How To Adapt To Change In The Supply Chain

Will:
All right, everyone. We are back with another episode of Safety Stock. I’m Will Davis.

Dan:
This is Dan Magida.

Will:
And Dan, I have an important question to ask you.

Dan:
Let’s shoot,

Will:
Please name the last soda that you had and what is your favorite soda? Traditionally?

Dan:
So actually surprisingly enough, I was in the office earlier this week and this the it’s this fridge has stocked with like dye Cokes, no more Cokes and Sprite. So I actually had a Sprite just because I just needed something. So Sprite was my most recent soda, not a huge fan. Favorite soda. I went to school in Atlanta, Emory, shout out Eagles. So IM partial Coke family. So I like, I like a Coke.

Will:
There you go. Yeah. Well, Dan, I’m glad you brought up Sprite because they are going to be part of the episode today.

Dan:
Yeah, that lead in.

Will:
There we go, Sprite is BA or getting rid of they’re green bottles and they are going to clear and making their label, their traditional green color. And primarily the reason for doing that is for environmental, be environmental benefits, such as it’s easier to recycle clear bottles. There’s a little bit of cost savings for them and that they don’t have to pay for the color anymore. And overall it’s just, they think it’s better for their supply chain. You know, where we’re gonna talk about Dan is, you know, as a business, you know, change is in some ways inevitable, but how you process the change and go about it within your supply chain is really what dictates who’s successful and who’s not. And so we’ll walk through some of those situations to cover those facts, but, you know, as we touched Dan on Sprite, you know, when you’re thinking about, okay, you’re making something more environmentally friendly, what are some of those ways that you’re communicating to the certain groups that it change is going to happen?

Dan:
Yeah. And, and just on the Sprite part, what there change is not that radical. I would say either there, the bottle’s still the same. It’s still that polyethylene tri Accolate. Well, you know, I can pronounce words beautifully.

Will:
Alate para alate it’s P E T for all of you non polymer people out there.

Dan:
God’s such a, those, when you, when you mix four CS in a row, it’s so hard with that. Th whatever sound they’re ready to keep the same bottle. They’re just removing that green color, as you mentioned. And then they can then use that recycle material easier for landfills. And that can go into like clothing, fabrics, anything that’s our P E T at that point. So nice, subtle changes. They’re not going, I would say like the extreme on the messaging side, like we’re going PCR now with bottles, like they’re doing a gradual eco-friendly movement and they’re keeping with P E T, which is one of the most friendly recyclable plastics out there, which you gotta respect. And you know, me, well, I don’t like non the whole concert of non recyclable plastics. If someone can still educate me on that at some point, like your ASNs and all that stuff, please share, cuz I still don’t get why anybody would use a non recyclable plastic.

Will:
Well, I think that’s a different episode, you know, for any of our beauty products out there or any of our beauty companies that listen, you know, there, there’s definitely some functionality pieces, depending on what raw materials work with, what, and then additionally you know, when you start adding metal to things and you’re starting to make things heavier, certain polymers come into play that, you know, sell better. Yep. So I hear you on that point, you know, as we’re talking about Sprite, P E T and HDP, which is milk effectively milk jugs, those are the two streams that we have in the us that they’re very set up stream cycles to deal with. And so, you know, when you’re Sprite and you’re making this change, you know, for this, this is what we would anticipate being a soft phase in. And we say that because they’ve talked about it happening and it’s happening at another date. So they’re clearing out the inventory that they have of green bottles. And then they’re going to then start running in the

Dan:
Clear box. Yeah. First.

Will:
So, yeah. So it’s, it’s pretty quick now, typically when you say it’s a hard phase in that means that you’re going to have a change that’s almost immediately done, but you may have some of those things that are living on both sides and when you’re having it living on both sides, you know, it’s typically because a change was dictated that you had to do it, whether it be financial regulatory, et cetera. So soft phase ends, meaning you, you, there’s not a hard deadline to do something hard deadline, meaning you had to make a decision because of a certain reason.

Dan:
Yeah. Do, do you think just in general, like this concept of removing colorants in bottles and this softer one is gonna be more not saying like Pepsi is gonna follow suit. I don’t know what, what color Pepsi’s bottles are they’re clear or they’re clear or anybody or, I mean, well, beer is different cuz there’s some Amber bottles, but do you see this trend possibly take on, on other outside of food in Bev where people are gonna just do that softer. I know there’s like retail is pushing for a lot of more recycled content the next few, few years, but could you see a compromise where, you know what, you can still use, like your PTs, your PPPs, your HDP HDPS, just make it clear or natural. And then those are recyclable as opposed to going like full PCR, like ocean bound plastics.

Will:
You know, most of the time scale and, and price are ultimately dictating and then like hard regulations are dictating what brands are going to do. You know, when you talk about brands, making a decision to, you know, use more clear P E T because it’s easier to recycle it. It’s, it’s ultimately based on okay, if, if you’re buying PCR and you’re going to color it something, you, you have to be okay with what the aesthetic is knowing you’re gonna have some shift. Yep. Number one. And number two, that it’s not necessarily always going to pan out being the color that you want. So you’re, you’re gonna try to pick, you know, if you’re a brand that has a color, you know, that is easier to hit, it’s a more bold color versus a nuanced color that you’re having to deal with the gray, you know, that’s gonna come in and factor into your decision and then your ability to get those PCR streams also comes into play.

Will:
And then the price, knowing that there’s a 30, 40% upcharge. So all those different things come into play in terms of like, why somebody does it or why somebody doesn’t metal and aluminum in this case, OB is the color as you’re reusing and melting it down, like goes away. And so that’s where you’re getting, you know, it’s not really much of an issue versus plastic. It is paper similar. It’s not an issue. The paper just ends up being more. It, it’s not as strong as a little bit shorter fibers. And therefore you don’t get the same properties as you just from Virgin paper. But the point being in that, you know, when you’re making these decisions as a brand, it’s mostly about, you know, when can you execute and how you’re communicating it. And a lot of brands, like, you know, when I was at when I was at another company, the, the decision to change, like a minor nuance on a cap. Yeah. And try to go and change things into color. It, it seems that it seems easy. But when you, when you start taking into account, you have 20 to 25 different flavors or skews of that color. And then you have certain pricing tiers that you’re getting at one, and now those go away. Yeah. And you’re having to manage different inventories. You know, all of a sudden it comes a lot more complicated.

Dan:
It’s a puzzle.

Will:
Yeah. It’s a puzzle. And there’s a human capital piece of making the change. And you have to decide, is this really going to get more sales? Like, can you justify the overall cost that it’s going to do to move? And I think a lot of times people forget about that part.

Dan:
No. I mean, just looking at Coca-Cola’s brands, you have Dasani Sprite, it’s Fresca ginger L and then throw dye Coke and Coke. We have Howard, but all those twist off caps, but they have obviously scale. They’re all a different shade. If it’s a green different shades of green. Like when you’re looking at, I think like Dasani as a, a green cap, but like a Fresca, great soda, by the way. And then a Sprite, they’re all different shades, Coke and dye Coke are a little bit different. So managing that on top of it, it’s, it’s a lot like, well that deter people, if it was just a standard black cap or white cap, would people like care as much? I don’t know. People’s eyes, perception’s always different. But I think it’s also they’re doing is to your point, like the soft, I don’t think this is gonna skew. I don’t think someone’s going to go into a store who wants to spray it and not buy it now because it’s not in a green bottle.

Will:
Yeah. And that’s what the brand managers have, you know, with this change as it comes about. I mean, those are the questions they’re asking theirself, they’re saying, okay. And are people going to be elite, less likely to buy this? And you know, they probably did a ton of consumer research. They probably came up with certain number and said, Hey, here’s a confidence factor we have in terms of, you know, we may see a dip. We may not, but ultimately they’re justifying it based on those decisions. And then the other thing that people need to keep in mind is if you’re a big company, like a lot of these that we’re talking about where they’re filling these products, they’re actually making the bottles right next door. And so you’re, you’re having to coordinate different things with multiple sites. And so it’s not just one central site, one central location where things are being done. I mean, there are different sites that are doing the bottling and capping for all these things. And so, you know, multiple people are having to manage how complicated or how simple your supply chain is.

Dan:
Goals always again, vertically integrated, just like we do here every week on safety stock. We’re vertically integrated on any podcast streaming device you have from apple to Spotify.

Will:
So Amazon, yeah. Where, wherever you listen to your, wherever you listen to your podcast, you can find

Dan:
Media. Is that, is that one? I don’t know. I feel like got a list of all this podcast names and they all

Will:
We’ll get it for you for the next iHeartRadio.

Dan:
Are we on iHeartRadio?

Will:
We’ll check and we’ll get back on the next episode. Yeah. Kick fan. Yeah. Well, you know, if you’ve had a change recently too, that you’re dealing with and you’re looking for support on reach out to us at hello@anvyl.com. That’s A-N-V-Y-L.com. And we look forward to the next episode and coming to you.