Latest / The Accounting Podcast / SuiteWorld #5: Meltdown Free Manufacturing and Distribution
Transcript
- Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Connor Wray: [00:00:00] MRP is a giant calculator. You give it a tonne of inputs and it gives you the best optimized set of outputs that the system can generate, which is why it's a tricky module to set up because it's the epitome of a garbage in, garbage out process. If you feed in garbage, you will get the most nonsensical, illogical suggestions for what to make, what to transfer, what to buy. Blake Oliver: [00:00:28] This episode of The Cloud Accounting Podcast was recorded at the Oracle NetSuite SuiteWorld Conference in September of 2022. To learn more about NetSuite and the SuiteWorld Conference, visit NetSuiteSuiteWorld.com. David Leary: [00:00:47] Welcome to The Cloud Accounting Podcast. I'm David Leary. Blake Oliver: [00:00:50] I'm Blake Oliver. David Leary: [00:00:51] And we are now on still on day two at SuiteWorld. And we are on our fourth or fifth interview. We just interviewed the CFO of Crumbl Cookies, and if that wasn't good enough, we now have our next interview. And it is Connor Wray. He is the co founder and CFO of JonnyPops. Are you familiar with JonnyPops? Blake Oliver: [00:01:10] No, but I'm excited to learn. David Leary: [00:01:12] It is frozen fruit. Other pops or freezer pops delivered right to your door. Blake Oliver: [00:01:18] Oh, wow. So we can get our cookies. We can get our frozen treats all together. Connor Wray: [00:01:23] Absolutely excited to be here, guys. I'm excited to be following Crumbl cookies. I'm a big fan of that product too. But yeah, so. So what you're seeing on our on our website is a shelf stable product that we have. You know, people may refer to them as outer pops, freezer pops, and those are a shelf stable product that we're able to send directly to you and then you can freeze it home. The majority of our products are pre frozen in our factory ice cream novelties. We've got a dairy free line in an organic juice based line that are all delicious frozen treats, better tasting better for you. Frozen treats is what we do that you can find at over 10,000 retail outlets across the country. David Leary: [00:02:06] So just using the the warehouse management, I assume, of that suite. Connor Wray: [00:02:10] We do use the warehouse management functionality within that suite. There's a lot of a lot of pops to keep track of, a lot of boxes to keep track of, and we need help doing that. Blake Oliver: [00:02:22] So, Connor, something unusual about your title is that you are founder and Chief Financial Officer and that's not something that we see a lot. How did you like how did you start? Did you start Johnny Pops Yes. Connor Wray: [00:02:36] So I have been at Johnny Pops for ten years now. The company turned ten this year, which is a milestone we're pretty excited about. And it was actually a business that I started with a group of college buddies, including my business partner and Johnny Pop CEO Eric Brust back in 2012. And so having been with the company for that amount of time, you know, at the beginning everyone is wearing every hat. There's work that needs to be done. And if you want to get your business off the ground, you've got to do it. But as you scale, you know, a division of labor starts to become something that's a more effective way to to get things done. And you got to take a look at who has got a passion for what work, who's got the strengths, for what different types of work. Blake Oliver: [00:03:24] So you fell into the CFO role. Connor Wray: [00:03:25] Yeah. And, you know, trial and error may be a reasonable approach, but at a certain point, ten years in, I guess it's stuck, you know, And I guess success is freedom when it comes to validating some of those decisions about how we structured the team along the way. Blake Oliver: [00:03:42] So you and your college buddies started your company in college? Connor Wray: [00:03:47] That's correct, yeah. In 2012, we were sophomores at a small little liberal arts school in southern Minnesota called St Olaf, which is which is where it all, which is where it all started. Blake Oliver: [00:04:00] And you were an economics and computer science major there. Connor Wray: [00:04:03] That is correct, yes. You know, I, I went in thinking that entrepreneurship was something I was interested in, but didn't come from a background with, you know, of entrepreneurship and didn't know how to start down that path. So I took a guess that the way I would get there would be some business economic acumen and then enough technical background to eventually come up with some great product idea. I thought it was going to be physics. That's that's where I originally started. Made it a little bit more than half a year down that track and said, it's not physics. Physics is not for me, but a lot of the same things that had me thinking I wanted to do. Physics are in in the world of computer science. You know, there's a lot of entrepreneurship happening there, you know, out in Silicon Valley, an opportunity to acquire technical skill. And I really enjoy it and was passionate about the type of work and learning that happened there. And so I put those two together. Now, along the way, I also had an opportunity to get involved in entrepreneurship that didn't require me to take a path into industry and, you know, build a career in a network, you know, and have a light bulb go off, which is probably where my head was at going in. Eventually, lightning will strike me and there will be the idea and the opportunity, which maybe it wasn't totally wrong, but the lightning struck, you know, in 2012 and not years down the road. And I got involved with the with the Johnny Pops business as a let's give this thing a shot at farmers markets and pushing. Arts to beaches to sell pops one at a time to to people who are out and enjoying themselves. And the idea took off from there. David Leary: [00:05:55] So somewhere along the line, somebody like you do the bookkeeping and then eventually you involved in the CFO? Apparently. Connor Wray: [00:06:01] Yeah, it starts as well. Someone has to figure out all this legal stuff, regulatory compliance, bookkeeping. Don't we need a bank account, maybe a credit card? I think. I think someone wants to get paid, you know, Can can. Can you deal with that? Yeah. It starts with the basics of we need to be a business and that requires certain things to be done and we won't be a business anymore. Yeah. And then it scales up. And today we're available at over 10,000 retail outlets in all 50 states. We ship to a few foreign countries as well. We have our own dedicated manufacturing facility, over 85 employees and an annual growth rate above 50% a year. So continuing to to bring our products to new markets and new consumer consumers at a steady pace. David Leary: [00:06:47] And so sometime during this ten year period, one day you're like, oh my God, we got to get off of our old systems and we've got to be a bigger big boy business now and we got to get NetSuite. Like, what was that decision process like? What was the state of things before that happened? Connor Wray: [00:07:01] Yeah, So for us, that was five years ago at this point. So really it's, it's a 5050 split on our journey. You know, you don't need that sweet to, to run your farmer's market stall. Right. That's very clear when the time to switch is, is a little bit murkier for every business for us. We were on QuickBooks and then some conglomeration of Salesforce for some CRM work and spreadsheets and other, you know, MailChimp, third party systems, stuff like that, all trying to work together. And it was a total mess. Our biggest single pain point that forced us to say, This isn't going to work anymore. Besides it just being a mess was being in, in food manufacturing the need to keep very detailed track of our inventory at a lots or batch specific level, you know, so not serial numbers, but every box that you're touching has a lot code on it that needs to be properly accounted for across a ever growing number of items and ever expanding number of locations, which was being done by in large in Excel spreadsheets, because that level of granularity was not supported in QuickBooks. So that was the we cannot do this anymore. We need to look at other options. Blake Oliver: [00:08:14] And that's because of food safety regulations, right? Connor Wray: [00:08:17] Correct. A combination of government regulation as well as industry and customer expectations. You know, the the food industry has a variety of third party customer sponsored standards as well as government standards that, you know, you want to do business with Walmart or Target or Costco. They say we're going to send someone in there and they're going to check you out. Similar to how textiles may require a social audit of their practices for food manufacturing overseas. So that forced the requirement on us to do that. And we said we're going to look into this and looked at a variety of solutions. You know, there were solutions out there, order management systems, warehouse management system types that plugged into QuickBooks that would have allowed us to continue running our general ledger there. And then we looked at a variety of ERP systems because, you know, since implementing that suite, we've grown over 400%. So it wasn't necessarily a given at that point in time that we needed a full fledged ERP. But but we looked at a variety of them. We were fortunate that the timing of the growth of our business left us in a spot where we didn't have a tremendous amount of legacy systems that we had to replace. We were essentially building from scratch. And so we pretty much from day one, adopted a mentality of we're going to do something in the cloud. The second we we laid that line in the sand NetSuite became a top contender because at that point in time, you know, five years ago, you're talking 2016, 2017. Blake Oliver: [00:09:49] Not a lot of options. Connor Wray: [00:09:50] But it was fairly well established, but not a lot of options. And people who were calling themselves cloud ERP systems was the on premise system that was like shoehorned into into a virtual into a server or IBM online. Right. Blake Oliver: [00:10:06] We know it well. Connor Wray: [00:10:06] It's not the same. Blake Oliver: [00:10:07] Not true cloud. Connor Wray: [00:10:08] Not the same. Blake Oliver: [00:10:09] Thing. No fake cloud. Connor Wray: [00:10:10] So we we went through that evaluation and we started fairly broad. We ended up narrowing down pretty quickly based on some of the industry specific requirements of being a food manufacturer that we were looking for and had a final couple of contenders there. And ultimately the biggest distinction that we saw with NetSuite is we knew that we were on a a rapid growth trajectory and even implementation takes time just to set it up. But beyond that, doing a whole bunch of work to cement and implement a business process that was very likely to be obsolete. Due to know the fault of no one other than the growth of the business was could potentially be a huge waste of time and money. And that was a model of ERP implementation that most of the competitors to NetSuite we were looking at were making available. Whereas with NetSuite at the time, Suite, success was very new, but they had it was offering a we're going to give you a lot of best practices out of the box. Implementation is going to be pretty quick and light. And then the technology we're offering you makes it pretty quick and pretty simple to evolve the system and fit it to your needs without massive technical services, professional services contracts, you and your in our team at Johnny Pops go in and change the form, add a field, add a workflow can be done in minutes or take longer depending on the complexity. Blake Oliver: [00:11:36] But you can do it. That's the point. Connor Wray: [00:11:38] But you can do it and you can do it pretty quickly. And so if your business doubles in size and you needed to have one person involved in a process one year and three different people doing different parts of that process, the next year, we were able to evolve our processes quite quickly in the system to match the real world business processes that we're now the right fit for our business. Blake Oliver: [00:12:02] Now, are you the guy going into NetSuite and making those process changes or do you have somebody that does that for you in-house or do you use it? Connor Wray: [00:12:11] That's the answer to that question has evolved over time. You know, I remain a lead subject matter expert on that suite at at JonnyPops. You know, part of that is I've been there the whole time. I know what decisions were made, baby. You built it. Exactly. I know more about how we have done that suite than anyone else, because I've been there from the beginning through to today. I know why decisions were made, you know, how come we chose to use that field and not that field again? No, don't touch that. It'll break something. Right. But it was not scalable for me to remain. The only person doing development work is maybe a bit strong, but improvement and implementation and evolution work within our system. And so we also our needs are not necessarily flat and easily compartmentalized into a single skill set or FTE at the stage we're at. And so we added a third party partner to supplement our needs several years ago that we work with on an ongoing basis. I retain on a retained basis that when projects come up, when things outstrip my bandwidth or capability, we're able to leverage the team of resources. And the advantage of doing something in that fashion is they have senior developers all the way down to people on their team who are fairly new to that suite administration and can dynamically staff my problem with the right resource to solve it with a variety, with a set of skill sets that unless I was ready to add a team of several FTEs to just handle my NetSuite would be very difficult to do. Blake Oliver: [00:13:50] I see that you launched e Commerce or I can buy Johnny Pops direct and have them ship. Connor Wray: [00:13:55] To me that is brand new. That shelf stable product is hot off the press for us. Three earlier this year. Yeah, exactly. Blake Oliver: [00:14:02] So did your ecommerce store did that exist before or is that new as well? Connor Wray: [00:14:07] No, that is brand new. David Leary: [00:14:08] Is that the net suite e commerce store? Connor Wray: [00:14:10] That is not we because the rest of my product portfolio is frozen. It's a little cost prohibitive to to direct, fulfill it and ship it out across the country. So we've generally not done direct to consumer e commerce, but having a shelf stable product caused us to to pause and ask if there was maybe an opportunity here. So we started it as a test. I'm happy to report that it's it's a fairly successful test, but the implementation of it from a technology standpoint was at a test level of sophistication. And now that it seems to be something we want to commit to for the long term, we will. You're considering it hopefully put in place a more durable and efficient solution. Blake Oliver: [00:14:54] I'm just curious, what are you using for the test? What's the the what's the site? Connor Wray: [00:14:59] The app? It's just built in WordPress. Okay. Yeah. Blake Oliver: [00:15:03] It's a plug. Connor Wray: [00:15:04] In. Nothing fancy. Blake Oliver: [00:15:05] Yeah, well, those those can be quite sophisticated. Connor Wray: [00:15:07] Yeah. And you know, and we've got someone manually generating labels and manually packing. So it's we didn't know the volume. Right. So expect on day one, but we believe in a bias towards action. Yeah. We don't know the market for for this product and service combination until we try it. Yeah. So let's, let's get it out there. Let's do it fast. Let's do it during the summer before we've lost the season. See how it goes and we can put an appropriate level of investment behind whatever type of results we see. Blake Oliver: [00:15:37] Awesome. David Leary: [00:15:38] So, so that leads to the next question. So we know you're not using the e commerce suite, but Blake likes to always ask about. Blake Oliver: [00:15:43] Yeah. What other parts of NetSuite? What are the parts and NetSuite? That are critical to you that you use. Connor Wray: [00:15:48] So for us, I mean, the capability that brought us into that suite from a pain point standpoint is still one of the most critical tests today. So you're talking about multi location, cradle to grave lot level inventory. That is something that probably more people touch across my business, more users use than anything else. You know, it powers other very important business processes. So we use what's now a somewhat legacy feature time phase supply planning to power our material resource planning process or MSSP. I say our MSSP because NetSuite has since introduced a powerful new set of MSSP features. But it's such a it is a fairly in-depth and complicated module to set up and so critical to our business that we have not taken the plunge yet to turn on. The new functionality is fantastic and powerful as it looks, but that drives all of our what do we what do we need to make, When are we going to schedule it? And then most importantly, if that's what what the products that we need to make in schedule, what are all the things we need to bring in to do it? And we transfer in product from third party warehouses that we've bought in bulk. We do just in time procurement. So if we lack a schedule for next week, we need the MSSP to say here are the components that need to be purchased. So we use the system to do all of that work for us. And then, you know, table stakes for for a business. All of our back end processes run on that suite. And for us in a fairly automated fashion, because the majority of our customers either request or require EDI execution of our transactions together. So we're able to go from order all the way through to fulfillment and invoicing with a very minimal number of touches and the most touches around the inventory. What are we going to send them? Blake Oliver: [00:17:33] And I forget what EDI stands for, but it's the it's the way that, you know, your customers ERP system can order directly to your system. Connor Wray: [00:17:41] So it's electronic data interchange and it's exactly what it means. They're able to transmit an encrypted file to us directly from their computer systems over a network, and we can then interpret that data directly into that suite. So no manual entry required of what they want when they want it. Blake Oliver: [00:17:57] And the big guys require that, right? Like Walmart, they're not going to like, play with you unless you have. David Leary: [00:18:02] That going to your website to put the order. Connor Wray: [00:18:04] In. Yeah, exactly. No, no, no. They don't want a website. They don't want a portal. And they wanted to eliminate faxing, emailing their orders over because of the chances for errors to occur in that process. And importantly for them, I got errors on the front side and then on the back side. They don't want to pay someone to key in your invoice. They they require that you send back the invoicing information electronically as well. David Leary: [00:18:28] I can't even get into those stores if you do not implement EDI. Connor Wray: [00:18:31] That's generally been our experience and. Blake Oliver: [00:18:33] That's the way it is now. Yeah, yeah, that's how I've heard. Wow, that's an MSSP was an acronym that we kind of ran through real quick. But for those who are not as familiar with it, could you just give us an example of like an MSSP process? Connor Wray: [00:18:47] Yeah. So, so the core of the MSSP process is if we have some type of demand that we know or think we know, as the case may be, you can plug it into the system and the system will suggest and ultimately issue the actions required for you to fulfill that demand depends on what your business is, what those orders would be. If you've got demand and you manufacture products like we do, the MSSP can suggest work orders to manufacture additional products to to meet the actual or projected demand if it's components for work orders or if it's just distribution. You know, you buy and sell the item. It can suggest purchase orders you need to if you know the lead time and the vendor, here's how much you need to buy at this on this date so that it shows up in time to meet the expected demand. Blake Oliver: [00:19:41] What about the weather? Can you feed in weather data and figure out? Connor Wray: [00:19:44] Well, the key to that is, is good safety stock levels, which is MRP is a giant calculator. You give it a ton of inputs and it gives you the best optimize set of outputs that the system can generate. So if I tell it that the lead time to get from an order shipped from Florida to Minnesota is one business day, it's not going to know any better. But if it's five business days, you know, if I, if I accurately state that and maybe we add in some cushion because we know that every time we ship something from Florida, even though the carrier says it only takes three or four days, it always takes six because there's some weather. Well, we can adjust that to get a better recommendation with a little bit more buffer. Same type of opportunity with safety stock levels. If we we want to hold an extra week of demand on hand, we can increase the safety stock so that instead of the MSRP letting demand run the warehouse to bone dry before suggesting an order. We actually maintain an X in excess stock level to account for delays or forecast error, things like that, which is why it's a tricky module to set up because it's the epitome of a garbage in, garbage out process. If you feed in garbage, you will get the most nonsensical, illogical suggestions for what to make, what to transfer, what to buy. Blake Oliver: [00:21:10] And suddenly your warehouse just starts making all the pops it can. David Leary: [00:21:13] For the wrong flavor. Connor Wray: [00:21:15] Well, and what really happens there is supply chain teams get frustrated and then just stop using the tool and go back to whatever whiteboard, pen and paper Excel spreadsheets they were using before, which typically are significantly more cumbersome and not generating the same level of actionable intelligence that an MSSP process can. David Leary: [00:21:35] So how how does the seasonality of your product go? Obviously, being in Minnesota, I don't see you selling these. Early on when you started the business, I don't see you selling these in the winter. Connor Wray: [00:21:44] Well, we we absolutely do sell product year round. But you're spot on that. We have a seasonality curve to our business. Our peak runs May through August, as you might expect. But we have a consistent base of business that we sell year round. You know, being in all 50 states, it might be -20 in Minnesota. But it's still 80 degrees in Phenix, and. Blake Oliver: [00:22:08] That's where I am. I'm eating those pops all year. Connor Wray: [00:22:11] And the Northerners are surprisingly hearty. It might be cold, but I'm telling you that ice cream still goes out of those stores. Blake Oliver: [00:22:21] Well, I think that's all the time we've got. Is there anything else you'd like to add, Connor, that we haven't discussed? Connor Wray: [00:22:28] I would encourage everyone if they have not tried Johnny Pops to visit our website. Johnny Lipscomb. You can key in your zip code and find it locator to find the nearest retail outlet where you can check us out or click right into that ecommerce opportunity and get our shelf stable freezer pop sent right to your door. Blake Oliver: [00:22:46] They look delicious. I'm going to have to try some of these. Connor Wray: [00:22:48] Did you miss the sampling opportunity earlier today? Blake Oliver: [00:22:51] I did, unfortunately. Connor Wray: [00:22:52] Oh, that's unfortunate. David Leary: [00:22:53] We're just in the recording room factor. Yeah, they said this is where we're at. Blake Oliver: [00:22:56] They don't bring. Connor Wray: [00:22:57] Us. There's no there's no room service in here. Blake Oliver: [00:22:59] Not in here. Well, and if folks want to, you know, follow you online, do you use LinkedIn or are you on Twitter? What's your preferred social media? Connor Wray: [00:23:10] I am really a LinkedIn only type of guy, but I absolutely follow me on LinkedIn and you can keep tabs on on me and on Johnny Pops, especially if you're a NetSuite guru or just in general, passionate about entrepreneurship, food and beverage. Our team is consistently growing and we're always looking for talented individuals to join. Blake Oliver: [00:23:32] All right. If you're listening, you know where to go. Look for your next role. Thanks, Connor. David Leary: [00:23:37] Thanks, Kyra. Connor Wray: [00:23:37] Yeah, thanks for having me.