240. Behind the Scenes at Little Spoon: Scaling a Perishable Supply Chain

0:00Garrett Otondo:Welcome to Startup to Scale, a podcast by FoodBevy. I'm your host, Jordan Buckner. Join me as I talk to aspiring entrepreneurs, seasoned industry experts, and everyone in between as we unlock the keys to growing from startup to scale.

0:18Garrett Otondo:As your brand grows, so does the complexity of your operations. Today, I'm excited to be joined by Garrett Otondo, who's the Director of Strategic Operations at Little Spoon, to talk about how they manage the increasingly complex supply chain. If you're not familiar, Little Spoon is on a mission to make fresh, quality food accessible for babies, toddlers, and kids across the country. Behind the kind of fun branding and delicious product, there's a complex operation that makes it all possible, from cold chain logistics to demand planning for perishable items. Garrett has been at the center helping to build and scale these systems.

0:55Garrett Otondo:We're going to talk about what operations looks like behind the scenes and the challenges and opportunities that come with managing a perishable supply chain and how partners like Allery help support Little Spoon's growth. Garrett, welcome to the podcast today. Hey, Jordan. Thanks for having me. So I'm excited to dive into all these details. I mean, first off, I would love if you could provide like a little overview of Little Spoon, how the business works and kind of what operations look like behind the scenes to help set the stage. Yeah, absolutely. So we are primarily a D2C brand. We just recently launched into Target.

1:32So if any of your listeners want to try us out, please go to Target. Really, so we're primarily focused on having an amazing product team that is developing these recipes that are just a tier above most things that are offered right now. And they work with a pretty extensive co-man network. And then we obviously have an operations team that is executing some of these recipes and formulations and super high functioning team here. As you know, startups are kind of scrappy, so everyone's wearing a lot of hats. And then we handle logistics from our co-mans to our four FCs. We have an FC in Los Angeles, San Antonio, Chicago, and New Jersey right now.

2:15So we have pretty good coverage.

2:17Garrett Otondo:And for those who are new on the journey, FC is a fulfillment center. Yes, thank you. Yeah. And from there, we leverage the large last mile carriers that everyone's familiar with. That's really exciting. So, you know, I ran my own energy bar company called T-Squares. We manufacture their own product. And even at that smaller scale, the logistics of like managing inbound freight for 12 different ingredients and the outbound to different partners got pretty complicated. What have been some of those challenges or just like growth pains that little students had to go through as you have so many different partners and moving pieces?

2:58Yeah, so absolutely. I would say it is primarily based on the scale that we've gone into. So when you're producing like 50 orders a week, getting fresh produce or produce or any product that meets very specific requirements from our end, it's much easier to do than when you're shipping out close to 30 ,000 shipments a week. So that is definitely the challenge right now. I think we've got an amazing procurement team who seems like they're working day and night to find all these alternative vendors that can provide product that is really dialed into our specs. I'm not sure if you're aware, we were the first baby food company to proactively test all of our products for heavy metal and pesticides.

3:38I didn't know that. Yeah, so it was like a huge pivot to just not saying that we didn't have high standards already, but it's just a different level of detail that our procurement team has to do. And finding alternative sources that meet those requirements has definitely been challenging. And then going back to scale, these compound one another. It's like, okay, we found these very specific ingredients. Can we find a vendor that can provide it? Or not one vendor, but multiple vendors. And is it all the same quality? So that's definitely been super challenging.

4:11Garrett Otondo:Yeah, I think that's so cool to see. Yeah, I've been following a little spoon, just like how the team has grown over time. Most of our listeners are probably like one to 10 person teams. And so like having more than like one or two people like handling operations seems like a pipe dream for them as they're growing. I'd love to understand just broadly, what does the operations team look like in terms of different roles that people have? Yeah, absolutely. So we are primarily focused on procurement and MRP, so material resource planning. We've got a handful of supply planners that manage our different commands and different product lines.

4:46We have a few directors overseeing that. And we have, we recently brought on an individual to run our internal logistics and actually bring some sort of oversight into that. It was kind of like the Wild West before where it was like, oh, we need to get product from A to B. Doesn't matter the cost. Doesn't matter how long, just do it. Brought in someone to focus on that. That's been a major improvement in our process. And then we have a VP running our overall strategy. So So kind of a large team, but it doesn't seem like it at times.

5:21Garrett Otondo:I mean, it's cool that you get to have so much support because like you mentioned, your perishable products are so many moving pieces. Kind of with that, like what are some of those biggest challenges of managing a cold chain logistics? And I know it's always a work in progress, but like how's the team working to solve that? Yeah, obviously the biggest challenge with cold chain is making sure that it stays cold. And being a D2C brand, we have to make sure that how we are shipping our products, direct a consumer product directly to customers in a food safe condition. We've got great partners that have allowed us to do extensive chamber testing to design boxes and processes that will ensure that the product is arriving safe.

6:09We just recently hired a packaging engineer that's going to reevaluate everything. We have been, like I said, we wear a lot of hats. So that was kind of like an operations effort to get the first level of a viable box out on the streets. Now we're going to refine that with a bunch of oversight from our packaging engineer. And then we've done extensive rerouting with our logistics, last mile logistics, to make sure that we are going out of distribution centers that really limit the transit time of our product to be less than two days. In some cases, there are two-day deliveries, but we're really trying to get the majority of our shipments to be in one-day zones.

6:50That has been hugely impactful. And then I got to plug another company that we work with that has been amazing. They're called Keep It Cool. Their platform is not only does it do some sort of pack-out design, but they really allow you to leverage their system to take theoretical performance of a box. And you can put in some sensors and test it in the real world where, you know, boxes aren't sitting stationary in a chamber. They're being thrown around on the trucks and thrown down on the doorstep and going through the last mile carrier logistics process, which we all know isn't like the most gentle thing.

7:32So we can put in really cheap tags and test like thousands of deliveries going to certain regions that are problematic and really test the performance and dial in our refrigerant logic to minimize any risk.

7:46Garrett Otondo:So I know like if one customer gets a product and it's like thawed and it doesn't feel safe, especially with it going to babies, toddlers, right? How do you handle that if a customer, I mean, it's probably more on the customer support side, but like how do you handle it if the customer is like, hey, this didn't arrive. cold or like I thought it was. It's like no question, no questions asked, like get rid of it and we'll send you a replacement. There's, there's no wiggle room there. Straightforward response. Yeah. No, that's cool. So, you know, how are you then handling the demand planning and inventory for perishable products?

8:20Garrett Otondo:Right. And so making sure the team is balancing, having enough so you're not like running out of stock, but you're not having waste, limiting waste in the process. Yeah, so we're pretty fortunate that our products, we've done some innovative preservation methods without using any like chemical or non-natural preservatives, and they have amazing results. So we're lucky that we have a bit of shelf life for our products. That coupled with the fact that we are a D2C brand and we have a lot of data on our customers, their reorder rate, their, you know, our slow seasons, our peak seasons. the rate of transferring from one product category to another as their child ages up.

9:04We've got a lot of data there. So we've got highly accurate demand models. And with a highly accurate demand model, we can plug that into our supply planning software. We use a system called Web Integrated. It is like a no-nonsense, not very pretty, but functionality-wise, it is awesome. we can plug in our demand, our inventory, and set some parameters around like lead time and stuff like that. And it spits out a really robust schedule, recommended production schedule. And it's just essentially going in and reviewing that as some of the, like the inventory or demand parameters change. So super straightforward, super, it's easy.

9:42It's a lot of work to communicate with all of our commands, but generally the recommendations that we receive from the system are solid.

9:50Garrett Otondo:You mentioned having like lots of different commands, fulfillment centers, you're getting ingredients in for all these suppliers. How are you tracking all those freight shipments and managing those? Are you doing that via Excel? Are you working with a software partner to do that? Yeah, that's a great question. About a year ago, we hired our logistics associate to come in and really start managing this or give it a little more attention to detail then we logistics was like you sweep it under the rug and we don't care about it yeah and whatever the price is you just have to do it yeah yeah uh and then obviously margin goals that's like a very easy opportunity to like shave off some some costs and improve the overall freight spend you know per month and annually so we hired this individual to come in it was a lot of work we soon found out that like the six different sheets that we were using to track all the different aspects of freight inbound, outbound, the spend, contractor rates, all this stuff.

10:51It was just like overwhelming and wasn't really painting a picture or providing the ops leadership enough data to make strategic changes to how we were performing. So we went through a few groups, I would say more traditional TMS groups. And we've coined the term or someone else has, but what we realized is that we were We're looking for less of one of those traditional platforms and something more of like a TMS light where like the core functionality was there, but some of the back and forth with the brokers and stuff like that wasn't really required. So we ended up meeting with a group called Owlry, who I can't say enough about.

11:29They're absolutely outstanding. And they came in and basically said like, hey, all these different sheets, we can just combine into one like easy, easy view. We'll give you high level analytics. We'll give you some custom reporting. We'll integrate with all of your carriers and your fulfillment centers so that like a lot of the manual tracking of like, hey, did this load arrive? It's all done for us. And the only thing we need to track are like errors or discrepancies with the things that we thought were happening. And so they've been absolutely outstanding. They're like super eager to expand their integrations with the different carriers because I think they can leverage that for other clients.

12:05So they do all these integrations on our behalf and we basically sit back and let them do their job. They're outstanding. One additional thing to say about them is as we were beginning to launch retail, we had an EDI partner to help integrate. And at the finish line, they basically told us, hey, we need an ERP to link up with and we don't have an ERP at Little Spoon. So that immediately fell through the cracks. And Alry was like, we can do that. And in, I think, two weeks, they spun up their EDI integration, and we were ready to go with our retail initiative. So, like, they literally saved our lives.

12:42Garrett Otondo:That's really cool. That's so cool to hear. And so, the software then allows you to, like, track all the shipments that are kind of ongoing so that you can keep an eye that, like, everything's on time, it's being picked up, it's arriving, right? Yeah, so all of those metrics. But additionally, the nice thing is like some of the integrations that they've done for us have really eliminated a bunch of like repetitive data entry. So like we can create a load in our supply planning system that automatically pushes to Owlry. And then Owlry will automatically push that out to our FCs and send advanced shipment notifications to the FCs so they know exactly what's coming.

13:20Like that all used to be very manual and time consuming. And now it's done in one click of a button. From there, now we can, when the FC receives it, we can actually see all three of, we can see what was shipped, what was on the BOL and what was received. And we can do like a BOL discrepancy report and really drive in a certain level of accuracy from both the commands that are shipping it out and our FC partners making sure that they're receiving correctly. So all around it has been a huge driver of process improvement.

13:46Garrett Otondo:That's awesome. And Garrett, I know that you mentioned the time variables for shipping, like refrigerated product, even with freight and stuff coming in. And I know we've had, I've dealt with so many issues of a shipment that was supposed to arrive and never did. And it was like stuck in a dock somewhere. And that was for our dry goods. Have you kind of had to experience that with freight shipments for Little Spoon? And does this kind of allow you to better track like when shipments are going awry to make sure they're arriving on time and being checked in? Yeah, so their platform with the correct integration allows you to see like, I don't know what the time interval by default is.

14:22but we can like every hour see where the truck is. You can define certain parameters like late thresholds. So if a truck that we thought would arrive today doesn't arrive until Saturday or Sunday or even later Monday, we get alerts to that. We can be proactive in trying to resolve it rather than waiting days for this to happen before we have any idea that the truck is late. So their platform definitely gives us insights and the data to make actionable decisions to rectify any problems that we see in the freight world. And in dealing with freight, it's not a matter of if it's going to happen, it's a matter of when it's going to happen, right?

15:00So they've definitely allowed us to be a bit more nimble in recovering loads when there have been problems.

15:05Garrett Otondo:One of the most confusing things about freight, to me, I'm sure someone that does it every day has a better grasp on it, but it feels like every time you're booking routes and shipments, pricing changes, the time changes. And so it's hard to understand like how freight is really affecting your performance, both financially and in terms of like delays and other metrics. And so has the team been able to then better track like how freight is impacting costs just overall? Yeah, I would say that's definitely something that Owlry has assisted with before we really, it was like, there was no way of saying what load was part of what time period.

15:43So it was a complete mess. So Owlry has definitely brought in the ability for us to drill down to a given month and say, hey, we have this many trucks at these contracted rates. Here's the spend. And we can very easily compare that to our budget for freight for that month. In some cases, as we're scaling, our budget is way off. Like we're not forecasting enough trucks, but it's super easy for us just to run that report and kind of see what our monthly spend is. You can drill down from like which co-man to which FC. You can talk about which freight group and their spend. We did our first set of quarterly business reviews that we fully leverage Owlry to present the data to our, I think it was our top three freight providers.

16:30So Owlry facilitated that whole process and it was great.

16:33Garrett Otondo:So absolutely. The level of insight that you get from Owlry is compared to using sheets and stuff like that is there's night and day. Yeah. I love hearing about the impact. Yeah, I do want to call like Owlery is one of our FoodBevys sponsors and they're hoping to sponsor this podcast. But I always love hearing from the companies who are using it to see like how it's actually making it impacting your business and become such like a central piece of making all the logistics happen. So I absolutely love that you're using them and how it's been able to help Little Spoon and grow. That sounds really awesome.

17:06Garrett Otondo:Yeah. One thing I'd love to kind of close out is understanding, like what other kind of key operational investments or systems are you and the team focusing on for future growth as you continue to grow? I know you mentioned like retail, which is like a whole nother piece and different type of business. And even learning like how retail is affecting how you're doing things for the rest of the business. So I think first and foremost, we're always looking for talented people. So investing in our people, making sure that we are recognizing our hard workers within the company already. So that is absolutely first and foremost.

17:41But then, like I've alluded to, we don't have an ERP. We've been exploring this. It keeps on getting pushed. I don't know if the need for it is quite there yet, but with retail, it would definitely be helpful. So I would say those two things, specifically from an ops perspective, would be the two areas I'm focused on in terms of investments.

18:01Garrett Otondo:That's awesome, Garrett. Well, thanks so much for being on today and sharing behind the scenes about Little Spoon operations and how they work and for sharing about Owlery. As I mentioned, Owlery is one of our partners and I was able to work with them to help brands get started. So if you need help managing freight transportation if it's getting too complicated, they're actually offering a 60-day free trial with a dedicated success manager to help you get set up and manage that entire process for you. So I always recommend like, hey, look, if you're sending freight shipments every week and you want to make sure they're arriving on time and they're not getting lost, definitely sign up, see if it can provide value for your company so that you can get a better grasp on that.

18:39Garrett Otondo:And I've heard from other clients as well that like the cost of the software pays for itself and what you can save by better understanding and how to limit your own costs for the business. Garrett, thanks so much for being on again. And I can't wait to check in and see how things are going at Little Spoon and how that growth is going. Hey, thanks, Jordan. I appreciate you having me.