Exactly How Supply Chain Executives From The Philippines Completely Changed This 8-Figure Brand

The most under optimized part of your e commerce business is probably your supply chain. The reason that I know that is because I talk to lots of founders and very few of them have any idea really how much value there is left to create in improving their supply chain. There are all kinds of ways this is the case and getting better terms, better pricing, lower MOQs, all kinds of different elements of supply chain improvement that are possible in a business. And my go to resource on all things supply chain is my friend Lara Guevara. This is technically a sponsored episode but I would have published it had it not been because it is going to be so good and so helpful to you. Lara is going to walk through supply chain improvements that she has made working with Section 119 Greg Cary, who you may have heard from before in this business a long time ago, he came on the podcast. Point of this episode is they're going to walk through the actual ways in which given a bunch of time they have made improvements in section 119 supply chain. Greg will tell you how that has mattered in his business, how much money they've saved and made by doing a better job in this case. I really do think that most E commerce businesses are wildly under optimized in this part of the business. And if you had to, if I had to bet on what area of E commerce businesses, DTC businesses were going to be getting better optimization in the next few years, like this is the area where there's the largest improvement of, I would say it's supply chain. We were doing a better job on marketing and finance and all these things. But supply chain is still, people are really behind and so I'm going to help you get caught up today. Lara's going to help you really more than that and Greg's going to help you. Let me not delay this any longer. Let's get into it. Greg, Carrie and Lara Guevara, hello to you both. Let me, let me do a thing. So we don't talk over each other right now. Maybe let's start with Lara. You are the CEO of More Staffing who sponsored this show for a long time but you have really deep supply chain experience. Maybe you can say hi and just give people a little bit of your background.

Yes.

Working with, working with supply chains.

Right. So third time also doing the interview with you, Andrew, and I'm very happy to do another one, especially if it's supply chain just to make sure that I can help spread awareness and supply chain. So more than 15 years of experience in working for Supply chain and I cannot. I'm very excited to share my the best practices, cost saving strategies and how we can improve processes in supply chain for especially for DTC brands. Finally, I could say good morning from, from California because when whenever we're doing a recording, it's always midnight or weird hours from the Philippines. But now we are here in California visiting clients for more staffing and more supply chain. So good morning and good afternoon. Greg Good morning, Andrew. And I can't wait to share more in this podcast. Sam.

Yeah, so we sell officially licensed apparel. So we leverage the artwork of, you know, some great iconic bands in history, Grateful Dead, Allman Brothers, Beatles. And so if you think about kind of the era that we're in, the era of like, you know, really excellent operators and in apparel you have a whole new level of complex or not a new level, but apparel brings another complexity to that. And then imagine taking 10 to 15 of your net sales and sending it off in a royalty payment to your, your business partners. So section 119, I believe is, is, you know, is, you know, particularly kind of placed to have this conversation because we're in the apparel business and we give away half of our, you know, we give away 10% of our net sales. And so those constraints create an even higher pressure situation for us to master our supply chain. And all the learnings that I've experienced coming into, you know, D2C E commerce four years ago, completely fresh and new. I have learned the majority of those optimizations from Lara. She was my first hire and my life has changed. In our business trajectory has changed because of the early changes in intelligence that we brought into our business when we were doing less than a million dollars. It was those principles and best practices that have enabled us to weather this rough patch and still give away that portion of net sale. So huge thanks to Lara and you. Big fan.

You're saying giving away in terms of licensing fees, right? That, that just like the cut off the top going to licensing. Yeah, yeah. Okay. And then can you give any people give people some kind of sense of the scope of the business now you don't have to say exact revenue numbers, but some. It's always helpful to have some context for like where business is at as you have a conversation about something like.

Yeah, we'll do about 10 million this year.

Okay, cool. That's great. So yeah. Section119.com Go get yourself. I was actually, I just now I didn't actually realize you had Beatles shirts. And I was like, oh, I. Okay, got to get some of Those. So big Beatles fan. Talk about a little bit more about the context here, Greg, for people to understand some of what has happened in your business. Maybe you can give a little more intro around how long you worked with Lara and her team and essentially like what are the, what were the supply chain problems to solve and, and, and just yeah, give people a little more sense of, of, of the beginning of the journey essentially.

Well, if I even take a step back and think about just the, the trend of E commerce, you know, initially it was very focused around, you know, meta and, and low acquisition costs, some, some labor, some arbitrage there. And that was, that kind of filled the, the, the noise within, you know, within the, the space. And that's, that's, that expertise gave you a great advantage. If you could get into Facebook manager and really optimize that. That, that is an advantage, huge advantage. If you can wrap a decent product with some pretty ads and a beautiful landing page like that was the business then. And then you know, we, everyone's at home, government's giving us money, 0% interest financing. That, that kind of continues until things start getting tight. You know, things start tightening up, 0% interest goes away and the focus starts to shift to contribution margin. And that required us all to be a lot more disciplined around how we were thinking about acquisition costs, marketing efficiency ratios and linking that back to our, our contribution margin and you know, driving the, you know, the available funds to operate the business. And we're at this stage right now, which I think is like the next era of the narrative which is hyper focused on managing your supply chain because that is where all of the business profits essentially come from. And at the very core of that is having an outstanding product that can, you know, weather all these storms through the test of time. And a lot of the principles that we kind of included in our business right from the get go are now proving to be even more valuable as we navigate this storm of. It's, it's more like, you know, it's all about staying alive in this era. And so, you know, the effective management of inventory has huge implications not only on your cash flow but on your income statement. Right. If you can manage that inventory more effectively, you know, you'll find yourselves in a situation where you're not having to run, you know, a season end sale and throw it all your profits to kind of move that inventory in favor of getting cash, but you can manage that more effectively and protect your gross profit. So there's interplay within cash flow and income statement of managing your Inventory, there's the optimization of your logistics as well. A lot of people will use kind of various marketplace and platforms for moving stuff abroad. But having a direct relationship with the people that can move your freight can dramatically, you know, impact savings, but also just tighter controls on the timing of all these things. And so, you know, and those are just two examples. And so just what we've learned is just that that tighter scrutiny during this period not only has benefits on managing cash in your income statement, but it does also give you more room to be more effective in your acquisition strategy. So as you know, as things acquisition cost goes up, the only tool isn't about optimization of your ads, but it is to work that gross profit, that product margin, and to give yourself more room to invest in acquiring customers through challenging times. And so these are all like big levers that move across all, you know, the balance sheet, the income statement and, and the cash flow. And by building these competencies early, they have compounding benefits as the business grows and evolves over time. And then when the, the tide changes and it's a growth era, you're now equipped to, to really maximize that opportunity. But it's an essential survival skill now.

I think that's so right. And this is part of why, I think, I think you just laid out the timeline of D2C really, really well. Like, and I think, I think part of the thing that's happening is that people are with you on that point. Like, they realize that there's huge value to be gained here, but they have actually like, no idea how to do it. Like, if I say to you, hey, your Meta Ads account, use manual bids to get better. There's like, actually a lot of difficult, difficult challenges to getting good at, you know, mastering manual bids. But there's just like boatloads of content. And I go join admission from ctc, like, you know, go watch my content, whatever. There's, there's plenty of that stuff out there. If I tell you, I mean, I've had these conversations with running brands. Like, if I tell you we really want to like make it so that our cost of goods goes down, but we don't lose any product quality or we don't have to trade that for, you know, the volume of orders and, and, or, or whatever, like, I have no idea where to start. Like, I, who do I get? Do I get on the phone with somebody from China? Do I just call my manufacturer and ask to pay less? Like what? Like, that's probably not gonna work, right? So, like, what are the ways in which you like. I have no idea what the strategic and tactical next steps are to thinking through the trade offs involved with all those things. And there are a lot of trade offs. So that's part of why I'm excited about this conversation. Because I think people as they recognize the value of contribution margin still and even as they also become more attuned to like having a good cash flow forecast and some of those things and they see how much inventory ordering matters for their, for their cash flow, they just don't know what to do. So maybe Larry, you can talk a little bit about the beginning stages of this when you think about sort of the big swings you took at section 119. Yeah, I don't know. Start wherever you want. But like in terms of, terms of what, where, where the supply chain was and what you got it to. Can you walk through the beginning of like, okay, here's the, here's the, the big things that we did that made a really huge difference and yeah, start wherever you want there?

Yeah. I think Greg hired me in the perfect Tim. The growth of section 118 wherein the founder, who is also the designer of everything is doing the supply chain, which is the most common scenario for. Based on my experience talking to a lot of DTC owners, they will start with new product development, they will source themselves, they will negotiate themselves and they will bring the products in and start selling the product. So I think the best support that I was able to create, I just wanted to give the five major categories of supply chain which is inventory planning, new product development, negotiation with vendors, the processes, the warehouse logistics and the administration. The first thing that I supported is the new product development, the speed of, of the new product development and designs. And I think this is very important for an apparel company. The closet share, the number of designs that you have per type of clothing and then the amount of apparels that you can launch. Even accessories. At that time we still have masks, we still have other products that we are selling in time for Pandemic. So it is a huge support for the brand that we can launch new products as soon as possible. If it's apparel, we want to make sure that we can launch from the design concept to sampling and production to be able to sell it right away, less than two months. Also it is being partnered with the analysis, the data analysis and understanding how much you should be shipping by air and by sea. So it's a combination of understanding how what is the pros and cons of, of sending some, some percent of, of that order via air and then following it by, by shipment via sea. It's, it's, it's always providing data to Greg. My goal at the time is to make sure that I have all the data, I have the numbers, I have my recommendations. And in one reading Greg will be able to give me an answer right away. Because speed is the name of the game in supply chain and that is for the new product development. The inventory planning was the next step that I supported with section 118, wherein there's no. The designer is not very conversed with inventory planning. So I created a template from ground up. So it's a combination of using Stocky, which is our tool at that time. It's a free tool under Shopify. And I used that to download quickly the data that we have, the sales data that we had six months, 12 months ago and use that to create the template, the forecasting template that I created for section 118 including the growth factor that we want, the seasonality of the product that we're ordering and other aspect that is required to complete the formula of the forecasting. And from there we had a huge improvement from being out of stock to having a better number of products in our warehouse and then followed by negotiations in savings. So we identified the low hanging fruits in negotiations which is not just, not just always unit cost but also payment terms, minimum order quantity and the lead time that you have. So from the initial 30 to 45 days production, understanding the processes with your vendor can help them lower or lower down the lead time for that and at the same time discussing with them the raw materials that they use, understanding the tier 2, tier 3 vendors it will all contribute improving the minimum order quantity. So sometimes I can clearly remember another, an important event in supply chain section 1 in the supply chain before when where we help our vendor find their raw materials so that we can also reap the benefit of having a lower moq. So they have their own vendor of the fabrics, but we source our own fabrics and we support and we, and we connected them with our vendor fabric vendor so it's cheaper and at the same time it is readily available and that reduces our lead time from 60 days to 30 days. And that's very important for us because at that time that's SSBD button downs for our products. So a lot of those have been like simple projects but has a huge improvement in our supply chain. And after that we initiated hiring more experts. Like for example, since I did everything, even the administration of adding product in Shopify, creating barcodes and Doing all of the administration in supply chain is part of my job description at that time. But we grew so quickly that after three months I hired Gleiza as my first hire in section 118. And after one month we hired Kate who supported Greg. So it's a huge, I think it's a quick improvement and development for section 118 that we were able to hire new team members that supported me to do the projects, the savings initiatives and all of the supply chain tasks. That is very helpful for the business.

There's so much. There is really quickly. Actually I love the list of five areas of supply chain. Could you rattle those off again? Just those five areas that might be a helpful thing for people?

Yes. One is inventory or demand planning, forecasting. Second is the new product development. Third is the logistics and then the warehousing or the three pl. And fifth is the administration and the coordination of all those four. So those categories, we couldn't leave one for supply chain. That's why when I was doing it in the beginning, I should divide my time how to develop new products at the same time, manage inventory, coordinate logistics and track wherever our shipment is. Coordinate with our three PL at that time, not just receipt receiving products, but also making sure that they have, they, they, they can, they can accept or receive our products in time. And then the coordination of all of that to our marketing, to our designers or customer service supply chain works a lot with cross functional team. And so coordination is very, very important.

Okay, so I want to, I want to go back to a really specific thing that you said and I don't know, I'll be curious to hear your thoughts on this too, Greg, but when you, you, you gave this very specific example here of you went to your manufacturer and you went and found them a new raw material supplier. Is that right? Is that what you said? You went and found them that and, and by doing so they were already ordering their raw materials from some supplier probably somebody had a relationship with for a while but didn't have a great reason is my guess for them to go and like shop that really specifically for your business in a way that would make the most sense. They just had their partner for that or whatever. So you went not around them or whatever, but you went separately from them and shopped a different raw material supplier that you connected with them with and said to your manufacturer, I'm going to walk this back. And then you tell me what I got right and wrong. So you said to them, hey, we want you to buy your raws from this manufacturer from this raw material manufacturer instead of our supplier, instead of the one you're using. And the net result of that was you cut your lead time in half and also reduce the cost of the product. Did I get all that right?

That's right.

Okay, Greg.

Oh, yeah, go ahead.

Go ahead, Laura. Say, say more about that.

Yeah, Actually, we are very fortunate that our vendor is very cooperative, so they're not married to their fabric vendor, and they are open to us helping them. And the reason for. For initiating that project is because the lead. The lead time is 60 days, because 30 days is their lead time to order that raw material and 30 days to produce. So we, we connected with the vendor how we can support, if we find it's in its fabric vendor, if we find a fabric vendor that can supply very quickly, lower cost, same design, good quality designs, if they are open to getting from that vendor, and they are very supportive in that project. So what I did is instead of relying on their supply chain, I know that my expertise is sourcing. I find a fabric supplier, and then I connected with them. So I did the negotiation of the cost of the fabric to their vendor, to that vendor, and I ordered the roll of those fabrics and paid for it. So instead we recalculated our cost of that product. Instead of getting that fabric cost plus the cost produced, we're now just paying them the cost to produce because we own and we buy our own fabric. And that made us very. That gave us the flexibility to order our raw materials separately. Not just cost savings in the raw materials, but I think the best result of that project is reducing early time from 60 to 30 days.

It's. I mean, it's like huge. I mean, you're on your cash flow. Greg, like, did you just, like, do backflips when she told you that? I mean, that's like a massive improvement to the business.

Oh, I mean, they're. They're all significant improvements that. For the, you know, the supply chain layman of which I was. You just have no idea that these options are even available. Where to start? Never mind that the time consuming, exhausting effort of being up at the middle of the night, you know, being on WeChat with China. And so the big theme here is, you know, at this time, we're a company, like, barely, you know, just on our way from like 1 to 3 million maybe back then. And the big. Another big kind of value add is just removing all this stuff that was done haphazardly, adding risk to the business and bringing in expertise to Leverage all these savings to manage it with much more accuracy, while also freeing up executive mindshare. It went from being a exhausting burden that was not done with any sort of care or expert. Care is the wrong word, but expertise. And now we have a team that's bringing and surfacing up a process that now requires a half hour meeting on a weekly basis to say, hey, here's our inventory, here's our current inventory, the velocity of each product and making recommendations to me about what we should order. I just have to go through that, approve, disapprove, and then also looking at the split because when you're in this stage of being, you know, sub 5 million or so, you gotta get a. Sometimes in apparel, you gotta get very creative in terms of the ordering process to make sure you're keeping inventory on step. You're your mechanisms for tracking inventory. Your ability to build consistent demand is not, is not really ironed out yet. And so you're dealing with these fluid motions of demand, ad performance, running out of stock, having to chase that really quickly and so bring in that weekly report where you can make decisions and then say, hey, I want a third of this to go on a plane. I'll take a hit on my product margin in order to get it in stock because that seasonality window is collapsing, right? And so. And I don't want to lose those sales. So it doing that, you know, alone as a business owner or founder in the middle of the night, aside from everything else that needs to be done, is just. Is not able. And it is this quality that's stage, this expertise that does give you, you know, more breathing room, more effective management of that stock, reduced risk. Because now the inventory that you're holding is a much healthier inventory. Not, not based on what was this kind of like gut feel of, you know, not enough instruments, kind of appropriately forecasting. And so being having this expertise allows you to even just build the momentum, not have these lulls so that you can give yourself the opportunity to get to that stage where you can, you know, hire that next, you know, in house, you know, fractal or that fractional CFO or where you can get to that stage where you can hire that in house creative director along those earlier stages. Part of it is this challenge and this goes to not just staffing remotely, but in the early stages, you're just getting from one stage another to kind of build out your team and the competencies so that you can break through through to the next stage. And supply chain is requires expertise that you can only learn by like getting into it. Well, I mean there's nothing that you can learn unless you've lived in it. And, and that was a huge learning for me to witness bringing Laura and her peers on board.

I have a quick funny story about this. Majority of the team members that I have in the fractional supply chain and the talents that I've recruited, we've worked together. We've worked for more than 15 years in supply chain. So since we are in the space of. In the topic of also spreading supply chain awareness I think what I wanted to to share is that there are experts in this field that you don't have to do it solo. You don't have. Just like Greg said, it's going to be very, it's going to be very tedious if if the founder or the. If the. If the owner of the company is doing it. So that's, that's one another is that since we have that more than 15 years of experience in supply chain working for multinational companies we are very versed with the projects of supply chain and working with an E commerce it's like unlearning the practices in the multinational company and slowing down or degrading some of the projects to so that we can tailor fit to E commerce businesses. And so when we have projects like this that we share with Greg of course we receive a lot of appreciation from the owners. But when we were discussing internally with my Filipino teams like those are very basic. Those are just like what we're doing in our previous work. This is not even what we're planning to do in the future but we are, we have saved thousands of dollars. We have launched more products than expected and we grew the company and we were able to hire other talents as well. So we started hiring supply chain in the beginning but then we, we hired graphic designers, customer service finance roles as well. Remoting the Philippines. So it allowed us to not just expand our product line and reduce our cost but to further provide savings to our brand because we were able to hire more talents for us. So again we still have some tricks up on our sleeves until now that we're also very free to travel like just what we've done attending five day Canton fair event in China, seeing, seeing our vendors actual manufacturing process and having that connection relationship building with them. So it's more, more to come more projects and I know that for new business owners who are navigating early supply chain there are more available strategies right now that is readily available as compared to five years ago when we were doing Section 118 and I'm hoping that more and more awareness, I can see more awareness and then tweets coming for supply chain. And that's the goal, is to make sure that we can support, by sharing more information, by listening for this podcast.

I mean, it is funny to hear you two talk about the difference of those things, right? Greg, you framed that as like, I have no expertise in supply chain and I'm in the middle of the night, we chatting with Chinese manufacturers just like completely fish out of water basically, right? You're, it's not a matter of care or whatever, but you just can't do that, right? And Lara, you're like, yeah, that was like absurdly easy for us. And you said to me the other night, actually, Laura, at my house, right, you were talking about like when people come to you with supply chain questions now, you know, when they, when they come for fractional supply chain services or whatever, they're like the questions you guys get on calls or like when you, when you first hear about the current supply chain stuff like that, you're like essentially trying to hold back laughter because it's like, it's so absurdly under optimized and. But it's funny because, because you, it's that it's, it's that easy. You know, you're saying that. But on the other hand, Greg, you know, when I, when I, when I tell the story of like going and finding a, a different raw material vendor for your manufacturer in China, even if I tell you, hey, that's a way you can make your, like, create drastic improvement in supply chain, like you might as well tell me to speak Japanese, like, I have no idea where to begin. Start it. You know what I mean? I have like, it's, it's just, it's just the relational gap there, the language gap, you know, the time zone gap, all of these different things create all of this friction to actually only solving that problem. So I'm curious, in section 119, what were, what were other large scale supply chain improvements that you guys were able to make happen? You know, maybe, maybe it's a different part of the supply chain. You know, you mentioned those five different areas or whatever, but what else sort of, sort of happened that created meaningful value in the business?

Well, I mean, I'll just echo your point too about, you know, if, if I had even conceived the notion that I can find raw materials that would send down a wild goose chase of a unbox, you know, I can't even box that time Effort. And so now it becomes something that is out there that, you know, I don't know how long it's going to take. I don't know where to start. But if I invest any time into it to grab the benefits and opportunities, I'm inevitably pulling away from another part of the business.

Right. Yeah, 100%. Yeah. The executive mind share point is really important. Yeah.

You know, I think I, at this stage, as Lars says, it's like, oh, you know, cute, you know, this is like cute level supply chain when you're sub 5 million.

Yeah.

And they all add up in terms of inventory on hand. Right. So how much inventory do you need to keep on hand? If you're smarter and more informed, you can keep less inventory on hand and be more adaptive to, you know, the, the rise and tide of demands which reduce risk but also optimizes your cash. Right. So that was just that right there, you know, huge, huge, huge value. The negotiation of not just our, you know, raw materials or, you know, a buck or two here on product costs or negotiating freight options by having a direct relationship. All these things just trim away at the landed product cost. The ability to just have all this be now almost invisible to me as, you know, the operator as the business owner and knowing that a team with competency is getting it done. It's like I don't, I don't, I don't have to worry about how things get from A to B anymore. And that's not always a simple process. You know, the tracking, the documentation, all that stuff. And so the big lever here, aside from like removing inventory risk, improving cash flow, the big lever here is, is freeing up, you know, the business owner mind to think about what the priority and the big levers are to get to the next level. Whether that's finding the next key talent, whether that's, you know, thinking about the next assortment, expansion, product release. You gotta a lot of that early journey is, you know, protecting that time. Offshore helps to do that, but not offshoring with a bunch of VAs. Offshoring with.

Yeah, right.

Expertise.

Yeah.

You know, and you're going to hear it more and more. Taylor or Collective Common Thread. Just had a great chat with chubby CEO Kyle. Leaning into this ERP software to equip this, this cohort of entrepreneurs that don't have, you know, the sophisticated tools to really get to that next level. And when you get empowered with that next level, then you can have a tighter control of your profits, tighter control of your inventory. You can start to synchronize you know, the balance sheet and the income statement with the cash flow and have them work in unison. And doing all these things helps you to deliver profit better. And so that's why we're in this stage where the profit of your company relies on it lies in the supply chain. That's, and that's the quality of the product that the people love lies in your supply chain. You know, the effectiveness of your inventory lies in your supply chain. Getting it here on time lies in your supply chain. So much of this business lies in your supply chain. And the earlier you build that, that language and those competencies, you're, especially in this era, you're dramatically reducing the risk and giving yourself that fighting chance to survive this tough market with expensive debt, climbing acquisition costs. And so you owe it to yourself to navigate that. And so that's like the key thing that can't lose sight of.

Yeah. And at the end of the day, right, these are consumer product businesses. Like, like there are sort of only two things at the end of the day, which is that, which is the customer and the product. And like the whole, the whole apparatus is built to get the product to the customer. That's it. You know, and, and so like it makes sense to me. The supply chain is this, is this crucial thing to get right on that. Maybe Laura, you can even speak to some of the other sort of stuff. If the raw material vendor change is child's play, was there anything else that you did that were the major levers, maybe even if it was a little trickier or whatever?

Actually, everything that I've mentioned, let's assume it's level one. The good news that I would like to share with our listeners is we're just approaching level 2. An example of what I'm working right now is working with an app or program company in developing their forecasting tool. And at the same time there are companies like Portless doing different kind of shipment that can help DTC brands. And at the same time, there are transitioning of vendors from China to other Asian countries to avoid or to minimize the taxes that, that Europe and US imposing for China products. So there are a lot of projects in the pipeline that is happening at this point and in the beginning we're hoping to support the five categories of supply chain like the basic inventory planning understanding. If. Are you, is your product better overstock or under stock? There are not. Not all out of stock is a negative thing sometimes when you're, when your product, for example, is very expensive and huge, that can incur costs in your Warehouse it's better to be understocked than overstock. And so that understanding in your inventory the negotiation. If you have the. If you think that you have negotiated the lowest cost for your vendor, what's the next step? It's looking for alternative vendors and not just looking for alternative vendors in the same country finding alternative vendors from other countries. So there are like let's do first the basic things that we can do for your brand. When that's done, let's move to the next level and then moving higher and higher up that you are that the business is growing together with your supply chain strategies as well. So again there's more projects to come for supply chain. The supply chain experts in our team are doing trainings non stop mastermind the talents that we have deployed to a lot of our clients. We, we keep on meeting for best practices. Like if someone find. I found this ven. I found this freight forwarding very cheap compared to our existing. They will share and when we will connect we will. We will ask. It's like making sure that we have like we have like a community and, and we're doing or sharing best practices and vendors together so that we can support different brands. And a supply chain manager for example for an apparel can support a lot of similar DTC brands. And we also handle formulated products. We also have clients in the accessories products and not just apparel but also some in food industry. So it's very important that we share the best practices with each other. And at the same time I think that's the best advantage of supporting different DTC brands in our fractional support is because we learn new things with new clients and so we can support other clients with that learnings as well.

You know it's funny you say the thing about like different kinds of suppliers because again when you were at my house the other night I showed you a product that was really interesting to me and you and Gleise both did something really funny that I noticed right away and I was actually telling a friend about this which is like the moment I show you the product because you're supply chain people the way you are, you just experience it differently than anybody else. I would show it to everybody else would look at it and like try to use the product or whatever right away and be like oh you know just kind of look, just take it in as from a consumer perspective. But you guys immediately are flipping the packaging over looking at the raw materials, thinking about like oh what is these versus what? You know just like looking at the packaging itself thinking about the price per ounce and the, oh, how much are they charging for this? You know, it was just a really funny. It's the same thing I do anytime like an ad comes across a feed of mine, like I can't actually see the ad anymore. Like all I do is see behind it, you know. But yeah, it's funny. And then that actually leads to this, this point, I think, which is, which that you said is helpful, which is, you know, the whole idea of like an ad agency is that there's shared knowledge in. At an agency level that comes by looking at a lot of accounts and an ad agency is as good as they are. Like basically the thing that will make an ad agency good is their ability to distribute that knowledge operationally across the whole company so that any ad buyer on that team or any creative on that team is using the knowledge that is pooled at the level of the agency. But it's actually really hard for an agency to do this, right? The pool of knowledge, getting it into the, into the rest of the agencies is very difficult. So great agencies operationalize that knowledge really, really well. And what you're describing is basically the exact same concept of the supply chain level, which is like, hey, we actually have access to way more businesses and see way more supply chains than you do. You know, just trying to do this internally yourself. And so what we're going to do is pool that knowledge internally and you know, you guys right now are relatively small team, like pull that knowledge internally and say, okay, we can, we can leverage this, like bought this baseline of knowledge across a lot of different stuff so we can go across industries and things like that and have insights into these different things when the, when the supply chain problems actually do get harder. You also have something else that is. Is so interesting to me at sort of a strategic level, one sort of unrelated. But I just wanted to comment on it, which is another thing I saw happen. This kind of is the state of the DTC industry over the last few years as everybody started thinking for the first time really seriously about cash management. I think Covid made that come into stark relief for a lot of people, right? People were either met, they were for a while massively understocked relative to the moment. And then after that they became massively overstocked for the moment because they all over ordered once the supply chain slowed down so much and shipping slowed down. And it created this conversation in D2C around inventory buying strategy. And I actually. One thing I noticed is that people really fetishized for a little while the idea of very fast cash conversion cycles. And they love the idea that you would be able to turn product into cash. I mean, there was, I remember a lot of stories about gymshark having a negative cash conversion cycle and some of those things. And it was like, oh, wow, that's what you got to go do. But you said something really important that I think is something people don't consider enough, which is like, that actually may be completely the wrong decision for you. You only need a fast cash conversion cycle if you need cash. But actually you may, depending on your business, really want not so much the cash benefit. You actually may be better served in your business by stocking a lot more inventory so that you do not run out of inventory when big moments come. Because I deal with lots of brands that run out of inventory all the time. And you think about this, if you're like a subscription supplement brand and you got all these subscribers, actually the, it's, it's a way bigger risk to you to run out of inventory and have all your subscribers miss their subscription and get really mad. That's a bunch of banked CAC free revenue that could come in. And if you run out of the product, like, it's, it's a really big problem for your business. So you'd rather be overstocked there. Or you think about a very high margin business where, where you know, it just simply doesn't cost that much cash to, to store a bunch of inventory because it's just the margin so high that the product doesn't cost that much. And so for that business, you would want to strategically think about, like, actually we just want to make sure we never run out of inventory. It's not, we don't have cash problems in this business. It's just the cash turn, you know, the inventory turn is just not that big of a deal to us. We actually sort of would rather optimize for the P and L in this respect and think about profits in that, in that respect, because profit actually is cash for us, you know, so obviously that's a really oversimplified version of it. But I think that baseline consideration is really helpful because if you go to the next level and say, now how do I go negotiate with my manufacturer? You're not going to go into that conversation with like, we want faster turn or we want, we want better terms or something like that. Like, if the cash outlay is not that big of a deal to you, maybe you can help the inventory or help help the manufacturer out by not demanding better terms. From them and instead taking a better per unit cost or something because, because you can actually win there without, you know, you have plenty of cash, it's not a big deal. And so you can go and, and do that. And, and so anyway, I think, I think it's a really important question that people do not think that well about or that carefully about a lot of times. And even like product by product, you know, higher margin product versus lower margin product. This one you want to be stocked more in this one less. And so there's like a lot of analysis at a baseline level that, that goes into that. So okay, each of you, each of you should make one more point and then we should, we should wrap it up. So, so Greg, what did you want to say there?

I'll, I'll kind of tack it on to your, your point there. I, I will say that, you know, all those kind of different kind of variables that come into play with your decision making kind of point to the point, point to the point that every company is different.

Yes. Right.

Every company is different. You cannot copy their ad strategy, you cannot copy their supply chain strategy. You cannot copy whether you do free shipping or not. You are your own entity and own operations. And, and you need to run the business that you need to run. And one of the things that I think I've realized with that is that there's no right now at, you know, at our level at least, there's really no tool out there that can help you effectively manage your inventory. The only tool that can take in all those unique variables is Excel and someone that knows what they're doing because it requires conversations with, with, with, with a multiple multitude of stakeholders within the business. It is alive. There's different ad campaigns, different strategies. Things are seasonal, things are not. There's too many assumptions to then rely on technology, at least what I've found. And so to maximize the intimacy that you need with your inventory, you really need someone who can master Excel and master inventory. Do not rely on, on these tools. Shopify apps, they will, they will get you in trouble. And you need a human to be looking at that to asking questions. Especially at this stage. It might get more sophisticated as you know, as you, you scale up. But you know, this is a job that we do in Excel and we are in Excel all the time. We have our own models, we have our own checks and we're looking at these things line item by line item. Not making a recommendation on sale because some app triggered an alert, but because our model says, hey, we should reorder this.

Yep. I remember hearing a comment a long time ago that in, in this area of the business, a smart person plus Excel is undefeated. But at some point you do have to get to an ERP or whatever once your business gets complex enough. But for a long time. Yeah, Excel or Google Sheets or whatever. Smart person is undefeated. That's right. What do you want to say, Laura?

Yeah, my last point is very related to your point as well, Greg and Andrew. I think before we dive into a lot of supply chain complicated strategies and projects, first line is understanding what your product is. As you've mentioned, not all DTC brands have the same strategies. And so understanding the category of your product is very important. Is this perish? Do you have shelf life? Is this again, is this a, is this very light and very small type of product? Is it cheap? How do we store it? Do we need a special storage system for, for that is there temperature control? So understanding all of your, the, the details of your products is very important for, for, for us for, for operators and supply chain experts so that we can, we can tailor fit the strategy. And I always share this as much as I can if there's a call even though they're not getting our service yet because it's, it's very early on I will be sharing. I, I am sharing strategies that is very easy to follow and that, that's something that, that is tailored fit for their product for the type of product that they have. So like initially you should be focusing on the weight, the size, the amount the margin is has shelf life or not, how to store it and how to ship it from, from one from point A to point B. Those information is very important so that we can identify if we are better over or better under for the type of product.

So yeah, all right, this is great conversation. There's a lot we could do this for a very long time I think because I want to hear all the little super specific stories of ways you guys have saved for people. And for Greg, I also want to just talk big picture strategy a lot because I think there's a lot in both of those things. But we are out of time. So Greg, you are on Twitter Reg Carey. I will link that in the show notes. And then Lara, what about you? Where do you want to send people from this conversation if they're interested in optimizing their supply chain more? You're the person to go do that with. Where should they go?

Yes, that's also my Twitter handle supply chain Lara and my email laramorenow co okay, awesome.

Laura More now co reach out to her references podcast if you, if you heard it and you wanted to get some conversation going. I just don't know why most people listening to this who are brand owners or even agency folks working with brands who are seeing these problems. I mean if you're, if you're on the agency side and you're seeing a brand incessantly run of stock, I literally build my campaigns with the expectation that like I'm trying to build them because I know people will run out of stock. I build my campaign structure to, to, to, to reflect that because some ideas are under optimized. Right. So, and in fact, no matter how optimized they are, that's still going to be a problem in e commerce businesses. But, but the, yeah. So whether you're seeing that be a persistent issue, if you're seeing long lead times for yourself or clients, any of those things, I just don't know why you wouldn't jump on a call and see, hey, is there actually an opportunity here and not have the conversation? It is going to be within reason, price wise. It's not going to be crazy expensive. That's another advantage of working with Laura and her team is that they're going to make it affordable for you. And so yeah, so go, go check that out. Thanks guys to you both for taking the time doing this.

Thanks.

Thank you, Andrew.