21 Aug Optimizing Ecommerce Supply Chains
Today we learned about the process of optimizing ecommerce supply chains with our guest.
In this week’s The Faces of Business Episode, our guest speaker was Francois Jaffres. Francois is the Director of Business Development at Noviland. Apart from this, he is also the Co-host of the Link Up Leaders Podcast. Francois has been working in the supply chain industry for many years and currently with Noviland he helps ecommerce clients manage global ecommerce supply chains and optimizing ecommerce supply chains.
The conversation started with Francois introducing himself. After this, he elaborated on the term supply chain and also on what he has studied. Francois said that up until last year people didn’t even know what supply chain is.
Just when there was a shortage of toilet paper, everyone was talking about the supply chain and what’s wrong with it. Aside from this, Francois said that for optimizing e-commerce supply chains, the past two years were very unfortunate.
According to Francois when the Chinese New Year happens, the supply chain generally slows down. However, last year, the Chinese New Year was in January and then Covid-19 started so since then the entire supply chain world has changed.
Moreover, Francois said that during this time, the businesses that were producing the supply shut down. However, the ones that were requesting quotes did not shut down. So that created an imbalance at that time.
In addition, when china closed all their supply due to COVID, it was really difficult to keep up with optimizing ecommerce supply chains. According to Francois, during the time of the pandemic, we saw a very limited supply of products even aside from the toilet paper incident.
Especially when it comes to PPE, many organizations and hospitals were in need of these kits and yet they were not available to them. Further, into the conversation, Francois explained the strains in optimizing ecommerce supply chains.
He said that when the situation worsened, the retailers asked to wire some money from factories in supply. But the factories owners were reluctant to do so because they said there is a line of individuals ready to pay by hand, then why should they wire the money.
So this situation, according to Francois put a strain on the logistical balance. He also said that with this, there was a huge boom in the retail stores as well because they were unable to meet the supply requirements.
By the end of the conversation Francois said that when it comes to optimizing ecommerce supply chains, it becomes very difficult in such situations. He said that these are the times where they had a shortage of containers as well. Moreover, with issues like the one in Suez Canal, the situation worsens in such cases.
The conversation then ended with Damon thanking Francois for his presence!
Francois Jaffres is the Co-host of the Link Up Leaders Podcast. Apart from this, he is also the Director of Business Development at Noviland. Before this, he was also the Account Executive at the same firm.
Noviland brings a low-risk purchasing and sourcing service into your life so you have more time to focus ON your business instead of IN it. Francois was also the contractor at Randstad USA and the Merchandiser/ IE intern at Coca-Cola Bottling Company UNITED.
Francois was also the Assistant Manager at Naked Pizza. As for his education, Francois has studied Industrial Engineering at West Virginia University.
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Optimizing Ecommerce Supply Chains
The Exit Your Way Business Round Table Live Stream
supply chain, factories, container, product, inventory, people, amazon, problem, optimize, warehouses, talking, goods, china, group purchasing organizations, logistics, sourcing, business, year, bit, innovation
Damon Pistulka, Francois Jaffres
Damon Pistulka 00:03
All right, everyone. Welcome once again to the faces of business. I’m your host. With me today. I have Francoise, Joffrey, Franz Sua. How are you doing today? I’m doing fantastic. How are you doing? I’m doing great. I’m doing great. So this is this is this topic today, optimizing ecommerce supply chains, I think is, is really relevant. And I didn’t even realize it. But I’ve got several supply chain speakers lined up almost in a row. Because it’s it’s a big deal right now. Nobody was talking to you.
Last week, I was talking to someone about it. And they said, no one even knew what supply chain was 18 months ago. And now that’s all everyone talks about. Because we’ve got shortages and ice chips, and you know, coffee, and any, there’s just so many things. If you go and look at what there’s actual shortages of that you don’t really know about, and you don’t. And the thing that I find interesting about when you look at consumer products, the stores do a really good job of hiding the fact that they’ve got shortages, because they’ll fill in the shells with other stuff. Oh,
Francois Jaffres 01:16
yeah, I used to be a merchandise for Coca Cola, and I saw how they would do. Oh, yeah, there you go.
Damon Pistulka 01:20
There you go. So it’s so interesting. So first of all, tell us a little bit about about your day. First of all, thanks for being here, if I didn’t say that already. And it’s a pleasure. It’s It’s awesome to get your perspective, because you’re helping people globally, source and manage that that whole supply chain. So let’s let’s start back a little bit farther, though, and and really kind of give us some background and and tell us how you kind of got into supply chain at a time when people weren’t really talking supply chain?
Francois Jaffres 01:57
Yeah, it’s um, it’s crazy. First of all, that if people don’t talk supply chain more often then than today, 18 months ago, it’s really because people ran out of toilet paper. And then they were like, Oh, the supply chain supply chain on the news supply chain, on the means and everything? Well, my introduction was definitely far earlier than that it was more so my background at school. So I studied industrial engineering, which was fun, it’s a lot of processes, a lot of manufacturing. Like I said, in our conversation before this, it’s no mechanical engineer.
But we do tend to problem solve, like on a on a, I would say a larger scale rather than more of a product scale. Yeah. And so that’s really where I started learning more about everything that went into it. So for example, manufacturers, how they select, you know, the labor force that they need indirect versus direct labor costs when it comes to inventory management, inventory, carrying cost and control, and, you know, looking at optimizations and like delivering, where they’re going to manage your next warehouses where they’re going to store their inventory.
So all of this I was actually exposed to in school, not on a very, very deep scale. But I finally got the opportunity at one point to intern here at New Zealand. And it was really just a concept to optimize and really revolutionize Yeah, i j. management’s handled. And this was back in 2016. And I was the third person with the company at the time, third, or fourth product company.
And the way that they described it to me, as soon as I got done with the interview, I went on, went online, and I googled every single thing that they could possibly talk to me about on the interview. And I was like, they’re absolutely right, there is no simple way of doing this business. And when I say that, I mean, the more traditional sense of a business owner going to a manufacturer or going to a factory owner and saying, Hey, this is my product, and this is my investment and my strategy behind it. Can we go ahead and get this product produced? And these are my forecasts, for example. And I’m sorry, can you hear that back? background? No.
Damon Pistulka 04:16
Just faintly, it’s not bad at all. So
Francois Jaffres 04:19
okay, okay. Good. Um, and so yeah, the essentially it’s merging technology as well as this human element of, you know, connecting those factories with these business owners to optimize that process. It fascinated me. Yeah, like a huge problem and a huge gap that no one was really looking to solve. We have things like Alibaba, and amazing marketplace, I would say where anyone can go on and list though. That’s that’s one of the problems. It’s kind of like Craigslist today here in the US. Yeah, yeah.
Yeah, very similar there. And so there was no real personal touch to So we said, Hey, why don’t we look at this from a different angle of you know, there’s the traditional sourcing agent, where you have one representative tries to oversee a lot of the, you know, the business dealings with the factory. They look at, you know, the logistics aspect, but they don’t have to get into every single piece of the nitty gritty, yeah, don’t have time to look at optimizing the packaging size, for example, to fit more into a container, to seeing how many fit onto a pallet. So you can optimize a pallet, and how you’re going to distribute that. It’s actually a very big job.
Damon Pistulka 05:32
And that’s a ton of work I’ve had I’ve had to do that project doing do in the last 1015 years, I’ve done some of the International sourcing projects, and just getting just what you said, the container size, the carton size, how many go into a carton of an item. And then how many go on a pallet and how that fits into a container is huge, huge, especially if you’re going to in the lifecycle the project.
It was a fairly big project I was working on. And I think it was a difference between like 1000s of containers in an annual basis. It was nuts, how many containers it really turned out to be. So that yeah, that’s that’s a big deal. Just optimizing the size of the just maximizing your your density in the containers.
Francois Jaffres 06:21
Yeah, yeah. And not only that, but also being able to effectively communicate with those factories, right, where traditionally, they might have to visit overseas, we saw just in these past two years that that’s almost impossible now, yeah, now we are resorting to more virtual and zoom meetings, which is great. But it does still remove that element of that personal touch, right? Yeah. Well, to actually see them face to face, what are they saying? Are they saying when they say no to me? How are they saying?
I guess more importantly, when they say yes to me? How are they saying? Are they saying yes, I can do that change? Or are they saying, Yeah, I could do that for you? And it’s Yeah, it’s a whole different concept. With the ladder being, hey, there’s probably going to be some quality control risks, they might be a longer time to develop the product itself.
They may be subcontract in some parts of those out. But overall, it’s it’s just a very complex process. It’s something that we’re not going to be able to solve immediately. I don’t think anyone is. If they are, they’re an absolute genius Einstein out there because this is a global issue. Yeah. But also, the the problem with it is, is that when things remain the status quo, innovation doesn’t tend to be there. Yeah. So when we’ve seen the supply chain stay exactly the same for the past few decades. It’s hard for someone to come in the space and say, hey, there’s something wrong with this, because everyone says, No, I’ve been doing this the same. Yeah. And everything’s been working out for me.
Damon Pistulka 07:58
Well, and I think to that awareness is a big thing. Because, you know, like you said, there’s some traditional brokerage type models where people do it, but they really don’t talk about the product, or have enough of a network of manufacturers, globally, that can actually look at two or three places to source the product, they, there’s all the things that I think that you’ve talked about that are really key into that, that you’re doing differently, that that does make things a lot different than the traditional, you know, I either know, a factory that knows a factory, or I have a broker that’s helping me do this.
I mean, I did I did it years ago, back in the early 2000s, where source products in China, just like you said, Alibaba, we did down between few factories, you can do it and go visit them. And and you know, that process was painstakingly slow and hard compared to what you’re talking about, where I could bring my, you know, product specifications or component specifications, you whatever it may be, and, and you can do a lot of that with existing relationships.
Francois Jaffres 09:18
And that also means that we can’t do every single project. Yep. Right. We don’t have every factory under our belt. And we recognize that we’re very upfront about it within just a few days, hey, we don’t have a factory for you. These might be some great resources. Yeah, there’s trade associations, for example, in China, that a lot of people don’t know about. They hear trade and they immediately think trade agent. Well, there’s an association for example, for like goods, or for electronics, or for certain types of components in hardware.
And some of the top factories tend to be a part of these associations, and they go to conferences and they, they network, right, so it’s knowing what’s actually happening overseas. And I mean, don’t get me wrong. A lot of us importers are very aware of that. They also go to these Yeah, you know, these shows and they network too. Yeah. By any means necessary, because that is the best way to actually handle it in effective supply chain. It’s not the most efficient by any means. Yeah, traveling, you know, spending a day just in flight is not the most efficient. Yeah. But it’ll it’ll do wonders to your overall supply chain.
Damon Pistulka 10:25
Yeah, that’s for sure. So let’s, let’s talk a little bit about what the last couple of years has. And it’s funny now, because we’re actually getting nearly it’s what is it? We’re a year and a half full into it, just say February until now or March until now we’re almost into September? It seems like that times flown by, but kind of kind of give us a what really happened into the importing supply chain last year?
I mean, was there a time that, that it was like the containers are coming in, and they just stopped for a while. And then they started up again, kind of normally? Or what happened last year that because we we’ve been, like I said, we’ve been insulated from some of this. We’ve seen a lot of it. But what happened just from like, the physical flow of goods last year,
Francois Jaffres 11:17
I think, Well, for starters, Chinese New Year, right, Chinese New Year happens every year around January, February, yeah. tends to halt most of the global supply chain even. Because Yeah, it does. Yeah. And there’s two weeks that they’re close. And there’s two weeks post Chinese. Yeah. And there’s typically two to four weeks before that when everyone’s leaving. Yep. And factory, you know, employee turnover with it. And after retrain workers, there’s just a lot of knock on effects by itself for Chinese New Year. And now that itself was amplified by COVID.
Damon Pistulka 11:51
Ik I didn’t realize that that could have coordinated almost horribly, because it was getting over about the time that COVID was starting. And there’s no there’s virtually no production during that time. So you either get your products on the water before that, or to the dock before that, or you don’t get them until they you know, in April, May, because yes, think of transit time. Yeah. So that they couldn’t hit a worse time. So we have the Chinese New Year hits,
Francois Jaffres 12:18
and then COVID hits. And then COVID hits, I would say the past two years has been the worst Series of Unfortunate Events. But the track back to the beginning, Chinese New Year hits, COVID hits. And we saw a slowdown in businesses that were actually placing orders, but not a slowdown in businesses that were requesting, requesting quotes. So RF cues, right submitting this RFP status, which I found interesting, because you know, the logic behind it didn’t make much sense.
You’re asking someone to quote you, when all of their components, suppliers, all of their upstream supply chain is also shut down. So it was difficult all around to get quotes. And a lot of who we were talking to what we’re also using Alibaba, yeah. But a little bit less experienced to where they might be working with a trade agent, trade agents. They have their merit to them, but they don’t always have their goal is sales. It’s not always to build a relationship or to be the most honest.
And so we saw that little bit of a slowdown, but really, when China kept everything closed, it was hard to manufacture anything. And when these components are going global, it’s not just to your final goods, it could be your final goods being made in India, and they’re sourcing, let’s say zippers from China. Yeah, if they can’t get those zippers, and they can’t finish the hoodie that you’re making, or whatever the case may be. And so we just saw that trickle effect star and and a few months later made June, like June, July was really started to pick see it pick back up in regards to production.
Well, the issue with it is we saw a big boom in e commerce specifically. Yeah, yeah. Yeah. And so a lot of retailers might have started to be thinking, Well, you know, crap, we have to actually get these products listed online. And, you know, Sears, Macy’s, all these different big box stores also are struggling with, let’s say, warehousing, because they traditionally will store things more in the retail stores, they might have some distribution centers, and then to handle cross docking from there. What this put a strain on warehouses, because everyone was looking for somewhere to receive their product. And Amazon was having its issues too. Yep. Right.
So and that’s more so going very downstream. We skipped a whole step of logistics. And now we’re talking p p e is at a full swing, right? Yeah, everyone is trying to get product out of China into the US or just anywhere in the world. Particularly face masks. And these products are small, but they’re single use, and they take up a lot of volume and a container. will also they halted the airline flights, right? I believe it was the 740 sevens and the Boeing’s because, yeah, regular air travel was halted by itself. So they stop bringing I think 40% of all packages that they typically bring from China to the US, or something along those lines.
Damon Pistulka 15:30
There’s that many packages that come in commercial airline flights across
Francois Jaffres 15:33
commercial air. Yeah. Wow. underbellies of them. Yeah, to the point to where Now, a lot of companies are charging their own planes. And instead of having people fly on them, they’re just loading boxes on them. And we saw this with PP two. Yeah, actually, it was it was who has the product first. So this is really where we started to see that the first bit of strain aside from the toilet paper, of course. Yeah, that’s pp. Yeah. And so with all of that space being taken up specifically for PP, because a lot of people were trying to make a buck. Yeah.
Also a lot of people, let’s say hospitals and group purchasing organizations, they want to get it to Yeah, yep. So it was to the point to where my team was sending me pictures of factories that were produced. These are some of them were pop up factories, they were factories that produce something else. And then they started producing PP out of nowhere, because the opportunity was there. Well, there were lines a mile long over a mile long of people with cash in hand to go to the factories and actually buy masks that they can resell them.
Hmm. And at the same time, group purchasing organizations, we are working with some state governments also, they were looking to buy the same exact thing. So you have, let’s say, the state of West Virginia competing against New Jersey, but they’re still trying to perform business as usual. They’re trying to send a letter of intent. For example, oh, yeah, wire some money through an escrow? Well, factories are like, why would I do that when I have an entire mile of people willing to pay the exact same price as you, but they have cash in hand, cash in hand and handed
Damon Pistulka 17:11
over? They’re ready to go?
Francois Jaffres 17:13
Yeah, yeah, ready to go. And so that caused a lot of strain on logistics. And then we saw a lot of retail goods, of course, start to pick back up, we saw a huge boom in Amazon, for example, quarter over quarter. And so factories were really struggling with just keeping up with the demand in general. And on top of that, logistics was already backed up. A lot of people were storing PP in containers, for example. Everything was leaving China, the issue was nothing was going back. Oh, so you had a ton of containers. And yeah, traditionally, they do export more than they import, I believe from the US.
But so they have a ton of containers that are just leaving, no one can find these containers now. So now you start to see these costs go up from like, 3000 to 3500 to 4000. I remember when I hit 5000, I had a meeting with my boss, and I was like, shit, what are we going to do? Like it’s it’s already getting up there. It’s, you know, almost two times what it was before the lead times were getting longer. And I got to 10,000 and then 12,000 15,000 17,000. Now we’re seeing like $19,000 for container that traditionally costed about three to $4,000. Yeah, yeah. And I’m talking like a Ningbo to, to Long Beach port. And
Damon Pistulka 18:36
so that’s not even that’s not even getting on the train and bringing it across the United States or the middle of the country or anything.
Francois Jaffres 18:43
No, that’s just port the port. And we’re seeing Oh, my goodness. This is really a time where carriers don’t care to make more space available, because you’re making so much money on
Damon Pistulka 18:55
Francois Jaffres 18:57
I just read actually the US agriculture Institute or something along those lines is I think filing a lawsuit. Because they are not getting the containers that they were promised, and usually a container going back to China’s about 600 to $1,000. Well, let’s say Costco, or anyone that’s leasing out these containers, because why would I give it to you for $600? You’re going to keep it for three weeks, because we have to take it to you, you have to load it, we have to transport it, get it put onto the boat taken back unloaded.
Why would I waste three weeks when I can get it back to China within two weeks. And I can flip that same container for another $15,000. So it’s all about economics, right? And it’s it’s these knock on effects just keep going and going and going sourcing is backed up because manufacturers are getting larger orders. Logistics is backed up because there’s a global container shortage. We had issues like the Suez Canal, which Yeah, you know, amplified these issues.
Damon Pistulka 19:57
It’s amazing now that you kind of go through this crowd Logically how bad that screwed things up first, the Chinese New Year, then the Suez Canal, and we already had COVID going, which which made it very challenging. So we were we were hosed.
Francois Jaffres 20:12
Yeah. And that’s why I’m saying, you know, this is very much something that it’s you can’t do business. As usual, this series of unfortunate events, I think, bursted a bubble of perfection in supply chain, this concept that, you know, Toyota brought to market of lean manufacturing and lean processes, just can’t hold up as easily in today’s environment, as it did two years ago,
Damon Pistulka 20:36
that that’s the one thing I think that if anybody has has realized is that this this concern, you know, jette decades of leaning out supply chains and going, Okay, we got inventory here, we got inventory there, and we don’t do it. It doesn’t hold up when you’ve got supply chain disruptions. Right, it just doesn’t.
And you know, and I think that from the people that I’ve been talking to, we’re seeing a lot more dual sourcing on critical items. Because it just makes sense even and to continue buying from both sources to make sure they’re relevant and still able to produce and some of the stuff they got to do. But that’s a great point that the, the the normal lean supply chain, just really doesn’t survive Well, in this situation.
Francois Jaffres 21:27
Well, the concept of lean is is interesting, right? You can only really make something lean when it’s perfect. Yeah. Or what once you’re, you know, let’s say you’re you’re applying some Six Sigma to it, or you’re just trying to optimize you can’t optimize something that’s not standardized. Yeah. Ready?
Right. And today, in today’s environment, nothing is standardized. The worst is always ahead. That’s one thing. I tend to always say. When it comes to supply chain. It’s, there are great moments, and they could be long, great moments. Yeah. But I mean, the worst is always going to be ahead. The worst thing that happened to you this year is only the worst thing that happened to you this year. It’s not the worst thing that happened to you next year.
Damon Pistulka 22:09
Yeah. Yeah. So So first of all, have the container prices started to come back down. Are we still living? Not yet. So we’re still here that much. So Oh, wow. So that had that then then when you’re looking the cost inflation on all the goods that you can get just because of container price, because because you know, when you look at if I was paying three or $4,000 to get that container, now I’m paying 15,000, just say it’s 5x times. But if the the if I’ve got 100k worth of product inside of there that I’m trying to sell, that just means that I had to raise that the price of that by 10%. Just to cover the cost of of shipping increase of that container, just that first leg,
Francois Jaffres 22:56
you would think you would think it’s that easy. A lot of brands that we talk to and that we work with are terrified, absolutely mortified of raising any sort of price. Yeah, yeah. It’s it always comes back to Well, let’s get better pricing from the factory. Well, the factories are already running on, let’s say, Yeah, 1617 17% margin. And, you know, the cost of the US dollar versus the Roman B isn’t the best right now.
So let’s try to find a different solution. How about we maybe take off your packaging and do master cartons and the packaging in the US? Is that cheaper? These are conversations, a lot of times that we have that business owners don’t want to hear they want to close their ears and say, No, I just want to do it my way. Well, just like you know, the group purchasing organizations and the state governments with ppl II, it’s not doing business as usual. It’s it’s very much looking at this as a two way road. Right? You have to you have to take as much as you give.
And a lot of times that’s just done through conversations. And we’ve had some really innovative conversations, hey, how can we flat pack some of this furniture instead of having any of it assembled? Right? For example, when cabinetry actually encountered a anti dumping and countervailing duty about a year and a half ago to 200. And I think was 230 or 260% for all imports coming from China, or some of our larger customers said, what are we going to do we have to go somewhere else will. What we know with boots on the ground is that some of our factories have already started to look into real estate in Vietnam. And we can help you know bring those two solutions together.
Someone has a problem. These factories with the real estate infrastructure in Vietnam already have a solution. We’re now it’s also working through compliance issues, of course and looking at costs and supply chain and Vietnam and understanding the infrastructure that they have built. Right like one interesting thing that I found out during the The whole cabinetry issue and cabinetry still an issue today. But that’s a that can be a whole different podcast. But in Vietnam, for example, the factory actually had to hire twice the labor force than they did for standard production runs in China, because every two weeks, they were losing workers.
And they didn’t realize why. Well, I guess in this, the city in Vietnam that they’re in, traditionally, the workers will work for those two weeks until they have enough money to give their families to pay off, let’s say, food and rent, and the men that will go to work will actually go get. But they go to have a good time for a little time until they need more money. So they had to constantly start to rotate out these workers. But it’s something that they weren’t used to. Now, we have to have those conversations with the importers in the US explain to them this is what’s happening.
This is why your orders are delayed. But that’s all they are. They are their conversations. And that’s all you should be asking for of your suppliers. Yeah, of course, you know, contracts are great. And, you know, putting in, let’s say, stipulations of this is how long it should take. And these are some potential penalties that could happen. If you’re late, or whatever the case may be, it’s great to have in a contract, but the supplier can fire you just as fast as you could fire them. Yeah. So it’s just it’s important to know that and, you know, to your point of diversification, very important.
I think that’s one thing that has helped a lot of companies sustain just steady inventory. So if you could outsource it to somewhere else, not the same country, that you’re already producing it, yeah, outsourcing it somewhere else, even if it costs you a little bit more. See that as a cost of risk mitigation. Right. I mean, how much do you do you care about having inventory? I hope the answer is that that’s your utmost importance. Yeah, without inventory, you have no marketing, you have no PPC, you have no sales. So you have no revenue. So that small cost can can definitely go a long way.
Damon Pistulka 27:00
Yeah, yeah. Well, on this, it’s funny, because we’re talking about this in 2021. And three or four years ago, now, when the when the initial tariffs came in from imported products, I mean, we did a bunch of work with the client to dual source different countries, like you said, to be able to continue to move product, the same product that into into their facilities to be able to ship to, to consumers.
And I have to imagine you had the double whammy going to for anybody trying to get product is the fact that we’re all stuck at home for a while and the e commerce sales shot through the roof. So the normal demand was out the window, and now you have customers that want twice as much as they originally projected it with all the problems that we just talked about.
Francois Jaffres 27:54
Yeah, and we’re pretty big in the building materials, too. And so, you know, we work with a lot of wholesalers, particularly for building materials, and it’s that industry, it’s all shot up. I mean, when Yeah, construction slowed down for a short bit. But as soon as everyone was able to get back to work, it just continued rising. And that’s why you know, the cost of let’s say, building a home I think went up 50 or 60%. At one point.
Yeah. Started normalize again. But yeah, I mean, it was a struggle, definitely. But that’s where we decided to get innovative to, it’s, you know, we opened up a 20,000 Square 28,000 square foot warehouse. 1819 months ago, it was really, really like right before COVID and it was more of a side project. Well, by the end of this year, we’re projecting over a million square feet, and just fulfillment.
Damon Pistulka 28:47
Francois Jaffres 28:49
Oh, so it’s an exciting time. And that’s where I say you know, innovation is really driven through you know, these issues when we see that there’s problems and people start to realize Yeah, I can’t do business as usual. You have to find solutions. Yeah, that’s you know, that’s where you find service providers and you find you know, individuals like yourself that can just help them think think of that next thing through how can we solve this problem? Not just complained about it?
Damon Pistulka 29:18
Yeah, yeah. Well, and so something I heard the other day and maybe maybe you guys are starting to help people with this is there’s a lot of there is talk anyway, they only read a couple articles about it where people that are actually doing a lot of FBA sales on Amazon are finding it necessary to have more offsite inventory locations just to make sure they’re replenishing the the FBA locations, you know on a timely manner, because I have people that don’t understand FBA is you charge for the space you use and you can only put so much in there at a given time.
So it’s, it’s not quite as bad as shipping products just in time for an automotive plant, but it’s you can’t load them up and let them run on it for two months or anything like that. or months and months and months, I said, I don’t know what the exact terms are now, because it changes, it changes their space. And it changes with the popularity of your product, the size and type of product, all kinds of things. So do you see is that part of what you guys got into is actually being that kind of stopping point so they could distribute to the FBA locations from where you’re at?
Francois Jaffres 30:26
yeah, that’s a, that’s an interesting concept itself, too, because, again, two years ago, no one thought about ipi or inventory performance index. And this is basically a score that Amazon gives you on your conversion rate on how quickly sell out of your inventory, or your daily sales increasing. It’s a series of four things, and we have a great blog on it. That my co host Lisa actually wrote. And all of a sudden, of course, Amazon is gonna do what’s in their best interest, they no longer want to be a warehouse, they want to film it center, they want the least amount of they want to be leaner, right?
They want the least amount of products that they can sell as quickly as possible. Yeah. And so a lot of businesses started to realize this, like, Well, you know, if they can change my IP, ipi score, or my inventory limits, which traditionally, if you were a decent seller, you didn’t have any, and then it changed to you can only have 200 units in a warehouse. And now it’s I think, 1000 units per category. So if you’re in a kitchen space, or category 1000 units is nothing. Yeah, for a standard business at selling on Amazon 1000 can be like, less than a week’s worth of inventory. Yeah, days even
Damon Pistulka 31:39
well, especially if you have multiple, you can have 1000 skews. Exactly, you get one each.
Francois Jaffres 31:45
And so now they of course, let you open up different stories. It’s a lot more to manage. But yeah, know that this importance of keeping inventory off site has definitely played a role in not only the supply chain, but the pricing, right? Yeah, no, you now have to consider getting those products to a three PL or reliable three PL that that can receive your inventory palletize it as needed. prepare it for Amazon FBA, the appeal for Amazon fbm, if you need it.
Also, if you have multi channels, let’s say Shopify or Walmart or anywhere else, they should be able to fulfill those as well. Well, how far is that from an Amazon facility? How much is it going to cost to get it to the Amazon facility? How long is it going to take to check into the Amazon facility, there’s all these new steps that business owners have to think about now. It’s something that we like to just take off their plate and say, Hey, we’ll tell you exactly when it arrives, when it’s going to be shipped when it arrives at Amazon and from there, Amazon checks it in.
Damon Pistulka 32:47
When you make a you make a great point, though, just about checking into an Amazon FBA facility. I remember there are times you wait 10 days, pretty checked in. And then imagine if they’re busy, a lot of lost a lot of lost in the I just lost to Yeah, lost inventory. And you have to go back and prove they actually shipped it there and then they can find it.
Francois Jaffres 33:07
Yeah, what what they also didn’t say, and they didn’t release it, anyone we found out from one of the drivers that left our facility, Amazon at one point stopped signing proof of delivery is the PhDs that usually they would sign at the warehouse itself because of COVID. You know, social distancing. And so they said that they were going to do it electronically.
But a lot of them didn’t, they would just say, Hey, this is the the proof of you the proof that you had a scheduled appointment. But since they didn’t sign it, you have no proof of delivery. So even if you make a claim to Amazon, they would say well send me your proof of delivery. Well, I don’t have one. They never signed one because they said they weren’t. So now an Amazon representative is confused about the Amazon policies. These companies is way too big. Yeah, they can’t keep up.
Damon Pistulka 34:00
So yeah, I mean, interesting stuff, though. I mean, it’s just, it’s fascinating when you look in the supply chain and little intricacies and the challenges because like you said, this is just one problem, or a series of problems that kind of hit us hit us all at once. But as you as we kind of see ourselves navigating the way through this, what are some of the cool things that you’re seeing emerge from things that are happening what people are doing that that really look like it’s it’s exciting to be in the supply chain world and what’s what’s happening that’s that you like to talk about?
Francois Jaffres 34:42
innovation and maturity are the two biggest things that I’ve definitely seen. We’re not the only supply chain, you know, company out there. We’re not the only sourcing company out there by any means. But we have started to see more competition which we welcome. very much welcome. It’s something that that’s the reason that we into the space force to for it to change because there are problems that a lot of people haven’t seen. Yeah. maturity in the sense that, you know, we’re starting to see a lot of businesses boom out of nowhere. And they’re starting to find new solutions.
So tools that are being built for forecasting, for example, or dual modeling, and logistics is starting to be used more often by larger companies, if they can afford it, if they have the right partnerships in line. I find that very exciting. more so because I think it’s going to have a trickle effect into just general infrastructure. When it comes to, let’s say, trucking and automation in trucking. How important is that? Because nowadays, we can’t get trucks. Yeah. What if we try to automate some of that? What’s that going to make more efficient? It’s going to make the deliveries more efficient might make the pickups more efficient, less truck waiting times at docks?
Well, now that we have this, we have to learn how to optimize let’s say grps, and warehouse management solutions also, or systems? Will once those are optimized, and they’re able to be integrated with more marketplaces and platforms, then we automate that next step. All done through technology, right? Yeah, there’s there’s a lot of people behind it. Well, then also, how can we make warehouses safer? Let’s reduce the number of accidents in warehouses? Well, we can incorporate maybe some robotics or some automation in that we can change the methods of picking and packing innovation.
It seems like a problem that’s never going to be solved is Yeah, look at it. It’s what industry engineering most got me excited, I guess about just College in general. Yeah. And it’s something that I get to do every single day. So it’s, it’s something where I love it. I think, you know, if any business isn’t focusing on supply chain, I hate to say it, but they may fail in the near future, because they’re not going to be able to keep up with general supply chain, they’re not going to be able to keep up with innovation. Yeah, be really hard to play catch up there. Yeah. So it’s, it’s fun stuff. It’s it’s never, it’s never a boring day, I guess is a good way to put it.
Damon Pistulka 37:06
Yeah, no doubt. No doubt. So when. So like, I’m coming back around again, there’s some good things are happening, you’re seeing there’s, there’s these things that are changing. So do you think that, um, I lost my train of thought a little bit? You know, usual. But do you?
Do you think that we are going to see some permanent changes? Or do you think that as soon as we turn out of this, right, and just say we’re sitting here a year from now, and whatever, they figured out how to how to keep us safe. So we don’t have to close things down like this anymore, and, or on and off, where we don’t overstay save whatever you want to call it? Do you think that people are just gonna swing right back into that? Or do you really think this is gonna cause some long term change?
Francois Jaffres 37:59
I hope that this, I hope that we find a light at the end of this tunnel innovation. Again, I really hope that we stopped doing business as usual. I hope this changes everyone’s mindset and changes the fact that lean is great. But it’s not the only way. It’s not the only thing to focus on. And I think that’s what’s really going to drive innovation. I think now people have started to see, particularly business owners, but they’ve started to see even consumers. No toilet paper again.
Damon Pistulka 38:31
Francois Jaffres 38:31
they started to see that this is an important aspect of everyday life. And that there should be a lot invested into this, whether it’s conversations, whether it’s money, whether it’s, you know, inspiring other great thought leaders to just come up with the next big thing. I mean, I’m very excited to see the changes that this has on supply chain. Unfortunately, I think there are going to be a lot of business owners that do go back to doing business as usual. perfectly fine. It’s going to happen. Yeah. But I also think this is going to spark that next great thought in Yeah, to say, hey, that’s a problem I think I could solve that would
Damon Pistulka 39:13
be cool. If it does, that’s for sure. And I’m sure there are going to be pieces of that no doubt. And I mean, especially when you think about just applying some sort of technologies and better know where products are or whatever it is, or like you’re talking about automation of some of the trucking things. I mean, there’s just there’s just so many opportunities that that could help us out at different places in the supply chain.
And and I read an article recently about when he was talking about supply chain, but it was it was mentioning how dependent we’ve we become on a global supply chain and they were talking about, sit down at your dinner table and just look at the food that’s on your plate. And they were they were breaking it down and it was like this product came from this part of the world, this product came from this part of the world, this product came from this part of the world, you know, and it’s all not coming from you. And then it went to the factory, you know, was grown here went to the factory was processed, went to your index that might have moved countries in that.
So we’ve integrated the supply chains, these complex supply chains, to to make sure that we can go to the grocery store any day of the week and buy, you know, whatever it is broccoli, or whatever we want, whatever we want, really at the stores, right? Or the Yeah. And the the challenge is not simply one or the other, or making it a local supply chain, because you can’t in some of this. And again, really, it’s just planning for these disruptions and, and better insulating them from these challenges, I think is about the only thing you’re going to be able to to to do long term with some of these innovations.
Francois Jaffres 41:00
It’s definitely not a single answer. Problem. Yeah. It’s it’s, I mean, just like, we call it pain for a reason, right. Everything has to work perfectly for the next link to work perfectly also. Yeah. And so I mean, there’s not a single problem. That’s why I think there’s gonna be so much innovation. Yeah, Ross, the board. And I think the smallest things that we never realized, are going to be something that we innovate on. That’s what I’m most excited about. It’s just new problems every single day.
Damon Pistulka 41:27
Yeah, yeah. You’re right, though. It could be the smallest simplest things making a huge difference.
Francois Jaffres 41:34
Yeah, hopefully we get more visionaries out there.
Damon Pistulka 41:37
Yeah. Yeah. Good stuff. Well, Francoise, it’s been awesome talking to you today. And this is this supply chain and understanding us a global supply chain. If someone wants to reach out to you and talk to the talk to you about optimizing your e commerce supply chain or with general supply chain questions. What’s the best way to get ahold of you?
Francois Jaffres 41:58
LinkedIn, I’m very active on LinkedIn. So if you look up my name Francoise Jaffer is spelled for invoice fra ncoi. s. You people see me and they think Francisco now Francoise? Yep. LinkedIn. Another way is just no v land. And oh, vi Li, n d calm. Very good contact form there. And I’ll be sure to see it.
Damon Pistulka 42:20
All right. Awesome. Well, Francoise, it’s been great talking to you today about optimizing ecommerce supply chains, the e commerce or then supply chain challenges in general over the last 18 months and your your thoughts towards future innovations in optimizing ecommerce supply chains. So thanks for being here. Thank you, Damon. All right. Well, thanks everyone, for less than appreciate you love the input that we get about new guests and other things. We will be back here again on Thursday, talking with more interesting people in business. Thanks a lot.