Episode 228
October 29, 2021

“The Beer Distribution Game”

Today we have a special episode! A conversation from our most recent Twitter Space with Lakhveer Jajj, CEO of Moselle. Listen now!

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this episode sponsored by

Our Inability to Predict Demand 

  • The National Retail Federation predicts a whopping 10.5% increase in holiday spending this year.
  • Maybe supply chain issues are overblown? 
  • Moselle is on a mission to provide e-commerce businesses with everything they need to create stable and scalable supply chains.
  • The Beer Distribution Game is really just supply chain 101. If you have shortages or additional lead time in this game, you'll basically run into supply-demand issues. A lot of what's happening now is on the extreme end of it, where there's a lot of individual things in the chain failing or slowing down immensely.
  • “Unless you have your own boats or private shipping method or have an exclusive way to bring your goods from one part of the world to another, you end up having to work within the existing system. And then when you work in that existing system, it's all about how can I get an edge?” -Lakhveer Jajj
  • “The inability to predict demand in the physical supply chain is this thing that will never be overcome, our expectations are skewed by online services and that's just not how the physical world works.”- Phillip

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Phillip: [00:01:27] Today, we have a different kind of an episode, what you're going to hear in just a couple of minutes is an interview that I conducted on our Twitter Spaces over at the Future Commerce Twitter handle. I sat down with the Moselle CEO, Lakvheer Jajj, and he and I had a really interesting conversation that sort of meandered a bunch across a bunch of different contexts. And one of the things that Moselle focuses on is back end operations, part of which is supply chain. And we certainly were talking a whole lot about supply chain these days. I just sat down for an interview with Forbes wherein I said, "Hey, the National Retail Federation just put out the data this week. They're forecasting a record holiday. They are very bullish on holiday. And they're looking at almost a 10 to 10 and a half percent sales rise for this holiday." Is maybe the media storm around supply chain kind of an overblown hyped up narrative? And maybe there's much ado about nothing. Or maybe the media narrative might spur some panic buying, which will bring about the very thing that I think we're all afraid of, which is shortages of the kinds of products that we just consume in everyday life and not necessarily the things that you might buy a loved one for the holiday season. So we touch on a lot of this. And if you want to dive in a little bit to it, we actually get into quite a bit of detail in our most recent pieces, over on Future Commerce Insiders and on our weekly newsletter, which comes out every Friday, called The Senses, where we're touching on a lot of these thoughts. But I tend to believe that maybe we're going to have the best holiday ever. If you're in eCommerce, you're certainly gearing up for that. And maybe what you need is some back end operations to help make sense of it all. Moselle's CEO Lakvheer Jajj has a little bit to add on all of these topics and much more. And again, this interview that follows is a conversation that we had over on Twitter Spaces at Future Commerce, Twitter.com/FutureCommerce, and we'll be holding a lot more of these. Please forgive the audio quality as the Twitter Spaces has, you know, a little bit of a different level of audio quality. But the content, the context of the conversation is fantastic.

Phillip: [00:04:10] First time doing Twitter Spaces on the Future Commerce account, but definitely participating in Spaces a lot over on my personal account. Just trying it out over here for the first time. We're chatting about a bunch of things happening. Big morning for news. For sure. We've got all kinds of things happening. Thought we'd maybe get a little quick check in with some folks in our community before we start the week here?

Lakvheer: [00:04:34] Hey, how's it going?

Phillip: [00:04:35] Yeah, really good. How about you?

Lakvheer: [00:04:37] Good, good. I just saw this pop up on my feed, so I figured I'd just jump in and listen in.

Phillip: [00:04:43] Yeah, I don't think we've connected before. Whereabouts, are you?

Lakvheer: [00:04:47] I'm located in Toronto, Canada.

Phillip: [00:04:51] Nice. You in the eCommerce community?

Lakvheer: [00:04:54] Yeah, I'm plugged into the eCommerce community. We just launched an application in 2020 before the pandemic to help eCommerce businesses with their supply chain. So it's called that Moselle IO, and I'm just plugging in more and more into the community these days.

Phillip: [00:05:13] Very timely app to be running these days.

Lakvheer: [00:05:17] Yeah, absolutely. Absolutely.

Phillip: [00:05:19] Are you finding it harder or easier now to sort of make the case for why you need apps and infrastructure type systems like you provide?

Lakvheer: [00:05:30] Yeah, no. What's going on in the world makes that case for sure. What we do differently is like, we're in the business of like visibility and automation. Obviously, we would know down the road if we could, we could buy boats and ship things faster to manufacturers and suppliers, to merchants. But right now, we're really focused in on helping businesses operationally by giving them that visibility of where things are at. What are the delays? What are the pain points around that? And then even going as far as doing their operations for them, just outsource. We'll build the purchase orders. We'll send it out. We'll follow up with your suppliers. We'll follow up with your freight providers. So then these eCom businesses can focus on sales and marketing and growing in a difficult time.

Phillip: [00:06:24] Oh wow. So it's beyond just sort of like an insights platform. You're kind of helping them solve, you know, maybe some labor issues as well, sounds like?

Lakvheer: [00:06:36] Yeah, yeah.

Phillip: [00:06:36] Oh wow. Wow, what a time to be alive. Congrats.

Lakvheer: [00:06:40] Yeah. What a time to be alive, for sure.

Phillip: [00:06:43] It's called Moselle?

Lakvheer: [00:06:45] Yeah, Moselle. You can just type in Moselle on Google, and we come up.

Phillip: [00:06:54] How are you acquiring customers right now?

Lakvheer: [00:06:57] Yeah. So we're mostly doing direct outreach to customers via email and social media plugging into these communities. But yeah, we also want to plug in via app stores. We're really pretty well integrated into Shopify. We're looking at we recently connected in with Amazon Seller Central, so just getting out there slowly but surely.

Phillip: [00:07:21] Mm hmm. And I see I'm checking out the website as we speak. I'm sorry, I wasn't aware of it before. I'm really, really interested. There's, you know, such a case to be made right now of a lot of mid-market DTC that are probably struggling with this exact problem right now.

Lakvheer: [00:07:38] We've been in stealth mode in 2020 because we were building it quietly during the pandemic. And then now we've kind of gone full throttle this past year.

Phillip: [00:07:48] I'm curious how many... I see you link QuickBooks and some others. And you know, we talked a lot about this QuickBooks, certainly top of mind with the MailChimp acquisition from Intuit. I'm curious, what is the case to be made around, like the operations platform of QuickBooks? Is that a large portion of your ideal client sits on QuickBooks these days?

Lakvheer: [00:08:13] Yeah, we kind of have that integration there because there's people who build their orders out to suppliers and manufacturers in QuickBooks. So we kind of sync that data in. One of the kind of golden rules that we have with our platform is not reinvent the wheel. If people are using QuickBooks or Shopify or Amazon or Shipbob or whatever it is, we want to plug in and create a universal dashboard versus like, here's another tool where you can punch in more information and create more operational work for yourself. So QuickBooks was something that we launched with, and we've kind of moved more and more towards eCommerce platforms.

Phillip: [00:08:53] Oh, sure. Yeah, it's funny. There's a case to be made about the eCommerce platform being a hub for ERP style information. It's like a little bit of an operations platform itself. I spent some time, so I don't know if we've connected in the past, but I had spent some time in direct to consumer startups almost 10 years ago. I spent the first half of my career there, and we didn't have an ERP. We had a bunch of homegrown systems that were mostly Excel spreadsheets. {laughter} It's like our eCommerce platform was our ERP, and it was sort of a system of record for everything, including accounting for better or worse, which is, you know, I mean, we were able to grow to 20 million that way before we had to invest in real systems. I can't imagine. It's so much easier these days. I really believe that with G Suite and a bunch of other, you know, Zapier, you can get a long way down the road.

Lakvheer: [00:09:58] Yeah, for sure, for sure. My whole kind of professional career has been in software engineering, product development for various tech startups and way before kind of this eCommerce boom, when my parents immigrated from India to Canada, they started a kind of an Indian grocery business and then we got into wholesaling them nuts and dry fruit. And we would do like co manufacturing and direct to consumer plays and all this kind of stuff. And so by the time I grew up, I was pretty much running the supply chain operations for this business, this family business, and I always found it peculiar of this really great merchant to consumer experience where you have platforms like Shopify, Amazon, 3PL services to ship the goods and order management and great customer support tools, but then when it comes to the merchant, to their supplier or manufacturer, it's all like spreadsheets, emails... Back when they used to do it, it was like, send a fax and it's like, you know, it's like you send out the order to into a black hole and you don't get any sort of visibility on where it's moving. You have to follow up. So yeah, it's like that is a whole block hole. And then you have the kind of eCommerce platform being like that central hub kind of ERP solution that you're kind of describing. And we're like scratching our heads or like, OK, what can we build on top of this to make the ops person on a DTC team much more happier than compared to like the sales and marketing people that have like really great tools?

Phillip: [00:11:38] Speaking of which, you know, I've actually run across a lot of folks these days at industry trade events, which are back online. And it seems like for all of the systems that have allowed the business of DTC to get to have, you know, greater systems, greater visibility, better data and even insights into the goings on of their business, they're all still struggling with similar things like profitability. And for better or worse, you know, the inability to sell product that they don't have yet. And that's I think it's sort of the everyone's talking about it as this existential threat. But I wonder if that's even a new thing. I think if we weren't constrained just on supply, so you've been constrained capital constraints in years prior. You know, I came from the natural product space. We had FDA constraints 10 years ago. There's always been challenges, right?

Lakvheer: [00:12:41] Yeah.

Phillip: [00:12:42] These current ones are just, you know, the present challenges. There's always been problems. You're operating a small, medium sized business, right? That's just how it goes.

Lakvheer: [00:12:51] Yeah, I think there's something... I think you can look it up on Wikipedia, it's called the Beer Distribution Game, which is literally like how... It's like supply chain 101, and it kind of goes through if you have capital constraints or shortages or additional lead time in this game, you'll basically run into kind of supply demand issues and like, how do you go about resolving it? And a lot of what's happening now is on the extreme end of it, where there's a lot of individual things in the chain failing or slowing down immensely, that's causing issues. Again, like unless you have your own boats or private shipping method or have an exclusive way to bring your goods from one part of the world to another, you end up having to work within the existing system. And then when you work in that existing system, it's all about how can I get an edge? And a lot of bigger companies have edges because they have massive departments and supply chain people and the capital to basically effectively move their goods better than a smaller business. But it doesn't mean like a smaller business can't get some edge through automation. Whether it's like a simple email automation of like following up with your suppliers and stuff, it makes an improvement to your bottom line and then your costs and margins on your product.

Phillip: [00:18:52] So this is so funny, I've never heard of this before, and it's maybe because I've always sat in a different... It sounds like you and I have some overlap in skill set and sort of product background. You know, I came from engineering, but I had never heard of this game before. This is fascinating. Just looking this up on Wikipedia. How do you use this? Is this part of a sort of like a novel way to highlight some of the challenges in supply chain? Or is this like, is this an entertainment? Is this how supply chain folks get, you know, get their point across like how hard their jobs are?

Lakvheer: [00:19:28] Yeah, I think...

Phillip: [00:19:30] Dungeons and Dragons for supply chains. {laughter}

Lakvheer: [00:19:34] Literally. It's a little bit of A and B, but it's also like a good teaching tool. You can apply it a lot with also within like computer networking. You know, it was funny. I was having this conversation with someone. I said, imagine if the pandemic hit five years or even 10 years ago, when the internet and broadband speeds and a lot of the same issues that you're feeling and supply chain would have happened if the pandemic happened sooner, we would have had like internet outages. We would have had probably issues with connecting to certain sites. Everything would have been even way worse. But [00:20:16] now, with the internet being what it is and you have companies like Cloudflare, Google, and Amazon, and internet providers who have built much more sophisticated infrastructure to handle like an immense amount of demand and give out supply in terms of the internet and created optimization algorithms and et cetera, et cetera, et cetera. But we haven't invested in our supply chain infrastructure the same way, and that's why it's like we can feel it more on our actual physical goods than we can like on the internet. Imagine, like 10 years ago, when the internet, when we still like 2G, 3G speeds, trying to work, everyone working at home, how that would have affected everything. [00:21:04]

Phillip: [00:21:05] This is interesting because we brought this up on a podcast back in like April or May. We had Stephan Ango, who also runs a sort of like a supply chain management piece of software, like a marketplace for acquiring packaging from primary and secondary packaging manufacturers. And he has a podcast called Well Made, and he was saying that even five years ago, had we had a pandemic five or six years ago, we couldn't have seen the sort of seamless scale of something like Zoom, which was able to, you know, 100 X and a 1000 x overnight their cloud scale without really even blinking. We were able to transition to remote work in mass without much of a hiccup. And that's not something that could have been possible even five years ago had it not been for the advent of all the services, sort of the ubiquity of the services you just mentioned Cloudflare and not just AWS, but the availability of many, many clouds. And that's a really modern... It's sort of the effect of modernity in cloud computing and the scale of cloud computing. And that's something that physical supply chain just can never, ever keep up with. Physical things don't work that way. [00:22:32] There's an interesting article I read last week about the effect of toilet paper hoarding and the fact that it takes about a year to set up a new manufacturing and new warehouses for those types of industries. You can't just bring, you know, a new toilet paper manufacturing site online in even two to three months. It takes a year. And so the inability to predict demand in the physical supply chain, especially with essentials like toiletries is this thing that just will never, ever overcome and that our expectations are skewed by online services like, "Well, why don't we just have X?" That's just not how the physical world works. [00:23:21]

Lakvheer: [00:23:23] Yeah, absolutely. But there's tricks and pieces from that that we can potentially copy over into the supply chain space. You know, one thing that [00:23:35] I see with smaller businesses and DTC brands and eCom brands is when you ask them, "I see that you have a Plan A to acquire your goods. What is your Plan B if the times double or what is your Plan B if the supplier runs out of the raw materials to make your goods for another two or three weeks, so the production is delayed for three weeks?" And a lot of people kind of shrug and it's like, well, we've been having supply chain shortages issues for 16 months now. It's like you should probably bake that into your production times, lead times and have a best case, worst case, and a nominal case around some of the goods that you're trying to acquire and sell and see how it plays out. And if you even run that simple exercise, it will kind of open your eyes to, oh, shoot like I should probably be putting in this order two months in advance than I was normally because of x y z. And you'd be surprised a lot of people don't do that. You don't even have to have very sophisticated forecast planning around your inventory to even just do that homework and realize that you're going to run out into stock out issues very, very quickly. [00:25:00]

Phillip: [00:25:00] That's makes such an interesting point there, I think, especially when you look at, you know, the advent of all of these... Well, Shopify has its own effect, but if you look at the advent of these marketplaces where you can effectively create a direct to consumer brand in days and weeks for very little capital and just in time manufacturing, you really have sort of this effect of novice brands and novice business operators who don't really have to have that sort of insight or rigor and really don't have to have the fundamentals to be able to operate a business like that until they reach some sort of a scale where it takes them by surprise and sort of learn the hard way. Things that I had never considered, this has been really educational.

Lakvheer: [00:26:01] Yeah, the one thing that I always think about when it comes to supply chain and kind of the holy grail of where I would love to see Moselle be taken, where if you think back to your point around how you can't really predict demand, especially with physical goods, as well as like the internet, there was always this interesting case with Twitter. The platform that we're on, where really early days they struggled to scale and they couldn't predict the scale that they would need because, you know, out of nowhere, Justin Bieber would blow up and a hashtag would come on. And then the site would crash because there's just this unpredictable demand out of nowhere, kind of to that toilet paper case like it was out of nowhere left field. And now obviously, Twitter is not a small, medium sized business. They've raised hundreds of million dollars. They're a publicly traded company, and they've kind of kept with the scale. They can handle scale now, but they came out with interesting kind of schemes and this gets back into that Beer Distribution Game around how they manage very spiky situations to prevent the site going down. And if I would apply that to a small business, it's like, how do we create that smoothing out of spikiness, like you run out or stock out, so the business doesn't fail, but you can survive and live to fight another day? Where you know a lot of Shopify businesses, eCommerce businesses in general actually turn off the platform because in their first year or first two years, they get some demand and then things stall out and then production is taking too long and you're running into cash flow constraints and then you end up failing. So I'm always curious about that. That's kind of like the long term thing that keeps me up at night of what is it that we can implement in terms of visibility and automation for these small businesses and activate so that they can handle anything that you throw at them better than they did, like two years and even now?

Phillip: [00:28:31] Wow, I did not expect this to happen when I started this Space. Thank you. This is amazing. I have found out that there's a way to download these conversations about 24 hours after they're recorded. And you know, I'd love to put this out on the main feed for the podcast if you wouldn't mind. I think this is such a valuable conversation for our broader audience to be able to hear.

Lakvheer: [00:28:56] Yeah, for sure. For sure. I didn't expect to go into full kind of like podcasting.

Phillip: [00:29:03] No, and neither did I. {laughter} It's so good. I'm glad you popped on. I'm really glad we actually connected. This is super cool.

Lakvheer: [00:29:09] Yeah, I'm actually going to jump off because I have a meeting to get into, but it was a pleasure jumping in.

Phillip: [00:29:16] Yeah, I appreciate you doing it and thanks for joining and thanks for listening. We'll see you guys later.

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