Ep. 27 - Sugarfina, COO, Ben Smith

Ep. 27 - Sugarfina, COO, Ben Smith

Satisfy your sweet tooth as well as indulge your eyes with the unique candy products of Sugarfina. Sugarfina is a luxury confections boutique with the finest candies from artisans all over the world targeted towards grown-ups. Ben Smith, the COO of Sugarfina, joins us to talk about how he ended up in the company after seventeen interviews and gives us an inside look on what Sugarfina is all about and how they operate on a day-to-day basis, including a collaboration with Disney to celebrate Mickey’s 90th birthday.

Sugarfina, COO, Ben Smith

Ben Smith is the COO at Sugarfina, a true omnichannel luxury candy boutique. Previously, Ben has held positions as COO for Fame and Partners and General Manager of Operations for Williams-Sonoma. Ben is a supply chain and logistics and operations expert who is incredibly passionate about bringing technology and operations together. He’s people-focused and strongly believes the supply chain is a characteristic of your product that drives brand loyalty and profit margins. He’s originally from Australia, but he’s also lived and worked in the UK and China before moving to the US. Ben, welcome to the show.

Thanks for having me. I’m really glad to be here.

Why don’t you tell us a little bit about your journey as to where you got some of the skill sets along the way and how that brought you to where you are now with Sugarfina?

I’m not sure if many people who were in supply chain and operations sought out after to get into that. A lot of us fell into it through a number of different ways. My journey started with me working on a factory floor and being lucky enough to say the right thing at the right time and being curious enough about how the business operated. I have always had a genuine interest in how does something get from A to B? What are all the moving pieces in this? Being lucky enough to say the right thing at the right time enabled me to start to move throughout different parts of an organization. I always tend to be drawn towards whether it’s transportation or warehousing and fulfillment logistics.

A pivotal point in my career was spending a bunch of years at a third-party logistics company, working closely with the founder and managing director of that company. The reason I found that pivotal was this exposure to many different businesses. Every client did something a little bit different. They’re eCommerce-driven and retail-driven. We had at one point 175 different clients all similar in what they needed to achieve, but all slightly different in the way they approached the business whether it’s custom experience or whatever that is. That’s been pivotal to me in terms of having this broad view of looking at an operation. If it’s not working, one of the many experiences we can draw on is to try something different and improve.

That’s an interesting insight in all those companies. I coach a CEO who is in a logistics space called BlueGrace Logistics out of Tampa, Florida. They have gone from 60 employees up to about 700. They raise $250 million from Warburg Pincus. They’re probably in the top three to five in their space in North America. They do have a unique insight into these different brands. Where you in the logistics side with the 3PL? Were you in another role with them?

I was over everything essentially. I did a lot of the actual customer facing and a lot of business development. I knew the ins and outs of the company well. I didn’t start doing business development until my later years. That came about because I knew the business well operationally. We always approached that business development process and phase in a consultative-type manner. Looking at what the client’s needs were, understanding their challenges operationally, be able to speak to that from a real set of supply chain perspective and understanding those details were helpful for them.

That’s different from a pure product sale.

What made us successful as well was taking that consultative approach. What are your challenges now? How can we solve them using shared resource and better systems and systems that are built to handle some of the challenges they’re having? I was also over the general operation itself and trying to get orders out the door every single day and communicate with customers and manage resources and so on.

What was your background in education?

Business administration. When I first left school, I went straight into the workforce. I didn’t go and do tertiary education until several years later. I thought, “I’m learning new skills. I should go back and learn some basics from a degree standpoint.” I went back and did something that gave me a broad spectrum at that point. I was getting into logistics and supply chain but didn’t know if that was going to be where I wanted to go long-term. I stuck with something broad.

You went from high school into the workforce. Most Aussies go what they call walkabout. Did you go and backpack around the world a bit?

I certainly did. I traveled extensively through North and South America. That’s what ended up taking me to the UK. I went and lived and worked in the UK for a few years. I don’t know what it is about Aussies and how you need to do that, but it was an amazing experience, eye-opening. You learn a lot about culture doing it as well. I highly recommend anyone to take some time and get out there and travel and see the world and places that you might not normally go.

I did a year traveling around the world when I was 25 and did my whole tour through Australia. Even got out as far as Perth. I met a couple of Aussies up in Indonesia and traveled with them for a few months. You do learn a lot about global culture, but you also see businesses from a completely different perspective too. How did you end up at Sugarfina?

I was looking for a change at the time. I’d moved to the US with an Australian-based company. I was with Williams-Sonoma in Australia. It was a great place to be. I was leading the operations and for the expansion into Australia for Williams-Sonoma. That essentially went from nothing, a startup in the country to $100 million in revenue in a few years. It was a pretty chaotic ride and it was an interesting dynamic as well because you’ve got this $5 billion business that’s also a startup. It was unlike a dynamic I’d experienced before. I’d been in startups and I’d been in medium to large size businesses, but never this strange hybrid. In any case, it was a great role. I was traveling a lot to the US. I always wanted an opportunity to come and live and work in the US as well. That was probably going to be more difficult and challenging through Williams-Sonoma because they got 20,000 employees, most of them in the US.

How do they justify moving someone from Australia to the US when they have got such a great talent pool locally? I was approached by an Australian company, more of a startup. They were looking for a COO who is relocating to the US. I thought, “This is a great opportunity for me to take that next step up in my career into the COO space and also get to relocate to the US.” It was challenging because the day I got off at that role, I also got a promotion at Williams-Sonoma. It was a difficult decision for me to make is to turn the promotion down and move to this other company. The reality being that I sacrificed a couple of things. One, I sacrificed a great culture and I sacrificed a connection to the product. It hadn’t occurred to me how important that is for you to connect to what you’re doing on a deep level beyond what you do day-to-day and manage a team or building a process.

Having some connection to believe in what you’re working with. It does change everything, and I left Williams-Sonoma where I could get behind the product and then through a women’s fashion business. It’s difficult for me to connect with on a product level, but a fascinating supply chain and that we were manufacturing everything on demand. It was fully customizable. Every piece was made individually for the consumer and delivered directly to them through China. I was fascinated by what the challenges in the supply chain we’re going to be, but I sacrificed a bunch of other things. When that environment started to get a little bit toxic for me, I started to look elsewhere. I found the Sugarfina opportunity and seventeen interviews later, I landed the job.

Was it that rigorous to get into the door with them?

It was rigorous in a way, but it made so much sense. That’s one of the things we’ve done well in terms of maintaining our culture as we’ve grown. It’s very difficult to maintain such a great small company culture when you’re growing at such a rapid pace. You need to bring in a lot of talent. You start to bring in different personalities. It gets challenging to maintain that culture. By meeting a lot of people, not only do the people that are interviewing you get a real sense for who you are cross-functionally, but you also get a sense of who are the people leading this organization now. Am I going to fit in with this culture? It’s not just, “Am I going to be able to work with my boss and another person?” It’s getting a good sense of what are the challenges. How are they approaching them? Who are the people I’m going to work with every day? It was a great process. At the time, I was like, “I’m meeting a lot of people.” Coming back, I’m thankful for it.

I want to get into a little bit of the interview process with you and find out what you saw in them and what they saw in you. Give our audience a bit of a rundown as to what Sugarfina is and what the business does day-to-day so we can start to attach to that as well.

Sugarfina is a luxury candy boutique, essentially candy for grownups. It’s a multi-channel business. We have over 50 retail stores in North America, most of them in the US and a few in Canada. We also opened our first Hong Kong store through our franchise partner. We do a lot of collaborations. You might have seen we have Casamigos collaboration where we’ve got some tequila-infused core jewels. We did a Corona collaboration, Tito’s Vodka. We do a lot of these great products for gifting. Our product is presented phenomenally. Our team does a good job of making our products beautiful. We launched a collaboration with Disney as well to celebrate Mickey’s 90th birthday. A lot of high-end, giftable candy products are essential.

SIC 27 | Sugarfina
Sugarfina: It’s very difficult to maintain a great small company culture when you’re growing at such a rapid pace.

 

Are you doing anything on Amazon? Are you doing anything in the online space? How would your percentages flow versus retail?

Retail is certainly the lion’s share of our total revenue. We do have eCommerce. It’s a smaller percentage, but we do all of that ourselves. We do some drop ship programs through Nordstrom and a few of the other wholesalers and large department stores. We also have our product in select department stores as well as select grocery retailers as well, which is more of a wholesale-type arrangement. We’ve kept the eCommerce fulfillment piece in-house for a particular reason and that’s because we control the customer experience.

Is gifting core to your strategy?

It certainly is. We’re heavily promoting that Sugarfina makes a great gift. It’s a great gift to give. It’s a great gift to receive. That’s what draws a lot of our volume. We’ve had many people come and buy from us and say, “I’ve received Sugarfina as a gift. I’m coming in to either buy for myself or to buy for someone else’s gift.”

I have a good friend of mine, John Ruhlin. He wrote a book called Giftology. He has all the major sports teams as clients and lots of big businesses. He tries to get people to understand that you’re gifting to either a prospect or to an employee or a client should be equal to what you would typically spend on a nice dinner out with them. Typically, we won’t even bat an eye on spending $250 or $300 or $500 on a nice dinner with a client. A nice bottle of wine and a tax and tip and good steaks and you might be $500 on a nice dinner, but then we cheap out and buy $50 gifts. We send them a gift with our logo on it. What do you think?

The corporate side of our business and another one of our channels, which is our custom corporate business, is growing phenomenally. One of our fastest-growing channels. It’s about a lot of the corporate businesses creating custom gifts through us and then distributing it to either their teams or their customers. We get a lot of repeat business through that. I had a vendor who sent me this gift as an appreciation, and now we want to do it for our staff or for our vendors. It seems to have the gift that keeps on giving in terms of as soon as we give it, someone else wants to come back and purchase it for other people or group.

It’s nice to get into a brand where you can stand behind the product and you like it. I don’t know what the percentage might be, but 2% of people might be able to do that or 5% at the best. There are many companies out there building a road or building a bridge or making glass or making women’s clothing if you’re a guy. I was in the auto body space forever and house painting. I didn’t love it. I liked the business of business, but I didn’t love the product itself.

It’s something that I’d learnt later in my career that is somewhat of a factor to how much I enjoy what I’m doing. I love logistics and supply chain. I’m a nerd for that stuff. A lot of the processes and functions are the same no matter what the product is. If you can get behind the product and truly believe in it, it makes it a little bit easier to do what you got to do every day.

Talk to me about what you saw in the company. You saw some of the culture sides of the company and you saw it in the interview process. What was it that stuck with you that attracted you to them as a brand in that early stage?

I felt it was an exciting brand and the brand was positioned that I felt I wanted to be a part of it. I liked what they were doing. I liked the fact that they were growing rapidly and they were well received genuinely in public. In terms of a culture and what I saw when I was interviewing with everyone here, even from the founders and meeting with them is they trust people. They weren’t the people that were looking to hire someone to tell them what to do. They were looking to hire someone to tell them what they needed to do and they would stand behind you wholeheartedly and trust what you were telling them was right. Allowing someone to come into the business and trusting them to make the right decisions for the business was a big thing for me.

How did you get on the same page with their vision? How many founders were there?

There were two founders. Their vision has always been focused on customer experience. That’s one of my core values as well. Even when I’m looking at a supply chain or logistics, I always want to start from the customer and work backwards rather than the other way around. That’s first and foremost what we want our customer experience to be. From that, we work backwards on how do we achieve that? Through the supply chain, we were aligned on that straight away. Their vision was we want to create not only beautiful products, but that experience has to be the quality of the product all the way through the process.

That determines your pricing as well. That determines anything else about the business. You got engaged. Did they have a formal vision that you’ve signed off on? How do you and they interact on a daily or weekly basis to stay on the same page?

Nothing super formal overall. We have company goals in terms of revenue targets and what we want to do from our retail expansion and international expansion. Where we want to grow our eCommerce to and different channels of business we want to get into. From my perspective, I focus on building a supply chain strategy. The short-term goals and then longer-term goals and medium-sized and rapidly scaling business, building a five-year plan doesn’t make a lot of sense. What a business looks like now and in a few years are two different things. Planning to achieve and put together a strategy is going to have people running all over the place and not being able to achieve it because the business needs to change so much. I focus on a couple of more short-term strategies and then a few more medium-term. I’m looking from several to couple of years out maximum. I’m looking at where our business is growing. The strategies to implement to take us and certainly get ahead of the curve in terms of scale and presenting that to the founders. Making sure we get buy-in from them and then I go off and execute that with my team.

What did you pull with you from Williams-Sonoma that you still use now? Are there any systems or practices that you brought with you from there?

There have been some strategies that I pulled from some of the Williams-Sonoma days that we’re implementing at Sugarfina. A lot of that’s around trans load centers and consolidation centers much closer to the vendors. If we look at our distribution network now, we have a West Coast operation that does production and production process taking the real candy and packaging it into our finished goods forms. We have that on the West Coast and the East Coast. We have distribution centers there. A lot of our product is sourced all over the globe, a lot from Europe and a lot of packaging from Asia. We look at the natural inbound flow. A lot of that’s coming either to the East Coast or to the West Coast.

We have to have domestic transportation to get that product to our distribution centers on each coast. We’re trying to shift a lot of the movement or separation of those goods much further up the supply chain closer to our origin points. That means we’re minimizing a lot of the touches and a lot of the costs in moving it domestically. That was something I was lucky enough to work a little bit on. At Williams-Sonoma, we were setting up some trans load centers in Asia to help break out a lot of the product and get it to the coast it needed to be at. Those are some things we’re working on. That’s our more medium-term strategy to set one of these up in Asia and one in Europe to get the protocol we need when we need it there.

How many employees do you have now?

About 400 permanent, then we flex up with temp staff. That can add an extra couple of hundred.

You’re hitting a point where you have to hire for deep expertise as well. How do you hire for that deep expertise and also keep the culture as you’re well past the 100, 200 marks where the culture’s starting to get fairly rooted? How do you hire for that culture? How do you maintain it as you continue to scale?

Going back to the same interview experience that I had, people from the director, senior director and above have multiple interviews functionally across the business. We also have a bit of a feedback process where we don’t influence anyone else’s decision. People might get around a room after meeting a candidate, and the CEO says, “I didn’t like this” or “I like that.” That might influence what other people say. We have a private way of being able to give our feedback on the candidate, so it doesn’t influence what anyone else thinks. That’s been working well for us. That’s something that we should have started doing a few months ago on a few of our key hires. Certainly, we look for people that have a certain demeanor that’s very much like us, that is very much a collaborator. People we bring into the business have to be talking and be able to demonstrate areas where they’ve collaborated and worked with teams cross functionally to get the job done. That’s important for us, and that’s where we focus in terms of the more senior hires.

SIC 27 | Sugarfina
Sugarfina: What a business looks like now and in a few years are two different things.

 

Are you hiring all of your people in the main offices, in your main distribution centers? Are you hiring any remote people as well?

Everyone is either in our pure IDCs. We have some offshore resources on our technology front ends and remote resources on the technology side. Everyone is based in one of our facilities.

Some of your packaging is coming from China. Any hiccups in what’s been happening in the politics in the US vis-à-vis China?

It’s something that we need to strategize on. It’s likely that a lot of this will start to move out of China and a lot of people are doing the same thing. This happened many years ago in the apparel industry as well with a rapidly growing middle class. China’s not as cheap as they used to be. They had a lot of great expertise, and they do all the things very well. They built that expertise up by having so much demand through the pricing. As that pricing started to increase, people started didn’t want to erode margin. They started to look at other areas in Southeast Asia that have a similar workforce and can produce quality goods. For us, it’s about how do we diversify our packaging and procurement and sourcing outside of it being in China or anywhere instead of Southeast Asia.

The retail landscape in the United States is changing, but I don’t envision that your stores would be in the big malls. Where would your stores be?

We have a combination. A lot of the lifestyle malls the more outdoor-type spaces which seem to be a lot more popular these days. Retail now, you have to do more than have a storefront and expect them to walk in. We have to do something different. The traditional way of retailing was we open the door, and people will come and doesn’t work anymore. For us, it’s making sure that our experience on a retail perspective or what you get online or what you get anywhere is the same regardless where you go. What store you walk into and what you buy online you should have that same experience. We have a lot of events in our store which get people in the door, and we’ll continue to keep doing that because that’s what helps make our retail side of the business successful.

You have a couple of locations in Canada. Do you have one in Vancouver?

We do, we have a couple in Vancouver.

Walk me through your beliefs around culture. One of the big disservices that we get from the mass media is they talk about the free massages and the free lunch and the bicycles for everybody. I’m like, “That’s not what culture is.” What does culture mean to you? Where does it come from? What systems and processes and thought you put behind creating a great company culture?

It’s potentially great to get someone to join your business, but quickly you see that has the potential of being a mask for a bad culture. It doesn’t necessarily mean it is, but you can have all the free stuff in the world. If you’ve got a toxic culture, it doesn’t matter. For us and me, a lot of transparency between me and my teams and cross functionally. I have a few different functional teams report to me that might not normally communicate all that much together. On top of those there are one-on-ones that I have with each of my managers of each area. I also bring my entire cross functional team together at least twice a month to talk about what we’re working on in each department. That way, someone in technology knows what’s happening in production and someone in fulfillment knows what’s happening in project management.

Walk us through the twice a month meeting with all of your direct reports. Secondly, walk us through what a one-on-one meeting looks for you as well.

There are a couple of things that we bring to the twice a month meeting with my whole ops department. For any of them who have a metrics-driven function, that won’t be our fulfillment area or our production area or our transportation area. By looking through those KPIs and those metrics as a group and talking about them. What’s working? What’s not working? Are we increasing volume or decreasing volume? What are our costs looking like? We collaborate on that a little bit. Those meetings are an hour-and-a-half. We spend probably the first half an hour or so looking at the metrics and making sure that we’re on track. We then go around and each functional head talks about any of the initiatives that they have or was part of the broader strategy.

Where are they at with those? What other new initiatives do they have to bring to the table? We go around the room and talk about those. It’s quite often that we’ll be talking about something in production and someone from technology has some great tool to help a metric. A lot of great things have come out of that, which you might not normally have if you’re only meeting in that more functional area. The general idea is it’s fairly relaxed in that other than going through the metrics, and we’re talking through them. The rest of it is about, “Let’s talk about what’s happening in your area. What are the roadblocks on? What are you concerned about? What else are you looking to bring as an initiative to the area?”

Who are your CEOs? What are the names of the co-founders?

Josh Resnick and Rosie O’Neill.

Those were exactly the format for my weekly meetings with my leadership team when we built 1-800-GOT-JUNK?. The only twist was we did our updates first, then we did the metrics second, and then we helped unstick people third. The one-on-one meetings, how do those work?

One-on-ones are every week. I expect that my functional head is giving me an update on what’s happening in their area. I always end the meeting by asking them what I can do to support and what resources they need to get the job done. It’s much more in my interest to get out of a lot of my people’s way and make sure that they’ve got the resources they need to get the job done. The biggest roadblock in delivering or executing on a strategy or an initiative is, “I can’t get it done because something’s blocking me or someone is blocking me.” My job is to remove those barriers so my team can get on and do what they need to do. It’s about where they up to in there. It’s a bit more of a private setting of the broader group to dive a little deeper into the details of that functional area during the one-on-ones.

That’s where they’re feeling supported by you, and they’re getting some mentoring by you. You were helping remove obstacles for them, but you’re not telling them what to do. You’re holding them up versus telling them.

I always try and hire people that know more in that area than I do. That’s something that’s taken me a little bit of time to learn or get comfortable with. In my early management years, I didn’t want to hire someone that I thought was better than me or knew more than me. It is scary. You would think your jobs at risk, but you learn quickly how important it is to have people who can do that job far better than you can. That’s why you have them. That’s why you want them on your team.

The reality is if you keep doing that, it propels you. It propels the company. You’re not going anywhere. There’s been a weird trend over the last number of years to flatten the organizations, flatten hierarchies, and get rid of titles. Do you have any thoughts around that at all?

It works differently in different organizations. For a labor-intensive operation like we have or we have hundreds of people running around. A more of a hierarchical organization structure works a little better for us. I worked in both. I remember my 3PL days. It was essentially a flat structure. You end up with people who are doing their best and manage functions that they might not be that well experienced in. They’re trying to do more than necessarily hiring someone who might look after that area directly and has a lot of experience in that area. We don’t have a crazy amount of layers. We’ve got a nice even mix. We have some cross functional roles. It works well. I prefer a bit more of a structured environment than a super flat.

SIC 27 | Sugarfina
Sugarfina: The biggest roadblock in delivering or executing on a strategy is, “I can’t get it done because something’s blocking me or someone is blocking me.”

 

I’m the same as you. I try to have that hierarchal organization, but I try to flip it upside down, so we have the CEO at the bottom supporting the senior team who support the managers who support the employees or the customers. I even publish it upside down where they can visually see that we’re there to support them and hold them up and help them, but they can still see where they fit and how communication flows. I haven’t seen a whole lot of companies have success with the other model. It always works for me. Over the years, you’ve learned some of the big leadership lessons. For our audience, what would the top two or three big lessons that you’ve pulled over the years, even the ones that you wish you’d known earlier on?

One of the critical ones that might be something that’s less talked about is one that’s not necessarily always a happy discussion. If you’ve got people who are potentially toxic in your organization, move on it quickly. You can’t move on that quick often. I’ve certainly been guilty of second guessing even myself and saying, “They don’t have the right leadership. They’re great but they need to be in another role, and that’s what’s causing this toxicity.” Ultimately, if you’re feeling that someone’s toxic there, do what you can to resolve that situation as quickly as possible because it only gets worse.

Slow to hire, quick to fire. That’s one. What else?

Mastering communication openly with your teams. It’s not all about work compensation all the time. It’s about you having care about what they’re doing in their life. That open communication method has created a great level of mutual respect between my team and me. Getting to know people, we have hundreds of people, and I know a lot of people in our production room and on the warehouse floor. I go down there and have a chat. Getting involved in the operation helps you to have people who want to come to work every day.

Do you do any skip level meetings where you meet with teams without their direct supervisor present?

We don’t, but we should. We’ve done that previously in the past, not here at Sugarfina. It was something that was encouraged at Williams-Sonoma.

I was coaching a CEO on it, and I suggested that he meet with the entire marketing team. There were twelve people in marketing, and I wanted him to meet with everyone in marketing without the VP of marketing present, and everything was going great in marketing. I wanted the CEO to go in and talk to them to find out what was going on, how things are working, what their thoughts were, and also to talk about the direction of the company and get their thoughts. The key for it was not to engage. I kept saying to him was anything they tell you, all you can say is, “Thank you. That’s interesting.” You can’t say, “We have to fix that” or “We’ll be on that.” When you’re asking them information, say, “I’m curious what your thoughts are on this.” When they give you the thought say, “Thank you. That’s interesting.” It’s a one-sided funnel. A lot of leaders want to solve the problem, but they don’t have the full story. You need to go back to the VP of marketing and find out what their side is to truly uncover the rest of it.

It’s got to be somebody who’s published something on a nice structure for that as well. I off the cuff talk about my experience. I had a mentor who is being groomed as a second in command at Starbucks. I remember Greg Johnson came up to meet with me. It was his quarter to come to Vancouver. We used to alternate. I’d go down to Starbucks head office, or he would come to the 1-800-GOT-JUNK? head office. We had a day of meetings set up, and I was all excited. I’m like, “We’ll meet for dinner tonight. Tomorrow we’ll do the whole day together.” He goes, “Change up. We’re going to go for dinner tonight, and we’re going to go for dinner tomorrow night.” Tomorrow during the day I’m meeting with each of your direct reports and their teams one-on-one. He’s like, “It’s okay. It’s all going to be good.” He came back with some pretty insightful stuff for me that I never would’ve been able to uncover for myself. Because he wasn’t inside the company, he couldn’t engage. He couldn’t say, “We have to change that,” because he didn’t know. That was where I learned the idea of a skip level that I could execute on safely for any of my direct reports. That was because he couldn’t engage.

A lot of time, your direct reports might not be comfortable in giving you that feedback. I always ask my team to challenge me. When we’re talking about a strategy that I might be presenting and I always try and go about my strategy and engaging my team first and us building it together. Some things need to come from a visionary perspective, and I try and deliver on that as well. I’m always open with my team to say, “Challenge me if you think there’s something silly. I don’t have all the best ideas, but I’ve got to come up with them, and we’re going to work together on them.” We’re in a good place where most of my team and I are comfortable to say, “What about this? Have you thought about that? I don’t know about this. This seems a bit funny to me.” I love that environment. That helps with our culture as well as it means that the people working in our organization feel they add value and that they can contribute to something as well. If it’s all me, “This is what we’re going to do,” and I don’t allow any feedback or any anything to be challenged. We would get the buy-in that we get now, if they would feel that they contribute to something.

You touched on something else about how you get people to feel comfortable with saying what’s on their mind or contributing. Have you heard of or used either of these tools? One is called TINYpulse and the second is called 15five.

Neither of them.

TINYpulse is a one-question survey that goes out to all of your employees either once a week or once every couple of weeks. You read the tea leaves. They tell you stuff. The other one is 15fFive, and it’s a program where it takes the employee fifteen minutes a week to write up their report. It takes the leader five minutes to read it. It gives you all the facts, feelings, restrainers, and drivers about what’s happening in the area before your one-on-ones. What I like about both of them is because it’s email based and because it’s technology based and it’s simple and lean. It integrates with nothing. It’s supposed to be its own little standalone. People will type stuff that they wouldn’t normally say face-to-face. I had somebody years ago, and he typed something about one of his peers and other VP. I was sitting down in front of him he’s like, “I can’t believe I wrote that.” I’m like, “Let’s talk about it.” They somehow feel comfortable typing something up and you can help them with it.

Everyone’s probably a little more comfortable being behind a keyboard than approaching someone face-to-face. You don’t necessarily have to deal with their reaction if it’s something that’s a little bit challenging in terms of what feedback you’re giving.

Tell me about what are your favorite hacks or technology tools that you’re using internally, either for yourself or the company?

Probably my favorite one is a relatively inexpensive tool by Zoho called Zoho Creator. It’s the whole process of making paperwork paperless and that you build easily. It certainly helps if you understand technology and you can script and write a little bit of code, but you certainly do not need to. With a lot of drag-and-drop forms to create app-based tools so it can go on an iPad or your phone or Android tablet or even through a browser. An example of how I’ve used that at Sugarfina is we had issues when I first joined about customers receiving stuff, or the packaging was damaged, or it was missing an item or it was the wrong item. In a standard pick and pack quality issues when you don’t have great systems in a warehouse. I built a QA team, and then I built an app through Zoho Creator. I gave it to the QA team where they would pull apart orders that had already been picked and inspect them or look inline to QC work.

Essentially, the app would guide them through a whole bunch of things to check. They’d scan the sales order. They’d scan who picked it. They’d scan who packed it. They’d scan through AR as well, so we knew who was picking and packing the order. That would then go through a series of questions that would say, “All skews correct,” and they’d say, “Pass or fail.” One of the things that differentiate us on our eCommerce is that we make a handwritten note on every single order. We will always make a handwritten note no matter how many orders we do. One of the things is we want to make sure that it’s neat and tidy and that everything has translated and spelt correctly.

Is this a hand written note using a pen machine or is this a handwritten note using a hand?

It’s a handwritten note using a hand. One of the things might be handwritten note pass or fail. If they hit fail, it then gives them another series of fixed options of why did it fail? The note was missing, the handwriting was messy, or there’s a smudge on it or something like that. What this app does is then drive a real-time dashboard showing us what’s going on. More importantly than that, do we have certain skews that fair more than others, people who are picking the same thing wrong or packing issues, down to an auto level or a personal level. That helps us retrain. By implementing this tool that captures all this information in a system that was cheap and easy to put together, we’ve been able to take our pass rate from, it was pretty bad at one point, 75% of our orders we’re passing in terms of what we determined to be suitable quality for us. What might be fine for the customer may not have passed our quality standard. Now, we’re 98%, 99%, sometimes we have weeks at 100%, and that’s been because we get visibility. They do this data we couldn’t previously capture. We look at the areas that we have to focus on. What’s failing the most and why? Let’s go and fix it. We’ve used that same app for multiple things. We build a whole bunch of them to make our lives easier, and they feed into reports and dashboards and give you the real-time information to capture.

You’ve been doing many great things, and I don’t often flip to this, but any lesson from the edge at all? Not so much a failure, but has there been a failure or a lesson from the edge or a time where everything got tested? What did you learn from that?

Probably a few. Early in my 3PL days, understanding a business well before implementing it were key things. There are a few things back in those days where we were growing and eager to grow. It happens a lot in businesses now where you ride this wave of new business and scale. It can potentially be revenue at all costs, or it can be compromising quality for speed to market. These are some of the things that I’ve certainly learned that you cannot do that. It doesn’t matter how badly you want to get that product to the market or get it to a consumer. If the quality is imperfect, you should not do it. You need to solve that, and you fess up, and you need to own it and fix it.

Are you guys making acquisitions at all in your growth?

SIC 27 | Sugarfina
Sugarfina: A standard pick-and-pack quality issue is when you don’t have great systems in a warehouse.

 

We’re not.

Is it all organic?

Yeah, It is.

I was on a plane from Scottsdale, Arizona up to Vancouver. I asked the flight attendant if they had any chocolate and they were like, “We don’t have any chocolate.” The ice cream they were serving was terrible. I didn’t want to try that. He came back, and he gave me this little chocolate bar, and I knew the founder of it, but it’s Chuao. It’s a Mexican brand. Their chocolate’s spectacular. This one had honeycomb in it. There’s a tiny little wrapper. If you ever want to buy a company, those are the little ones to snap onto. Perfect little brands tuck up under some other luxury brand for distribution. Ben Smith, COO for Sugarfina. I got some great ideas and more inspiration. Thanks very much for everything. I appreciate it.

Thank you so much. I appreciate your time.

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About Ben Smith

SIC 27 | SugarfinaA global supply chain, operations and logistics executive specializing in omnichannel retail and 3PL with experience across both start-ups and multi-national, fortune 500 companies who is incredibly passionate about bringing technology and operations together.

I am a customer and people first focused and strongly believe supply chain is a characteristic of your product; speed to market, transparency, and flexibility will impact conversion whilst driving brand loyalty and margin.

Developing and implementing strategies with the above in mind has enabled me to be very successful in the following disciplines across a global setting:

• Supply chain risk mitigation and management
• Sustainable supply chain design and development
• Financial modeling and cost reduction
• Process design and implementation
• Productivity Improvement (Lean, Six Sigma)
• Organizational restructuring (Global)
• System design and implementation (WMS, ERP, On-demand manufacturing etc.)
• Building, leading and motivating global teams
• Supply chain strategy including procurement, manufacturing and global fulfillment & logistics
• Outsourcing (3PL, Manufacturing etc)
• Managing complex, global warehousing, and distribution operations, both internal and as a 3PL provider

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