MISSION CRITICAL MISSION CRITICAL
In conversation with the Senior Leadership trio at Empirix Partners and their guest, Michael Kokal, the President of KODIS Holdings
How has the environment shifted in the last five years? What new trends are impacting it? And why are businesses potentially limiting success by making decisions based on the environment of yesterday, not tomorrow?
Our guests discussed all this and more, including the importance of visibility because ‘the age of no information is over’ and ‘getting comfortable with being uncomfortable’ is crucial to help develop stronger partnerships.
Ethan Summers, Chief of Staff for Empirix Partners, led the lively discussion with Zach Peña, CEO of Empirix Partners and Sam Robinson, VP at Empirix Partners, plus special guest Michael Kokal, President of KODIS Holdings. Let’s start with an introduction from each before getting into it.
Ethan: I’m Ethan Summers, the Chief of Staff for Empirix Partners. My main role is supporting Zach with strategy, leading all of the internal operations and team performance.
I have a deep background in the supply chain, finance and operations space for some major manufacturers and health care systems and spent several, I call them ‘dog years’, in the startup space with consumer electronics and software development
Sam: I’m Sam Robinson, Vice President here at Empirix Partners, responsible for leading client delivery.
Most recently, I was at NTT Global Data Centers helping build out and establish their OFCI program. Before getting into mission critical, I did a host of different things in the consumer products world, from setting category sourcing strategies, selecting supply chain partners to be able to bring new products to the market, leading supply planning across several different manufacturing plants, and, helping build an allocation strategy and tool for our sales team to survive the toilet paper apocalypse of 2020.
Zach: This is Zachary Peña, the CEO of Empirix Partners. We are strategic sourcing and procurement advisory, providing disciplined, predictable, and scalable solutions for all of our Mission Critical Partners. I’ve previously built and led data center supply chains with Microsoft, CyrusOne, and NTT.”
Michael: I’m Michael Kokal. I’m the President of KODIS Holdings. We provide freight warehousings and supply chain technology for mission critical type end markets – including digital infrastructure, aerospace and more.
Ethan: So, I’m the outsider to the space. I come in from a very different background, mainly focused on startups, product development – that kind of space. And it’s been really interesting learning about the mission critical space, especially the first 10 to 15 years focused on data centers and then the massive shift that’s happened in the last five years. So, I think that’s a good launching point for us.
Ethan: Zach and Michael, can you lay out the history of the market, including the ‘Age of Easy’ pre-Covid, where we are now, and what are some of the big changes we’ve seen in the space?
Zach: You know, the last 5 years have been pretty interesting. In the golden age of data centres land was affordable. I’m not going to say cheap, but land was affordable. Power was available. Money was borderline free. Your lead times were low on equipment, and everybody was coming into this new, I’ll call it ‘more hyperscale vision’ of what the future looks like.
You know, people were emerging out of their shells and moving from 1 to 10-megawatt data centers into 20 to 30 megawatts – and hyperscalers were moving into those 30 to 40 megawatts.
And that was massive, right? Five years ago, you mentioned the 40-megawatt data center and people were like, ‘Wow, where is that going? We can’t wait to see it.’
Now, if you mention a 40-megawatt data center in passing, they’re like ‘Cool. What are you going to do next?’ People aren’t really intrigued by that, which just blows my mind! In half a decade, that’s the change.
I keenly remember in late 2020 visiting the same grocery store every day, and I eventually found a six-pack of toilet paper, and I put it in a bow and brought it home for my wife the same way I was bringing home flowers. And we all joke about it now, but that’s just how fragile the supply chain is.
Ethan Summers
“You’re starting to even see chief supply chain officers become CEO’s of companies”
And when Covid hit, things obviously got much more complicated when it came to a supply chain perspective. But the environment didn’t shift too much other than just the hockey-stick acceleration of need or demand, which obviously put a constraint on the supply chain and on a lot of the things that were known to be real. And that set the stage for where we are now, which is substantially different.
But, Michael, I’d love to hear your take on where this all started.
Michael: So, what’s really interesting about where we sit in this whole ordeal is that supply chain was never a sexy topic prior to Covid, right? It was low person on the totem pole, maybe a stepping stone to get to something different, whether it was finance or something else.
The reality is, when Covid hit, people couldn’t get their products – both businesses and consumers. It brought the supply chain into focus for everyone. I think what we’re even seeing today is that the supply chain side of things is starting to become more or less a higher portion of the executive management team. You’re starting to even see Chief Supply Chain Officers become CEOs of companies.
All that being said, as you bring visibility into a certain industry – like supply chain, which was generally invisible before – well, that’s going to come with a whole lot of issues, including infrastructure issues.
So, we were sitting there saying, ‘I’ve got all this stuff on the water. It used to come over in two weeks, now it’s taking two months or four months. How do I see it? How do I know?’ Communication increases, but the ability for anybody to actually come to the table and say, ‘I’ve got viable solutions to be able to give you accurate information,’ was all gone.
So, we’ve got all this into the limelight, then Covid goes away, then we started coming into the age of data centers. And now we have the AI hit. We have these businesses that went from three or four people in a Denver office or somewhere raising $3 billion, $6 billion or $10 billion in order to move. And the reality is they may or may not know how to build a data center. They know how product moves.
So, what we’re seeing on our side of things is that, just like the Empirix team are coming in and working with purchasing agents and working with teams to be able to start their operations, we’re doing a lot of the same things. We’re building their delivery chain from the ground up. We’re providing visibility, we’re providing greenhouse gas emissions visibility.
All that being said, in this particular industry, in mission critical, whether you’re purchasing, whether you’re shipping or whether you’re warehousing, status quo is not going to be okay.
Further, we have to be able to move at the speed of technology to be able to deliver the same customer experience to Empirix and their clients as you are used to getting in the consumer side.
We can all order Chapstick from Amazon and see when it gets picked, see when it gets put in the truck, see when they close the door, see when they’re 20 feet from your house. But you can’t buy a genset that you spent a couple million bucks on without having to call six degrees of Kevin Bacon!
So, the industry had to make a step up. And I think the biggest thing – and this is where the Empirix team has done a really good job of bringing us along as well – is that mission critical operations require specialized, mission critical vendors.
Visibility is not about necessarily just seeing where something is at a point in time but –within your visibility platform – being able to tell a story.
Michael Kokal President of KODIS Holdings
Quantity has a quality
Ethan: There’s a phrase I really like that comes from the military. It says that ‘quantity has a quality’. Another way of saying that is ‘more is not just more; more is different’. When I joined the team less than a year ago, Zach, you said that a 50-megawatt data center was a huge data center. And then this spring we started talking to clients who were building 200-megawatt data centers. We toured one, and it was like walking around a Death Star, it was just enormous!
That scale brings lots of challenges, and I think it brings out one of the most interesting trends; data is a utility. Power, water, food, data – we don’t want any less of that.
Ethan: What has that scale change brought to your business in terms of challenges and how you’re solving those challenges?
Michael: I think it’s an interesting question. Why it’s a little bit challenging is because when you talk about scale rate and you talk about the scale of the size of the building, you talk about the project itself.
At the end of the day, what we’ve learned here is that a shipment is a shipment, right? Doesn’t matter where it goes from A to B, it’s table stakes for anybody to operate. But it’s the way in which you actually construct the project prior to cutting a PO and prior to pouring a foundation.
Because what’s changed? Yes, the project has got a little bit bigger, but it’s not like time has condensed – if you’re going to build a 200-megawatt data center, it’s going to take you longer than building a smaller data center. The time has spread out.
But what I’ve seen more than anything else is that the age of ad hoc is over, the age of no information is over. The ability for data center developers or construction managers or procurement professionals to not know exactly where everything is at every point in time is over.
So, it requires the Empirix team or your own procurement team to be able to have access to information to make data driven decisions.
On our side of things, every single day that a truck is late, every single day that someone mismanages a piece of paperwork, these are dollars that are going out the door. And that’s not $100, $200 or $500. That’s millions of dollars that we’re delaying every single day.
So, has it got more challenging? Yes. Does it require more prep on the front end? Yes. But the reality is, the stakes have become so much higher.
Ethan: Sam, I’d love to kick that question over to you. You are our resident project delivery wizard. You touch these projects and lead these accounts every day. What are you seeing from the supply chain side that’s maybe changed with this same scale?
Sam: I love what Michael was just saying about the age of information. We’re in that stage of visibility – you must have that to be successful. There’s a stat that’s something like ‘only 15% of CPOs have visibility beyond their tier one suppliers’. That’s a major problem when we’re trying to move at the scale and pace in this industry to deliver. So that stands out to me.
Building on that topic, when I came into the mission critical industry, I got in right when the pandemic whip was starting to hit. So, on the supply chain side of things, over several months you started seeing these increased demand signals that were hitting the manufacturing plants, and those signals were getting passed down the chain, but nobody’s really stepping back and realizing that this supply chain can actually break – until it broke. It had been trickling on for months then, overnight, it had broken, and the lead times were through the roof for every product you were trying to get.
That’s where we were a few years ago. We’re getting better in today’s world, but like Michael was saying, you have to have visibility throughout the supply chain, throughout your partners, to be successful.
Ethan: I keenly remember in late 2020 visiting the same grocery store every day, and I eventually found a six-pack of toilet paper, and I put it in a bow and brought it home for my wife the same way I was bringing home flowers. And we all joke about it now, but that’s just how fragile the supply chain is. I think both companies agree that visibility is crucial.
Ethan:Zach, I want to ask you: visibility is a huge part of what Empirix does. Can you talk through some of the tools and processes that we’re investing in in that space and why they matter so much as we make these long-term decisions?
Zach: The core tool that we use is called Watchtower. It looks at the supply chain from cradle to grave, and all the way from demand planning, all the way through execution and even into – if the client wants or a partner wants – supplier relationship management, so you’re managing the full supply web, not just parts and pieces of the supply chain. That’s the key product that we use. And we see it as very valuable.
And, Michael, you said about the need for visibility. I mean, people need to not only understand post-PO visibility, they also need to understand why they’re cutting that PO, why they’re fighting for that availability of supply base.
We bring it in from a multifaceted perspective, and we’re not only just driving it from, ‘Hey, we know what’s going on and what should go on’ but from a strategic perspective as well. We’re making data-driven
“You can’t just show up and say, ‘I’m going to go run a supply chain tomorrow’ - I mean, you’ve actually got to be good at this now.”
decisions on the front end, so that we drastically limit the risk or potential risks down the supply chain or through the supply web, because it’s really a web – not a chain.
But you know, there are ripple effects regardless of what you do. People look at different strategies for different regions. A lot of people are starting to move from a regionally led, regionally executed supply web or supply chain to a centrally led strategy that then deploys regionally. And to do that you have to have visibility, you have to have data, you have to have decisions that are made to de-risk, not just to accomplish.
And I think that’s the interesting place we’re now in. We went through the crazy bullwhip that Sam was talking about, and people were like, ‘I just need butts in seats. I need a generator. I don’t care where it’s coming from or where it’s going to. I just need it here because I have an SLA I have to hit.’ It was the Hunger Games for a while and running a supply chain through that was quite interesting. But without having the proper visibility and the right data, it’s the blind leading the blind.
And as Sam mentioned, yes, we’re getting better. But just because we’re getting a little better doesn’t mean we shouldn’t implement and do all the things that would have stopped that craziness from happening in the first place, so that when it does happen again – and it’s not ‘if’, it’s ‘when’ – we’re prepared for that so we can actually make it through, regardless of the industry that you’re in.
Ethan: That’s a fantastic perspective. And one of the things that we focus on with Empirix Partners is creating control. We want to build a platform that is disciplined, predictable and scalable, so that our partners have control over their supply chain. And we think about control as two factors. One is
visibility, which we just addressed. The other is leverage. Because you need to see what’s going on, but you also need to be able to do something about it.
Ethan:Michael, I know KODIS is doing some really impressive stuff on the visibility front, but you’ve all also developed a network that I think creates exceptional control on the freight and transportation side. Can you talk about that?
MichAEl: Yeah, before I get into that, which I appreciate, I want to I want to circle back to the bow and the toilet paper. You are still married, correct?
Ethan: Yes! It was very romantic in November 2020, I promise!
Michael: Okay! Right, there’s a few different points around visibility. Because when we consider visibility for any sort of environment, I think the definition of visibility is what’s really hard. And sometimes it’s lost in translation.
Visibility is not saying, on the transportation side, ‘I can put my tracking number in and know where that freight is.’
Visibility is understanding that the moment that piece of equipment goes on the production line, you know that it’s going to take six days. You know, the paperwork’s going to take a day. You know the truck’s going to take four hours. You know the transit time is whatever amount. It’s about not necessarily just seeing where something is at a point in time, but – within your visibility platform – being able to tell a story.
What’s really interesting about the Empirix model and using vendors like us to be able to have really good information is that, without talking to a vendor and without talking to a
Zach Peña CEO OF Empirix Partners
trucking company, you can go into the Empirix system and be able to answer questions in real time that in the past would have maybe taken your procurement team hours.
Because what we’re really looking to do here is provide accurate information for boots on the ground to be able to decrease any sort of maverick spin.
One of the things that we talked about with a couple other vendors was, ‘You’re going to pinch pennies on freight or warehouse or whatever it is, but you’re willing to pay your GC $4 million to coordinate inbound deliveries?’
I’m not saying that ‘that’s not a bad thing’ – that’s the easy button. But it’s not in line with the overall technological push forward of the industry. Why are we so archaic in the way that we manage the supply chains, manage the visibility on the trucks, ultimately communicate with one another via phone? We can give you the information as you need it and how you want to digest it.
And that’s what’s unique about the partnership that we have here. Zach’s talking about Watchtower, but you know what that is? That’s a template. They’re going to mould it into what they want for each individual client because you’re going to ingest data in a way that makes sense for you as an ultimate decision maker.
So, I look at anybody that’s out there, pending on what their ERP system or lack of ERP system, are you their ERP system? So now we take that to say, each individual customer requires a bespoke level of service. And I think that’s really what we’re talking about here is giving a higher level of service to anybody that’s out there.
But what does that mean for us as a company? Anybody can pick up and deliver. Anybody can warehouse, anybody can work and develop a bot that goes into someone’s ecosystem to scrape data. It comes down to, at the very end of the day, shit in, shit out.
If your data that is going into your single source of truth is not quality data, then the output is not able to be trusted. So, our two organizations, when we work together, we ensure that the data that’s going in for consumer/stakeholder consumption is accurate data that can be trusted.
And I think as people start to get over this hump of not hitting the easy button – of using all the ways you used to do it before – I think you’re going to see a little bit of a technological revolution in mission critical logistics. And in particular us, on the visibility side – we don’t own trucks, I don’t have a fleet of boats, planes or anything like that, we deal with 9,000 different trucking companies every single year – but how can I deliver to Empirix and Empirix clients that same level of visibility? And from ours, its commitments of visibility, different layers of how we actually track that freight as it goes in and then, ultimately, having a back-end team here that allows us to be able to provide data that is useful, relevant and ready for decision making.
Zach: That useful data is interesting too, right? Michael, we’ve known each other for multiple years, but we didn’t really get into deep diving into opportunities in data centers until recently, in the last year or two.
Because we worked together and we found, wow, when you see this data – and now that we have the data, we have the visibility – we should be looking at freight. It’s not just that thing that happens. We should be looking at the money being spent post-PO, that
maverick spend, that unmanaged spend or whatever it might be, or that, ‘Hey, we’ll get to it eventually once we optimize the important parts of the supply chain.’ Which people really view, especially on the owner operator side, as pre-PO or getting to the PO. So, I mean, I’d love for you to give us a little background on that because it was extremely interesting to go from ‘We’re not really looking at data centers, but we are moving some of their equipment’ to now it’s a pretty big concentration of the work you guys do.
Michael: So, when I started the business, I went after clients that were really challenging because I thought cold calls were stupid. I don’t want to call somebody and then they tell me to piss off. So, what happened is we go to these more challenging places – anybody that the normal transportation provider wouldn’t go to, we would lean into those sorts of things.
For us it’s digital infrastructure, it’s power generation, both nuclear and fossil, underground construction, nutraceutical, pharmaceutical. All of these niche industries that, at the end of the day, if something goes wrong, there are going to be financial ramifications for it.
So going back to Zach’s point, we still do to this day have a very large presence in the semi-custom and custom commercial HVAC space across North America. And where we used to ship to a hospital or used to ship to a school, it’s now going to data center A, data center B, data center C. So, it wasn’t hard for us to see the market and where it was shifting to.
So now, what we say is, A) we’re the low person on the totem pole – how many times is this being marked up on the way until it gets to the actual end client? B) What does that experience actually look like?
Sam Robinson Vice President of client delivery
It’s about transparency and getting comfortable with being uncomfortable, right?
Sitting down with your partners, facing the problems that either they have or you have and working together to solve them.
Because we’re not necessarily saying we’re going to save money. We might not, we might be even a little bit more on the front end of things. But when you look at the overall total cost of the delivered product to the site, I think that’s what Zach’s talking about, is how we got into this space together to be able to understand what are the needs of a developer, what does the logistics provider need to bring to the table? How do we make it scalable, and how do we make it repeatable?
And I think that’s where we came into this. And it’s not an ‘ah-ha’ moment. It’s not really that hard. We follow the money. And I think that’s really how from our perspective we get to that next phase. I don’t know what the next industry is going to be. If any of you guys know it, that’d be great if you could give me a heads up so we could buy futures! But that’s not where we’re at.
And then I think the other thing too is the Scope 3 emissions conversation. This is really where we were able to work with Zach and say, what do we want to provide? How do you know how to reduce your emissions before you even know what the hell they are? How can you say that you’re putting together a plan and you’ve got to net 0 in 2030, hyperscaler, when you don’t even remotely know how to walk and chew gum? We’ve got to start somewhere.
So the point here is, if you start with the basics of understanding what the industry is going to require, and then we’re able to be pliable enough as a partnership here to be able to deliver a custom experience to these clients, I think ultimately, not only are you going to have any sort of decreased spend or delivered spend on anything like that, but you’re going to have a solution that fits your organization and is also able to scale with
your organization. As two different businesses, our philosophies are very much the same and aligned in that perspective.
Ethan: That’s a fantastic point. It’s one of the talking points that we have a lot with Empirix Partners is this shift, not just from cost reduction to opportunity cost. When you’re talking about building a data center, they can charge $100,000 a megawatt a month, sometimes 50%, 100% higher than that. The cost of them missing a month online, a quarter online can be tens, if not hundreds, of millions of dollars compared to them pinching pennies on a little bit of freight or taking too long to make a decision on releasing a PO. And I think about that a lot: this idea of fighting the last war, that they’re so used to this pre-Covid concept of bottom line, bottom line, bottom line, that they’re not thinking about how much they’re giving up on a much more competitive market.
Ethan:Sam, from your unique perspective and experience, what is one of the areas where we’re routinely seeing customers in this space fight the last war? Where are they making a decision based on how things were, instead of looking ahead towards how things are or are going to be – and you think that that’s going to really cost them?
Sam: I think everyone’s very much focused on the total cost of ownership. It’s certainly a buzzword, it sounds great, everyone wants to focus on it, but it’s hard to do. It’s not an easy thing to grasp and understand. And I think that’s the challenges that probably our team and Michael over at KODIS probably run into as well is, ‘We do understand the levers and the different things that get pulled and shifted when you make a selection for partner A versus partner B, or product A versus product B, and we can see that and we can help bring
data behind it and show that, hey, there is long term value that is created and goes with this solution or recommendation that we see that fits your business and your strategy’. And I personally think that that’s an issue or a challenge that a lot of our customers and clients face today: really grasping and putting the data behind that TCO-type model and decision that needs to be made.
Ethan: Zach, what do you think?
Zach: I think pinching pennies on what they actually need or having this grand facade of ‘I’m going to go out and build a supply chain team, or go out and do this, and it’s going to do these great things and it’s going to cost a little amount of money. And we’re going to go take on the world and be fine’. That sounds cool, but then you realize you’re actually building the plane while it’s not just going on the runway but taking off.
So, the ability to go do that, if you don’t really have that established, it’s not a light switch moment unless you bring in somebody like Empirix, or other help, to be able to do it. Because the difference between five years ago and now is that you can’t just show up and say, ‘Hey, where’s the line for all the cheap land and the free money? And where’s the line for the data center that I want to build?’ If you do, you’ll realise, ‘Oh, it’s nowhere? Okay, crap, where do I go?’
I mean, you’ve actually got to be good at this now, you can’t just show up. You have to be very good at finances. You have to be very good at supply chain. You have to have amazing relationships to be able to leverage across the board. This is not a knock on any specific individual or group or company, but you actually have to know what the hell you’re talking about. You can’t just show up
and say, ‘I’m going to go run a supply chain tomorrow’, or ‘I’m just going to go build a team’, or ‘I’m just going to go quadruple my capacity globally’ now.
I mean, you look at some of these forecasts of some of our current clients and potential future clients – and I’m not saying they can’t get there and I’m not saying that we can’t help them get there – but they’re looking at their two, three, four gigawatt global capacity that they want to put online between now and, we’ll call it, 2028. And they’re looking at it as a hill or a speed bump or a slight elevation. And they don’t realize that they’re staring at Mount Everest.
And I think that’s the big miss here. People are having a misconception that today’s environment is yesterday’s environment. So going in, doubling and tripling your capacity like you very easily did over the last five years is not going to happen in the next five years if you are not set up to win. And we can talk about what winning truly is, I think that definition is different for everybody, but I think that’s the big blind spot that I think we’re walking into.
Michael: So I agree wholeheartedly with all of those concepts. Zach, I thought you put it very eloquently. You either are losing or you are winning, there’s no middle ground here.
I almost look at this and I say that the buyer – whomever the buyer is, let’s just call it the developer – if they’re trying to do these things on their own, I think a lot of times the choice isn’t always theirs to make that next step. What do I mean by that? There’s so much concentration and critical path items that are, you know, for the OFCI side of this thing, that it’s concentrated at a very small group of
manufacturers, at least domestically. Now, every year that we go, we keep adding and adding and adding. The market needs to set itself right on the capacity side – the ability to produce product.
Because if you are going to buy a certain fan array with specific requirements, you’re going to one company. So, we’re going to one company, whomever they are, and now we say we want to decrease our delivery costs, we want to increase our speed to market – well what happens if I don’t have a Google balance sheet? What happens if I am that well-funded startup, but I don’t have the ability to carry all of that product for three years by ordering ahead of time?
So, I think there’s also this market setting situation which won’t happen until the developers or whomever is making the sourcing decisions allow themselves to use more nimble, newer technology companies that aren’t the old guard. Not to say that those aren’t phenomenal, phenomenal companies, but you’ve got to allow the small- to medium-sized players to get a chance at your data center, to get a chance to be able to scale – pay them properly, don’t string them out for 180 days, because they’re not going be able to scale their operations.
Zach, you talked about the cost of money, right? We’re going to hit inflation. The cost of moving something from A to B five years ago was half of what it is even today. That’s the biggest driver of what’s going on that’s nobody’s talking about right now. So, if you don’t have options on where to source, or you don’t have relationships with people, what are you going to do? You’re going to stand in line. You’re going to overpay.
And that’s what I loved when Zach and I started talking about this whole idea, was that you guys do have those relationships. We partner with people that other people maybe don’t know exist. But they’re a custom shop, right? I think this concept of ‘I’m going to go to that person because I always went to that person’ ultimately is stunting the growth and capacity for the market. But then I also look at that and I say, ‘Money is still undefeated in 2024, so reining in capacity is ultimately going to be good for everybody’s bottom line’.
Ethan: That’s interesting because that’s what happens when any market matures. And that’s what we’re seeing right now. None of these are surprising challenges. It’s just the data center, the mission critical space has hit maturity, but when any market matures, you see the same trend happen. Michael, it’s what you said – you win or you don’t, there’s no middle ground. And that’s what we see here in a mature market is you either have to be very, very big or you have to be very, very good – and the best companies are big and good, of course.
So, I think that the middle market players are maybe not making the right investments, the right decisions, to either get really, really good – which they can do by partnering with people like KODIS, partnering with people like Empirix – or to get as big as they can. They all seem to be aiming at big and that’s a very boom or bust bet, so we’ll see how that goes. But one of the big themes that’s been coming out of this is partnership, that’s something that we value at Empirix and something that you value at KODIS.
Ethan:So, I’ll just open this to the floor to share some thoughts on key partnerships –what makes them work, and also what makes partnerships hard to develop?
“So that’s the hot take for me: I think we’ll start seeing a little bit of an industry shift. The bottom of the totem pole is going to start pushing some of the technology needs.”
Zach Pena
Introduction
A developer and operator of clean energy technologies engaged KODIS, a leading 3PL providing specialized logistics for demanding end markets, to devise and implement a comprehensive logistics plan for the transportation of oil sands filtration equipment from Utah, United States, to Kuwait in the Middle East.
Client profile
Our client is a publicly traded clean energy technology company focused on the oil remediation and natural resources sector. Its patented filtration centers enable the environmentally friendly recovery of heavy crude and other hydrocarbons from shallow, oil-laden sands.
Objective
The goal was to dismantle the oil sands filtration equipment in Utah, ship it to an export facility in Houston, Texas, and transport it via steamship to the Port of Shuaiba, Kuwait. The client required consultation on best practices for loading, minimizing crane downtime, transporting to a specialized crating facility, handling customs in the U.S., managing ocean transport, and clearing customs in Kuwait. Additionally, the client needed consistent communication and global visibility of the goods in transit.
Solution
KODIS coordinated with the export crating facility, freight forwarders, and the steamship line to advise the client on efficient breakdown of the equipment for ocean-bound transport. A decommissioning crew was deployed to split the machine into transportable pieces that required several types of trucks. Due to a lack of space onsite in Utah, each piece of equipment was lifted directly onto a trailer. This process required a precisely choreographed sequence of thirty trucks and trailers to minimize costs. Given the complex nature of this multinational product movement, KODIS served as the nexus for consolidation and communication with over forty vendors, ensuring the client had a single point of contact. KODIS also provided GPS-enabled IoT devices, leveraging its technology platforms to offer a single source of truth for cost, item-level tracking, and visibility.
Outcome
Simply put, the project ran on schedule. without any excess trucks, crane downtime, or general hiccups. The freight arrived at Kuwait’s Port of Shuaiba on time, intact, ready for transport and reassembly.
Conclusion
KODIS successfully developed and executed a comprehensive operational plan, efficiently managing the logistics of transporting the client’s oversize equipment from Utah to Kuwait. This project highlighted KODIS’ expertise in providing organized, costeffective logistics solutions for complex, multinational movements.
MICHAEL: It comes down to trust, right? If you have the ability to say to your partner ‘Do this’, then you can’t micromanage. You, as Empirix, are looking at it at the highest level possible, even though you’re offering it to the clients at the most granular level, at the end of the day, you’re running the strategy. That’s really what you’re doing. You’re ensuring that what you said you were going to do, how you said you were going to deliver it, is going to happen.
So, when Empirix comes to us and says, ‘We have this new client, here’s the build, here’s the scope, put together what this looks like, your SOW’, you just have to trust that what we’re doing there is not only market-based pricing. It’s ultimately going to aid the clients and increasing their speed to market for whatever they’re building at that time and ultimately doing it efficiently, effectively, and with the least amount of disruption to it in any way, shape, or form. So to me, it’s still trust. I don’t know if that’s going to ever go away.
Zach: Yeah, I mean, here’s a great example of that. When Sam and I were at NTT together – you know, by no means did NTT have the buying power of Microsoft – but we sat in a room with the executives of Cummins and they said, ‘Because of your transparency, the trust you’ve built with us, just the availability of data, and your willingness to partner and be a true partner, not just something on a piece of paper, with your very large volumes that you have, you have the same clout in our boardroom that Microsoft does’. And we were like, ‘Oh, that’s cool! That sounds awesome’. Just because I used to work there, right, which was great.
But I don’t think it really hit us until we were really in the trenches, and we’re sitting there putting in orders and we’re getting whatever
we want, and we’re getting it when we want it, and we’re getting it for a fair price, and we’re getting a very senior dedicated resource that they specifically put on our account who’s probably one of the smartest people in the industry. And he was able to help us not just be good but guided us to be there.
And I think we do the same thing at Empirix – we’re not trying to be that hero, we’re trying to be that guide. And I think that back-and-forth trust is needed because we need to help guide the industry as professionals but also, we need the industry to help guide us. Because they’re seeing this, they’re feeling that, they’re understanding that. And if we’re not treating our partners and suppliers and OEMs whatever we want to call them, like we do our own internal families within our companies, then we’re not taking advantage of a very good leverage point to make sure that we are good at what we do so we can win.
Sam: Yeah, it’s really that transparency and getting comfortable with being uncomfortable, right? Sitting down with your partners facing the problems that either they have, or you have, and working together to solve it. We’ve seen that pay dividends in our past and do it here at Empirix. And, Michael, I know you guys over at KODIS, it’s on your website within your core beliefs of how you approach challenges with collaboration.
Ethan: It’s really important to understand what your partner goal is, what they’re after. Zach, one of the interesting insights you’ve taught me is, especially for these OEMs, of course, they want the highest total upside, but they don’t want a gigantic order and then three months later, 20% of it drops off and six months later, 20% drops off. They want a predictable production curve. You would rather have a known volume of business every
day, week, month, quarter that you can grow on rather than having these boom or bust trends.
So, I think it’s really important for trust, partnership, collaboration to understand what your partner’s goals are and to freely share what your goals are. I think we all know, from this space, the classic way of doing things was to not even admit that you had goals, and to make your partner try and guess what the goals are, which is just maddening to me.
Zach: Yeah, I mean, the looks on the on the suppliers and partners faces when you actually sit and be honest with them. They’re dumbfounded.
‘Oh, what do you mean – you’re sharing this with me? What do you mean you’re going to allow 360 feedback to go back and forth? You’re going to let me tell you that I hate your Ops guy because he screws me over every time I try to come and replace an air filter on your generator?’ That real, tangible stuff is what we need with trust. Not just giving them data and taking it back and having a communication. It’s truly getting deep and showing them what’s behind the curtain and not just saying that we have a curtain.
Ethan: We’re starting to wrap up, so Michael, what’s your spiciest take on the market?
MichAEl: What I think to be the spiciest part of this right now would probably have to be what I touched on earlier – people’s willingness to go outside of what is the norm right now. At the end of the day, if you get something up and running, more than likely you’re going to make money right now. And do we think that this whole demand side for data centers is going to continue at this massive hockey stick pace? I don’t know, I
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Zachary Peña – CEO
think basic macroeconomics would tell us there’s going to be something out there that’s going to stop that, maybe even something unknown.
So, I think ultimately what works today, what gets us through today, is still going to work today. However, in this binary, yes or no sort of situation, we need to build for what could be, minimize our downside and look to the fact that, you know, maybe demand might not be there next year due to whatever forces.
We have geopolitical issues that are out there where there’s been threats of nuclear invasion. How does that work here? I’m not 100% sure. If somebody fires a nuclear weapon, it’s not going to be great for our markets. It’s not going to be great for people’s ability and trust in the banking system. How does that work, then, into the future? How do we how do we minimize the downside for that? And how do we ultimately have pliable supply chains to be able to react to things that we may not even see in the future?
Zach: I think the tide’s turning on the way that people approach the market. I think that historically it was very hyperscaler driven by the technologies that were brought to market. And then, just organically, the colocation providers would come in and then either repeat that, copy that, or have some type of version of that, because they were then obviously seeking those hyperscalers to lease their space.
And that was kind of the transition, right? It was like, ‘Okay, coming out of this technology, coming out of this new way of doing things we’re either going to concentrate on lowering PUE, or we’re going to concentrate on moving from water to air side, or move from this technology, that technology’. And I think that’s shifting. I think some of these new market entries, some of these medium guys that are trying to make a name for themselves or go big, are starting
to get some testicular fortitude on them. And they’re saying, ‘Hey, I have this. Let’s run with it and screw what we used to do; we know that there’s going to be an AI problem with capacity. We know that there’s a current capacity issue. Let’s just get online and let’s go do something cool. Let’s go.’
We want to work with you to go build cool shit. Well, there’s people that are finally starting to build cool shit. And we’re seeing that ‘grid last’ or stuff like that is real and coming and being produced today – dirt is moving on these sites.
And so that’s the hot take for me: I think we’re going to start seeing a little bit of an industry shift. The bottom of the totem pole is going to start pushing some of the technology needs, and I think you might see some of the hyperscalers either following suit or having a less direct impact to the actual movement of the industry.
Ethan:That’s a great take. I’ll go to Zach next.
“SALUT!”
Ethan: You both lead companies that are crucial, mission critical to this giant, nebulous thing we call supply chain. Michael, Zach, do you have any core message you want to leave us with related to what you do? Maybe what makes us uniquely suited to help meet these challenges?
Zach: I’ll go first if that’s okay. I think choosing the right partner is the way to success in the future. I think a lot of people have gone out and tried to build their own teams, and I think they’ve been successful on that, but they’ve built those teams to answer a problem that’s in the past and not the problem in the future. And I think supplementing that and figuring out what your gaps are and who can help you – I’m not even saying it’s Empirix or KODIS – but just realizing that you probably have a pretty large gap to get to where you need to be, and very quickly figuring it out and choosing the right partner to get there is going to be vitally important to be able to achieve these 2X, 3X, 4X gaps in
these forecasts that people are putting out there.
So, I think the message is, do a little bit of a gut check. Sit there and say, ‘Am I tooled for what our North Star truly is? Or do I even know what my North Star is?’ And get into that very quickly because without that, developing the team you need and/or maturing the team you need, or supplementing the team you need, is not going to be a quick process for you. And obviously both KODIS and Empirix are here to help and would love to, so, if you need help, give us a call.
MichAEl: That’s actually kind of the way that I was going to go through it. You know, we live our lives as individuals, and we buy houses, and we drive cars and we have a computer. But as individual consumers of anything, I don’t build my own car. I don’t build my own house. I do what’s core to me, right?
And I think my message for anybody is – and kind of going back to that gut check Zach just talked about – as a business that is buying services from anybody, the best partner you can be to a service provider is somebody that knows who the hell you are. And once you define and know who you are, know what your strengths are, know what your weaknesses are, don’t be afraid to say, ‘I don’t have coverage in that space. And what I’m really going to do is go out there and hire smart people’.
I think those are the people that ultimately win.
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