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Direct-to-consumer manufacturers tell AFFI summit how the 3PL provider handles their fulfillment and lets them focus on production and marketing.

Food manufacturers facing challenges in their direct-to-consumer fulfillment efforts can overcome a variety of problems, grow more quickly and improve profitability by partnering with third-party logistics providers.

Two such manufacturers, speaking at the recent Supply Chain Solutions Summit hosted remotely by the American Frozen Food Institute (affi.com), McLean, Va., discussed their successful teaming with Burris Logistics (burrislogistics.com), Milford, Del.

Mosaic Foods (mosaicfoods.com), Brooklyn, N.Y., started working with Burris Logistics this past spring, according to Matt Davis, co-founder and CEO. And Splendid Spoon, (splendidspoon.com), Brooklyn, N.Y., began working with Burris’ New Castle, Del., operations two-and-a-half years ago, said Julian Corash, vp of operations. Both companies specialize in frozen, home-delivered plant-based meals, and were panelists in a session entitled “Overcoming E-Commerce Challenges by Partnering with a 3PL.”

The primary benefit, according to the panelists, was the ability to focus on food manufacturing and marketing without having to worry about the logistics of home delivery and the resulting need to staff up and find warehouse space and trucking.

Davis, formerly an executive with Blue Apron, described the initial challenges faced by Mosaic Foods. As a start-up, the company made products in small batches that people loved. But scaling up production proved difficult when frozen food manufacturers couldn’t match factors such as spicing and thickness of sauces. After being told many times that they had to change the way they were doing things, the Mosaic team began looking to caterers and prepared food providers.

Here, they found a more receptive audience; soon they were making product in larger batches, freezing it individually and finding success. Davis’ advice to companies in situations such as his is to believe in your product and keep on trying, choosing partners carefully.

EXPERIENCE & INFRASTRUCTURE

An immediate benefit from working with Burris, he said, was tapping into the logistics provider’s experience and infrastructure. For example, Burris was able to help Mosaic anticipate and plan for surges, when sales might bump up 30% in a single week around a holiday season.

“If you’re running everything yourself, that’s all you’re doing – planning for that surge. But if you have a supply chain partner that’s been through that many times, and has clients doing 10 times your business, you don’t have to worry about that anymore. Having people who have already figured out the supply chain – that’s huge,” Davis noted.

He had considered getting into supermarket distribution at the start, but “it was not necessarily a fight we wanted to fight.” There would be price point battles, established competitors with existing buyer relationships and the need for killer packaging, for example.

Down the line, Mosaic may well get into retail distribution, but entry seemed quicker and easier by going direct. “We’re branching into different verticals over time,” Davis said.

Splendid Spoon got its start when founder and CEO Nicole Centeno began selling soup door-to-door on her bicycle in New York City. But lest you get the wrong impression, she’s studied diet therapies as treatment for illness, trained at the French Culinary Institute and taught cooking and nutrition courses at Columbia University. She is also the author of Soup Cleanse Cookbook.

Corash described the company’s early days of self-distribution, and how teaming with Burris has ironed out many logistics kinks. There were a couple of misfires with other logistics providers, including one that shut its doors overnight with no notice.

Like Davis, he noted that the Burris partnership has allowed the company to focus on product and marketing, without having workers spread thin across many areas of responsibility. Further, Burris’ purchasing power helps Splendid Spoon save money on everything from dry ice to freight. “Those are all really big value-adds, especially to a smaller brand that doesn’t have that purchasing power,” Corash explained.

He added that shortly after the partnership was formed, his company was able to expand into Burris’ Oklahoma City location and “effectively eliminate our need for express shipping, which immediately returned a handful of points to our margin.” Recently, the company expanded into Burris’ Jacksonville, Fla., facility.

KEY BENEFITS OUTLINED

Megan Caruso, a Burris account executive, said all parties have benefited from shared experiences in the direct-to-consumer model. Among the key points she cited:

–A subscription model is of tremendous benefit to marketers, in that customers automatically reorder without having to remember or receive a reminder.

–Order size and pricing are make-or- break factors. “If your retails aren’t high enough, it can be really challenging to absorb all the expenses to get the order to the customer’s door.”

–Expenses can be daunting. Among other things, you have to consider packaging, the cost of dry ice or gel packs, transportation to the fulfillment center from the point of manufacture, labor costs and the parcel rate for the final- mile carrier. That parcel rate can vary depending on different transit zones and points of origin, for example.

–You need well-insulated packaging that provides a branding opportunity while protecting the product. The packaging has to be the right fit for the product being shipped. Too much open space can result in quicker dry ice sublimation or less efficient gel packs. Packages that are too tight can damage product.

–It all gets down to communicating honestly and efficiently about problems and opportunities so that everyone works together comfortably as a team.

Chris Robins, general manager of Burris’ New Castle, Del., facility, described the evolution of the company’s direct-to-consumer operations, its fastest- growing business line and also its newest, having started in October of 2017.

“We started by using a traditional case-pick mindset, where you basically walked in a circle to pick customer packages just like you see it in any typical grocery fulfillment warehouse,” he said. “That quickly evolved into selecting multiple orders at once, using a system of parallel picking. We did that for about a year and then we condensed the pick path to cut down on team member travel time and increase product density. We’ve adjusted the ergonomics for our team, and added some technology to reduce the risk for errors.”

Robins said Burris’ goal is always to utilize every cubic foot available. “With the e-commerce model, we’ve sacrificed overhead storage space to accommodate high-velocity pick locations. This has allowed us to generate similar product throughput but in a smaller space.”

He noted that direct-to-consumer business has spiked sharply because of COVID, with many customers having reached their end-of-year projections by the end of May. “The real trick has been communicating with our customers and trying to navigate the trend while being as nimble and agile business partners as we can be.”

In a concluding question to panelists, Burris vp of marketing Bobby Bailey, who moderated the session, asked what factors might lead to disruption of the direct-to-consumer business model.

The answer from Robins pretty well summed things up:

ROLL WITH CHANGES

“The real opportunity for disruption is the inability to roll with the changes in e-commerce… The only constant is change. If you’re inflexible or incapable of adapting, you’re going to be weeded out pretty quickly in this industry”.

‘Having people who have already figured out the supply chain – that’s huge.’ Matt Davis, Mosaic Foods

The partnership ‘effectively eliminated our need for express shipping, which immediately returned a handful of points to our margin.’ Julian Corash, Splendid Spoon

‘If your retails aren’t high enough, it can be really challenging to absorb all the expenses to get the order to the customer’s door.’ Megan Caruso, Burris Logistics

‘If you’re inflexible or incapable of adapting, you’re going to be weeded out pretty quickly in this industry.’ Chris Robins, Burris Logistics

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