Scaling out supply chains can make businesses and communities more resilient. Two companies that have done it show us how.
By necessity, the last two years have been an exercise in rethinking supply chains. In many cases, keeping things as they were really isn’t an option. Periodic factory closures have led to inventory interruptions. Ports have been jammed with increased demand for goods. It’s led companies to envision shorter supply chains with a local focus. BOSS spoke with a pair of British Columbia-based businesses that are ahead of the game, concentrating on scaling out rather than scaling up. The strategy has been good for them, their customers, and their communities.
Pandemic restrictions forced just about every business to change something about its operations. Not many had to change more than Nada Grocery. The business is modeled around package-free bulk sales. BC provincial health regulations prevented the sale of bulk food.
“Things were definitely quite tumultuous for us in the beginning,” co-founder and CEO Brianne Miller said.
Other grocery stores just taped up or Saran-wrapped their bulk bins and called it a day.
“We had to pivot quite quickly.”
Nada digitized the entire store — covering about 1,000 SKUs — and got a website up within six weeks, giving customers the option to order online for pickup. The store got a new point of sale system and redesigned its processes for ordering and receiving.
“Moving online ultimately allowed us to reach a much larger audience,” Miller said. “It was a little bit rough at the beginning, but it allowed us to grow in a way we hadn’t necessarily planned.”
Appetite for Creative Thinking
COVID didn’t disrupt Skipper Otto’s business model. On the contrary, what they already had in place is something more businesses are seeking to emulate for more sustainable supply chains. Similar to the community supported agriculture model, Skipper Otto is a community supported fishery. Members estimate at the beginning of the year how much fish they will buy and pay upfront. They can always add more money if they exceed what they’ve already paid for, but the system helps Skipper Otto estimate how much their 40 fishing families will need to harvest throughout the year along the BC coast.
“You’re up against some pretty big mechanisms that have been in place for a long time,” co-founder and CEO Sonia Strobel said about the challenges of shortening a supply chain. “It’s very easy to get swept up in the ways things have always been done. It’s actually very difficult, I think, to reinvent those things, but the benefits are pretty huge.”
You need an appetite for creative thinking, Strobel said. You also need smart people who are great at thinking through systems.
Skipper Otto’s harvesters use more traditional methods — trolling, gillnetting, and longlining — that minimize bycatch (catching species you aren’t fishing for). Because they’re operating on a smaller scale, they can afford to take the time to fish sustainably. They abide by department of fisheries regulations, as well as following recommendations from Ocean Wise and the Marine Stewardship Council. Skipper Otto even has in-house sustainable fisheries researcher.
“Perhaps an area is open for fishing and these agencies say it’s OK, but maybe we need to take a closer look because we know some granular piece of information about that particular run or area,” Strobel said.
The emphasis on keeping things local in that way facilitates more sustainable practices. The short supply chain also enables harvesters to make more money without raising prices for consumers, Strobel said.
Nada, meanwhile, is a certified B Corporation, meaning it demonstrates high social and environmental performance and is accountable to all stakeholders (not just shareholders). Suppliers that Nada works with must be willing to reduce packaging and food waste in their supply chains. The store strives for a circular supply chain, upcycling containers that already exist in favor of needing to make new ones and has even helped along a nationwide food safety policy allowing the reuse of containers.
Nada’s operations are carbon negative, and it partners with a co-op that has electric cargo bikes for carbon-neutral delivery in the downtown Vancouver core and uses electric vehicles for deliveries farther afield. In-store, Nada recovers imperfect fruits and vegetables, or ones close to expiration for inclusion in sauces, dips, and smoothies.
“As we scale, we continue to draw down more greenhouse gases than we’re producing,” Miller said.
Not only did Nada not run out of items because of supply chain disruption the way other grocery stores did, it was able to keep people employed and keep money flowing through its community.
“That’s a really important part of resilience throughout the pandemic,” Miller said. “It really does go around. People in neighborhoods in our community were earning a good income and were able to spend money on groceries and with other local businesses.”
British Columbia’s fishing industry yields about $400 million Canadian worth of catch annually. When a large portion of that ends up in the hands of harvesters, Strobel said, the community impacts are enormous.
“The money that goes more into the hands of harvesters ends up more in the hands of coastal communities, in shoreside businesses who are doing processing, ice plants, offloading, trucking, and all these things, it ends up in the hands of the community,” she said. “You can follow these chains of the benefits the more dollars go into the hands of communities versus the industrial model that we have now, where often the dollars are siphoned out of the coastal communities into the hands of quota license owners and shareholders of companies that are often far away and have no connection to the community.”
The benefits are more than economic, she said. The coastal communities retain the social value of their resources and can remain resilient, thriving places.
Skipper Otto’s 7,500 members across Canada pick up their orders from community partners — typically grocery retailers, butcher shops, or breweries — making personal connections and spending money with other local businesses.
To shorten your supply chain, scale out, not up. You never know where it might take your business.