By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE | 0 | 0 | August 01, 2014
Founders of new businesses often struggle to balance their good ideas with business fundamentals. In “Meal-Delivery Startups Look for Winning Recipe,” the Wall Street Journal outlines the business and supply chain acumen necessary to win in the weeknight dinner delivery market.
Start-ups Plated and Blue Apron, to name just two, are capitalizing on the foodie surge by sending fresh, pre-measured ingredients along with an accompanying recipe directly to customers’ doors.
“At the two-year-old [Plated] and fast-growing rivals such as Blue Apron Inc., the challenge is to marry software applications and web and mobile technology to a just-in-time supply of ingredients for generally healthy meals.”
While some workers, in hair nets and lab coats, pack the meals for customers, other employees analyze the customer data to predict demand. “Crunching data is a crucial chore because Plated says it aims to lose less than 1 percent of its perishable inventory to spoilage even as it offers a different batch of seven new menu options weekly,” Ruth Simon and Lora Kolodny write. “It receives orders in as little as the day of delivery in some locations, and ships more than 100,000 meals a month from three different cities to customers in 46 states.”
In the United States, consumers spend $1.1 trillion annually per household on food- and beverage-related items. Plus, Americans have demonstrated an increased willingness to order things, including fresh food, online. That market is enticing to investors. According to the Wall Street Journal, Plated has raised $6.4 million, while Blue Apron has raised $58 million.
Blue Apron reports that it works directly with many ingredient producers and suppliers when planning its menus. It also contracts with some farmers to grow produce specifically for the meal boxes. “Matching an ever-changing set of recipes to a variable ingredient supply requires a deft mix of planning and agility,” Simon and Kolodny write.
Supply chain knowledge for success
Innovative ideas combined with savvy business strategies don’t have to be limited to start-ups. However, as Plated and Blue Apron have demonstrated, supply chain knowledge is a prerequisite for success. Take for example the just-in-time (JIT) production strategy, which is noted in the Wall Street Journal article. Consider the following description of JIT as it appears in the Supply Chain Council’s Supply Chain Operations Reference (SCOR®) model, revision 11.0: JIT “is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs. [JIT] is also known as the Toyota Production System. [JIT] processes rely on signals or kanban between different points in the process [that] tell production when to make the next part or tell a supplier when to make the next delivery. [JIT] focuses on making materials or products available just before they are needed.”
As you by now have heard, APICS and the Supply Chain Council are merging, creating a single-source solution for individuals and corporations looking to evaluate and improve supply chain performance. More details of the merger will be available in the coming weeks; however, this exciting development offers greater value to both organizations’ members, volunteers, partners, customers, and employees.
With the Supply Chain Council, APICS will continue to provide organizations and individuals with essential and advanced supply chain education and resources. Visit apics.org
to find your “winning recipe” for success.