242. How Opply Is Fixing Supply Chain Chaos for CPG Founders

0:01Helen Murphy: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.

0:18Helen Murphy:Today I'm joined by Helen Murphy, the CEO and founder of Opelate. If you've ever felt overwhelmed by sourcing ingredients, managing supplier relationships, or just trying to fund that big production run, this episode's for you. Oply is building an operating system for supply chains that's helping founders like you streamline sourcing and secure financing so that you can focus on scaling. So let's jump in. Helen, thanks so much for being on today and welcome to the podcast. Thank you. And so excited to be here because I've been a big follower of yours for a while. Oh my gosh, I love it. I mean, I would love to just jump right in and have you share your personal journey and what inspired you to start Apli?

0:57Sure. So I have been in Consumer Goods my whole career. So I started at Procter & Gamble and ran one of the e-commerce businesses there. Actually, I'm an ex-founder in this space, so I understand literally all the challenges. And I started a baby food brand and scaled that to about 1.5 million revenue. And I did that by myself. And so like any solo founders out there who are like probably screaming inside everything when everything happens. I've been there.

1:24Helen Murphy:What an important category and very challenging category to be in as well. And obviously the amount of compliance things you have to do in it as well. Yeah. And so it was I sold that business about eight years ago. And then kind of just saw like supply chain was the most difficult part of my day. I was a marketer, a growth person, which I think a lot of founders are. And so it was kind of good. Well, yeah, I'd be good at that and like growing that business. But then the operations side was always the bit I was working really late on at night. I didn't have any specialism. Always seemed like I was being deprioritized by suppliers or similar.

2:03And so just really wanted to tackle this for like all the other brands out there. And I'm an engineer by trade. And so I was like tech consultants.

2:11Helen Murphy:Oh, my goodness. That's wild. I mean, yeah, definitely from running my brand, I ran an energy partner company called T-Squares and operations seemed to be the thing that was always, I would say holding the business back, but because it wasn't my expertise was always the thing that would stop my vision of explosive growth. I remember we were self-manufacturing our product, sourcing all our ingredients ourselves. Went to work with a co-manufacturer, which was fine until they dropped us because they got like a million bar order from another client. They were like, sorry, we don't have any line time for you.

2:44Helen Murphy:And we got like one of our products went off the shelf at Whole Foods. Then we like went back to self-manufacturing, trying to find another manufacturer. It was always that thing that kept like feeling like it limited our skill. And so I personally felt that pain firsthand. Yeah. And it's just such a difficult one, right? And I think as you start, as you say, you start to move into retail, because everyone thinks that the most difficult part is getting into retail. And I always say the most difficult part is staying in retail. And a lot of that is if you go out of stock for maybe like a month or two, you get delisted.

3:17And so it's such an important part to get right, especially as you scale it.

3:21Helen Murphy:So operations can encompass a lot of different things that have been there. What were some of the specific problems you saw in the CPG industry that you knew you had to solve yeah so this is actually got what we got really excited by where we actually went into thirsty brands when we first started the company and just watched them and that sounds creepy when i say that but we and we were watching everything they did so like every action they did and we were basically looking for where they got most frustrated and where they spent the most time and so we actually mapped the full process and so this is from deciding what product you actually want to do in your MPD to forecasting, how do I do it?

3:59What suppliers do I need? How do I talk to those suppliers? Wait, how do I get cash for this? And then I've got it into market. Do I need to replenish stock? How do I get my logistics right? How do I expand into retail? And so that was, we basically went across the board of this and looked at what could be automated across it and what would really benefit from the aggregate scale of all those brands working together.

4:26Helen Murphy:Yes, I hear that. So then what were the key things that you found and how did that kind of build into Oply? So probably like three main problem points that we found on this. One was actually sorting ingredients at both quality and pricing. So when you're just one brand by yourself, typically you're either sourcing your ingredients from retailers or distributors quite up the scale. And as you said, you're never priority for them. And so you have no bargaining power and no negotiation power. But if you pair 100 brands together and they're all sourcing sugar, you've suddenly got power. And then the second one that we saw was really forecasting on this side, which was you see a lot of tools out there which kind of like plug into data and like visualize it.

5:12And a lot of the problems we saw were just what is going to trend next? Like what is the seasonality of this? should I be running a production in September or I should be running it close to Thanksgiving I don't know and then the third one on this was hey now I've got my production run going my retailer has 90 day terms so I can't I'm not going to get paid for that production run until 90 days or even later after I've sold it and so that's a huge cash flow gap for these brands I think it was just that real size of the brand and they just weren't big enough to get that economy of scale that the bigger guys get and then they just didn't have the cash to actually fund it oh my goodness yeah

5:53Helen Murphy:definitely problems that i've experienced firsthand i love that you like watched a lot of founders and companies to see like what their problems are because you know it's so revealing how and where people spend their time and their energy as they're they're building all this out so I think that's really cool um you know for someone new to Apple can you explain how the platform works sure of course so our big vision for the company was to become the operating system of every like small medium F &B brand and that was because we always felt like if you chip into one part of it it just doesn't really solve much and so we were like what if we can actually manage this right from the beginning and so what oply does we literally manage your entire back-end operations we show you a better visual of it we give you insights on it we actually fully run it in the background and so like you would come on oply and you'd say i've got these five products and and these are the ingredients we have right now and these are maybe our suppliers we're using So we actually take over those supplier relationships and then get you firstly better prices, maybe better suppliers as well often.

7:07But also we just start doing that ordering for you from day one. And so like no more back and forth, no more like ringing suppliers, no more just chasing around everything. We take over that and then we start to optimize from there. And so we, for example, do credit builders. So because all of your invoices are in one place, all of that ordering is in one place. For our average brand, we increase their credit limits by three times in the first three months. And then we start seeing, oh, wait, there are 20 brands on our platform and they're all in Whole Foods. And so we start seeing Whole Foods always do their financials at this time of year.

7:48So we then can fill all your financials in at that time of year. And then we see there has been a change in this customs form that like 50 of the brands all started doing a different customs form. So we automate the customs form and then we just do the customs form for you. So we do all of this and basically we just take control of all of it and we use agents to do that. And with human checks across the board, because this can never be fully automated. and yeah to find every possible optimization in every part of it and then we implement it you

8:22Helen Murphy:know I can really tell just like your approach is understanding maybe it's an engineering background but like how things work like you're very focused on understanding like the the process behind everything the decisions why and then anything that can be kind of automated or taken care of I think you know taking care of that part which I think is really smart I'm curious like what was were some of the challenges and and starting to build oply because on one hand you mentioned like being the operating system for brands but that can be so encompassing uh and i know you started on like the operations supply chain side but where are some of those difficulties of like actually building this out and implementing it i think as you look across that stack there is a certain part of it you can automate like i always say forecasting is probably one of the easiest things to automate which a lot of people won't like how i say that but as my co-founder who's a big data whiz always says this the gay guy and he's always like forecasting is literally plus minus and looking at external factors that pull like weather and stuff like this or like retail trends that pull it together the really difficult part is anything that is real and physical so for example your suppliers like you have to have partnerships with these suppliers to actually like get all their forms they need push po's out whatever you want to do and or partners with financial organizations to get you the working capital like you can't can't you can automate the process but you can't automate the partnerships so that was what we really focused on and we thought would be our blocker basically at the beginning and this was such an amazing one of we now work with most of the biggest ingredient and packaging suppliers in the world and when we went to them we didn't know if they'd work with smaller customers because they're so big um and we like but we will bring like we now work with like nearly a thousand of these brands and we're like we will bring them all to you but they will work as one you'll only have to be admin of one brand and they were like okay we'll trial this we don't believe it but we'll trial it and then it worked and so that was the biggest problem to solve in the industry of you can automate based on limited data that is there, but you actually have to create these bigger partnerships to leverage effectively what the big companies get, but on a smaller scale.

10:43Helen Murphy:Yeah, I think that's so important. I'm curious to think because I remember having that problem with my brand of like ordering a few cases of product and right, like at the beginning was so small, they're just being shipped with common carrier. And then getting to the point where we actually had LTL trucks being trucks and freight delivering to our warehouse we never quite got off to like full truckload but always having that thought like I wish I could combine ingredient ordering to get some of these larger discounts as a smaller company one of the problems that I found is that our ingredients tended to be like fairly different from the companies at least that I knew locally and so we never actually were able to get it off the ground I'm curious in terms of like how do you build up enough skill and find those commonalities so that you can get the volume discounts um while also you know knowing that every brand and company is going to have a slightly different sure so probably two sides to this one is we actually we probably have the biggest database of fmb brands that exist so we know most things about most brands and we basically know what everyone uses and so I can I feel like like pulling something up now but I could show you could give me any ingredient any packaging and obviously we don't show this to the other brands because like yeah I never want to show any IP to any of the brand so we're highly locked down on that but yeah we know internally the say 50 other brands nationwide that use the exact same thing as you and often they're not competing so if i use something like um inulin or erythritol which is like a sugar substitute where right now there are 6 000 brands using those products using those ingredients in their products in the us alone and you can go everything from like sugar-free donuts to granola bars to drinks and everything in between it isn't the inulin that makes your product special but actually it could be the differentiator and i think out of all the brands on our platform actually none of them compete but they see it as competing with the bigger customers because we have over half our brands organically refer another brand because they start to see it and then i think for this second piece here on kind of that aggregate level and how we do this is you start to see across the brands just general themes of what they're they're using and for a lot of our suppliers like if you're using say sugar there's there's roughly 20 different variants of sugar this is i won't go into it but there's like granulated there's cane sugar and then it goes into different granule sizes i get really nerdy about this but when you do that the sugar manufacturers do it across the board so like we actually create partnerships at the top level we don't create it for cane sugar we create it for sugar and so then you can leverage the partnership that we have, even if you do the different types of sugar.

13:41That makes sense.

13:42Helen Murphy:Yeah, that makes sense. One of the coolest things I think in learning about Applit as well is that you're able to also help get better credit and extend terms and buying terms for a lot of these ingredients. So I remember when I was buying, a lot of times at the beginning, I had to pay cash up front, essentially before shipment, and then eventually got some terms like 15 day or 30 day terms, which really helps in cash flow, especially in this industry. You reference, you know, sometimes you might have to wait 90 days to get paid from a retailer. And if you can shorten your cash conversion cycle by having longer terms for your ingredient suppliers, that means that you can have more cash on hand for longer.

14:23Helen Murphy:And so I'd love to hear more about like how you're able to help get those better payment terms for brands. Sure. So in a few ways, we do this. So the first one is we team up with a payment provider who work pretty exclusively with us. And so we can get better terms through them. And so we act as merchants. So they give the terms to Oply instead of to the brand. And so we're often, because we're doing the aggregate again of all, we'll get way better credit limits than the brands will individually. So that's the first one. Secondly, if any brand who's watching this has tried to get a credit limit or tried to get working capital, you'll often find you get a pretty low limit when you first go because you're a young brand.

15:07You don't have history. You probably don't have that good financials because you're not sat there like massaging your accounts every quarter to get that right. You're just trying to get it in. And so that's one of the other things we automate. We basically automate all of those reporting or et cetera. So it's super clean. And so, and we report that in a way as say, we're pretty instantly, we like up your credit limit. And then with suppliers as well. So like the more brands we get working with these suppliers, you just become as big as the big customers. And so you start getting better and better and better terms.

15:41Helen Murphy:I love that. I think that's so important. It's something that like having the extra time to pay suppliers is just really, really huge. I mean, I'd love to hear too, like now that you've been working with so many brands, what have they been saying in terms of how working with Apple has been able to help them grow and scale their business faster yeah you'll probably see me smile the most at this because like this is the reason we started it hey is my team is full of like operators from the industry so I think every time we see a customer just like land a new retail listing because they got better cash flow or they could actually just make their bills that month um instead of being constantly in credit like that's a really big one and i'll probably give a customer story which actually happened like two days ago which is was one of the nicest ones was one of our customers and they're like a sugar-free and hazelnut spread so like a competitor of nutella and delicious they're called a bunch so please buy them because they're amazing and she is effectively she actually secured two retail listings and she couldn't take them up because she had to do her certifications so we've all done certifications right where it takes like so much paperwork so much like your organic certification or similar and you're trying to run through it and a lot of these certifications are necessary for retail um but it takes like a long time to get them so because of that and because of cash flow she didn't think she'd be able to actually take the retail listings that she'd worked hard to get so she started working with us and then we were like we can get this for you and so we did all her certifications really quickly and then got her this additional cash flow etc and then she actually secured the listing and she was crying on the phone with me because she was like this could have been the end of my company if this didn't get secured sorry that's late because yeah just like the impact that you have in like working with people and being able to like have such valuable to their business is just so so important and heartwarming So I'm glad you're able to do that.

17:45Helen Murphy:You know, I mean, it sounds like you really work as a partner to a lot of these companies, right? You're not just like a software provider. So like, how do you build relationships with your customers? Like, how much is it software automation? How much is it like someone from your team actually kind of embedding themselves within their team? Yeah. So we say we're personal with growth and we're automated with operations. This is probably something we actually created a podcast for all our customers. So like, as in like, we didn't run a podcast, we have an internal one, where we write up a story about every one of our customers.

18:21So almost like it's a storybook. And like, we put it into our own internal one and everyone listens to it as though that brand is a story and that founder is a story. Because it's critical to me of I'm an ex-founder in this space. Like this is something where it's such a personal journey when you're creating that product. My team should feel like that with you. And the best thing I probably had was we were at like a trade show and at least five brands came up to me and were like, oh my, we get called the purple team all the time. And they're like, oh, it's the purple team. And they were like, Freddie, who runs my customer success site, Freddie is the most helpful person.

19:00He just gets my brand. And Freddie used to be ahead of buying at HelloFresh that he just kind of knows the industry and they would when your customer comes up and tells you that they have to speak to one of your team because they want to speak to them they love them like that's what we want to be forever like we're not here to like automate like brands being created or anything we want to take the rough stuff away and then get so hyped with you about like when it grows that yeah it's amazing

19:28Helen Murphy:that is so big helen thanks so much for joining me today and being on telling your story and telling the story of Apple, it really stands out like how much you care about the companies that you work with and being able to help be part of their growth story. So I really appreciate it. Yeah, thank you. And thanks for taking the time as well. Yeah, for anyone listening who wants to learn more about Apple, check out Apple.com. It's a great resource to help source ingredients to grow your own and also get the extended terms and credit so that you can improve your cash flow, which I know is so important right now.

20:00Helen Murphy:So thanks so much for listening. I'll catch you next time. Another episode of Starved Scale. Thank you.