Episode Transcript
[00:00:00] Speaker A: Making up our own stuff, folks.
Take a look.
[00:00:03] Speaker B: Because logistics are allowed, right?
[00:00:05] Speaker A: Their sales guy came back all excited. We landed in Publix. Well, Publix is located in the Southeast, so we got to figure out how to get it from the Pacific Northwest to the Southeast at a reasonable cost. That's almost impossible.
[00:00:17] Speaker B: I hope you would see an order for 10 cases and be like, I think you could do better. Let's bring this up to the retailer.
[00:00:23] Speaker A: You know you want more of this?
[00:00:26] Speaker B: Get a full pallet.
[00:00:27] Speaker A: Yeah.
[00:00:28] Speaker C: Calling all CPG shippers, truckers, and logistics pros.
Welcome to the truck. Yeah. Podcast your ultimate cheat code for smarter shipping, smoother logistics, and dominating the shelf where it matters most. Buckle up. It's time to learn, laugh, and get your freight on.
[00:00:47] Speaker A: Ladies and gentlemen, welcome back to another edition of the Zipline Logistics Podcast. My name is Jesse Jewitt. Join with me. As always, tech Teddy Lee Knox. Hello, Teddy.
[00:00:59] Speaker B: Hello. How are you?
[00:01:00] Speaker A: Wonderful, wonderful, wonderful. We're talking about.
I'm gonna paint you a scene.
[00:01:05] Speaker B: Oh, okay. I love this.
[00:01:07] Speaker A: You are a consumer product or food manufacturer, CPG shipper. You just secured your first PO With a new retailer. Congratulations.
[00:01:16] Speaker B: Thank you.
[00:01:17] Speaker A: We're gonna talk about what happens next. How do you get your product to that retailer? What do you need to know about the relationship you just entered? How do you ensure it remains profitable? Because large stores have very specific ways of working with vendors.
You got to enter that relationship prepared so you're most likely to succeed. Sound good?
[00:01:38] Speaker B: Sounds good. Although I agree with that, large stores do have a very specific way. But I'd like to mention that all stores have a very specific way. It's just the large stores usually measure you.
[00:01:49] Speaker A: Everybody's got something.
[00:01:50] Speaker B: Other stores may have a little bit more leniency, so they're not going to call you out on it as much.
[00:01:56] Speaker A: Absolutely. So we're calling this the 10 keys to retail success.
We're going to kick it off with number one. You ready?
[00:02:03] Speaker B: I'm ready.
[00:02:04] Speaker A: This is a fun one.
Know that you might lose money when you land new locations.
[00:02:10] Speaker B: Not what I would think would.
[00:02:12] Speaker A: Yeah, not a great. Not a great feeling, but, uh, let's talk about that. Tell me. Tell me why you might lose money.
[00:02:18] Speaker B: Well, you might lose money because it's. Your product's going to be tested, and it's going to be at a handful of locations. So it would be regional, not national.
[00:02:26] Speaker A: Yep.
[00:02:27] Speaker B: And then if it goes well, you get to expand to more stores. But although exciting, that could be costly. Depending on where your product is, is Held, produced and where it's shipping from.
[00:02:41] Speaker A: Yeah. So like Publix, that's an example. I always reference that. You know, we've got this Pacific Northwest CBG shipper and their sales guy came back all excited. We landed in Publix. Well, public Publix is located in the southeast. So we got to figure out how to get it from the Pacific Northwest to the Southeast at a reasonable cost. That's almost impossible.
Especially we talk about all types of shipments. Truckload, ltl, that's just a lot of miles to cover. So that's great in, in getting into a new retailer, but you gotta make sure that you're prepared for that success.
[00:03:15] Speaker B: And we say this in so many podcasts, I don't know the, the actual number, but overall, treating your logistics, your supply chain as an investment, this is sure showing that as well. So you have to basically show that you are a solid investment for this retailer to go nationally. And in order to do that like you have to, you have to make sure that this goes well in order for your revenue to increase. So it kind of goes both ways.
[00:03:42] Speaker A: It's a great idea and a perfect transition. On our number two key to retail success. When you talk about investment in transportation, one of the key things about transportation is you got to make sure you can deliver.
How about that? Yep. Retail buyers surveyed, 90% of respondents said that a supplier's ability to deliver on time impacts the their purchasing behavior of that brand. And 66% said they have ended relationships with suppliers over delivery issues.
If a brand underperforms when it comes to logistics, they can easily be replaced by another hot product.
[00:04:19] Speaker B: Yep.
[00:04:19] Speaker A: One of the vocabulary words that you coined is involuntary sampling. That's certainly part of this. Right. When you're talking about a grocery pickup, you know, will you accept a different prebiotic soda? Will you accept a different gluten free granola opportunity that's getting your product onto the shelf to make sure that it's available for your consumers. But again with the, the retailers, they're talking about just headaches on their end, right?
[00:04:48] Speaker B: Yeah. So if they are constantly having to replace something with another product and have it be returned because they wanted this product instead of that product, they are, it's more stress on them, but it also could result in them losing their customers because the product their customers want isn't there on time. So they would just kick them out altogether and find someone else to take that place that's actually going to deliver on time and cause as many headaches.
[00:05:15] Speaker A: We're going to throw all sorts of stats to our listeners today. How about another one for you?
$81,000 in gross margin lost due to out of stock per $1 million in sales.
You can't deliver it, you got fines, you're losing out on sales. $81,000, you're just basically lighting on fire because you're not getting it there in time.
[00:05:36] Speaker B: Yep.
[00:05:37] Speaker A: So how do we fix it, Teddy?
[00:05:38] Speaker B: Well, the amount of times I get the question when we're dealing with customers going into a new retailer, regardless of who it is, is the overall confusion of I got multiple dates, I got a poo date, I got an end date, and I got an mabd. What does this mean? And, and I think a lot of times not delivering on time is missing the end date and the MABD and not understanding how those are correlating. So, like, it needs to be in the store on this date. But the MABD is actually not an mabd, it's an maod, meaning that it has to arrive on this date to hit the next date to make sure that someone can buy it. And every retailer calls it something different.
They have, like arrive, arrive by, deliver by, requested to ship by. There's all these different dates that can make it very confusing. And I think that that's important to understand as well. So if you can, if you know those things and you understand dates and what those dates correlate to, you can then successfully figure out how to route, ship and deliver on time.
So you look good, they want more of your product, and then you grow faster. So you're talking about weeks to months to infiltrate to the other regions versus having to start all over again.
[00:06:53] Speaker A: Nailed it.
[00:06:54] Speaker B: Thank you.
[00:06:54] Speaker A: If that sounds complicated, it is the end of the day. You could always just build a relationship with a high quality carrier that understands that for you. Right.
[00:07:02] Speaker B: Who would that be?
[00:07:03] Speaker A: That would be us. Moving on to number three, understanding buyer guidelines. Every retailer and distributor has its own set of rules, as Teddy just mentioned.
You got to make sure you're. You're familiar with them.
Some of the things outside of those delivery date requirements would be palette configurations.
What else, Teddy?
[00:07:25] Speaker B: So there's the palette configurations, there's dunnage included in these palettes, the palettes themselves, not only the way that they look, but the type of palette, whether it is a block palette or a stringer palette. And then there's certain, actually palette manufacturers that retailers will only accept, like Chep or Peco.
So if you've ever been to Costco and you see those blue and red palettes, those are the some of the biggest block pallet manufacturers, Chep and Peco.
And if you don't follow these instructions, it could be rejection or it could be additional fines that don't have a lot of description. So it's very confusing.
If you have things, any liabilities within those configurations that would cause more work for that dc, not even the store, but like the DC of where it's going into. You could again be looking at refusals, fines, delays, that again, overall impact that you know what you're actually making the gross margin you're making per million dollars.
[00:08:28] Speaker A: And we're trying to save you money,
[00:08:29] Speaker B: people, and make sure that this goes well so you can see that revenue faster. I think that's really important is that this doesn't have to be a super grueling process. If it's done with the right amount of communication, it'll actually be a lot easier, less white noise and then that that growth will just work really well.
Everyone will want you on their shelves because you're always on everyone else's.
[00:08:54] Speaker A: One of the best ways to make sure you're getting smooth deliveries is understanding. And this leads us to number four on key elements of retail success is understanding preferred carriers and routing guides. Mm. So retailers will work with specific carriers primarily in the LTL space, but we've certainly seen it on the truckload space in terms of carriers that are allowed to drop or drop their trailers or have multiple delivery appointments a day.
So it's really, really important that you understand who delivers into that retailer and when.
Just because like for us as a 3 PL, just because a carrier is providing you rate does not necessarily mean they can meet the service requirements of said retailer. Fair, Fair.
[00:09:48] Speaker B: And on these routing guides as well, most of the routing guides for these retailers will actually list out their preferred carriers. But what's very tricky about these routing guides is they will have allowed carriers and then preferred carriers.
So to your point, you may have carrier A that is allowed to deliver here and they do, you call the D.C. and they say, yeah, we deliver there often.
[00:10:10] Speaker A: Right.
[00:10:11] Speaker B: And then you find out that carrier B who maybe didn't look as appealing because of a cost, maybe they're fifty to a hundred dollars more. But then you find out they actually drop every single day and that trailer gets turned around in 24 hours. So you're going to hit your MABD and you're going to have every single time better tracking things like that, which $50 more is go still less than what you would pay in a late fine and possibly peace of Mind to know where it is?
[00:10:41] Speaker A: Yeah. Speaking of late fines, heading over to number five, get clear on those chargebacks. Give us some examples of those fines, Teddy.
[00:10:49] Speaker B: So Walmart and I think is actually the retailer that started the term otif that we use for so many other retailers. And this stands for on time and in full.
So if orders are left unfulfilled early or late based off of that mabd or you know, like so many days early, it can cause issues with your score, meaning that maybe you don't get as many orders or the chargeback will actually increase and you're subject to a fine around 3% of the COGS, also known as the cost of the goods sold.
And some retailers will actually increase this over time. So if you are consistently late or have your otif fall under, let's say somewhere between like 95 to 90% on time in full, then you could see that fine go up to 6%, sometimes even 9% of the COGS, depending on what you're shipping. All of those are a problem.
[00:11:45] Speaker A: It helps you as a shipper.
And this is going to sound counterintuitive because everyone's important, right?
Every customer is important.
But think about that in terms of prioritization.
If you make a pallet a day of product, I'm just using that as an example, and one retailer requires you to hit a specific mabd or they're gonna fine you 3% of your total invoice.
And another one just says we'd like it here on this date, but really you can deliver it whenever.
It's not necessarily fair, but it's reality.
[00:12:31] Speaker B: And maybe there's a buyer that's a little easier to work with, that's willing to move through an abd with a specific amount of notice.
[00:12:38] Speaker A: So you gotta understand that and be clear on the expectations and the chargeback rules of engagement so that you can again prioritize the right retailers
[00:12:50] Speaker B: first.
[00:12:51] Speaker A: Or.
[00:12:52] Speaker B: Sorry, I keep interrupting you.
[00:12:53] Speaker A: No, no, go ahead.
[00:12:53] Speaker B: Or the. I just want to say the right metric as well.
[00:12:56] Speaker A: Yeah.
[00:12:56] Speaker B: Because that acronym otif is actually usually measured the on time one percentage, the in full another. Some retailers will actually ding you more if you're not in full. So you could be a day late and it's less of a fine than if you are short.
[00:13:12] Speaker A: Short a specific SKU or product.
[00:13:14] Speaker B: Right, exactly. So like you can be a day late or two days early and not actually receive any fines, just like a warning until you get to a certain percentage. Whereas if you're not in full, you're probably going to Get a fine right away and understanding those differences and understanding how to ask them or like where to look in the routing guide or vendor guide to make sure that you're setting this up correctly. Yeah, it's really important.
[00:13:40] Speaker A: So knowing your cost in the bigger picture. Right. In theory, we're not back to my one pallet example. You're not just shipping out one pallet a day, but let's say you're shipping ten pallets a week.
How many of those are going to the similar region? What does that look like?
Could, is there a better way to do it? Basically is my, my question, can you reduce your costs in some sort of way? How would you do that?
[00:14:04] Speaker B: So you could do that again, as you mentioned, working with the right carrier and provider who can help spot these things for you.
[00:14:12] Speaker A: These are all connected.
[00:14:14] Speaker B: So I think the big picture thing is looking at a network analysis, being able to see where things are coming and going, going, but then also the cadence, how often and what those orders look like and the MA BS and then being able to spot those things allow you to use things like consolidation.
[00:14:36] Speaker A: Yep.
[00:14:36] Speaker B: So Zipline's consolidation is a little bit different than the general term of consolidation, which provides more visibility and more security to the integrity of your product rather than mixing it with a whole bunch of other products going to the retailers.
[00:14:52] Speaker A: Yeah.
[00:14:53] Speaker B: And it also prioritizes what you say, regardless of the retailer.
[00:14:59] Speaker A: We're talking multi drop consolidation.
[00:15:01] Speaker B: Yeah. Kind of like load to ride like a school bus system. First one on is.
[00:15:05] Speaker A: There we go.
School bus.
Good one.
[00:15:09] Speaker B: So that can really help. But then also looking into different modal solutions depending on what's going on. Yes. This technically would be an LTL due to the pallet size, but we actually have a really great partial carrier or a local carrier that might be able to do this a little bit differently. And again, maybe the cost is the same, maybe it's a savings, but overall it provides the service that you need to ensure that you know your cost. You're looking at the big picture and have this done in the correct way to continue your success. Again, that investment piece, not just thinking about each individual load, but you know, like each individual thing as an overall like effective system.
[00:15:47] Speaker A: Absolutely. There's all sorts of things to consider when you talk about minimum pallets ordered on a, from a sales perspective, like or days that you're shipping.
[00:15:57] Speaker B: Right.
[00:15:57] Speaker A: I always remember that example of, you know, maybe a two day point that was scheduled to ship on like Tuesdays and Thursdays because the MABD was Monday and Thursday and We did an analysis and most carriers want to ship Monday, Wednesday, Friday to a two day point because you pick up Monday, you deliver Wednesday, you pick up Wednesday, deliver Friday, et cetera, Friday to Monday, et cetera. And round and round we go and just shifting it back a day improved our costs or took off like a six pallet order or something along those lines. Maybe you ship six pallets to retailer X, that's in the northeast on Tuesday and you ship six pallets to retailer X on Wednesday. If you actually could ship them together, you could do a two drop delivery then following day.
If you could ship them on the same day. Right. So just working with that buyer and changing the ma b D, can it help improve the cost and like you said, integrity of the product, which is most important?
The only way you're going to have control of that type of arrangement leads us to our number seven key to retail success which is understanding customer pickup or CPU versus deliver pricing. Right. So a lot of companies defer to listen, we're just going to get out of it. We don't want to deal with this. We're focused on making widgets and you know, a protein based snack food.
So we're just going to let the brands pick up or the retailers pick up their, their, their orders.
But that can get dangerous. Why is that, Teddy?
[00:17:37] Speaker B: Because you are still, you'll start, you're still in charge of this even though you don't have control over it. If it doesn't hit the mabd, it is still your fault as a brand regardless of whether you selected the carrier and requested the pickup and scheduled the delivery or not. Yeah, and I think often people think oh well, if this retailer is picking up, they know the right carrier to use and the carrier knows how to sch.
Like yes, overall those things are correct, but there's a different prioritization and no one's gonna care about your product as much as you do. So having that visibility and understanding what's going on is gonna make sure that things go smoother. But then it's also gonna make it clear what chargebacks you're getting and why. And if you're available to fight them. Yeah, I mean if you think about these retailers, they're busy, they're big, they have a lot going on. I imagine there's accounting and chargeback mistakes that happen and if you can't call them out on that because you don't know, you're just basically handing over money for no reason.
So having that visibility makes a big difference. And with that, with that as well, the understanding the CPU delivered pricing. There are some instances and there are some retailers where CPU does make sense, but maybe not for a long period of time. Yeah, you need to be able to go in knowing exactly what's going on. So I wouldn't recommend just jumping in and saying, great, take control of it. Understand what the pricing should be, what it should look like, what your chargebacks should look like. So you can have these conversations and then make the decision.
But you know, going into, like you said, like, maybe there's certain retailers you need to prioritize. Those are the ones that you need to have full visibility to. And you need to understand and I would think it would be the ones that have the biggest chargebacks, issues, liabilities that may be involved.
[00:19:27] Speaker A: Maybe you're just a control freak like me and you want to own it all. Nothing wrong.
[00:19:30] Speaker B: Nothing wrong with that.
[00:19:31] Speaker A: That's kind of my mentality.
Another way that with control that you can, you know, leads us number eight, if again, once you have that control of all your products is optimizing minimum order quality quantities or moq.
Right. So some LTL providers have an quote, unquote, absolute minimum charge.
The minimum price will not go below or their base price to move product. Right. So that means no matter how far, how much are you shipping, your costs will be at least the AMC. So shipping 10 cases or 40 cases might be the same.
So you got to make sure you're understanding that so you could properly manage the costs.
[00:20:14] Speaker B: Yes.
[00:20:15] Speaker A: Anything I missed there?
[00:20:16] Speaker B: No, I agree. The only thing I really like to I call this cadence tracking, which we actually have a podcast on.
[00:20:23] Speaker A: How about it?
[00:20:24] Speaker B: So I have a slightly different terminology to these terminologies and acronyms.
[00:20:28] Speaker A: Making up our own stuff, folks.
It's like a look.
[00:20:32] Speaker B: Logistics are allowed. Right. Is understanding not just that minimum. So again, I hope you would see an order for 10 cases and be like, I think you could do better. Let's bring this up to the retailer.
[00:20:44] Speaker A: No, you want more of this.
[00:20:46] Speaker B: Let's like get a full palette.
[00:20:47] Speaker A: Yeah.
[00:20:48] Speaker B: You should maximize whatever space you are shipping in, whether it is the pallet or the trailer.
And being able to have those conversations should start at the very, very beginning. So when you are getting set up with this customer, that salesperson, instead of getting I got us into Publix celebrate. I got us into Publix Truckload.
[00:21:06] Speaker A: Right.
[00:21:07] Speaker B: And I maximize this. So now we're going to be able to keep that cost per piece, per pallet, per mile, per pound, whatever your KPI is. And again, if you don't know your KPI, give us a call because we love doing this.
[00:21:19] Speaker A: When it comes down, let you know. Yeah. When it comes down to it, the retailers want their suppliers to deliver product on time. Back to that otif.
[00:21:27] Speaker B: Right, Exactly.
[00:21:28] Speaker A: So that's a good way to renegotiate the minimum order quantities.
Speaking of that, heading into number nine.
Teddy, I think we're going to talk about this. We already have in detail. But taking a data driven approach to logistics. Right. So leveraging data analytics, geographic pricing trends, you know, there are trends in terms of the market around produce season or imports, spiking things of that nature, setting up warehouses, network analysis, et cetera, et cetera.
You gotta understand it all. It's not just on a spreadsheet, it's visually appealing.
I bet we can help with that, don't you think?
[00:22:16] Speaker B: I think we can. And something I think is really important to note about that too is, you know, everything right now is so driven by AI and automation that data should incorporate a decent amount of that. But it still does need a human element.
And to be able to go through, explain it, modify, correct it, to be able to talk to a person and say this isn't what I want to see and then have it fixed immediately or at least have something temporary in place, I think is really important because I mean, just thinking about when I go grocery shopping, how much I have to change things and how much I'm asking of my retailers, I imagine the retailers are doing that to get the products there.
So you need to be able to keep up with that. And if it takes you a couple weeks or a couple days even to get your reporting together to respond to your customers, that's too long.
[00:23:08] Speaker A: That's a great transition to our last key to success.
Reducing that lead time for responses from weeks to days to hours.
You gotta work with a retail specialized 3 PL.
Know anybody like that?
[00:23:23] Speaker B: I've heard of this place called Zipline Logistics.
[00:23:25] Speaker A: Yeah, we obviously specialize in retail deliveries.
We've created our Canopy software. It's a proprietary shipper intelligence tool.
Everyone has access, every customer has access to it. Once you start moving freight with us for free, right. There's different elements of it. We can have a daily shipment tracking trace function which is called the summit. We've got our data analytics page, we've got our AR and an accounting reference point where you can pull documents, pods, invoices, BOLs, etc. You know, it's really a one stop shop for a lot of our CPG brands. Both the Ones that have grown significantly in those that are just starting out, like we're talking about here, that are looking to grow fast and furiously shout out Vin Diesel, hashtag family.
[00:24:13] Speaker B: I think also they get experts like you and me who have been actually in the industry for a decent amount of time. But also at Zipline, before Canopy existed, before Canopy was what it is now. We were Canopy. We were doing this quickly, turning around and giving it to customers. And so when they want something specific, not only do we have the industry, the retail, even the carrier level knowledge, but we're able to go in and actually help them manipulate their data to see what they need to see on the cadence that they need to see it. And again, that makes the biggest difference is it's not just the fact like, oh, great, you have reporting, you have AI. Who else, you know who doesn't? It is more than that and it's customized to the individual person, not just industry wide.
[00:24:59] Speaker A: Yeah. All nine of those keys we listed prior to this last one we essentially own for our customers.
[00:25:05] Speaker B: Yep.
[00:25:06] Speaker A: Right. We'll work with you. Right. We need some help gathering some data or understanding the expectations.
[00:25:13] Speaker B: Then you can just focus on beating up your sales guys for not getting the full truckload.
[00:25:17] Speaker A: There you go. There you go. It's pretty wild when you mentioned this is a tangent, Teddy, and we can edit this out if we need to, but you said we were Canopy. That reminds me from the great movie in the mid-90s with it was Judge Dredd starring Sylvester Stallone, where he was like, and the law.
We were Canopy.
[00:25:40] Speaker B: I hope I sounded like we were Canopy.
[00:25:45] Speaker A: Judge Jury and executioner Judge Dread coming to theaters today. Otif Specialist. I say, can you turn preferred carriers Zipline Logistics? Check us out www.ziplinelogistics.com 888go zipline.
Download the 10 Keys to Retail success white paper on our website or just
[00:26:05] Speaker B: call us and get the abridged version.
[00:26:08] Speaker A: As always, leave a five star review on Apple or Spotify.
Check us out on the next episode of the Zipline Logistics podcast. We'll see you next time. Thank you.
