Noah Buntman serves as Foundry’s Head of Supply Chain covering end-to-end supply chain management and fulfillment operations. Noah’s prior experience includes working as a management consultant for IBM, serving as a US Department of Defense civilian for an expeditionary task force restarting idle factories and rebuilding broken supply chains in Iraq and Afghanistan, and most recently working in Apple’s product operations organization.
Informed by these experiences and what he’s observed over the last year working with multi-channel, multi-market e-commerce brands, Noah shared insights on how he and his team think about managing supply chain(s) in the aggregator space.
Supply Chain as an Operational Differentiator
Until February 2020, supply chain was often grouped with HR and Accounting as a back-office function. Fast forward two and a half years through COVID disruptions and supply chain issues remain and center every day. Supply chain skills have jumped out of the back-office and into a key strategic function across most industries. Brand aggregators depend heavily on having the right amount of product, at the right place, and at the right time (particularly on algorithm-driven marketplaces like Amazon). Building resilience throughout your supply chain, be it quality assurance/control, supplier redundancy, or a trusted network of logistics partners, is not optional, but table stakes. With inflationary pressure not seen in decades, a supply chain organization must achieve new performance to manage product, freight, and fulfillment costs particularly.
At Foundry, unlocking the potential for an acquired brand means finding new customers in new markets and channels. A central focus and capability for Foundry’s supply chain team is new product development. We believe NPD is a significant lever of long-term growth for any brand. Leveraging our deep supplier network, close relationships to brand founders, and cross-functional communication, our supply chain team drives new product development from ideation to production to porch at an accelerated timeline with scale, quality, and cost.
Understanding the “New Normal” of Supply Chain
Warren Buffet famously said, “only when the tide goes out do you discover who's been swimming naked.” When COVID hit in 2020, no one could have been prepared for the global shutdown of production and fear that brought supply chains to a standstill almost overnight. Nor, could anyone have predicted the surge in demand that would soon follow as consumer spending shifted from experiences and services to household goods. However, the fact that we are still feeling the supply chain shock today reveals how vulnerable so many supply chains were to such an event. What’s more interesting is that Buffet’s metaphor is relevant once again for those who have over-learned the lesson of a COVID-based supply chain impact and fallen victim to the bullwhip effect. As it relates to the aggregator space, this is playing out two-fold: 1) we are amidst an economic downturn where there is widespread nervousness around capital markets and consumer spending. This directly impacts aggregators that pursued a capital structure in which they were highly leveraged on debt and are now struggling to service it. 2) Many aggregators pursued a rapid acquisition pace at higher multiples during COVID, yet did not anticipate how quickly a COVID “bump” in demand could turn into a COVID “cliff” – thus leaving them victim to the same over-inventoried effect being felt by retailers. To mitigate this uncertainty, Foundry operates knowing that that we’re not returning to supply chain “normalcy” anytime soon – this is the new normal. Being mindful of dynamics like China’s “Zero COVID” policy or the war in Ukraine and its impacts help us anticipate and manage risk. Further, our focus on building robust, foundational processes across our supply chain, from demand planning, strategic sourcing, and predictive analytics for inventory management is imperative for our success in the “new normal” of supply chain.
The Messy Middle
Scott Belsky’s, “The Messy Middle” explains that start-up success is often forged in the challenging, middle stage of the venture. To reappropriate the book title, the “messy middle” is how I’d characterize one of the fundamental challenges in the aggregator space. Specifically, how and where within the supply chain can you efficiently achieve economies of scale while maintaining the cost advantages that a brand achieved acting as a scrappy start-up? For example, the founder of one of our earlier acquisitions, Brute Magnetics, was so maniacally frugal that he sourced his corrugated boxes and packing tape from eBay for cost minimization. There are literally hundreds of other examples we’ve seen from founders like this. Our challenge is to think creatively as to how we can achieve scale that can compete with start-up scrappiness through a broad array of brands (with often non-overlapping supply chains). At Foundry, this process starts in our supply chain due diligence and continues through integration where we assess where within a brand’s operations can scale be achieved quickly (i.e., container consolidation, outbound shipping, warehousing) and where it may be more challenging (i.e., supplier consolidation amongst diverse products, technology, personnel). Like a boulder rolling downhill, we’ve discovered that for each acquisition there is more momentum and opportunity for scale but it’s not a given, and you must be intentional about where this can be accomplished.
Respect for the Brand Founder
On a recent tour of one of our brand’s (TechnoRV) warehouses, I was trying to understand the criteria by which they stored goods at their warehouse versus stocking at Amazon. As we walked through aisles of product, the brand co-founder recited from memory not only the product dimension and weight but what tier of Amazon fulfillment and storage fee it incurs. While my team may have initially taken several weeks (now it takes us just a few days) to collect, organize, and audit a product catalogue and run a unit economics exercise – this co-founder, through years of living/breathing the brand, could do it in her head.
Most of the attention in the aggregator space since its inception is around funding. Having now been part of this sector for over a year, I’m still surprised to hear so few aggregators acknowledge the inherent hubris of the model and how central the Founder is to the continued success of the brand. Foundry’s strategy to retain founders and their institutional knowledge has profound effects on our ability to seamlessly acquire, integrate, and grow brands. Nowhere is this more apparent than in supply chain – where founders continuously contribute their knowledge around supplier history, relationships, fulfillment operations, and new product development (after all, who knows their customer base better?). Starting in due diligence, our supply chain team thinks deeply and applies frameworks to understand a founder’s expertise and their brand’s strengths. There often follows a rich dialogue and acknowledgement that the methods, processes, and resources that successfully got a brand from “zero to one” likely won’t be the same that will get that brand from “one to one hundred.”
Final Thoughts
My team thrives on the challenge of finding commonality and efficiency within a range of diverse brands, products, and markets. We understand that decade-durable brands evolve with changes to markets and technology, but we believe brands must be built upon strong foundations. The foundation between Foundry and founders is built upon the recognition of a brand’s achievements and history. And that partnership continues with recognition of the immense opportunity that awaits that brand when supplied with the capital, resources and expertise, and most importantly, Foundry’s passion for staying true to a founder’s vision while creating an enduring brand and company.
-Noah Buntman, Head of Supply Chain @ FB