Latest / Speaking of Supply Chain / Food on the Move: Flexible Logistics in the Food & Beverage Industry

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Food on the Move: Flexible Logistics in the Food & Beverage Industry · Speaking of Supply Chain

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You're listening to Speaking of Supply Chain, a meboch podcast. This is a
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show for logistics professionals looking to learn more about the latest innovations in supply chain.
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Each episode will feature a conversation on topics such as mitigating supply chain disruption
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and reducing risk, current automation trends, sustainability initiatives, and more. Let's
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dive right in. Hello, and welcome to Speaking of Supply Chain, where
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we explore trends, current events, and innovations impacting the supply chain and logistics
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industries. I'm your host, Ellen Wood. Today i have joining me Aarin
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Mizrahi from Ingredient Brothers, and I'm looking forward to our conversation today about some
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flexible logistics strategies inventory management, but specifically in the food and beverage space.
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Welcome erin, Thanks so much for having me Alan, looking forward to having
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a chat about some pretty challenging topics. Yes, this is a big deal
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in the industry right now. The industry is huge nowadays. It's such a
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diverse landscape of producers and suppliers and consumers at so many different levels. Because
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it's not a simple supply chain anymore. When it comes to food and beverage,
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the consumer market has its own issues. When we're talking about, you
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know, direct to consumer companies, do those issues still exist higher up in
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the supply chain or when we're talking between producers and suppliers and not even talking
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about the end consumer. Well, I think those two things are very connected.
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And it's an interesting way to look at it because if you think about
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on the consumer side, tastes are changing pretty frequently. New companies are coming
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out with new innovative things all the time, and that change at the beginnings.
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People are trying different things and experimenting with different products. Sometimes those things
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start to take off and become more mainstream, and then you have a supply
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chain on the other side that needs to react. And now certain food ingredients
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don't just appear overnight. And so if you take an example of macademia and
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nuts, which has seen a really big explosion in popularity over the years,
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but those trees take many, many years to get to maturity, and so
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it doesn't matter how much demand you have if you can't fulfill the demand right
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which what lands of happening is obviously drives are pricing, but you then have
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suppliers or farmers who take initiative and start to invest in planting more trees,
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and then people see that the trees are being planted, So then processes start
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to expand their capital in the hopes that by the time things come to maturity,
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demand still exists and the product is still relevant. And so I think
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you do see a lot of the timing of each supply chain is so different
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and the ability for each part to react is so different that balancing it is
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almost impossible. And you have to try and listen to what the consumer is
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saying, try and take those signals, try and react as quickly as you
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can. But at the same time, know that the supply change jenneral doesn't
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change as Foster's consumer behavior may want it to change. And so you do
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you know that evolution does take some time, and you see that happening,
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especially in products like a macadamia nut that take I think it's over five years
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to get to some level of maturity where they start to bear some fruit.
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Absolutely, and that risk has got to be even higher on the supplier side
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when it comes to these raw ingredients or I mean, in this case it's
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an agricultural product where to your point, you can't just make macadamia nuts happen.
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It takes time, whether it's a macadamia nut or an almond or an
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avocado exactly, these things take time before they can they can be ready and
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produced on that larger scale. So is part of that risk that the consumer
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preferences are going to change within that time period. Where if a macadamia tree
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takes five years to be able to produce enough nuts to support its existence,
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what happens if macadaem and nuts aren't popular in five years? Yeah? I
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think you know, you definitely see that happen where farmers will swap crops in
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and out depending on what's happening, and you'll see shifts happen where you've had
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one year of just oversupply of a certain crop, and then the next year
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people are planting something different. And this is even and you know, crops
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are lesser of a shorter time horizon and that balance, and there's so much
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capital that's invested in trying to build out certain supply chains that don't work.
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I think that suppliers and processes and farmers have so many years of experience and
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they understand how to read consumer behavior, and so sometimes I'm sure people take
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bets that aren't correct, but a lot of times they allow the curve to
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run its course and they don't try and like overcorrect too quickly. And so
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that's why you see consumer demand build up maybe a little bit more in prices
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go up a little bit more, and then slowly over time you start to
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see that supply easy and easy, and and then getting to some normal equilibrium
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where everyone's happy and making enough money to justify it. But you don't have
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too many new entrants into the market where you have this like bloat of oversupply
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and then prices come crashing down. Sure. Well, and your company is
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kind of in the middle there where if one supplier doesn't have the necessary ingredients,
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it's a supplier marketplace. So where ingredient brother steps in is Okay,
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farmer A doesn't have macadamia nuts for you, but farmers over here do.
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So how is that supporting the supply chain? Obviously it's reducing risk in terms
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of being able to source the materials that are needed. But what else is
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that addressing in the process. Well, I think you know in Green Brothers
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what we're trying to do, And to your point, we have created a
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sort of marketplace where we have a large catalog of vendors that we work with,
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and I think if you go to the macademia nut example, where it's
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grown in a variety of different regions, and so one year crops maybe good
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in one region in another region. What we try and do is one our
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main objective is to be a number one ambassador for our customers and find the
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right the best supply for them, but at the same time be a great
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ambassador to the vendors that we work with and they rely on us for sales
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and marketing and to help drive some of their demand and react to some of
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the changes in market conditions. And so when we're starting, when we start
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to see shifts because of maybe bad copiers or something happening on the continue on
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the demand side, our role is to really facilitate communication and to make it
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easier for everyone to react in time, be at the customer being able to
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divert supply it from one region to another, or on the vendor side to
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try and give them signals hey, like we see demand softening, or we're
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seeing something happen in the market that you maybe should take action to. We
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spend a lot of time. Like that's what we're trying to democratize what is
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a fairly complex process that has many many steps and many many people involved that
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I think in the past ten to land you know a lot of broken telephone
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where you just didn't have good communication, and so we're trying to bridge that.
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We're definitely we're three old companies, so we're nowhere we want to be,
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but we're trying to take steps every day to try and improve that communication
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on both sides, which I think will make the market more efficient for everyone.
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Well. And is that communication from the vendor or the supplier side,
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you know you were talking about, you know, having market signals or information
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that they may have about their product, about their industry that is useful and
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important information for their customers. For these other food and beverage producers who are
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using these ingredients, that sounds like it's a little bit newer of a concept
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to be working together in that collaborative way rather than just I'm a food producer
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and I'm placing an order because I need this raw ingredient. Get it for
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me. Yeah. I think if you're a large lodge company and you've been
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buying elmends for years. You probably have great information and you have great relationships
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that you have the capacity on in your company, or you've worked with distributors
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who give you access to that. I think what we're trying to do over
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time is to give everyone access to that, and I think that that's where
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we're trying to differentiate, is that if you're a small business and you have
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one or two people in your procument department, you just don't have the capacity
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to get access to that information. You don't have the depth on the bench
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and resources and time to really spend the time to understand what you need to
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know. And so a lot of what we are doing now is really trying
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to build out the technology and the process to collect the data, make it
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easy to digest, and then fee to the customers so that they can make
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more informed decisions, so that they can understand that, hey, this is
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the best time to contract cheer. I may not be the biggest customer and
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chair, but at least now I have an avenue where I can go and
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lump my demand with other people's demand and contract the year for the next twelve
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months. But some of that exists already with very large companies who have really
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great information, but how do you use technology to give other companies access may
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not have access, especially because a lot of the consumer market and even these
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smaller companies that produce small batch or very thoughtfully curated items. It really is
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an entrepreneurial market where if you have an idea for a product, you can
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get it out to marketplace so much easier than you could have in the past.
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You know, whether you have your your own online distribution or whether you
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use Amazon is one of the easier ones, or Walmart where you put your
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product out there, but that does give them a lot of information to mitigate
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some of that risk and give them a better chance at getting off the ground
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floor with their new product. I know over the weekend we had a cookout
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with family and had a recipe and it used a very specific item that you
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can't get in stores. You can only order it online. And so you
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know, it's one of those things where it was it was delicious. It
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was a portant tenderloin that had this marinate on it, but one of the
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ingredients had to be sourced from a specialized source. So I think that when
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it comes to some of these new companies trying to put their products out to
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market. Having that information is going to be so crucial to their success or
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lack of success. Yeah, I think we're definitely not we I'd like to
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be in terms of being able to give smaller companies access and that's where we're
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working towards. And you know, I see the struggles as a founder coming
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into this. This was the vision of the company was to try and democratize
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sourcing. And then you start to put in place the things that you need
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to do and you realize how difficult it is, and that supporting small businesses
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is extremely hard because they require almost the same amount of work as a large
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company because they don't always understand the supply chain, they don't understand their product
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yet, they're trying to figure out their testing and so how do you give
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them access to that information at the right costs so that you can build a
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good business. And we can build a good business while still helping smaller businesses
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and empower them with the right information. But there's so much it's so difficult
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right now for them to go out to So I get questions every day,
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do you know where I can find this or do you know what source I
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should look for? Or where I should find something. And it's very bizarre
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to me that in a world where you can buy twothpastes in two minutes and
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you're looking for wholesale ingredients, that it's just such a It's still very manual.
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There's no secret directory out there. There isn't really good scorecards to give
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people access and the ability to make decisions really quickly, and so still takes
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a lot of time. And so I think over time, that's this type
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of information we'll start to unlock and feed and give and make it accessible to
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everyone in the market, so that it's one they come and work with us,
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and you know, we can build and support them as they grow.
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But at the same time, I think there needs to be an organization of
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data which will make the whole supply chain a little bit more efficient, because
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it just isn't tried now, like one central repository which makes it easy for
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everyone to understand where these ingredients coming from and how much, and what is
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the pricing and what does the seasonality and all of that look like. So
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how difficult is it to find second and third tier suppliers for some of these
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very niche ingredients. When I looked through your website. There are some very
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specific things that your customers are able to purchase through that particular marketplace. And
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as you said that, there isn't a global directory. As much as we
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love Google and everyone knows how to use it now, it is not the
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end albeit all when you're trying to find that needle in a haystack. So
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is it as easy as you make it sound, or is there still a
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lot of work to do to make sure that that information is accessible to these
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companies? Yeah, I think I mean that's a great question, and we've
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learned by doing a little bit about how difficult it is. And I think
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one example comes to me MI is coconut milk. There's many sources of coconut
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milk. It's probably relatively easy to find where you can buy it from.
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But number one, you need to validate the vendor right and so there is
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a lot of work in the compliance side to understand the vendor, do your
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risk assessment, make sure they've got the right certifications, that they are trustworthy,
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have the right capacity, the right pricing so that you can work with
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them. And so we have a very high bar that we set at the
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beginning just to get through that bar. But then once you're through there,
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now you have coconut milk, and you're so excited. But the sensory part
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of it, right, all coconuts taste different. And so if you've got
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if you're working with a consumer package brand that is using something and they want
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a product that is very coconut forward in flavor, but one of the coconuts
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that you're getting is just not as coconut forward as the one that they're currently
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using, you can't substitute it. And so it takes the pull down and
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down and down. And so it's really interesting to see and work with all
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these brands because so much of it comes down to like sensory evaluation. You
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do all this work, you try and like figure out the right profile of
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vendor, which takes so much time, the right capacity. You find this
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perfect mix of everything, the product looks great, and then for some reason
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that sensory evaluation doesn't work and the flavors just a little bit to the right
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or a little bit to the left or what they're using and it can't be
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used as a secondary supply. And so I think it takes a lot of
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time and a lot of validation to work with your customers to rarely understand what
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they're using and how to find a substitute for that. So that's a lot
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of what our service is is that we have patients, We work with our
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customers to really go through a lot of rigorous testing before they're accepting something that
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will go into their product. And I think it does make it more challenging
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but also more fun because you get to learn a lot about the little intricacies
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of each of the different ingredients. That's true, and I know that when
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it comes to you brought up coconut milk, We've talked about Macadamian uts.
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These are all very tropical ingredients, and so this isn't necessarily something that can
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be put into a bucket of an industry that is strongly affected by near shoring
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or on shoring. I'm sure there's some level of that when it comes to
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some of these suppliers, because it's going to affect transportation costs and delivery times
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and things like that. But I think more importantly, when it comes to
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some of these ingredients that have to be sourced from other areas of the globe,
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are we still struggling with a lot of those ESG certifications or those factors
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of are these suppliers taking care of their employees or these ethically sourced ingredients?
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How much of that comes into the conversation. I imagine more when it comes
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to smaller batch companies that are doing smaller batches of things. But these large
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companies are going to be forced to show compliance with a lot of these new
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regulations that are coming into play. Yeah, I think the one thing to
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always remember is that these suppliers are their customers are mainly Europe in North America.
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And if you look at those consumers, especially in Europe today where the
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rules are even stricter than in North America, absolutely, I think you see
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that suppliers are being forced and challenged to make changes because the consumers are going
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to vote with their wallet. And yeah, it's definitely a work in progress,
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and I think that in general, for some commodities the change will take
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a lot longer than for others. But you're seeing blanket strategies and policies being
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put in place by some of the large some large retailers and large consumer package
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brands companies. That is then flowing down to the suppliers. And because supply
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comes from one region, but a lot of the times there's multiple regions.
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Within those regions competing, everyone wants to make sure that they maintain market share.
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And you see even with regulatory compliance and certifications and just adherence to quality,
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I think you've seen a huge improvement and shift across the world right in
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terms of standardization and just the level of trust that you can have in a
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lot of products that come from all over the world. And I think people
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take that for granted, but that hasn't always been the case. And you
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are people are probably every day of their lives consuming products from all over the
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world, whether they know it or they don't know it, and you've definitely
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seen an improvement in that Now. I think that next level in terms of
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ECG and just getting vendors to understand what it is they need to do and
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how it is they need to compliant. What are the steps we can take
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right cand flip the switch that doesn't work now, But to just stop working
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with people is also not the solution. What this you know, In my
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mind, the solution is to try and partner and find people are willing to
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change and willing to be partners to make improvements and get to a place where
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we can all be proud of what we consume. And I think this new
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way of consumer that is even pushing more and more on certifications, on understanding
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or at least feeling confident in the product that they're consuming, will impact the
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whole industry around the world and will result in a lot of people getting treated
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better, thinking more about the environment, and making the supply chain a lot
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more sustainable in the future. So I think it's a lot of positive in
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my mind, and I think we're moving in the right direction, and just
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supply chains are slow, and so you know, we just have to keep
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pushing and I think we will make a lot of improvements. So do you
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think that the transparency of information that you're trying to make available to your customers
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about your suppliers, do you feel like that is making this easier or are
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we able to get back to those suppliers and have those conversations of if they
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are not doing everything possible or if they're not reaching a standard of compliance,
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that we're able to work with those suppliers in those maybe even remote areas and
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bringing them up to a level that is socially acceptable. Yeah, I think
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we're seeing some of that where we're trying to help is just vibe the supply
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with like the incentive, which is, hey, this is the opportunity that
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you're missing because of these factors, and if you can improve on those factors,
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maybe there will be opportunity for you. Now, not all supplies are
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going to take action, and sometimes the changes are too drastic that it doesn't
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happen. But I think in general, the right supplier will sit down at
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the table and try and say, okay, well, what can we do
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to make these changes. I think that what's tough is that at the moment,
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it's very hard you know exactly what needs to happen, and I think
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everyone's still trying to figure out what level it needs to go down to.
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You know, it's really in some cases when people are like, oh,
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do you know from the farmer level, and like, well, sometimes the
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farmer level is like two or three degree separation between even the processor and the
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farm, And so there is so much work that needs to happen, and
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a lot of the industry is very manual and not as well documented until it
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gets to certain and maybe in a further further downstream where you have more regulation.
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But I think asking questions and continue to push. I think we will
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go in the right direction. We are seeing that happen, but it definitely
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will take time. And I think it's not it's not for lack of trying
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or lack of willingness. It's just there's just needs to be a path and
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a roadmap to getting in and also an understanding of what is exactly expected of
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them. On the other side, absolutely, well, I know marketplaces seem
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to be the go to for the consumer. We talked about Amazon briefly a
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minute ago, because you can get almost anything on Amazon these days. Is
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it the same when it comes to within the supply chain our marketplaces for suppliers,
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for vendors, Is this the way that the market is trending in terms
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of how they source their materials? Well, I think if you're a buyer,
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you wish that, you hope and you pray that that's the way it's
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going to be, because it's really tough right now to try and manage many
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vendors and understand who to work with and who you can trust. I think
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there's a lot of benefits to something like an Amazon because go and you see
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reviews and you understand other people's experiences, and there's validation, and there's like
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searchers and filters, and you're able to almost go through your own buying process
21:08
without anyone and then if you have a question at the end, maybe there's
21:11
one or two other questions that need to be answered that you go somewhere else
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for you you ask in the forums, and I think in the B to
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B space one for smaller businesses, this has to exist, and unfortunately it
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doesn't exist today, and I think we're trying to aggressively move towards that in
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some way where you can give a smaller business access to a certain level of
21:33
information before even talking to someone, because that's going to start to get expensive
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and it's hard to justify. If you have an account manager working with a
21:41
small customer for two months on a project, it's really hard to justify.
21:44
But if you can try and automate some of the initial validation and information that
21:48
you're presenting to people, you can then reduce the cost of a transaction and
21:52
give people access Like I think Ali Baba does a great job for supplies.
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I think in food, food is very specific and that's why I'm excited about
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the opportunity of building Ingreeding Brothers because it has a different flavor, it has
22:06
different compliance, it has different validation points, and so that's what we're trying
22:10
to build towards where you can give people that same level of trust that some
22:14
people have when they go into Alibaba and buy certain widgets, and it's a
22:18
little bit easier, but it has to be a marketplace because people are desperate
22:22
for their job to be easier and they don't understand why it wouldn't be when
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you have all this technology like figuret Ai. I mean, we've just had
22:30
so much other stuff happened over the last twenty years that it doesn't make sense
22:33
that it doesn't exist right in the way that it should. But that means
22:38
a good opportunity for us if we can make it work well. And the
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one thing you just said was that it's very hands off. The consumer can
22:45
do all their research, they can look through the reviews, they can make
22:49
their choices, they may have a few additional questions. So when it is
22:52
so hands off, and that's just such a singular journey for the customer,
22:57
how do you take such a transactional type of business relationship and build that top
23:06
shelf customer service well I think if you look at consumer brands that have built
23:10
great customer service, I think that there is an approach within the space that
23:15
that can work, where again, if you're a public company and you're coming
23:18
to us, we can allocate four or five people to work on your account,
23:23
and that's great. If you're a smaller business, we can still allocate
23:27
resources and give you great customer service. We just need to understand where in
23:33
the transaction the relationship we need to allocate that and be able to answer those
23:37
questions. And I think with anything, scale solves a lot of that.
23:40
Where if you hire someone to answer R and D questions and they're getting one
23:44
question a day, well that doesn't really help. But if suddenly they're getting
23:48
a hundred questions a day and they're able to answer and provide value to a
23:51
lot of perspective customers at scale, that becomes really exciting. And so I
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think with scale we're going to be able to bring a level of expertise in
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to the business that when someone who's smaller needs twenty minutes of someone's time,
24:04
that's easier for us to give and allocate. And I think that that's where
24:07
direct to consumer brands have done an amazing job because they have a lot of
24:11
information on their websites and they have customer service reps that are well educated,
24:17
they understand the product, they can answer certain questions, and I think within
24:21
the B to B space, you just have a little bit of a disconnect.
24:23
You're either like getting full account management, great service, full suite of
24:27
everything, or you're not really getting much. Yeah you're on your own.
24:32
Yeah, you're on your own. And so I think if you can take
24:33
a little bit of what people have invented already and try and understand how you
24:37
can make it work within our space, then people could come in and it
24:41
won't feel so transactional because they can still ask that question and get some technical
24:45
answers, but they're not spending five days with someone. They're spending twenty minutes
24:51
forty minutes, and that becomes a lot easier for us to build out and
24:53
justify. So, tell me about a customer story where your customer service was
25:00
able to really deliver something fantastic for one of your customers that was looking for
25:08
something and they weren't able to figure it out on their own. What is
25:12
one of your best customer service stories? Yeah, I think again, we
25:15
worked with some great brands. I can't mention their names. We work with
25:18
some really great brands. And one of the companies came to US and they
25:22
had a lot of volue within a certain product, and this product was being
25:26
brought into the US, it was being reprocessed in the US and then sold
25:30
to them, And through many many hours of looking and understanding the supply chain,
25:36
what we realized was we could reduce a significant amount of cost by actually
25:38
producing this at source and taking some of the steps out that was happening in
25:45
the US that was not necessarily value added. It was almost like you repackaging.
25:49
It wasn't manufacturing, it was just repackaging. And so by offering a
25:53
more aggressive planning support, making sure that they understood how we were going to
25:56
support them, because as soon as you start doing more and more sure,
26:00
you now have longer lead times and you need to be more responsive. And
26:03
so by doing that, we were able to move some of their supply and
26:08
change their supply chain, the structure of their supply chain so that instead of
26:11
it getting packed in one package formats and then going into another in the US,
26:17
it was getting packed in the required package format straight away. You are
26:21
now able to reduce their costs. Was a great partnership for us. It's
26:23
very sticky, it's a great supply chain, and we were able to improve
26:26
service and proof costs. So that's one of those where, you know,
26:30
it's just a fun problem to solve on how you can bring efficiency and add
26:33
a lot of value to one of your customers. Absolutely, and that has
26:37
nothing to do with what product they were trying to source. It was all
26:41
about the supply chain and the efficiency within that process. All right, last
26:45
question, go for it. What is the most interesting product available in your
26:51
opinion on your marketplace. There's a lot of interesting ingredients. Yeah, I
26:56
want to hear what you think the most interesting one is? Oh, man,
27:00
don't you know people always ask me these questions and I just get stumped
27:03
by these questions. I think from a looks perspective, there's a product blue
27:06
Sperrillina, which is made out of this algae and everyone's very familiar with the
27:10
green one, but the blue one is just this beautiful royal blue, and
27:14
like every time we bring it to a food show, everyone stops and is
27:17
like is that coloring? Is that edible? And we even had someone open
27:21
the container and taste it straight away, just to like see that it actually
27:23
is is edible, and I think that's probably one of the most beautiful products
27:27
that I've ever seen in terms of like a natural blue coloring that I'm most
27:30
excited about. Another product that I always get excited about is coconut aminos.
27:36
I don't know why, it's just it's a great alternative to soy. I
27:38
think it has a lot of like aligen benefits, it's like gluten free,
27:42
it's low sodium. I think that that one isn't used enough, and I'm
27:45
a big fan of the coconut, so that one I'm always excited about and
27:49
probably repeated myself about that way too many times. That's all right, it's
27:55
good to have passion for your products. I agree. Well. That brings
27:59
us to the end of this episode. Thank you Aaron so much for sharing
28:03
your insights with us today. To our listeners. If you have a suggestion
28:07
for a topic or would like to be a guest on the show, we'd
28:11
love to hear from you. Please reach out to me at podcast at mebok
28:14
dot com with your ideas for guests or topics. As always, thanks for
28:18
listening to Speaking of supply Chain. If you enjoyed the show, please rate
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28:30
Thank you so much, Ellen all right. Meeboch Consulting is one of
28:40
the largest and most globally recognized supply chain consulting, engineering and advisory firms.
28:45
For nearly fifty years, we've helped clients achieve supply chain excellence and sustainable competitive
28:51
advantage across the entire spectrum of the supply chain by delivering improvements and innovation strategically,
28:57
tactically, and digitally. To learn more, visit meeboch dot com.
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