From Ports to Products: Supply Chain Lessons with Jennifer Polce of izba

Full Transcript

Jennifer Polce: I think customers, at least myself, appreciate the flexibility of not needing to find a UPS Store and instead being able to go to a location like Staples to drop off a product. Again, many different options exist. One of the key things is leveraging technology to make it easy for your customer to make those choices and make the process as frictionless as possible.

Welcome to B2B Commerce UnCut: A Journey Through Change. On this podcast, we have honest, hard-hitting conversations with thought leaders, distributors, and innovators in digital commerce and transformation. We explore not only the successes but also the challenges that manufacturers, distributors, and wholesalers can face in achieving successful digital transformation for their companies.

This episode is brought to you by OroCommerce, a leading innovator and provider of customer-driven, powerful, and connected open-source software for B2B digital transformation. OroCommerce seeks to build long-term, trustful relationships with its customers, integrators, developers, and technology partners by empowering people with the best tools to digitize their business.

Find out more at oroinc.com. That’s oroinc.com. And here’s your host, Aaron Sheehan. Welcome back.

Aaron Sheehan: I am Aaron Sheehan, your host of the B2B Uncut podcast sponsored by OroCommerce. I’m happy to be joined today by Jennifer Polce. Jennifer is joining us from beautiful and, it sounds like, very hot Pittsburgh.

Jennifer is a world traveler, has been all over the place, and worked in, I think, just about every continent except Antarctica. It sounds like at this point. She has a variety of experiences to share with us. So I’ll stop talking and let Jennifer Polce introduce herself.

Jennifer Polce: Great. I’m Jennifer Polce. I’m with Izba Consulting, and I’ve been in the consumer product space for almost 15 years, nearly entirely in supply chain and operations. My background is in helping fast-growing brands operationalize and go to market.

As you said, most of my early career was overseas in Singapore and Australia. I relocated back to Pittsburgh six years ago, almost six years ago now.

Aaron Sheehan: I got it. I was looking at your LinkedIn, and you went to school in London. Is that right?

Jennifer Polce: Yes, it was with the University of London, but it was an external program. I did that while living in Singapore. And yes, I have been to Europe several times, a couple of times for work, but I didn’t ever live in London.

Aaron Sheehan: Yes. I tell myself that when I go to London. Cool. So you said you’re with Izba Consulting. First off, can you spell that for all our podcast listeners?

Jennifer Polce: Sure. It’s I-Z-B-A.

Aaron Sheehan: Got it. Okay, fantastic. So what does Izba do? What problems does it solve for brands?

Jennifer Polce: We’re a supply chain and operations consulting firm. The companies that we really focus on are fast-growing consumer brands. We’re helping them as they move through the lifecycle of their business and really operationalize what they’re trying to do.

This means improving efficiency and reducing costs, which can look like a lot of different things. It might be finding the right product manufacturer. Or, when you’re bringing in the goods into the US, we analyze what that looks like, what freight forwarders are being used, and what strategy is in place.

Depending on what market you’re in, we look at the distribution strategy. Then, of course, you need to get your products to the customer. Whether that be D-to-C or B2B, different ways to do that exist. So we’re helping brands think about the most optimal way to do that, depending on their size and ambitions.

Aaron Sheehan: That makes sense. I think Teemu and Shein and Amazon are making de minimis really interesting to people. I think people are starting to learn about this term, learning more than they were aware of before. Some of Amazon’s recent product announcements are, I’m sure, interesting in your line of work.

This is the B2B Uncut podcast, so most of the people who listen to this are in distribution or manufacturing. You’ve had a pretty wide variety of experiences. What were you doing before Izba?

Jennifer Polce: A couple of different things. For a long time, I was working with a consumer electronics distributor in Australia. We supplied most of the major retailers there with various consumer electronics products. We would manage brands and bring them into Australia. A lot of them were US-based, but a lot of their manufacturing, especially at that time, was based out of China.

Then we also started developing our own brands for those retailers as well. These could be phone cases or wall chargers, for example. We’d help them manufacture and develop those products as well. This thing started wanting to do that and cut out the massive brand margins that buyers got.

Aaron Sheehan: Got it. So you started off doing distribution and brand side and then moved into consulting. It sounds like the supply chain has been a continuous thread for you. Dealing with procurement, you’ve been dealing with suppliers, you’ve been dealing with logistics and shipping optimization all the time.

It’s interesting because I think you’re the fourth person who self-identifies as being in the supply chain industry that I’ve interviewed in the last five months. It’s always fascinating to me to hear how everybody is in the supply chain, which sounds like one thing. But every single person I’ve talked to has been coming at it from a totally different area, has a different background and expertise.

You’re all doing logistics, you’re all optimizing warehouses at some level, or operating inside of a TMS, and trying to figure out how to deal with freight forwarding and everything that you just talked about, de minimis regulations. But the way you’re all coming at it is very different.

What’s a cool story? You’ve been everywhere and seen all sides of this. Give me a cool story or cool experience from maybe something that you did before Izba, an experience that you had, that you find yourself thinking about a lot in your day-to-day as a consultant.

Jennifer Polce: A couple of things come to mind. There’s a funny thing that comes to mind when we were launching a product. It was coming from Hong Kong, and we were air-creating some of the product, which I always don’t recommend doing. But sometimes you have to if you’re running across tight timelines. It definitely reduces your profitability on the product when you do that.

I happened to be on the same flight as the cargo that was coming over. It was just funny. I was like, “I can deliver this inventory to the warehouse.”

Aaron Sheehan: Did you get to charge a fee or bill?

Jennifer Polce: I was working there. Maybe now I could build that service. Very good service.

Besides that, something else that comes to mind is when, before we moved our operations to be outsourced, we had our own operations on-site. It was quite different. Most of the clients that I work with now are using some type of 3PL or outsourced provider. Being able to see and touch and go to your operations on a daily basis has costs associated with it, but it really helped.

I always think about that, especially when I’m speaking to my clients today about how important it is to be in person when you can be. It’s also important to go on-site to your providers and try to improve the morale of your manufacturers or the 3PLs that you’re using.

I always think about that because we were so hands-on. I was often out there building pallets if we were low on staff, or when we were launching in different B2B channels. Every single one of them has very specific routing guidelines. So you’re going through that with the warehouse staff and showing them what needs to be done.

We were building out pallets for Costco, for example. We were enacting the actual requirements for those pallets. I just remember how hands-on things were in the beginning. I think it wasn’t that long ago, but things have become more digital and easier as time progresses. I think that type of thing can be lost. It can often make things more complicated the further away you are and removed from your supply chain and operations.

Aaron Sheehan: I think that’s absolutely right. It’s interesting, obviously, for us at OroCommerce, for me, as an e-commerce practitioner, we’re usually living more on the technology side of things. Your focus tends to be on trying to operationalize and gain efficiencies.

Then it’s very growth-oriented. Usually, there’s stuff you have to do if you successfully grow around, getting the product, getting the pallets built, getting them out, and getting the product to the right people in the right quantities with the right skews, or the right barcodes on time. That’s actually not solved by someone behind the keyboard most of the time.

Jennifer Polce: Sometimes you can over-engineer something depending on the stage of the business. You expect this growth to come, and then it may be it doesn’t necessarily do that, or it doesn’t pan out exactly as you thought it would. So you end up over-engineering something that is relatively simple.

Aaron Sheehan: That is a really good segue into my next question, which is how does one go about setting up a supply chain? I ask this because I have conversations sometimes with startups who have an idea for a product, and they’ve gotten some proofs of concept. Now maybe it’s becoming successful, or they’re projecting that it’s going to be successful. What goes into a supply chain? Let’s do a little one-on-one for the listeners.

Jennifer Polce: I have these conversations almost every day with different brands, whether it’s companies that we’re already working with or new companies. We go through the lifecycle of a product.

The first thing is thinking about where you are in the product lifecycle currently. Is your product already developed? We want to know where your manufacturer is located. Sometimes we’re thinking about nearshoring, where are products coming from? With all the tariffs in China, a lot of manufacturing companies are thinking about bringing their product closer to reduce bottlenecks and constraints. That’s something that we’re thinking about. Depending on your size, varying things can make sense.

After we get past that stage, we want to think about how to get the product to the place from which you’re bringing it to the customer. Are we going to be bringing it and warehousing it in the US? Or, if you’re manufacturing in China, do you want to set up a distribution center potentially in China or Hong Kong and then ship directly from that particular location?

I always think even as a customer, sometimes I’ll buy things, and then I don’t even realize that the product is actually coming from India. Like something for clothing, it’s coming directly. They’re bypassing that whole supply chain of putting it into a container and bringing it all the way to the US. There are pros and cons to that as well.

Then we’re thinking about distribution. Where is your end customer? Are your primary customers more on the B2B side? Are they more direct-to-consumer? Depending on the answer, we think about where your distribution centers need to be.

Things like the size of your product also come into play. The larger your product, the closer you want to get it to the end customer. You have to think about the differences between sending a toothbrush versus a couch. They’re very different supply chains that we’re setting up. Those are all nuanced things that we think about as we’re evaluating a company’s supply chain options.

Aaron Sheehan: Got it. It makes total sense. If it’s cool, I’d like to move through some of the common models that we see here in OroCommerce. This will cover all the different motions that we just talked about.

If I’m a fast-moving consumer good brand, where you got your start, and I’m selling direct-to-consumer, that’s pretty simple. Everything you just outlined answers the question of what goes into direct-to-consumer because the endpoint of that supply chain is the last-mile delivery.

The only thing you didn’t really talk about was, let’s say, for a US-based audience, a carrier landscape. There’s a part of DTC that gets overlooked a lot, and that is that last mile and then the returns. I’ve always been curious about how that end of it works because you don’t see that in B2B very much.

Jennifer Polce: The parcel is extremely interesting at the moment. Leading up until the last couple of years, and it’s really driven by technology, UPS, DHL, FedEx, have been the primary players in the parcel market. That’s who everyone was using, and most people are still using them.

But because of the ability to rate shop and potentially utilize many different carriers, a lot in the regional carriers’ space, things are changing. There’s a lot of up-and-coming companies that are taking advantage of zone skipping and offering more lucrative air rates as well. A lot of players are in the market now.

If you can take advantage of a lot of them, it’s actually really disrupting the amount of business going to the larger players, which in the end, allows you to potentially renegotiate. It’s about what makes sense for your size of products and where your customers are located within the US.

You might want to think about having one central location. That’s pretty common for a lot of smaller product types. If you’re an apparel company, you have a lot of skews. But if you have a larger product size and maybe have fewer skews, you might want to think about a more distributed type of landscape where you have more warehouses across the country so that you can reduce your parcel spend. Usually, from a D-to-C landscape, the most significant spend in logistics and fulfillment is on the parcel side of things. Anything you can do to optimize and drive that cost down is really important. That’s where we spend a lot of our time with the DTC-focused brands.

Aaron Sheehan: Got it. And when somebody wants to return something, what does the reverse logistics side of that look like?

Jennifer Polce: For returns specifically, it can vary quite a bit from business to business. Apparel has quite a high return percentage. I think, especially in apparel for women versus men, a stark difference exists.

A lot of different software can bolt into whatever your e-commerce platform is, such as Shopify, and help manage that returns process. You want it to be easy so you don’t overburden your customer service team. But then you also want to potentially take that opportunity to upsell to that customer. Ideally, it results in an exchange versus a flat-out return.

A lot of things can be done. Options exist like Happy Returns, where you’re taking advantage of Amazon’s kind of like drop-off and return distribution network. I think one thing that has been interesting is the consolidation of returns versus just putting a single label on a package.

I think customers, at least myself, appreciate that flexibility of not having to find a UPS Store. It’s easier to go to a Staples, for example, and drop the product off. But again, a lot of different options exist. I think one of the key things is leveraging technology and making it easy for your customer to make those choices and make it as frictionless as possible.

Aaron Sheehan: Okay, thank you. That was very educational. Since it’s the B2B Uncut podcast, I want to start talking about wholesaling. I understand everything you just said about the DTC supply chain, especially the return provider consolidation. I’m seeing a lot of that now, even in the last six months, there’s been a tremendous amount of that.

Let’s say I’m a brand, and I want to start wholesaling my products to a brand new market where I don’t have a distribution network today. I’m thinking of the scenario where I’m a consumer brand, and I’ve decided to add a channel. I’ve decided that I need more breadth of revenue and more diversification of revenue.

I want to start building brand presence in places where I don’t necessarily have a good, effective way to sell direct-to-consumer without paying an enormous amount of acquisition cost. I’m used to shipping individual parcels directly to my buyers. Maybe I’m using Amazon for that. Maybe I’m using, I’ve got my own 3PLs that I’m working with. Now I’m doing wholesale. It’s a totally different ball game. What do I need to think about for wholesaling that I’m not thinking about for direct-to-consumer?

Jennifer Polce: I would say that for a brand that’s looking to get into wholesale, the first thing to consider is your distribution strategy. A lot of different options are available. You could work with a local distributor, depending on if you’re expanding into another country, or a particular market like grocery, where it’s quite common to use a distributor model.

You could also be looking at contracting with sales agents, or hiring a sales team to manage the relationships with the retailers directly. That’s another option. So one of the things to be thinking about is your distribution model. How are you thinking about that? That’s going to, in turn, make you realize how much of the logistics and supply chain you’re actually responsible for because it varies model by model.

Something else that you would want to think about is legal and regulatory compliance. Certain requirements exist about what your packaging says that isn’t necessarily the same as it is from a DTC perspective. Usually, that’s outlined within the routing guidelines. Retailers will often have certain manufacturing compliance standards and criteria that you need to meet. You want to make sure that you’re compliant with that in advance of moving forward with them.

From a logistics and supply chain perspective, every single distributor, retailer, and wholesaler, they have their own set of routing guidelines that you need to adhere to. That’s really to just make their receiving process as efficient as possible: pallet guidelines, labeling, system setup, how are you going to be communicating with them? Usually, it’s via EDI. You want to make that process as seamless as possible.

Think about order intake as well. You don’t want to take orders in via email, for example, for every single one and have someone on your team manually key them into a system.

Aaron Sheehan: You know, that’s super common. Even for very large distributors, it is shocking how much volume still goes through manual processes. It’s a game of telephone often because it’ll go through multiple sets of human beings who are typing orders from one system into another off a piece of paper from a telephone call, transcribing it. It’s crazy.

Jennifer Polce: It’s inefficient. You get questions like, “What do you have in stock? How many units were on this pallet?” A lot of inefficiency and things that can be lost in translation occur. Anything you can do to reduce that is really important.

The marketing and sales strategy can be very different from e-commerce. You might be thinking about end caps or being in a catalog. The way you’re thinking about marketing is different.

From a financial perspective, different margins are involved with wholesaling. Sometimes discounts are required for early payment or chargebacks associated with not being compliant with the routing guidelines. A lot to take into account from a financial perspective exists.

Aaron Sheehan: It’s really interesting because the e-commerce world has had an interesting arc in the last five years. E-commerce was on a slow, steady curve up in terms of adoption percentage of the total market, the total commerce market. COVID happens, and it shoots up because you can’t go to the mall, you can’t go to Walmart, go to Target, etc.

Everybody jumps on, and you see all of these direct-to-consumer online e-commerce brands launch and blow up and raise crazy money. Of course, we all went out and bought Away luggage in 2020, 2021, even though we didn’t travel very much. Then you see an implosion in that market because, honestly, too many people, too many straws were in a glass that didn’t have enough water.

Now what I have seen is all of these direct-to-consumer brands have done exactly the scenario that we just talked about. They have diversified their channels by realizing that they want to be inside of brick-and-mortar chains for distribution. Distribution is actually hard. It’s cool to disintermediate, but you’re paying crazy acquisition costs. Okay, we’re doing wholesale.

From the software industry side, it’s actually not that hard. But everything you just described that goes into a brand deciding to go into wholesale, from the routing requirements that you keep mentioning, and they sound scary, I’ll be honest, the legal and compliance piece of it, the distribution, how do I get the relationships because it’s very relationship-driven? How do I start? How do I get packages? How do I get pallets out instead of individual packages? All of that is very complicated.

You mentioned Shopify earlier. From the Shopify view of things, it’s super simple. You’ve already got a website. This website sells in quantities of 10 instead of quantities of one, and I’m selling to boutiques, but it sounds more involved than the software people would have us believe.

Jennifer Polce: Something else that’s worthwhile to think about is what you’re actually offering on these channels. Do you want to have the exact same product mix that’s on your DTC site as you are offering to the wholesalers? You mentioned selling to a particular boutique, so maybe on your B2B site, you want something that’s more of a cash-and-carry unit. This ensures you aren’t cannibalizing your B2C sales, and you have a clear channel diversification.

It’s definitely more complex. It’s really important to stay organized because every single channel requires a different framework. But something I’ve noticed a lot of companies do successfully is segment. There’s the bigger retailers that you’re working with, and then you’re also working with a lot of different wholesalers. If you’re able to bucket them into categories of how you think about them, that’s a really helpful, fantastic way to break things out.

If it’s a smaller retailer or wholesaler, don’t try to make completely different price lists for every single one. Maybe just have categories so that it’s replicable and scalable for your business as you expand in B2B.

Aaron Sheehan: I agree. I think the salespeople listening to this probably just winced a little bit because they love to create individual price lists for their competitive advantage. I totally get that. Everything you said about segments, sort of segmenting or bucketing your buyers into, to me, it’s like, who’s gonna buy from me via EDI, who’s gonna buy from me via my website, who’s gonna buy from me via a phone call to a field rep, who’s gonna buy from me, and this is all B2B context, is going to buy from a hub, go to a data trade desk or something like that. All of those people have different needs because their businesses dictate how they come to you. Each one of them has different expectations around fulfillment, or how much they’re gonna buy, how they’re gonna pay you, tax and regulatory. It gets complicated pretty quickly.

Jennifer Polce: How they’re paying you is really important. It’s an actual order-to-cash process. Sometimes I’ve been in situations where it’s like, “Wait a second, did we invoice?” Operations did everything, and then all of a sudden, it didn’t get handed over to the finance accounting team. A gap exists. I think all the way through is important.

Even actually making sure that someone’s actually checking the remittances and making sure that you’re getting paid as expected per the invoice is important because that’s where a lot of the chargebacks come in. I’ve seen that people are surprised and don’t realize if operations and finance aren’t communicating, and then they ended up with a lot of operational or different chargebacks that they weren’t aware of that needed to be rectified.

Aaron Sheehan: Totally. It’s one of the reasons why I advocate for, if you’re in the distribution business, use a CRM. To do all this, because so many handoffs happen from the ops to the finance side, it’s very easy for individual emails with attachments to get lost in translation along the way. Having a consolidated view of the whole customer lifecycle is important. DTC has talked about this for a while, that customer lifecycle, but B2B often has not quite figured that out and experience, but it’s super critical if you like getting paid on time, which I do.

Okay, so one, maybe final kind of scenario here. If you’re a distributor who’s sold field sales, but you need to add new channels because your buyers are popping up in weird places like, I want to start listing on Amazon, or I want to start listing in vertical-specific marketplaces, doing industry, like ChemDirect, how do I add channels without my ops becoming a hot mess? We’ve talked about these individually, and I think we’ve alluded to some of it. I’m super curious how you do this without burdening your business with having to keep track of an entire new compliance department and customer service department, sales department for every single channel.

Jennifer Polce: That’s really important and important to think about from the beginning because that’s exactly what can happen. It can spin out of control. Every single new channel that’s added becomes like a new set of problems.

Some of the things that I’ve seen companies do successfully to navigate this would be, one, setting up some type of online ordering portal or website.

Aaron Sheehan: Yeah, I do.

Jennifer Polce: A central place where you can send your B2B customers, and they can see inventory levels, similar to an e-commerce buying experience. Something that’s user-friendly that they can use, see what the latest promotions are, and then have the set in a price list for their login. I’ve seen that work really well.

The other thing is centralized product management. Have a central system for all of your product information, your assets, your UPCs, product dimensions, case packs, all of that information. I’ve seen a lot of companies struggle to have all of their information centrally if they’re not in some type of system. Things become disparate. People are sharing information that’s potentially out of date. Having that all centralized in a digital place is really important.

Similarly, coming back to the first point, inventory tracking is essential. You don’t want a customer, if they’re trying to place a small wholesale order, to have to check in with a salesperson every single time they want to order something. It’s helpful to see if an item is actually in stock. Limiting that interaction unless it’s absolutely needed, but similar to what you would do from an e-commerce framework, being able to see what is in stock, when it’s shipping, and not having to follow up for small information like that is helpful.

CRM is obviously very important as well. Have that centralized place for customer relationship management. From a warehousing perspective, I would say make sure that your warehouse is trained and understands the different scenarios for sending things out. Try to limit the permutations of that. Most customers should be ordering case pack quantities so that the customer doesn’t enter the warehouse, doesn’t have to open every single pack and pack different things. It’s okay, I just had to grab a few boxes, put them on a pallet or send them out. Try to keep your operations for your outbound to these new channels as simple and straightforward as makes sense.

Aaron Sheehan: I 100% agree. It’s also a lot easier to calculate COGS and project revenue if you use standard quantities because when you start breaking stuff apart, now you have to get very granular to try to figure out what you made on a particular order. It’s easier to track that way.

Jennifer Polce: It also leaves less room for error. You reduce instances of “Is there something missing?” when an order arrives. Reducing potential errors on the warehousing side helps with that, too.

Aaron Sheehan: Yes, all of that does. There’s something else that can be done potentially to make the distributors’ or the brand’s life easier. We have manufacturers who listen to this podcast. If you could wave your magic wand and have a manufacturer or supplier do one thing to make your customers’ lives easier, what would it be? They’re listening, now’s your chance. They’ll do whatever you tell them to.

Jennifer Polce: Just one thing? Okay. This could be done in multiple ways, but clear communication is one of the most important things. Have information in a clear place about how you want to be communicated with, how purchase orders should be received, how things are processed, anything that can be standardized. Those two things go hand in hand. I think that’s extremely important. It just makes everyone’s lives a lot easier.

Aaron Sheehan: Don’t make me pull information out of you. Exactly. Practically provide how you would like me to buy from you, pay you, and what you’re selling. I totally get it.

I always ask one last question. I know we’re coming up on time here. I’ll ask one non-serious question to all my guests, which is, what is one piece of media, book, television show, movie, whatever, podcast even, you’ve consumed recently that stood out to you? It does not have to be business-related.

We’ve had a lot of answers, sci-fi novels, podcasts, and stuff. What’s one thing that stood out to you that you think somebody else should see?

Jennifer Polce: I’m currently reading a novel called “Real Americans” by Rachel Khong. I’m about 300 pages in, so 80% done. I think I can recommend it since I’ve made it this far, but if it changes drastically in the last 80 pages, I might need to retract this.

I’ve really enjoyed it. It follows the story of a family, starting with the perspective of a woman named Lily Chan. It moves through time and then switches to her son’s perspective about 20 years later. It’s multigenerational. Then it switches to her mother’s perspective. She’s from China and immigrates to the US, so it shows her life in China and how she immigrated to the US. It’s a multi-generational story about how their decisions impacted one another. I love that. I’ve been a little obsessed with reading most of it in the last week.

Aaron Sheehan: Great answer, I will have to pick that up. My 12-year-old daughter is making her way through some Jane Austen, and I’m reading “Jane Eyre.” That’s what I’m stuck with. It’s fine. It’s good. It wasn’t my first choice, but that’s what I’m working on these days.

It’s nice to go back to the classics once in a while. I found myself reading a lot of nonfiction for a couple of years, and I wanted to get back into fiction. This is the first fiction book I’ve read in a while, and I’m really enjoying it. I hope it’s the first of many.

It’s been great having you on. This has been very educational. I really appreciate it. Thank you so much for sharing your knowledge about the supply chain with our audience.