VARGO® Featured in Columbus CEO Story

VARGO® was featured in “Smart Logistics” section of the Columbus CEO story on Columbus winning the Smart City Challenge, published in January of 2017. Read the full article below:

Columbus is Showing Up Smart

By Mary Yost & Chloe Teasley

Look around and it becomes apparent that smart is contagious in Columbus and shows up strong in multiple sectors.

Winning the US Department of Transportation’s Smart City Challenge was not the first independent proclamation of Columbus’ smarts. Columbus rose above 400 cities from around the world to be named the 2015 Intelligent Community of the Year by Intelligent Community Forum, a think tank for 21st century economic and social development. ICF bases the designation on how cities and regions use information and communications technology to grow prosperity, solve social problems and enrich quality of life. Columbus was among the top seven intelligent communities as ranked by ICF in 2014 and 2013.

From education to healthcare, logistics to retail, Columbus-based companies, public agencies and not-for-profit organizations are working daily to stake a convincing claim that Columbus is one of the smartest cities in the country. As for the Smart Columbus project launched by the USDOT challenge, work is well underway to put into action the aspirations spelled out in the city’s grant application.

“We are looking to our workgroups to validate some of the ideas we have and to refine the target and then to prioritize,” says Aparna Dial, program manager and deputy director in the Columbus Department of Public Service. With a background as director of energy services and sustainability at Ohio State University, Dial sees almost endless possibilities in what Smart Columbus can spawn.

“The ultimate goal here is to be smart as a region, right? And how do we define smart collectively as a region and what does it mean to be smart? From the city’s perspective, it would be how we deliver our services every single day, whether it’s issuing permits or collecting garbage or delivering utilities, how do we use data or automate certain things and then use this data to make smart decisions? How do we build an action plan to get to that better future as a city?” Dial says.

From there, goals can include regional economic growth and development and how to attract new industries, innovation and jobs. “There has to be a broader strategy and vision for us as a region,” she explains.

Technology is the enabler for smart work, Dial says, and it starts with connected devices that mushroomed worldwide from 200 million in 2000 to 10 billion by 2012. “But the infrastructure to some extent already exists with cell towers and all the data networks that are out there that we can piggyback on,” Dial adds.

One definition of being smart means increasing people’s access to engaged, clean, healthy and safe lifestyles “without compromising the ability of future generations to meet their needs,” Dial says. “It’s all about enhanced ladders of opportunity for all of our citizens; no doubt about it. Better health, better mobility, helping people break through the cycle of poverty, improving infant mortality. That’s what keeps me up and going every day—how we can improve life for our people.”

For most of 2017, visible signs of change may be lacking, but Smart Columbus’ focus will be “really engaging our community in validating the problems and the solutions and focusing on designing with the community,” Dial says.

Smart Education: Listening and Learning

Customization is making tech ed. in Columbus smarter. Columbus City Schools Superintendent Dan Good initiated a transformation of the Career-Technical Program that is available to anyone, currently educating people ranging from seventh grade to 80 years old, who may be un- or under-employed, he says.

The 37 pathways offered through the new Career-Technical Program are made-to-order. Not only are they revamped to offer relevant positions—think cyber security instead of keyboarding—they are specialized by neighborhood and new ones are created as needed, always with a goal of reflecting the city’s demographic to avoid a disproportionate number of people prepared for any position.

“The thing we’ve learned in large school districts is you don’t necessarily want to have the same solution for every site. It needs to be unique to the neighborhoods you serve,” says Good. “I just came out of a meeting where we’re looking at expanding the emergency medical technician programs and our computer-coding technology career programs down to our southern-most school, which is Marion Franklin, because of the needs they’ve expressed, because of their proximity to the fire safety training facility and the Columbus fire department,” he adds.

Beginning in seventh grade, students have an option to take classes through the Career-Tech Program in pathways from high-end catering to construction technologies. Not only do they get a jumpstart on a possible career, the classes teach executive functioning that is transferrable to all careers, says Good.

The classes are in-depth—no mere flavor of the month—which helps students savor potential occupations, and they are relevant.

“Who needs to sit in the classroom for 40 hours a week anymore and not apply those skills? They’re earning credit, credentials, money. And they’re graduating and getting jobs,” he says.

Another thing that excites Good is the possibility of natural mentoring relationships forming as adult learners work alongside younger ones.

“Where we’re headed is we’re really beginning to blur the lines between high school education and post high school education. Maybe not next year, and maybe not Columbus—but I hope Columbus—you’ll begin to see where there are adult learners side by side school-aged learners, and learning some of those same skills and being able to apply those skills,” he says. “The modeling, the mentoring, the possibilities for tutoring—it’s brilliant. You’ll see more of that.”

FutureReady is coming toward the solution from a different angle. One of its five areas of work decided in 2016 is to build a data dashboard with stats related to barriers in learning for children that is available to the community and is expected to be online in September or October of 2017. It is meant to take Columbus’ temperature, not to point fingers.

“These are some phenomenal opportunities we have, but these are also some areas of needed improvement that will make us even better than we are,” says Lillian Lowery, president and CEO of FutureReady.

The dashboard will focus on 10 different indicators of the city’s education health. Relevant entities already having databases have been included in the discussion, including Ohio Education Research Center, Hands On, Nationwide Children’s Hospital, juvenile court systems and the county’s mental health services.

“We went from not just academic, but also social determinants that can in any way impede success for our children graduating from high school, college and (becoming) career-ready,” says Lowery.

Indicators range from kindergarten readiness and attendance to mobility and food insecurity. They each represent another possible barrier blocking a child from being able to learn. The indicators will be measured and used to inform other work on the docket for the next three years. “What gets measured, gets done,” asserts Lowery. “And focus matters.”

The idea behind the dashboard is to help discern “what would be the most critical indicators at this point in time for us to watch, measure and develop trend data around so that we can tell a story of what’s happening in our community and what we’re doing to impact that,” says Lowery. It also illustrates to providers a unified footprint of the children they serve.

“We have early warning indicators which are attendance, behavior and course performance. Our school-time partners, with parents’ permission, will have access to the students’ data every day. Now we can support the schools instead of just showing up at the Boys and Girls Club and doing a program that is completely isolated from anything that goes on in schools. Now the school systems are working hand-in-glove with their out-of-school-time partners that provide before- and after-school and summer services so that they are all speaking a common language, looking at common data and customizing support for students like never done before.”

The city has gone to bat for Columbus public education by heeding recommendations, generating solutions and tailoring them to fit specific needs right down to the neighborhood level with some smart solutions that often address more than one problem at once.

“In 2013, then-Mayor (Michael) Coleman and Mayor (Andrew) Ginther as city council president put together the Columbus Education Commission to examine challenges facing children in the Columbus City School District. “… One of the recommendations of the commission was to establish an office of education improvement, so here I am,” says City of Columbus Education Director Rhonda Johnson. “Another recommendation that Mayor Coleman wanted to focus on was early childhood education and providing access for 4-year-olds. Mayor Ginther has continued that as one of his priorities,” she adds.

One way this improvement idea has blossomed is the Linden Park Neighborhood Pre-K Center, opened fall 2016. The center focuses exclusively on 4-year-olds who receive publicly funded childcare. “These are our most vulnerable children,” says Johnson.

The center’s philosophy is to gather programs already in place and have them work together rather than just cohabitate. In the center, programs like CBC Head Start and YMCA will both be providing care, but parents will not be able to differentiate between them. “They’re going to be able to learn from one another because they have different skills and requirements. My dream is for it to be this professional development center that other providers can go in and learn and be coached,” Johnson says.

Right now, six classrooms are operational. By 2018, Johnson expects the center will have 16 classrooms; a parent lounge with computers and a way for parents to work on getting GEDs and space for teachers—working both in and out of the center as childcare providers—to undergo professional development.

“There are other pre-K opportunities in the Linden community, but not enough for all of the children, so our kids already start at a disadvantage because of challenges they face just living, and then not having the opportunity for a high-quality learning experience is not good for them. The center helps meet a need, and it is these kids who will really help keep our city smart,” says Johnson.

Smart Healthcare: Lifesaving Data

As healthcare providers and payers across the country work to make medical care smarter, two Columbus-based organizations are leading the way.

For several years, the federal government has awarded competitive contracts to entities that can meet stringent goals for better medical outcomes and fewer preventable errors. While the number of contracts offered decreased from 26 to 19 to 16, only one city in the nation can claim having two of them—Columbus.

The Ohio Hospital Association won a $6.75 million, two-year Hospital Improvement Innovation Network contract with an optional third year valued at nearly $3.7 million. The Children’s Hospitals’ Solutions for Patient Safety has a two-year HIIN contract for more than $4 million with an optional third year. The contracts build on work both Columbus-based organizations have been engaged in for years to use shared data from adult and pediatric hospitals, respectively, to identify good and bad outcomes, contributing causes and then to broadly share what’s working to prevent problems and keep patients healthier.

“The starting point is almost always the data: what are the data telling us? Not only the biggest area of need but where we have the highest potential for success in addressing the issues. Then we bring in outside expertise from across the country, but we also bring in very real expertise from our membership, not only speaking about what went right but what went wrong and how to address what went wrong so it doesn’t happen to other people,” explains Amy Andres, OHA senior vice president, quality and data.

One of the first smart lessons from that work came when Rosalie Weakland, OHA senior director of quality programs, recognized a need for hospitals to partner with other providers to keep patients from ending up back in the hospital after they are discharged, Andres says.

“There was a recognition on her part—and all of the studies and data are bearing this out—if a patient ends up back in hospital in seven days, it probably was something related to medical care. Days eight through 30, and the more you get away from day seven, the more it’s likely to be something outside the hospital, circumstances related to the patient. They don’t have somebody else at home to help with their care. There’s a language barrier that it is not so much a medical situation but a circumstance situation,” Andres explains.

That led to Ohio hospitals coordinating with long-term care, home health providers and others to address multiple issues—medical and non-medical—to help patients continue healing after hospitalizations. “Because of that, Ohio’s had one of the fastest reductions in readmissions compared to most other states,” Andres says. The financial impact is a savings of more than $1 billion a year in avoided readmissions in Ohio, she says.

“That was smart because those are healthcare dollars that have been pulled out of the system. It was smart that (Weakland) and the hospitals realized early that the problem is not so much healthcare; it’s related to the coordination of care and what happens to the patient after they leave. So if we’re going to fix the problem, we have to look at the situation differently and not just think about it clinically. And frankly, that’s the reason Ohio was funded,” Andres says.

With work targeted to prevent surgical site infections and patient falls as well as reduce readmissions, ventilator-associated pneumonia, sepsis and infant mortality, OHA says its collaboration with member hospitals has avoided nearly 2 million incidents of harm, saved 673 lives in its sepsis initiative alone and prevented 143 infant deaths. Its work in 2017 has specific goals of reducing patient harm by 10 to 15 percent, depending on the condition.

OHA President and CEO Mike Abrams says Ohio hospitals readily embrace opportunities to partner for patient safety. “People focus too much on competition in this industry, which is real and in many ways it’s healthy, but when it comes to patient safety and quality, there is a lot of collaboration and people just genuinely care about raising the quality of healthcare that we’re delivering communitywide.”

A similar data-based approach in pediatrics is behind the work that has gained a strong national reputation for children’s hospitals in Ohio.

Nearly a decade ago, corporate leaders in the Columbus-based Ohio Business Roundtable prompted creation of the Solutions for Patient Safety project that now engages more than 110 children’s hospitals across North America. Former Cardinal Health CEO Kerry Clark was the original corporate champion. Nick Lashutka led the initiative as a Business Roundtable staff member and has expanded its reach in his current position as head of both the SPS and the Ohio Children’s Hospital Association.

The business leaders wanted to find ways to improve healthcare outcomes while lowering costs. They focused on patient safety issues as a way to do both.

“The power of our approach was born out a very strong belief inside of pediatrics from the clinical leaders, both physicians and nursing, as well as the CEOs and other C-suite leaders, but more importantly the members of our individual hospital boards of directors, that we had a commitment to our patients and our families that we wouldn’t keep the best ideas to ourselves,” Lashutka says. He recalls a favorite quote at the time from then-Cincinnati Children’s Hospital CEO Jim Anderson: “We’re not going to compete on ideas, we’re going to compete in execution.”

What was especially smart about the SPS approach was how it looked outside of healthcare for lessons on leadership and culture.

“That was the key to cracking the nut. So leadership and culture, something that all high-performing companies have in common, became the key factor in how we began to build this system of patient safety in originally our eight Ohio hospitals. And that initial work on adverse drug events and surgical site infections yielded tremendous results. We were able to successfully reduce the incidence of those two HACs (hospital-acquired conditions) in Ohio by 66 percent on surgical site infections and 35 percent adverse drug events,” Lashutka says.

Cardinal Health was an early funder of SPS and American Electric Power got on board as the work expanded. Current Cardinal CEO George Barrett picked up the mantle when he succeeded Clark.

SPS remains the only pediatric-focused patient safety network to receive a federal contract to eliminate serious harm, and it routinely is invited by federal regulators to help teach other networks. Lashutka says key differentiating tenets he shares are “learning from outside of healthcare, partnering with the business community, focusing almost exclusively on culture and leadership.”

Another smart approach SPS employs is that good ideas can come from anywhere, Lashutka says. “We are always exploring new ways to have impact on our work. The ‘all teach, all learn’ approach means we are not simply going to go into our laboratory and develop a bundle for how to eradicate a specific hospital-acquired condition and then tell the network ‘go do this.’” he explains.

Instead, “Everyone has a responsibility to contribute knowledge and out of that very powerful diversity of where kids are receiving care, yields, in a very short order of time, what that recommended best care bundle might be for a particular condition. In the medical literature around research and publications, it’s often said that it takes 17 years for an idea to germinate, be vetted, published and ultimately implemented broadly into the healthcare delivery system. What we’ve been able to do with SPS is substantially decrease that.”

Lashutka can’t talk long about the work of SPS without sharing the story of his son, Ike, a twin who recently turned 7. As an infant, Ike was very seriously ill with strep pneumonia and hospitalized in pediatric intensive care. As a toddler, he had successful brain surgery in Cincinnati Children’s. In both cases, their family benefitted from SPS’ success, Lashutka says.

“For our son Ike, it’s what didn’t happen when he had a nine-day stay in the PICU in Nationwide Children’s. He didn’t get a central line infection. He didn’t have an adverse drug event. He didn’t get a ventilator-associated pneumonia. He didn’t have any of these hospital-acquired conditions or serious safety events that no family or child should have to endure.

“We’re so grateful that we live in a state and a community where the hospital leadership and the clinical leadership inside of those hospitals have such a passion and such an internationally renowned group of experts that they’re willing to take really hard looks at how our healthcare system operates and make the tough choices to improve it even though that oftentimes can be uncomfortable for people,” Lashutka says.

He adds, “I’m happy to talk about this to anybody, anywhere, anytime. It’s been a game changer for everybody.”

Smart Logistics: Smooth Moves

he logistics scene in Columbus extends miles beyond ground transit, but with smarts often hidden behind the operations served, good logistics may be easy to miss.

For instance, VARGO, a local company operational since 1971, is the self-described pioneer of waveless technology for fulfillment centers. Its software directs a steady stream of fulfillment center work rather than a clunky weekly queue. Its software system, Continuous Order Fulfillment Engine, works within a warehouse management system to parcel tasks to pickers as they are created. One big reason for COFE is the advent of e-commerce, which throws a wrench in traditional warehouse operations.

“With today’s e-commerce environment there is no such thing as a plan, so the systems that were designed to handle things that are very planned now get the introduction of chaos through e-commerce,” says Bart Cera, chief operating officer and chief financial officer. “What COFE does is it takes those work execution tasks … and it makes the next best decision based on one thing—the next item, the next order—not necessarily based on a plan of orders.”

VARGO excels in an omnichannel world, says Cera, as COFE blends both the planned and unplanned processes of retail fulfillment, allowing for the consolidation of fulfillment centers designed to handle store fronts and e-commerce separately.

“That has freed up a tremendous amount of capital for our customers so they don’t have to have everything doubled. The associate that’s on the floor doing the picking, the packing and the shipping, they don’t know if they’re doing it for an e-commerce order or if they’re doing it for a retail fulfillment order,” says CEO Mike Vargo.

Though COFE has had many different versions, one of the smartest iterations it has undergone is that of simplification; removing complexities from the solution the software offers.

“COFE was and continues to be kind of a moving target; it’s a forever-growing software solution. When we acquired this company ten years ago, to look at the software solution today, it’s very different than what it was even ten years ago,” says Vargo.

Cera and Vargo give credit to Columbus’ education institutions for the continual provision of talent that has been a catalyst of VARGO’s forward movement. “I think the city itself sets itself up well with the institutions we have in town—Ohio State and some of the other universities—I know we’re able to pull talent out of these schools that furthers our mission,” says Cera.

In 2017, VARGO’s focus will be on signing new users who see companies like American Eagle Outfitters, Target and Forever 21 reaping the benefits of streamlined fulfillment centers. The first two quarters of the year will see multiple installations of the system.

“One of the items that jump out when I talk to people is that our company in Hilliard, Ohio, is affecting companies across the nation. I think the importance of that relays to the fact that Columbus is a pretty smart town. Not just the distribution, not just the service sector, but really the fact that there are companies in Columbus that are having substantial impacts on well-known Fortune 50-type companies across the nation,” says Cera.

Another Columbus logistics exemplar, Rickenbacker Inland Port, has been busy adding things to its reputable space. Among them are a new building, airline and export.

Columbus Regional Airport Authority President and CEO Elaine Roberts points out that collaboration with other companies used to grow the port is unique and has made the port a “forward-thinking logistics hub.”

2016 saw the construction of 100,000-square-foot Air Cargo Terminal 5, built by Mast Global, a subsidiary of L Brands. Anyone can use it for exports; it has seen mostly textiles and auto parts since becoming operational, with much of the latter being driven by Honda.

“It’s been going so well and growth is happening so quickly that we may even consider expanding that building next year. The city, the county and the state, as well as the airport authority, all collaborated—which is pretty unheard of in the logistics industry—and invested close to $15 million for utilities, roads, an aircraft parking ramp, as well as the building,” says Roberts. Because of this rapid growth a new airline was installed—Etihad—which will fly in goods from Sri Lanka.

“Another thing that’s setting us apart that’s ‘smart’ and pretty unique: We’re one of less than 20 airports in the country that the US Department of Agriculture has approved for animal exports,” explains Roberts. “Racehorses are being brought from Kentucky to Rickenbacker and being exported. We’ve also had pregnant heifers and pygmy goats—so it’s becoming kind of a niche of ours at Rickenbacker. We expect to see more shipments next year.”

Rickenbacker set a new precedent for animal export. Animals are typically required to have a five-hour rest period whenever they cross state lines, but animals travelling from Kentucky into Ohio can now make a straight shot to Rickenbacker. The airport was even used recently to fly an endangered rhinoceros from the Cincinnati Zoo to Indonesia.

Currently, the port is being smart by promoting to areas and states surrounding central Ohio the possibility of trucking to Rickenbacker to use its services rather than driving all the way to Chicago. “This is a better location to ship from than to drive all the way to Chicago,” says Roberts. “That’s our value proposition—we can get it there faster with less delays and it’s also more cost-effective.”

Just being in Columbus is part of what has made Rickenbacker highly successful, according to Roberts.

“Very few cities have two major airports, and most do not have a dedicated, primarily cargo airport like we do. That gives a lot of advantages, it (also) has some challenges because of the cost to maintain two big airports, but I think it’s going to give us some opportunities that other cities don’t have. Probably the best asset is our location—we’re centrally located and can ship goods to over half the United States’ population by truck in one day, that’s pretty rare.”

Smart Retail: Brand Building

rom early days as the nation’s ideal test market to recent accolades for its third-ranked fashion design presence, Columbus is accustomed to modeling success in the retail sector. Now increasingly, brands in business around the world are relying on data scientists in Columbus to smarten up their communications with consumers.

Columbus-based Alliance Data has become a global leader in helping retail brands know exactly what their customers want, when they want it, how they prefer to shop for it and what they are likely to want next. The key to its smart work is lots of data—coupling information gathered through today’s technology with scientific analysis of old-fashioned consumer research.

“We like to think we’re smart, too,” says Mike Schmidt, Alliance vice president, marketing insights. “We do some really great work. What we are really all about, is ‘know more, sell more.’ From that perspective, we always talk about it two ways,” he explains.

“One is how do we help our brand partners know more about their customers so they can sell more but also sell more effectively, sell more relevantly,” Schmidt says.

“The second piece is to make sure that you feel like you’re getting offers and merchandise and communications that really speak to you. Nothing worse, in my mind as a consumer, (than) when I get an email with an offer the day after I was in the store. Or you get a special offer for infant clothing when you only have a 10-year-old in the house,” he adds.

Alliance works with more than 150 retail brands to try to make sure such gaffes don’t happen.

One of the smart approaches Alliance uses is predictive modeling, and the company relies on more than two dozen PhD data scientists to apply their best analytical and creative skills to help brand partners know their customers intimately, Schmidt says. Another 80 “strong analytical minds” look at trends to understand consumers more deeply, “so we have that bench strength that we can bring people in even without the retail experience and just teach them about that space.”

One type of model Alliance develops is a “shopping cycle model” to answer questions about customers such as, “Are they a once-a-year wardrober? Do they like to come in every two weeks as the floor set gets refreshed and take a look at what’s new? Are they a clearance buyer? Are they an early fashion trendsetter?” Schmidt says. The more retailers understand customers’ shopping habits, the more they can communicate with them effectively and get the right offers to them at the right time.

Alliance also helps its retail partners—brands like Victoria’s Secret and Pottery Barn—understand what types of merchandise their customers prefer so the retailers can direct consumers to more of what they like.

“It’s, ‘Oh, she likes those shoes in that color? Here are the three other things that you really should be thinking about offering her.’ And then, where it’s not always apparent as to why the connection exists, we do a lot of direct customer surveying, too. So we’ll do focus groups and online surveys because that way you can augment the what-is-happening with the true voice of customers as to why it’s happening,” Schmidt explains.

“That way you don’t go down path of tripping yourself into thinking that everything’s a mathematical formula, but you really bring that strong human element back in and ultimately, if you think about decisions you make, it’s what you hear from people and not just the numbers that really convince you. So it’s bringing those pieces together, making it relevant for each brand partner individually, uniquely, (that) really gets them excited and then ultimately really gets their own customers excited. So we’re able to take whatever loyalty you have within a brand and really just magnify that. That’s powerful,” he adds.

Speed and place are also important aspects of knowing customers, Schmidt says. Alliance helps retail partners set up a geo-fence that can access customers’ smart phone GPS and trigger messages when the boundary is crossed.

“Our sister company within Alliance Data is Conversant, and Conversant has done a really, really good job of being able to identify that it is in fact Mary’s smart phone as opposed to maybe Mary’s tablet (used by other family members) to make sure that we’re also delivering the message to right person, and in the digital world, that can get blurry. So being able to do that well also becomes really, really important,” Schmidt says.

For their part, consumers are incentivized to allow access to their data because they want relevant, timely communications from retailers, Schmidt says. “Our goal is always (to) be so transparent that you can just see through it; you don’t even see us behind the scenes. It just feels natural and this is what you would have come to expect as a modern consumer anyway.”

To keep its data scientists engaged and energized, Alliance encourages them to spend 10 percent of their time working on outside modeling competitions or writing professional papers to publish for their peers. Data scientists also meet directly with brand partners to learn their challenges and brainstorm solutions. “This is not an arm’s length where you’re just getting a work order and you’re sitting in a cubicle and crunching numbers. You’re sitting down with the marketing folks or analytical folks at our partners,” which Schmidt says keeps the work fresh and interesting.

Schmidt has watched Alliance’s expertise evolve since joining the company in 1994, and he is still obviously excited about the work.

For 2017, Alliance is exploring “machine learning, where you’re starting to almost get into the beginnings of artificial intelligence-type analytics, and we’re continuing to bring in and find new information and new data sources about our consumers to help continue to drive that differentiation,” he says.

Schmidt adds, “It’s something that we’re committed to. We’ve built out a strong analytics team and we’re in the process right now of finalizing what is that next generation of what that looks like so we can continue to not only ourselves be relevant but continue to contribute to what makes Columbus a smart city.”