Supply Chain Secrets With Aaron Alpeter | The UNCAGED Show

Welcome to Oncage. Today we're speaking with one of those folks that's really shaping the commerce of today and tomorrow, Aaron Alpeter. Aaron is the principal and founder of Isba. It's a company that focuses on really, I'd say providing growing companies, startups, really fast, accelerated growth, companies that support when they're outlining their sales and operations and fulfillment and I'd say really logistics strategies. Right. So what they're doing in terms of really getting stuff from here to there and really all the pieces that are part of that process. Anyone that talks about things like direct to consumer, they act like it's super easy that you just plug in an API and it magically happens. And we know that's not the case. And so Aaron will tell us a little bit more about where we are with that space. But before we get there, Aaron, tell us a little bit about you and your career.

Yeah. So you know, for me, I'm a husband and a father. That's what I love to do most professionally. I'm a supply chain nerd. I have loved supply chain since before I knew what it was. I've always been fascinated with how things work and I remember being in college and making my sister's eyes roll at the back of her head when we were sitting in Walmart at the cereal aisle and I talked about all the steps that went into getting that cereal right there so that she could walk past it and get the generic brand. But yeah, I started my career out at Unilever. I was there for about five years, was lucky enough to be in a management rotational program and then decided that I want to get into startups. And I've been fortunate to work with some really great companies like Hubble Contacts, the Farmer's Dog, Sustain, Natural Flex Co. And Mirror. And yeah, just love supply chain.

So now you have a company really focused around supply chain Isba. What a great name, Isba. And I'm really curious to hear a little bit more about what you're building here.

Yeah, so we've accidentally on purpose built a portfolio of supply chain tech and supply chain services companies. So there's actually three companies underneath Isba. So Isba Consulting, which is the, the original one, we help brands, typically venture backed companies, improve their profitability and cash flow by fixing their supply chain. This could be everything from providing fractional CEO services to redesigning your network, determining what your tech stack is going to be, helping you plan or liquidate inventory. So that's it, that's company number one, company number two. Is a company that we acquired called sourcefy and Source of I helps brands lower their cogs. So if you have a widget and you're paying $10 for it today we have a network of about 3,000 factories around the world. We can go find that widget for 850 and then sell it to you for 860 and you get boots on the ground, quality, factory management, all things like that. And then last but not east, company number three is a software company we've built called Capable, which helps brands hold their three PLs accountable. So every fulfillment center and brand sign a contract and part of that contract is an agreement for how well they're going to perform, what the SLAs are going to be for on time fulfillment or order accuracy. What we recognized was after solving this problem over and over again, that there really wasn't a standard way for brands to measure the performance of the three PLs. And so capable is an automated scorecarding system. You upload your contract, connect to Shopify and you're able to to be validated that your three pills doing a good job or to, to be alerted when things need to be addressed.

I love the combination here with the services as well as the technology. It certainly I think reflects what is needed in the space especially for companies at this stage. And you know, this conversation, Aaron, reminds me of a chat I had. Oh wow. Maybe 10 years ago. It was a young guy who had come out of Google and was launching a very cool, sexy direct to consumer business and had done all the technology build out and was trying to figure out the fulfillment because he said, you know, I went to FedEx and I plugged in the API and you know, it should all be functioning but. And I said buddy, there's a lot more to this here. So tell me though, I mean obviously that's 10 years ago, things have moved on. We've gone through the craziness of the pandemic where it was impossible to get anything, but now we're coming out of that and moving into another era. What's on the mind of folks today in terms of logistics and really supply chain?

Yeah, I mean I would just say that, you know, supply chain is the intersection between the technical world or the data world and the physical world. And so a lot of things have changed in 10 years, but a lot of things haven't changed. We still use trucks, we still use parcel carriers, we still plant crops in the ground and harvest them to make different products. And so you know, really the discipline about supply chain is Making sure that you have enough of what you need without having too much and without having too little, and you have it kind of when and where you need it without sufficient waste. And so to some extent the challenges haven't changed, but just the tools that we're using have changed. And so, you know, there's been a lot of investment in technology, a lot of new, different types of concepts and things like that. But at the end of the day, we're still looking for different ways to predict how much we're going to sell of a particular product. And then we have different carriers, different providers, different ways of getting that product to the end consumer.

Yeah, well, I tell you, I mean, during the pandemic I relocated down to Miami and I remember going on to one of the furniture sites online and ordering a whole bunch of different pieces of furniture and expecting it to be there the following week and then rereading the fine print on the site and realizing that my couch was going to take nine months for us to arrive. And so clearly we've gone through kind of this boom and bust period and there certainly is a ton of new technology pouring into the space. I mean, we hear about sexy things like Elon Musk's cyber trucks or his Uber or Tesla fleet, but tell me what you're seeing on the tech side that is really making a big impact right now.

Yeah, I would caveat by saying that a lot of tech can be a bit of crap to some extent if you don't know what you're doing with it.

Yeah.

One of the biggest mistakes I see companies make is they have a problem they don't really know how to define or how they're going to solve it and they reach for tech as a solution. And so I was just talking to a brand the other day that they said, hey, we, we forecasted the wrong inventory, the wrong amount of inventory. You've got six months more than we need. We need to go buy, buy software to fix this. And, and the problem isn't necessarily the forecasting piece, it's the fundamental principles and how they're, how they're operating their business. Those, those non technical pieces that they need to work out themselves that they have to fix first before they can go into technology. But when it comes to just overall trends of what you're seeing, you're, you're kind of seeing two main vectors. One is an enormous focus on visibility. And you know, this is where you've got lots of different software platforms that are allowing you to see where your package is when it's in transit, where your goods are when they're on the boat. The status of pos, the status of manufacturing or quality things. There's a lot of stuff there, just about kind of bringing data to the surface and allowing people to. The other thing that you're seeing is like a macro trend is kind of the apization of supply chain. And so there's lots of different companies that are asset based that are starting to build themselves out to say, hey look, if you need trucks, you know, we got trucks. And so we'll, we'll just be a piece of your tech stack as you build your, your API solution or your text, your supply chain solution. And they're slotting it allows people to kind of build one on top of each other. And, and what's interesting is a lot of the tech that you'll see out there is kind of still based on the same, you know, three or four carriers I know of. You know, one software business that you know, has very good marketing, has a sleek ui, but they're, they're still using the people that they're competing against because at the end of the day you still, it takes money and effort and scale to move product around the country.

Yeah. And Aaron, with your solution, I feel like even though we would love to think of logistics or supply chain as being sometimes a local thing, it's really an international question. And one of the things that really poured out of COVID was this rethinking of the supply chain so that we didn't have a situation where we were dependent on one market over another for one particular good or component. Is that continuing or are we seeing it kind of reverting back to the norm?

Yeah, I think the norm is changing. So if you think about supply chain is kind of like water, it's going to find the path of least resistance. And if we zoom back and just as a history lesson, if we look back at China entering the WTO in the early 2000s, that was really a watershed moment that dropped all the barriers. Ocean containerization, which happened in the 50s and 60s was now the norm. And we, we basically had, you know, the Pax Americana where, you know, single superpowers, single, you know, basically single country making the rules, all these international institutions that said, let's do this experiment, let's organize the world economy in a place where we have the most efficient production. And so as a result, we had mega corporations created. We had, you know, look at tsc, tsmc, which makes, you know, an ungodly amount of the microchips the wafers that go into all the processors there. We have these mega companies, these mega scales that were created. And so as a result, we have certain countries in certain regions that are specialized into a certain, you know, a piece of things. And so, you know, the economy has been completely reoriented around these ideas. And I think the fundamental principle that we had was that, you know, we were all going to get along. The Pax Americana was going to continue forever. But as things start to change, as, you know, maybe we look at saying, hey, some of these countries that, you know, we thought that if we opened up and, you know, gave them a lot of business, they'd become more like us. But now they're a little bit more different than us. And we don't, we feel comfortable with that. We start to see, you know, more regionalism, regionalism, more nationalism. And so what's happening now is that governments are, are rewriting the rules, right? We're basically looking saying we kind of want tariffs, we kind of want trade barriers. We think that there are some industries that are important from a national events perspective that we have, you know, here in the United States. And so the, the norm is changing. And so people are reorienting and trying to figure out what the rules are going to be. And you know, they'll be lobbying, they'll be complaining for a bit while people, you know, figure out what the rules are going to be and try to write them. But, you know, the world could survive understanding that we had $25,000 shipping containers. That world looks very different. Right. It's inflationary. There's a lot more produce locally to where you're going to get it. But that world could exist because it existed before. And so we're kind of in this period where as governments and businesses start to decide what those rules are going to look like for the next 30 to 50 years, you know, supply chains will be very quick to adapt.

It's really well said, Aaron. I mean, certainly we are at a moment where it seems like a lot of elements of our international economy are shifting and changing, and this certainly is one of the key ones. But up front, you mentioned an incident with your sister, I think, in Walmart, and I want to kind of go back to that, that something about cereal. Was that really kind of the instigation for you to get really involved in this space and push more into supply chain? Tell me a little bit more about what drives your passion.

Yeah, no, the serial story was just after I was already a nerd. Look, I've always Been interested in business. I think that's what I, I knew what I wanted to be when I grew up. I remember in the fourth grade we had to kind of do a project about what wanted to be. And I came up with like, AK Industries, my initials. And I wanted to be a business guy, right? And I didn't really know what that meant. You know, in college, I, you know, my freshman year, I looked at like, okay, I'll do the finance, accounting things. That's what people do. And you know, the Wolf of Wall street and, you know, those sorts of things look, look kind of cool. But then really for me, I, I took a break. I was in Sweden for a few years and then moved back and transferred into the business school at Ohio State and just asked them what their most difficult major was. And I figured if I could get in there and cut it, worst case scenario, if I don't like it, I can go elsewhere and. But their most difficult major at the time was logistics. And so I got into it, took some, some general eds and I remember my first factory tour. The first time I got to go to a warehouse. The first time I got to be around a semi truck and move around, I was just like, this is cool. This is how stuff actually gets done. You're not moving bits around. Like you're actually doing things, interacting with people. So I think that's, that's really what.

What for me, you know, I lived in Hong Kong an earlier part of my life in the mid to late 90s, and at the time, a lot of what we would say are kind of consumer goods were being manufactured in South China. And a couple of my friends worked in that industry and I went on some factory visits with them. And me being a digital guy, oh man, I loved it, you know, to see things actually being made and what kind of came of all the stuff that we thought was all done just on the computer, but actually there was a lot more to it. But I completely understand it. But there's another passion here, Aaron, and I want to understand it. I look at your background a bit. I understand you studied Swedish, but what's this whole thing about being a taco aficionado?

Tacos are amazing. I don't think we have to go in beyond that. But unless you have tacos in Sweden, the tacos in Sweden are actually quite bad. I do not recommend. So don't do that. But no, look, I think growing up, I just, we always had tacos. It was kind of a special thing for us. And then as I moved around and spent a lot of time in Mexico and California and New York. You start to kind of go on this culinary adventure. I think what really got it for me was probably three or four years ago I was doing a tour of Mexico trying to find a factory for a client. And we were in Juarez, Guadalajara and Monterey and we kind of sampled the tacos and so I got this, this, this tour of Mexico. From a culinary perspective, it was, it was pretty awesome. So, you know, affectionado may be too strong of a word. Maybe it's just think about changing that. But I love tacos.

You know, everyone loves tacos. For sure. It made me think that maybe you might be onto something here and you could become like the barstool founder, you know, what he's done with pizza. Maybe you'll become kind of the score out of 10 for tacos around the world. But we know that Swedish tac be down at the bottom of that list.

They're awful. They're awful. Yeah.

Lots of good things in Sweden, but probably not the tacos. Right? I hear you. Well, listen, Aaron, I mean, when you look at the space, really the supply chain space going into 2024, there doesn't seem to be an end in sight in terms of the amount of change that we're seeing internationally on almost every topic related to business. What are you seeing popping next year as kind of the core areas that things are going to evolve and change with?

Yeah. So I think in general there is a big return back to basics, like basic fundamental principles of profitability and justifying spend and ROI and those sorts of things that capitalism has talked about in the last four or 500 years. In startup world, we kind of forgot those lessons. Right. It was an endless fountain of money. And, you know, you get, you know, give me 5 million bucks and I'll, I'll figure it out. And that's going away. That's, that's not coming back anytime soon. And so what you're seeing is that companies and therefore their supply chains are starting to normalize their, their ambitions. They're going to right. Size their ambitions. And so, you know, not every graph is going to be up into the right and it's going to be a lot of just, hey, what? How do I have a really sustainable, ongoing, profitable business? And so you're going to look at folks that say, okay, you know, if we only grow by 2,3% this year, how do we make sure that that is good growth? And you know, we, we just want to make sure that we exist. So, yeah, this year has really been a lot of folks trying to get to default Alive and cutting and streamlining to the point where they, they feel comfortable that, you know, they can weather the storm. And who knows what happens with interest rates, who knows what happens with some macro factors. But the best founders that I know are really the ones that are focusing on not taking tomorrow for granted.

Yeah, well, I love the phrase default Alive and certainly I can see how companies need to evolve, really with so much being unpredictable in the near future, but also evolving as quickly as they are and so trying to make sure that they do efficiently as possible now. I mean, Aaron, I'm going to guess a lot of folks might have some questions for you out there if they wanted to reach you. Where's the best place to get in touch with you?

Yeah, I'm on LinkedIn, X, Twitter, whatever you want to call it, and then you can send me an email, just aaronzba.co.

Excellent. Well, we've been speaking with Aaron Alpeter. He is the principal and founder of isba. And you know, we've talked about the three branches of isba. Really, they're playing in the services space, they're playing in the technology space and they can really help companies move forward in terms of what they need for supply chain. They're working with entrepreneurs. I'd say early stage, mid stage. I don't know if you work with big companies, but really I'd say that kind of early mid all the way through to when they start scaling. ISBA is a resource that you should be tapping into an Aaron, very, very knowledgeable conversation today. Thank you so much for being on the Uncaged show and we look forward to having you back.

Thanks for having me.