another one doesn’t cost them anything. Most places, it depends on whether or not that item is still a sellable. So certain things, if it’s open been used, like it can’t be resold. Other things will get sent back to the warehouse, and the warehouse will either try to A, see if another store needs it. Sometimes stores will do store to store transfer. So the store over here needs it. So we’ll send that over there. Otherwise, if it comes back to the warehouse, and it can’t be sold, it’ll generally either A, be destroyed, go to waste, B, be donated, be donated. So if whatever reason it can’t be sold anymore, because sometimes it’s now an out of season item, it can’t be sold, so it’ll get donated. So oftentimes, if you go to any of like your smaller stores, like your Marshalls or TJ Maxx’s, Dollar Generals. You’ll find products that typically are at your larger stores like your Walmart’s and your Targets, you’ll find those brands sitting there at a discounted price.

Tom Kubiak
Yeah.

Ian Robertson
That explains it. Because I’ve often wondered, I’m like, are they selling an inferior version of what I see at Walmart?

Tom Kubiak
Or they’re just selling the leftovers you know? Okay, interesting.

Ian Robertson
We had a commentary on Dollar General a few weeks back about how it always looks simply got ransacked.

Tom Kubiak
It’s true.

Ian Robertson
I’ve never walked into one and been like, this looks neat.

Tom Kubiak
Wow, it’s so well organized.

Alden Fischer
It’s funny, because I don’t know if you guys saw the news lately, but like, a lot of places are closing stores in cities. Yeah. Because of what is the organized retail crime. I think Dollar General just embraces it. Hey, guys, like, this is our look, how are you? I mean, do you want to ransack a place that’s already ransacked, like, you’re gonna walk in and go..

Ian Robertson
Robbers go in and be like, oh, man, this is the wrong place, I don’t want any of this crap.

Alden Fischer
Like, like, if you walked into a bank and saw the bolt door was like, ripped off and everything was broken, you’d be like, this place is already hit. I’m gonna rob someplace else.

Ian Robertson
So you talked about…

Alden Fischer
I’m gonna talk about this in my next Loss Prevention unit. Hey, guys, we’re too organized. All right. All right. Let’s start a small fire.

Ian Robertson
Everybody start throwing packages. So that does make me curious, though, about the theft part of things. So that is a big issue. And that’s creating, there’s already food deserts, they call them a lot of big city areas. Because they don’t want to be there because they’re like, you know, various reasons, whatever. But now, it’s also creating other types of merchandise deserts. Like I was just reading an article about how there was a big box chain that was pulling out of all major cities, and they’re only going to sell on the outskirts in the suburbs. Yeah, but for people in there, they can’t, you know, what, if they can only take public transit, or they can’t, they can’t make it out to those outer places? How does that affect the shipping industry? Do you guys experience a lot of that, like, at the warehouse, robbery, I imagine that would be mostly employee based, or like even the trucks and things like that?

Alden Fischer
So we actually did have a big case a while back for trucks were diverting the trucks and just taking the stuff product that we were supposed to be getting and just stealing it, like it was a multimillion dollar case. It doesn’t happen as often as it could. Like, I’m not saying it doesn’t happen. It definitely happens. But I don’t, it’s not as frequent in those instances. Because generally, if you’re going to ship something, you have a seal on it, the seal if the seal is broken, your warehouse is not going to accept it. It’s gonna go now, this is broken. I’m not opening this. There’s something wrong here. Stores and warehouses generally have two very different thefts. Like items that are gonna get stolen. Because in a store, it’s very easy to just shove things in your shopping cart, stick a bunch of things over the top. So like clothes, stolen all the time and stores. Makeup is a big one. Products for baby formula, diapers, electronics, like it’s all over the place for stores, because it’s whatever you can fit in your cart and walk out with. We’ve seen people just walk out the front door with a TV.

Tom Kubiak
Yeah.

Alden Fischer
Warehouse. It’s more focused on what are the small things you can hide. So electronics, small electronics, like air pods, smartwatches, Bluetooth. If you’re in a warehouse that ships things like electronics, like phones, things like that, anything that small, you could break packaging, and then food, which blows my mind how many people will open up a box of m&ms just to steal one package of m&ms because they were just hungry.

Tom Kubiak
Really. And they eat it while they’re in the warehouse.

Alden Fischer
So you know, you’ll go searching and you’ll just whatever piece of equipment they were using, you’ll just find empty wrappers all over the place, and it’s interesting how much like operational shortage happens that yeah, we try to fix but like theft, eventually they get caught. Or a lot of times in the warehouse, you know who stole, you know they’re stealing. But you’re gonna watch them for a little bit and see, hey, what else are they gonna take? Because after they get off a certain threshold, suddenly goes from a misdemeanor to a felony. And you’re like, oh, I can get police involved. This is much easier to deal with.

Tom Kubiak
Okay, yeah, that makes sense.

Ian Robertson
I gotta say, this is all very interesting.

Tom Kubiak
Yeah, it is interesting.

Ian Robertson
Yeah, we could go on talking about this for a lot. But, uh, I think we’re towards the end of our podcast, Alden. Yeah, I know. This is super I want to talk more about this. We’re gonna have to have a follow up episode. But in the spirit of Drinking With Tom we usually end on an inappropriate fact. Or some sort of joke. Do you have one for us, Alden?

Alden Fischer
See, Tom just told me about the rules right before so.

Tom Kubiak
He wasn’t aware of the rules.

Alden Fischer
I wasn’t aware of the rules.

Ian Robertson
What rules?

Tom Kubiak
The joke at the end of the episode rule. I got a joke for you.

Ian Robertson
Okay, tell us a joke, Tom.

Tom Kubiak
So in harmony with my effort to make my jokes coincide with our topics. What is the most frustrating part about being a sheep farmer?

Ian Robertson
I feel like there’s still too many people even in that career.

Tom Kubiak
It’s gone down, but they’re still there. Every time you have to take inventory, you fall asleep.

Ian Robertson
That was bad. That was so obvious. It was in front of my face. I’m like, it can’t be that.

Tom Kubiak
How did you get that?

Alden Fischer
All right. Well, guys, it was great being on this podcast.

Ian Robertson
I feel bad about myself now.

Alden Fischer
I got one for you to tell you. So I gave away all my batteries today. They were free of charge.

Ian Robertson
Definitely a Drinking With Tom joke.

Tom Kubiak
That’s a good one.

Alden Fischer
Was it a good one?

Ian Robertson
For this show, sure.

Tom Kubiak
For the context. Yeah.

Ian Robertson
For Drinking With Tom, it’s perfect. Alden, thank you so much for being on, drinking with us, and explaining to us the wonderful world of shipping and fulfillment centers.

Tom Kubiak
And congratulations in advance because in just a little over a week, you’re gonna be getting married. Nice.

Alden Fischer
Is that what I’m doing?

Tom Kubiak
So exciting.

Alden Fischer
Is that what’s happening?

Tom Kubiak
That’s what you’re doing. That’s what I’ve been told at least.

Ian Robertson
There’s somebody out there on the other end of that, that said, you’re doing that. So..

Alden Fischer
Yeah.

Tom Kubiak
Get used to being told what to do.

Alden Fischer
Is there just a point where you just give up and you don’t have to say anything anymore?

Ian Robertson
No, you have to pretend that you didn’t give up but you really do. You’ll figure it out. Don’t worry.

Tom Kubiak
Yeah, it’ll it’ll come easily to you.

Ian Robertson
Just know that your future wife will be upset at you because she wants you to talk to her. But she wants you to leave her alone. But she wants you to want to talk to her about her wanting you to leave her alone. But still talk.

Alden Fischer
Yeah, I’m really struggling with the hey, I have a problem.

Tom Kubiak
Three of our four women listeners.

Alden Fischer
I’m really struggling with the I have a problem. And I’m like, well just do X, Y and Z. It’s like, No, I didn’t want you to fix the problem. I just wanted to tell you about the problem.

Tom Kubiak
Yeah, that’s yeah.

Ian Robertson
I’m always like, why tell me about the problem if you don’t want to hear a fix. I feel like there’s two sides of that coin.

Alden Fischer
And it’s like, if I don’t if I don’t tell you a fix. Are we going to fix the problem? Or is it still gonna be there tomorrow?

Tom Kubiak
It’s still gonna be there tomorrow.

Ian Robertson
Enjoy.

Tom Kubiak
Good to see you, man. Thanks for joining us.

Ian Robertson
All right, guys. Have a good one.

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