Avoiding AI Traps: Supply Chain Tech That Works With Rob Kress – RFP 71 Transcript
Gordon Lamphere (00:05): Hi, I’m Gordon Lamphere, and welcome to The Real Finds Podcast, where we have real conversations with key entrepreneurs, activists, and researchers shaping the real estate industry and, as a result, our world. On today’s podcast, we’ll be speaking with Rob Kress. Rob is founder and CEO of Waypost Advisors, which specializes in middle-market supply chain strategy. On the podcast, we take a deep dive into the US-China trade war. Our conversation explores the challenges and opportunities for middle-market businesses in today’s difficult environment, and how the trade war could affect the US industrial sector and US industrial real estate. If you’re interested in industrial real estate and supply chain strategy, today’s podcast is well worth a listen. Rob, thank you so much for hopping on the podcast today.
Rob Kress (01:05): Thanks for having me, Gordon. Looking forward to it.
Bringing Big-Company Expertise to the Middle Market
Gordon Lamphere (01:09): So what got you into the whole space of logistics, supply chains, and understanding how trade moves?
Rob Kress (01:20): I spent most of my career working at very large international corporations, running businesses, with supply chain reporting up to me. One thing I kept seeing over and over when we worked with smaller, call it mid-sized, companies is that they just lacked the supply chain resources and expertise that the very large companies had. So I started Waypost five years ago, with the idea of bringing that expertise to mid-sized businesses that either can’t afford it or don’t have the staff they need to tackle global, and frankly domestic, initiatives, whether that’s inventory, supply chain risk, logistics, warehousing, or even optimizing ERP systems, which we do a lot of work on.
We’re a little unique in that we focus a hundred percent on execution. We come in and bring an experienced resource. My whole team comes from industry, with an average of about twenty years of experience. We take those large-company learnings and tailor them for middle-market companies, because we also recognize that mid-sized businesses don’t operate the same way as Fortune 50 companies, nor should they. So we come in with solutions that work for them.
Gordon Lamphere (03:06): What are some of the unique ways mid-sized companies operate versus Fortune 50 companies?
Rob Kress (03:16): It’s a good question. We define the middle market as companies with less than a billion dollars in revenue, so still good-sized companies. I’d say it’s a constant allocation of scarce resources. As these companies grow and scale, and this is where we come in, they start stubbing their toe because they’re trying to operate as if they were still a fifty million dollar company when maybe now they’re a three hundred million dollar company. They might not have anybody on their team who understands these processes.
At a big company, if you’re starting a new initiative and need a position, you can sometimes throw money at it and hire the team. Mid-sized companies don’t always have that luxury. Quite honestly, their payroll budgets are such that it can be tough to lure a high-ranking expert away from a large company. So I think mid-sized companies have to be a little more scrappy by nature.
Gordon Lamphere (04:45): What lessons have you learned from those operators? We understand some of the problems, but what are some unique solutions you’ve provided mid-sized companies that a Fortune 50 company wouldn’t even consider?
Rob Kress (05:05): The biggest thing we do is help them build capabilities and get stuff done, as we say. A company might have an opportunity with, let’s say, inventory. They have too much inventory, maybe not enough of the right inventory, and they’re experiencing customer backlogs. Or we hear this a lot: “My procurement team is just placing orders. They’re not strategic.”
We not only come in and solve the pain point they’re feeling, but we help build capabilities internally so they can go on and do it themselves. We’re very cognizant that these companies don’t want a third party in there forever. They want to be able to do it themselves and grow, and a lot of the time they just haven’t seen it before. Whereas a large company might hire a new head of supply chain to drive organizational change from a strategic level, we’re very much at the boots-on-the-ground level, driving that change from the bottom up. Mid-sized companies don’t need someone to come in and be a delegator. They need someone to come in and be a doer and help them figure out how to do it better.
De-Risking the Supply Chain
Gordon Lamphere (06:27): Speaking of strategy, one of the big things we’d like to focus on today is de-risking supply chains. What are the key strategies a middle-market company can use to diversify its supplier base and mitigate some of those long-term risks?
Rob Kress (06:49): It’s interesting right now. In today’s environment there’s not necessarily a silver bullet, but there are plenty of best practices we’re advising folks on. Let’s take the example where all of your supply comes out of China, and you’re very concerned from either a cost perspective or a geopolitical risk perspective, which are both very valid. We’re advising and working with clients to find alternative sources outside of China. The reality is that for some industries, it’s just not feasible to have a hundred percent US production. Textiles, a lot of packaging, the list goes on and on.
That being said, it comes down to some basics. Are you sole sourced on your key raw materials? Do you have internal metrics in place to track your inventory? A lot of companies have what’s called S&OP, sales and operations planning. It’s basically a planning process: are you buying enough, but not too much? We see a lot of companies that don’t really have a solid sales and operations planning process. What that results in is that you pay a tariff on everything you bring in today. So it’s about mitigating internal costs to offset some of these increasing costs, getting your house in order, so to speak.
Then from a risk standpoint, it really comes down to looking across your supply chain and starting to do the de-risking work. If all your materials come in from China today and you’re looking at other countries, it’s a long process. Six to eighteen months, depending on the industry, is not unreasonable, and there’s typically an investment that goes along with it.
Rob Kress (09:13): What we’re also seeing today, because of the massive uncertainty around the whole tariff situation, is that a lot of companies are doing nothing. They’re choosing not to invest, and in some cases choosing not to hire. They’re in a bit of a wait-and-see mode, trying to figure out how much of those cost increases they can pass on to their customers.
Resilience Through Operational Efficiency
Gordon Lamphere (09:41): We’re seeing a lot of that wait-and-see mode too. A lot of our clients aren’t buying, selling, or leasing. They’re not doing anything, just waiting to see. For the companies that are taking action, are there ways to balance resiliency with efficiency, or is it one or the other?
Rob Kress (10:15): No, no, no. Especially in the middle market, where we focus primarily on manufacturing and distribution, so you need a supply chain for us to be of much value to you, what we’re seeing now is a really big push to improve operational efficiency. The recognition is that it doesn’t matter where you’re getting your product from today. Even inside the US, costs have gone up, period. So the question is how to mitigate those costs through operational improvements. How do we get better internally?
Think of your own personal budget. You go through it and ask not just what you can spend less on, but how to be more efficient. If you can burn less gas by working from home a couple of days a week, for example. That’s more of a personal example, but companies are looking at all kinds of ways to reduce their internal, ongoing costs to accommodate these tariffs.
I was going to mention layoffs. In the middle market, we haven’t seen a lot of layoffs. We’ve seen a lot of people delay hiring, as I said, but good people are hard to find. I personally haven’t seen a lot of layoffs, especially on the manufacturing floor, because the reality is that tradespeople are just about impossible to find. So you’re seeing companies hold on to their people, and you don’t see people switching as much, but you’re also not seeing the mass recruitment efforts you used to.
A Dual-Source Case Study
Gordon Lamphere (12:14): Do you have any good case studies where you’ve applied some of these rules to help a business de-risk? We’ve been talking in generalities, but even without naming companies, are there specific examples of an effective de-risking policy?
Rob Kress (12:34): Yes, a couple of examples. We worked with a medical device company that purchases a lot of its materials out of Asia. Asia still produces a lot of the lower-value raw materials, I’ll call them. In this case it was a catheter-like product, so tubing and things like that, but medical grade. We started working with them on how to de-risk their supply chain. They were concerned not just about cost, but also about geopolitical risk, with a lot of uncertainty there. So we helped them explore options for where else they could get this product made.
That was a good example of a team so busy keeping the business running that they didn’t really have the resources or the expertise to focus on this. So we came in to find them alternative suppliers outside of China, and the folks on our team have the experience to do that. But one of the challenges, and I think everybody who’s tried this has seen it, is that China is inexpensive compared to the rest of the world. In this case, even going to Thailand was something like a thirty percent increase compared to China, and coming back to the US was about a two hundred percent increase. So some of the work we’re doing is a make-versus-buy analysis. One option they looked at was bringing production in-house, but the reality is that the expense wasn’t justifiable in this case.
Rob Kress (14:58): So it came down to what we’re seeing over and over: a dual supply chain strategy. The thought is that something with tariffs will probably get figured out with China, and it will probably be more expensive, so we should still keep our China source. But in this case, they’re going to explore a secondary source, let’s say Thailand, so they have dual sources. If there’s a geopolitical event with China, they already have something established. That’s a great example of what we’re seeing a lot of companies do around de-risking: “What’s my plan B, in case my plan B needs to become my plan A as well?” The reality is there’s a higher cost associated with that, and we’re starting to see it trickle down into the consumer space too.
Offsetting Tariff Costs
Gordon Lamphere (16:01): Are there effective strategies to mitigate some of those higher costs, or is it generally case by case?
Rob Kress (16:10): I’d say universally, everybody has gone back to their suppliers and said, “Let’s partner on this.” I’ve seen many cases of suppliers saying, “Okay, we’ll forgo this price increase and work with you to share the cost on some of this.” But the reality in every situation, at the level of the current tariffs, is that it’s just more expensive. So far there’s no scenario we’re seeing where you can completely mitigate the cost increases. Going to Thailand is a thirty percent increase, but if the tariff out of China ends up being, I don’t know what it’s going to be, fifty percent, it’s still maybe a better option to go to Thailand.
Gordon Lamphere: Yeah.
Rob Kress: But I think negating all of the cost increases related to tariffs is not possible right now. The exception is that we’re seeing clients have a lot of luck identifying operational cost savings. For example, we worked with an industrial client here in the Midwest and looked at all their trucking routes. We call it network optimization: are you using your supply chain network most efficiently? Are trucks going to the right locations without having to double back? What’s the most efficient location? Through that work, we were able to save them something like three million dollars.
That’s a good example of improving your supply chain operations after you receive your product or raw material, and we’re seeing some significant savings there. But it’s not easy. I’m talking like this is super easy, but it’s a lot of work and a lot of digging in, and you need the right expertise and focus to make these things happen.
Automation and AI in the Supply Chain
Gordon Lamphere (18:31): One thing the market has generally been focused on, and I think you’ll have some unique expertise here, is how companies are leveraging AI and automation to evaluate gaps in their supply chain, like what you just discussed. Have you seen AI and automation applied to de-risk supply chains and maybe reduce some of the cost inefficiencies of nearshore supply options?
Rob Kress (19:15): That’s a great point. It absolutely is, especially on the automation side. This started a few years ago, when workers were just nowhere to be found. Across our client base, we’ve seen a significant focus on and investment in automation, specifically manufacturing automation. Think robots that can take the place of some of these workers. It doesn’t necessarily mitigate all of your supply chain risk, but the folks looking to bring manufacturing back to the US are looking heavily at automation. If they can make an upfront capital investment that pays back, they don’t have to worry about finding labor, because the reality is that skilled manufacturing labor is still very hard to find in the US.
When you talk about AI, I’m not talking about ChatGPT. It’s more machine learning and data automation. We’re seeing a lot of interest in that, and some investment, though I feel like the larger companies are leading the way. The challenge many middle-market companies face is that the quality of their data just isn’t up to snuff yet for having a model process it, because it’s very much a garbage-in, garbage-out scenario. You have to make sure your data is organized and clean before you go down that path.
But we are seeing lots of examples of companies using this technology to automate processes, whether that’s invoicing or placing POs. Before, it was highly manual, someone was double-checking everything, and some of it was hand entered. We’ve seen companies automate that to remove the human element and then redeploy their people on higher-value tasks and jobs.
Rob Kress (21:40): And the investment for things like that is coming down every day, so it’s very reachable for a lot of mid-sized companies.
Gordon Lamphere (21:51): Talking about other reachable issues for mid-sized companies, there are certainly a lot of barriers to automation. How have you seen companies navigate those barriers using some of the technology you’ve mentioned?
Rob Kress (22:13): Gordon, could you go a little deeper with that question?
Gordon Lamphere (22:18): Sure. You mentioned some of the challenges with data and with automation. We’ve worked with clients dealing with greenfield and brownfield automation, particularly on the manufacturing and distribution side. I’m curious whether you’ve seen anything unique in the barriers middle-market companies face versus larger companies when applying technology to automate processes, and whether there are efficient ways to get through that process.
Rob Kress (23:04): I see. Okay, thank you. Yes, I think the barriers I’m seeing really revolve around, going back to it, the resource question. A large company probably has a group or division focused on IT and AI. If you’re a mid-sized company, you’re probably not hiring AI strategists. So I find a lot of these things are somewhat homegrown. Not everything. The good news is that there are a lot of companies starting up to help mid-sized companies find their way, bringing some of that strategy and problem solving to the table.
Beyond the data, I think a lot of these companies just don’t know where to start. “This sounds neat, this sounds cool.” And I think all the seminars on AI haven’t done some of these companies many favors, because it feels like AI has been talked to death a little bit. All you hear about is ChatGPT and “look, you can make this cool video,” and some of these CEOs are sitting back saying, “Okay, great, but I don’t really know what that does for my company.” So having the knowledge base of what AI can do for your company is one of the biggest hurdles we’ve seen.
Some companies are reluctant to get into that space because they’re looking for a return on their investment, and sometimes it can be hard to quantify, depending on the automation. It’s easy to say, “This is going to increase our output,” or “This will help with head count,” and calculate an ROI. But when you’re just dipping your toe in and you’re not really sure, you ask, “Do I want to spend all this money trying to figure it out? I don’t know.”
Spotting AI Snake Oil
Gordon Lamphere (25:09): There are a lot of snake oil salesmen out there in the AI world.
Rob Kress (25:12): There really are, unfortunately.
Gordon Lamphere: I wasn’t around for it, but from reading so many books on it, it feels like the early days of the internet, where it was very hard to determine who was the Amazon and who was the Pets.com. It’s just challenging. Do you have any advice for people evaluating products or bringing in consultants on how to detect some of the snake oil in the AI world?
Rob Kress (25:47): Absolutely. I’d ask for a couple of things. Ask for specific examples of work they’ve done. Ask for references from similar companies. To your point, it feels like half the people I talk to are AI experts. Okay, but have you actually done the work at a similar company? Do you have a reference? And I think anybody who isn’t willing to take a little time, maybe a few hours, without charging you anything, to sit down and say, “Here’s how I think I can help you,” is a flag. If they’re pushing for “just sign on the dotted line and then we’ll get to work,” I’d be a little careful. And be careful of anyone who makes it sound too good to be true.
Building a Culture of Continuous Improvement
Gordon Lamphere (26:40): One thing that can sometimes seem too good to be true, but I think is a real strategy moving forward, is that a lot of companies build cultures very effectively around continuous improvement in operations. In our business, we regularly hold monthly, and sometimes biweekly, seminars and strategy sessions where we go through our procedures and operations and try to improve efficiency. Beyond AI, do you have strategies companies can apply to work on continuous improvement in their processes and operations?
Rob Kress (27:34): Absolutely. I’m a big believer that AI is a tool. It’s not culture, and it’s not what’s going to drive continuous improvement. It’s a tool to be utilized. If you’re talking about fostering a culture of innovation around improvement, it has to start from the top. Leadership has to champion the message of continuous improvement. It’s also about being open to helping your employees find new ways to work.
What we see over and over is that everybody is running lean right now. Everyone has a lot of work to do and is overwhelmed in some cases. If you go into a team that’s already working umpteen hours a week keeping the business running and say, “Great, now make things better, guys. Go,” that doesn’t work, because people feel overwhelmed. It’s human nature: change is hard. So you have to make it easy for them. That’s why we focus a lot on change management in our engagements. If you just come in, drop a new process, and say “Go,” it doesn’t work. You have to show folks the path to the promised land, so to speak: this is how your life is going to get better.
It has to start with leadership, and then you put people in place within the organization who have that improvement mentality: “I know we’ve been doing it like this for twenty years, but we’re fifteen times the size we were, and that doesn’t work anymore. How do we make it better so you’re not spending all your time in a spreadsheet?” Going back to my earlier point, you may or may not be surprised by how many people are working so hard, and trying really hard, but are so busy because they’re stuck in old ways of doing things that
Rob Kress (29:59): they just don’t have the bandwidth to think of anything new. So you have to take some of that pressure off. Nine times out of ten, it doesn’t necessarily involve hiring more people. It’s about developing better processes. Make the initial push, show people that life is better, and then start on that journey.
What Shifting Trade Means for Industrial Real Estate
Gordon Lamphere (30:24): One thing I’d like to discuss that pertains very much to what we talk about regularly: how do you think the shifting world of logistics, trade, and manufacturing is going to change real estate, and industrial real estate in particular, ten years from now?
Rob Kress (30:44): Good question. I don’t believe you’re going to see every manufacturer come back to the US. We are definitely seeing more interest and more of a push with the tariffs in place, but the reality is that it’s a global economy. So from a real estate perspective, I do think you’ll continue to see investment in the US, and more industrial space built.
Depending on who’s in the next administration and what their policies are, before the current administration there was a massive build-out in Mexico, because that was one of the main strategies companies were using to de-risk from China. You didn’t have the ocean freight risk, Mexico is right there, and it was still a much lower cost base compared to the US. So I’d expect that to come back, depending on what future policies entail.
I also think you’re going to see more pressure for folks to return to the office. That’s not a personal opinion. It’s what we’re seeing from our clients and hearing from others. As more people are expected to come back to the office, I think you’ll see that materialize from a real estate perspective, especially as companies invest in new facilities and build their new office next to their new manufacturing plant. Coming from a non-real estate guy, I think on the commercial real estate side you’ll see more of an increase. We’re even seeing it now. Everybody is really knowledgeable about tariffs right now and about where to build their next facility, and things like state-by-state incentives are really important.
Rob Kress (33:11): So I think you’ll also see companies more willing to build in other places across the US to take advantage of some of those nuances.
The Final Four
Gordon Lamphere (33:22): One of the nuances we always like to talk about is the unique perspective every human being has. We have a lot of younger listeners, and we’d be curious: if you could travel back to the start of your career, what little tidbit of advice would you give a young Rob?
Rob Kress (33:47): So you’re saying I’m old.
Gordon Lamphere (33:49): Well, I’m old too, to some of our listeners.
Rob Kress (33:53): Which I am. I’d say a couple of things. Be willing to learn. Raise your hand. Especially for me coming out of college, you think you know everything, and the reality is you know nothing. So be willing to learn, raise your hand, and ask questions. And probably the biggest piece of advice: listen more than you talk.
Gordon Lamphere (34:26): That’s the whole point of this podcast: asking questions and listening to expert advice, so we truly appreciate that. One thing we always appreciate as well is looking at other ways we can listen, read, and learn about the world. Do you have a book or a podcast we should listen to or read that would help inform us and teach us a little more about the world?
Rob Kress (34:58): One book that’s been very valuable to me, and I recommend it to everybody, is Chris Voss’s Never Split the Difference.
Gordon Lamphere (35:12): Yes, it’s a great one.
Rob Kress: At face value, it’s a negotiating book, but if you go deeper, it’s really about developing your empathy, which I think can serve a lot of folks well in life. Taking a moment to step back, take the emotion out of a situation, and think about it from the other person’s perspective
Rob Kress (35:28): has been invaluable for me.
Gordon Lamphere (35:39): That’s a book we’ve had recommended before, and there’s a reason for it. It’s an excellent book on understanding the perspectives of others and how that plays out in business. There’s one thing in the world of business we won’t let you get out of in this interview, and that’s telling us who the next person influencing the world of trade, logistics, and manufacturing is that we should have on the podcast. It’s the whole reason for the podcast. We always find that the men and women in the arena tend to know the next best person to bring on. So who should we ask to hop on next?
Rob Kress (36:22): I have a great name for you. In fairness, they may be a competitor of yours, I don’t know. His name is Cory, and he’s with a company here in the Twin Cities called Brookshire. The reason I bring it up is that what they’re doing is really neat. They have what I’ll call a series where they highlight very rural communities. The intention is to help build community and get manufacturers and distributors to build facilities and bring jobs to these areas. They actually go out and do something like a documentary in some of these areas. The focus they have on rural America and trying to help rural America is really neat, and I’m happy to make an introduction if it’s useful.
Gordon Lamphere (37:17): I would love that. In our business, we’re all about making friends, and there’s really no one we’d say is truly a competitor. We’re always happy to bring on other brokers, and we’ve done that with other shops in the past. There’s one last and final question we’d love to ask you, and it’s an easier one: what’s the best way to get in contact with you if somebody listened to this podcast and wants to reach out?
Rob Kress (37:48): I appreciate it. Feel free to visit us at waypostadvisors.com. That’s W-A-Y-P-O-S-T advisors, with an “i,” dot com. I’m happy to have a conversation if anybody wants to reach out.
Gordon Lamphere (38:05): Rob, thank you so very much for hopping on today, and we’d love to have you on in the future.
Thanks again to Rob. We appreciate his insights. If you enjoyed the podcast, please give us a like, a five-star rating, and a review. Your comments, interactions, and subscriptions truly matter and help us continue to bring on quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with The Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.