Supply Chain Elasticity

Will:
All right, everybody. Thanks for being here. We are back with another episode of Safety Stock. The lovely gentleman in front of me is Dan Magida. I am Will Davis and Dan, we’ve got a pretty fun topic today.

Dan:
I’m just, I, I can’t get over how you just described me as lovely. I am truly flattered.

Will:
You’re you’re welcome. You know, I speak the truth and

Dan:
It’s made my dad. I may just walk off. I think you can do the show by yourself today. I I’m just glowing and basking too bad. Nobody can see me, but it’s

Will:
Yeah. Well, great. That may change, you know, that may change for, are

Dan:
You teasing that we’re heading to possibly a streaming website soon.

Will:
Hey, who knows what the future entails? But what I do know is what we’re talking about, and that is about supply chain elasticity. And does your company, does your brand have the ability to be flexible when it’s needed the most?

Dan:
Yeah. Which you just define what elasticity pretty much means in one word flexibility.

Will:
That’s right. I think, you know, when you th you know, it’s been interesting as we’ve gone through the pandemic, and as you know, we’re now at this point, you know, two years plus, and as depending on who you talk to, things are ending, settling down, ramping up, you know, that’s, we’re not gonna get into that, but point being that for supply chain, they’ve gone through a lot. And I think most brands and companies would say they have learned how, how to deal with certain things that maybe they wouldn’t have ever dealt with. If this pandemic can not happen. And so, Dan, when you think about how people can be resilient, how can they have elasticity in their supply chain? What are some of the things that they can do?

Dan:
Yeah. So, I mean, we’ve stressed it before, but the one thing that, what this, these past two years, as you’ve touched upon with the, like, obviously the COVID shutdowns or even some geopolitical things that have, that have happened is getting to know your supply chain where you’re not as reactionary. And you’re now actually thinking about everything in a proactive way, but I mean, I would say the first one in this kind of hints on it, but just actually when you understand your, your supply chain and the capacity, if it’s a constraint or restrictions that your, your manufacturer has fully understand those, but also look at it in terms of, in, in terms of your unit economics too. So if you’re shipping containers, 20 footer, 40 footers, or truckloads, half truckloads, understand what you’re packing out to because as you’re hopefully over time, your, your demand increases, but as your demand increases, you have to look at it in terms of the, the variable cost too, on a freight side. So what’s the cost implications of going from a 20 footer to a 40 foot container, or are you maximizing the full truckload because fit more goods into your containers, your fixed costs in terms of transit’s gonna stay the same, but your unit economics will actually will actually decrease that the truckload costs are, are the same for 10,000 goods versus 20,000 goods. That total costs. So actually to understand those costs are, are really important, but also understanding what the outputs are in terms of your cubic meters or PA weight, however, you’re measuring your freight.

Will:
Yeah. Where, where we see a lot of brands also struggle is that they’re good at knowing parts of their workflow. You know, for example, we’ve seen smaller brands that, you know, have one to two people in the operations side, you know, they’re good at what they know best. So they may be good at, you know, getting things ordered. They may be good at understanding the, you know, upfront logistics piece of getting a good from point a to point B, but where things go dark is on the fulfillment and on the eCommerce side and vice versa. So the biggest thing that we see is that you need to understand the full scope of where your product’s going, how it’s getting built all the way from the purchase order to when it gets into the consumer’s hand and really understand where do you have constraints there in order to get to the next piece?

Dan:
Yeah. I mean, the one thing that, and it’s been hitting recently is a lot of, I think I believe it’s FedEx or maybe ups they’re decreasing, like they’re Sunday deliveries, just slashing that as well. So understand, especially during these peak times where everybody wants their, what they ordered as fast as possible, that, that Amazon effect, but truly understand, like what’s the cost of actually getting that, cuz it’s can be expensive ship if it’s cross country shipping or next day understand the cost implications as well. But also you may wanna look into technology or just like fix costs, like if you’re scaling and you know that there’s a bio neck in your production, but you can fix that with some sort of automation or technology advancement, truly understand what that cost is and measure that out over the next one year, two years or over the skews that you’re running there, it could make a huge difference where you may not have to invest in possibly getting a second or third manufacturer online. You could just build that those enhancements with one preferred manufacturer, even though redundancy is very important in the supply chain knowing what’s happened these past two years.

Will:
Yeah. I think, you know, Dan, one of the, you know, larger brands that I worked with you know, when we talk about a need for people to report on key performance indicators, K KPIs, what they did really well is that they understood if they were producing a product at a certain time, they always had the knowledge of if they needed to double that or do 1.4, the amount they were doing, they knew what the cost was in order to get there. And additionally, they always knew at their production facilities, how much capacity they could have, whether related to that item, but then also if they would need to maybe move something else to another location that leads us to as a brand understanding what are the key items that you need to report out on and give you a really good snapshot of the health of your operations team or where things are moving both related to the P and L but also to your team and understanding what you can support or what you have to say no to. Yeah,

Dan:
No, exactly. And, and one thing that’s, I would say is really important. And we talked, talked about this, the concept of elasticity, our podcast, very elastic. You can listen to this on the go, wherever you are, and on multiple different streaming devices. Well, if it’s Spotify or apple, so just like supply chain, we’re elastic in terms of our content.

Will:
Overall, I think as we’re talking with, you know, as we’re talking about these scenarios, there’s a lot of different things that you can do, you know, really in a, they don’t all have to be sequential. You know, you can kind of move back and forth as you have time through it, but ideally you need to have a plan in place. And so share with us what that plan may be. You can reach out to us at hello@anvyl.com. We’d love to give you feedback. We’d love to tell you you’re doing great. And until then, Dan, I think we talk to everyone soon.