Staff Photo by Dan Henry / Kristi Montgomery, vice president of Kenco's Innovation Labs, speaks about uses for collaborative robots like "Baxter" made by Rethink Robotics while in the labs.
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Staff Photo by Dan Henry / Kenco Innovation Research Manager Matt McLelland speaks about Microsoft Hololens "mixed reality" goggles and how he is using them to benefit the company while at Kenco's Innovation Labs.


* Headquarters: Chattanooga

* Business: Third-party logistics and supply chain management

* CEO: Jane Kennedy Greene

* Employees: 5,000 with 600 in Chattanooga

* Revenue: $530 million

* Locations: Over 25 million square feet in 90 North American sites

* Scope: $75 billion of product managed through facilities

Source: Kenco

Matt McLelland of Kenco Innovation Labs says that when they talk to customers of the Chattanooga-based logistics company, the businesses all want to know about the future of drones.

"Companies are figuring out ways to use them," he says. "It's not about replacing people, but it's freeing them up."

Drone use is just one of an array of new technologies and ways of doing business in which Kenco Group's labs are pushing the envelope in the logistics business.

The labs were started in June 2015 by logistics giant Kenco to focus on researching and developing innovative approaches to supply chain management challenges.

Kenco, which employs about 5,000 workers including 600 in its hometown of Chattanooga, set up the dedicated department and team of workers to collaborate with customers and others. The aim is to identify, investigate and prototype what it calls leading-edge ideas and processes.

"Logistics is a fast-moving business," says Kristi Montgomery, who heads the labs as vice president of innovation and research and development. "There are always new challenges."

She says that by Kenco dedicating space and people, the labs aren't involved in "constant fire-fighting" day to day.

"We've got to figure out how to solve problems in the future," says Montgomery, who has been at Kenco for 26 years, all in information technology.

McLelland, the labs' innovation research manager, says Kenco has been an innovative company since its startup in 1950.

"Now it's just more formalized and channeled. There's a tremendous amount of technology already in the industry," says McLelland, who has 12 years at Kenco and had been in IT before moving over to the labs.

Montgomery says the labs have four goals: marketing, education, research and prototyping.

"We plan around these goals," she says, adding that there's a council of seven top leaders in the company that oversees the labs' work.

The labs partner with entrepreneurs and vendors from multiple industries. They seek to identify trends that can be cost-effectively applied in the supply chain and create customer-driven solutions.

Montgomery says that most of Kenco's customers are manufacturers and much of their R&D is in product development with little focus on the supply chain.

"It's not their priority," she says. "It's not their core business."

But, Montgomery says, companies are interested in delivering new value to the supply chain and are reaching out to Kenco.

"They're eager," she says. "They don't have the resources to do it on their own. It's seeing through a different set of eyes."

For Kenco, Montgomery says, innovation isn't an after-thought.

"It's where we want to take our organization and our customers," she says.

McLelland says that logistics tends to be high volume and low margin and simple changes can yield big results over time.

"We're always looking for that kind of process change," he says. "It's not just gadgets and technologies."

The two officials cited the so-called cluster of logistics operators in the Chattanooga area and plans to continue to grow that business.

Lamp Post Group, a business incubator created with the help of Access America Transport founders Ted Alling, Barry Large and Allan Davis, has started an accelerator program and fund called Dynamo. It's designed to promote the advancement of the logistics, transportation and supply chain industries, and Kenco is a partner in the effort.

"There's a lot of things going on to put us on the logistics map," McLelland says.

Among technologies with which the Kenco labs are working include 3-D printing, mixed-reality headsets, drones and collaborative robots.

The use of 3-D printers can take the fabrication of components from computer design to actual part in hand in a seamless manner known as direct digital manufacturing. Kenco could have a bank of 3-D printers and "take out the manufacturing step," McLelland says.

Mixed-reality headsets can create a virtual reality for the user. McLelland says it has created a training experience for Kenco workers and there's "a lot of potential" for the headsets in the logistics field.

When it comes to the use of drones, those could be used to scan trucks outside. Kenco already is working with a pair of companies for indoor use.

"Indoor [use] is for sure," Montgomery says. There's less regulation than outdoors. It's definitely a viable technology."

While many companies use industrial robots, so-called "collaborative robots" can do repetitive tasks and work around humans by reacting when people enter their space.

"It allows humans to do higher things," Montgomery says.

McLelland says that company management has seen the value of the labs, and he believes "we've delivered on their confidence."