Transcript:
Peter Crosby:
Welcome to Unpacking the Digital Shelf where we explore brand manufacturing in the digital age.
Peter Crosby:
Hey everyone, Peter Crosby here from the Digital Shelf Institute. In February of 2021, we welcome to the podcast Gireesh Sahukar, VP of Digital at bakery ingredient manufacturer, Dawn Foods, to talk about their investment in delivering a best in class digital experience for its customers. Now he is back with the receipts of the fruits of that investment. Particularly, as we continue to navigate through a challenging economic and supply chain environment, Dawn Food's strategy of the people, process, and tech to transform their entire business to serve a new set of digital first customers is inspiring. Lauren Livak and I dug into the details with him.
Peter Crosby:
So, Gireesh, welcome back to the podcast. We are so excited to have you back and learn about what you were experiencing in this period of the B2B space, which is never dull. So we really appreciate you coming back to this.
Gireesh Sahukar:
Peter and Lauren, thanks for having me back. Appreciate the invite to come back again. And I'm only one more appearance away from getting my DSI leather jacket, I understand.
Peter Crosby:
It's as famous as the EGOT, the Emmy, Oscars.
Gireesh Sahukar:
This is [inaudible 00:01:29]
Peter Crosby:
Oh my gosh. You need to get out [inaudible 00:01:34] is all I would say. But last time we chatted, it was just right in the beginning of the rapid e-commerce change during COVID and your company that actually just delivered redesigned direct commerce sites for your B2B customers, which is really a different journey than how people think of the normal consumer sites. In some ways, we talked about it, you're trying to solve for the B2B buyer that is accustomed to how it works in the consumer world, but at the same time, trying to free up your reps to have more high value conversations allowing self-service. And now we're at this point where there's more upheaval and headwinds coming our way with economic impacts and inflation and things like that, which I imagine have an impact. So I'd love to hear just some of the concerns, the challenges, and the bright spots that you're seeing in the food service sector right now.
Gireesh Sahukar:
Yeah, we have seen all of those issues: the pricing pressures, the inflation has been going up. We thought we would see some stabilization with some of the inflation numbers, and we have not yet seen that. Although we do see some hope and optimism that that will improve. There's also some economic trends, as you alluded to, that are making people focus more on profitability rather than just investment and hoping growth will bring profitability eventually. And this is especially true in the case of B2B companies that are selling on Amazon. They're focused on profitability and they're focused on profitability on their Amazon channel. Logistics cost for manufacturers and distributors has been going up. Diesel is stubbornly more expensive than gas at this point. And until that changes, a lot of the supply chain issues that you have been hearing about has been and will continue to be where it is.
Gireesh Sahukar:
A lot of the last mile logistics relies on using diesel fuel vehicles so we've got a challenge there as well. And with a slightly older aging workforce in the B2B industry, we've got a labor challenge. Most of the drivers in commercial driving types of vehicles are 50 and over, so that's a workforce that is looking more towards retirement and not towards the other spectrum of their career.
Gireesh Sahukar:
So we've got labor shortages that are working against bringing these costs down. There are some interesting innovations, although innovation is slow due to all of these constraints, but there is innovation happening. There are self-driving and semi autonomous trucks coming to the marketplace, and we are seeing some of that take the pressure off of commercial trucking. And there's hope that we'll have some, specific to the food service sector, where we are hoping that some of the shortages around grains and produce and meat will ease up somewhat so that the high grocery store sticker prices that we are seeing will go down and we will be able to get a lot of our raw ingredients that we need in the food service space at lower prices moving forward.
Lauren Livak:
So what are some of the things that you're trying to do to pivot because of the challenges or at least trying to write out the changes, whether it's different ingredients or... What are the things that you're thinking about?
Gireesh Sahukar:
First and foremost, we are in a climate where we are trying to protect and operate our business as effectively as we can. And so everything we are doing really is aimed and geared towards that, but we are looking at making sure we are running our business more efficiently or as efficiently as we can, making sure our sales and service distribution levels are up to par and trying to eliminate as much of the cost headwinds as we can, from being able to buy raw materials, being able to buy grains for 6 to 12 months at a time so that we are pre-buying and pre-booking the sale, and having the ingredients be available to us. In some cases, we're just buying whatever stock we can and housing it in our warehouses, which helps us with our manufacturing abilities so we can predict what we can manufacture and what we can sell from the fact that we have all the ingredients necessary.
Gireesh Sahukar:
So we're doing some of that. We're doubling down on keeping our additional talent, and we are continuing to look for new talent as a lot of tech industry slows down and they are talking about slowing their hiring, or even going to the extremes of laying off a large number of their people. We are looking at the talent that is becoming available and trying to attract that talent so we can grow our internal teams as this becomes an opportunity for us. We're collecting some interesting data across the board. We're looking at how do we optimize our supply chain and what do we need to do from an inventory positioning perspective? What data can we take from e-commerce and feed it back to our supply inventory processes so that we can improve our operations all the way back in our manufacturing plans. So those are some of the things that we're doing. We can double click into each one of them as you like.
Lauren Livak:
I have questions around going back to business playbooks and figuring out how to execute and looking at digital capabilities. A lot of conversations I have, a lot of people are focusing on going back to the basics. Would you say that that's really where you're focused on? What are the really core elements of the business that we can go in, optimize, improve upon versus maybe focusing more on innovation and really taking a step back and saying, "Okay, what can we really work on now that will help us sustain through this time?"
Gireesh Sahukar:
As a manufacturer and distributor, we have somewhat of a unique positioning there. When we talk about playbooks, we're talking about how do we improve the manufacturing process and make it better? We can't always rely on having a plant that is of as many lines or as many people required to run all the lines. So what automation can we do? What process steps can we take to eliminate some of the manual intensive steps we're using or we have used in the past, and how do we go about doing that with what we have, equipment wise already, or people wise, and how can we improve?
Gireesh Sahukar:
So some of those capabilities are really deep in the back office and in our manufacturing capabilities, some of them are, how do we run more efficient routes? For example, if we run a route from our New Jersey distribution warehouse to all over New England, what can we do on the back haul to make that truck be efficient in taking some other raw materials along the way and loading it up and taking it back to our distribution center that can then go into our manufacturing plans from there so that reverse logistics and back haul processes are becoming more efficient and provide some cost controls for us. So a lot of it is focused on that.
Gireesh Sahukar:
We're also putting new playbooks together to help our sales teams provide better, more effective selling and advising our customers. Again, this is a continuation of where we were once we launched e-commerce. We put a lot of these playbooks together to help our sales reps become trusted business advisors, and we are going deeper into putting those playbooks out into the field, giving guidance on how our products can be used in multiple different ways. The same donut mix can be used three other different ways to make other products and without requiring additional labor or effort, how do you make those other products that you can make and sell? So that is some of the advice and guidance that we're enabling our sales teams to have so that they can go provide that advice to our customers, help them overcome their labor challenges as well.
Peter Crosby:
First of all, hearing that the same donut mix can make three awesome things is the greatest joy so far of this inflationary period. But I think that is so creative, Gireesh, to be able to arm your sales teams. And I don't know if that's also content that shows up on your site, but to be able to say you can operate your business more efficiently because of how we think about how we serve you, extending that message into the conversations that you're having out in the field, I would imagine is a great loyalty creator and relationship creator.
Gireesh Sahukar:
It is. It drives a lot of loyalty for us. We've got customers who've been with us for 30, 40, 50 years or longer, in some cases. So loyalty means a lot to us. We strive to keep our partnerships intact with our customers, with our vendors, with our suppliers, everybody in our ecosystem. We grow by winning and keeping our customers. The retention is key. And to that effect, all of the content we are talking about is not new content. It's content that we've had.
Gireesh Sahukar:
We've had these recipes on how to use the same donut mix to make four other things on our corporate brand marketing site forever. It is taking that recipe, trying to package it in a way that is consumable for our sales reps and purpose driven for them to be able to use it and use it in the context of their customers. So if you're a cake shop, that donut mix doesn't mean anything to you. You need the same kind of advice, but with a cake mix. So how do we do that with cake mix? We already have these tool kits and these recipes. Now, it's a matter of taking that packaging up and creating those playbooks that help [inaudible 00:13:11] for our customers.
Lauren Livak:
And your journey is also a really great example of going from making the decision to be more digitally focused, launching e-commerce and having more of a central focus and team who's doing that and then empowering the rest of the organization on those pieces of e-commerce and enabling them with those playbooks. And I love that story because as we think about all of the places you need to connect with customers, you need to connect with distributors, you need to connect with everyone in your network, it can't just be a central team or one person in your organization. You need to empower everyone to be able to have those conversations. So I love that play with the sales teams, because it really must help you advance your message across the organization.
Gireesh Sahukar:
Yeah. And just to add to what you just said, Lauren, we do some things with our internal teams. We do open office hours where anyone can come in and ask questions. If they're not clear on some tool or some toolkit, some material they have, or some capability on the e-commerce side, anything, if they have a question there are open office hours, there are teams available for them to interact with that you can get direct answers from the teams that are living, breathing, building, and managing these things. Whether it is a playbook or whether it is a capability, whether it is a product, any advice they want, they have these open office hours where all of the expertise in our company is available to them. They can just jump on and ask the question, get the answers, and go on with their day.
Peter Crosby:
I'd like to double click, as you said, on the digital talent part, because it seemed like, did I understand you correctly that you're starting to see maybe some of it could be other B2B organizations that are deciding or needing to pair down their digital organization, and then so you're starting to see some talent maybe become available. And so are you seeing that at some scale? And then do you feel like those are companies that might be seeing the trend line of e-commerce coming down from the COVID heights and maybe they over invested? Or how do you guys think about your level of investment and how you're matching it to what you think e-commerce is for your business?
Gireesh Sahukar:
Maybe to clarify, Peter, we are not seeing the e-commerce talent come from other B2B companies. We're seeing tech talent coming from technology companies that are shrinking. The Facebooks or the fast checkout vendor that laid off all their employees. So we are seeing e-commerce and digital talent from those technology oriented companies that are coming into the market and are becoming available. What we think, and this is our theory of the case here, our ability to teach these technology talents or this digital talent, we think we can bring them in-house and we can teach them how B2B works. And that is an easier thing to do for us at Dawn. I don't know if I speak for the entire B2B industry here, but certainly at Dawn, we've been very successful in bringing digital talent and helping them understand how e-commerce works and how B2B e-commerce works and helping them deliver value for our customers. Has been a successful journey for us.
Gireesh Sahukar:
We think we will end 2022 with about 20 or 21 individuals on our additional innovation hub. And the way we have structured our team is we have what we think of as three pillars. We have a product pillar; this is product managers, product owners, and program owners that help define the feature capabilities and help deliver the capabilities. We have an engineering team that is responsible for building and delivering the capabilities. And then we have an operations pillar that is overseeing all of the technical and business functions of operating an e-commerce site. Those are our three pillars and we've added people to each one of those pillars since we started. We have about six or seven individuals in each pillar. And with that, the rest of the team [inaudible 00:18:12] behind them that do the sales, marketing technology, legal finance functions.
Peter Crosby:
Wow. That's a tremendous investment. And I think it would be great to... That says to me that some of the investments we talked about the last time that you were here, in terms of really investing in a digital customer journey, that then as Lauren talked about earlier, spills over into the interactions that you have in customers. Can you give us an update on... Obviously, you continue to invest in this period and that says to me, things are going well with what you wanted to do. Can you just give us an update on what you're seeing from the things you were trying to achieve when you set out with that project?
Gireesh Sahukar:
Yes. Things are definitely going well. When we started e-commerce, we targeted our e-commerce initiatives towards the artisanal bakery segment. And in about a little over two years, e-commerce is the primary channel that the artisanal market is using to transact with Dawn. We have gone from zero e-commerce to being the majority in that segment. We've brought on other segments of our customer base onto e-commerce. Some of the large multi-door multi-location customers are coming online to transact with e-commerce. We have seen our e-commerce customers deliver higher margins and higher ALBs since we launched, and that has stayed the same as we've grown the e-commerce side as we've become a nine figure e-commerce business.
Lauren Livak:
So how have you brought your organization with you along this journey? That's a big change. Now, it's ecommerce is the primary driver. Has there been any resistance? Has there been excitement? Has there been both? How have you really brought everyone along? I know you mentioned those office hours. What other things are you doing there?
Gireesh Sahukar:
One of our focus areas for our company and this is part of our core company, what we call the Dawn Circle of Excellence, the people are at the top of that circle. So everything starts with people and for e-commerce, that means we need to bring the people along the journey. So we took a lot of pains to have initial conversations before we launched e-commerce. What does this mean for you, the sales rep? What does this mean for you, the customer service rep? What does this mean for you, the manufacturing focus person? What does this mean for our distribution centers? For our warehouses? For our technical folks? Technical folks, as in the bakery experts. What does this mean for our IT organization? What does this mean for our enterprise technology landscape? We took all of that into account. We said here's what it means for people and for each one of these different areas.
Gireesh Sahukar:
And we went to each one of these teams and we discussed at length. We provided open insight on what ecommerce means for all of us. E-commerce is just the pretty front door, but we need to get the rest of our business processes aligned and looked at and re-imagined because e-commerce will expose all of the inefficiencies in your business processes in your workflow. So we had to work on those things. We had a team that looked at every single business process we had and figured out how do we optimize this for a new e-commerce business model for additional business models. And that was the majority of the work. The heavy lift was not in building technology. The heavy lift was in understanding processes, understanding the people's impact from making process changes, and driving those process changes to align with the launch of e-commerce. And we've continued to do that.
Gireesh Sahukar:
We've continued to invest in our processes, look at our processes, making sure our processes align with the best in class e-commerce approach and industry leading e-commerce site that we have. How do we drive better processes? How do we drive better visibility? How do we drive better conversations? All of the work we have done to do process optimization has provided us with those capabilities and the conversations and relationships. And we took a lot of people that were in our company and that had been in our company for a long time, and we enabled them to go have these conversations with their teams. We took the sales leaders and we told them about e-commerce. They were excited. So they took the e-commerce message to their teams, helping them understand what e-commerce means to you for their own team. So having a lot of the senior leaders in the company, giving the context, helping their teams understand what e-commerce means and how they should think about e-commerce within their teams, having those conversations without digital being present in the room, so to speak, help get the entire company aligned on board on this journey.
Lauren Livak:
I love that so much and it rings true to my past life as well because you've taken the human element of change. People are going to say, "What does this mean for me? And how am I going to be affected?" So I love that approach. And I've seen that be the most impactful with any change, especially digital, and then hearing from their peers who do the same type of work why it's important to them. So I absolutely love that approach and it's really exciting to see how it's worked because you really put the human, the employee at the center and the focus of that change. So that's really exciting. And I also-
Gireesh Sahukar:
And we also did this, sorry, we also did this, not just with our employees. We also did it with our customers. Even before we launched the site, we took our customers through what we were going to do, what we're going to launch. We asked them, would you use it? What is your feedback? And our customer told us, "We wanted this two years ago, three years ago, four years ago, we wanted this years ago, what took you so long?" And we finally got them to the site. We got them on it and they started using it. We have seen adoption grow month or month, week or week, and is not dipped.
Gireesh Sahukar:
There have been a lot of different milestones that we've hit, like the majority being e-commerce now. That's a pretty significant milestone. When you talk about B2B and e-commerce being the majority, that is really not the case when you talk about B2B industries in other industry segments. B2B is a very small e-commerce business, and is a very small percentage of the company. It doesn't get as much attention, focus or investment, simply because there's not broad acceptance of e-commerce being the way forward in a lot of those segments. And I get it. I get resistance. I get why those hurdles exist and I get why they do. And we consciously took aim at all of those things and made sure that we would not run into the same issues at Dawn and we worked through those things.
Peter Crosby:
And that's what I love about what you've done, Gireesh, at your company, is thinking about e-commerce as a force multiplier for your sales team and as an enabler of your customers to get the value that they want from Dawn Foods in any way that they want it, that they won't meet a roadblock, and when you take that friction out of the system. And then you also have your human beings on the road, adding more value every day, that's the wheel. That's the wheel that keeps you getting more average order value, et cetera. And as you said, that's not a natural starting place for a lot of B2B people who you really started with the customer. And then you figured it out from there and bashed through the silos and brought people along. And that is the hardest work of what it is that we do. And that's why we wanted you to come back and talk about this. And I'm so grateful that you did, and congratulations for the results that you're seeing. It's well earned.
Gireesh Sahukar:
Thank you, Peter. A lot of this is really more about the change management aspect of it. It's more about shifting people's mindset, bringing them in, leaning in, asking the questions. What concerns do you have? What do you need to do? More people is not the answer, but less people is also not the answer. We need to make sure that we understand that there's a human aspect to this. There's an emotional aspect to this. We don't want people to feel afraid. We want them to feel excited and come into the journey with that. And because a lot of our people did, they were able to go from being a gatherer to being a hunter.
Gireesh Sahukar:
They changed their mindset to shift that gatherer to hunter mindset and we are seeing some of that. We are winning new business. We're growing our company. They are able to go get business away from our competition because we have worried about our processes. We are taking data and going deep into the company with that data and driving better decisions across the board. We are able to have better inventory levels than our competition. It has allowed us to win in places that we have historically not been able to penetrate and make any progress. And now, we're seeing those areas and those regions of resistance break down and come to Dawn for growing our business and building new relationships and partnerships.
Peter Crosby:
That is really exciting. And I think it just goes to show when you make the proper investments with support from the top, then it builds resilience and agility into your system so that you can adapt. Because recessions come and go, and there are more extraordinary things happening in the world that also affect what we are doing. But if you have resiliency and agility, then you can pivot.
Peter Crosby:
And in times like these, not only survive, but also, like you said, take market share grow in the midst of that, which is what everyone's looking for in this time. So just again, thank you for sharing that experience with us. I know it's not easy. It didn't happen overnight and there's challenges you're trying to solve every day, but the foundation that you've built is just impressive. And again, thanks for sharing it with us. We're super grateful.
Gireesh Sahukar:
Again, thanks for having me.
Peter Crosby:
Thanks again to Gireesh for bringing the receipts. Sign up to become a member @digitalshelfinstitute.org to keep up on everything coming out from the DSI. Thanks for being part of our community.
