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The Sourcing And Purchasing Hub to Scale Your Business
Francois Jaffres is the Director of Business Development for Noviland, a third-party sourcing and purchasing hub. Noviland was founded in 2016 with the mission of making the supply chain easy and accessible for businesses of all sizes. Francois is also the Co-host of the Link Up Leaders podcast, where he provides education and insight for supply chain professionals.
Previously, Francois was a Contractor for Randstad USA and a Merchandiser/IE Intern for Coca-Cola Bottling Company UNITED. He graduated from West Virginia University and was a volunteer for Beta Theta Pi – Beta Psi.
Here’s a glimpse of what you’ll learn:
- [2:23] Francois Jaffres discusses the disruption of the supply chain and how to get it back on track
- [9:01] How the team at Noviland helps clients with supply chain issues
- [15:35] Francois’ tips for establishing relationships with suppliers and manufacturers to reduce your costs
- [19:26] Francois talks about adjusting your prices to avoid losses
- [27:11] How third-party sourcing is filling operational gaps in the supply chain
- [33:37] The typical businesses Noviland works with
- [36:08] Why you should diversify your portfolio of potential suppliers
In this episode…
If you have an e-commerce business, you know that supply chain issues are a real problem in 2021 — and there appears to be no end in sight. So, how can you improve your supply chain management to boost the value of your business in the new year?
When you’re juggling a hectic day-to-day business, port congestion and lack of inventory should be the last things on your mind. Francois Jaffres is experienced in sourcing and purchasing, and his team delivers supply chain solutions so you can focus on your brand. Now, Francois is here to share how you can optimize your supply chain management to create a more profitable — and scalable — business.
In this episode of the Quiet Light Podcast, Joe Valley and Pat Yates sit down with Francois Jaffres, the Director of Business Development for Noviland, to discuss the current supply chain issues e-commerce businesses are facing and how to overcome them. Listen as Francois talks about innovating the supply chain infrastructure, why you should use third-party sourcing, and the importance of establishing relationships with your suppliers and manufacturers. Stay tuned!
Resources mentioned in this episode:
- Francois Jaffres on LinkedIn
- Link Up Leaders podcast
- Quiet Light
- Quiet Light on YouTube
- Joe Valley
- Mark Daoust
- Pat Yates
- Quiet Light Podcast email: [email protected]
- The EXITpreneur’s Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success by Joe Valley
Sponsor for this episode…
This episode is brought to you by Quiet Light, a brokerage firm that wants to help you successfully sell your online business.
There is no wrong reason for selling your business. However, there is a right time and a right way. The team of leading entrepreneurs at Quiet Light wants to help you discover the right time and strategy for selling your business. By providing trustworthy advice, effective strategies, and honest valuations, your Quiet Light advisor isn’t your every-day broker—they’re your partner and friend through every phase of the exit planning process.
If you’re new to the prospect of buying and selling, Quiet Light is here to support you. Their plethora of top-notch resources will provide everything you need to know about when and how to buy or sell an online business. Quiet Light offers high-quality videos, articles, podcasts, and guides to help you make the best decision for your online business.
Not sure what your business is really worth? No worries. Quiet Light offers a free valuation and marketplace-ready assessment on their website. That’s right—this quick, easy, and free valuation has no strings attached. Knowing the true value of your business has never been easier!
What are you waiting for? Quiet Light is offering the best experience, strategies, and advice to make your exit successful. To learn more, go to quietlight.com, email [email protected], or call 800.746.5034 today.
Hi folks. It’s the Quiet Light Podcast where we share relentlessly honest insights, actionable tips, and entrepreneurial stories that will help founders identify and reach their goals.
Joe Valley 0:29
Hey folks, Joe Valley here. Thank you for joining us again for another episode of the Quiet Light Podcast today I have Mr. Pat Yates back with me to be the co-host welcome, Pat. How are you?
Pat Yates 0:40
How we doing Joe? Good Monday morning. Good way to start the week.
Joe Valley 0:44
I’m doing all right. I’m doing all right. So glad that you’re co-hosting this podcast with me because you’re an actual e current ecommerce business owner importing from how many different countries and what are they?
Pat Yates 0:55
Well, right now they’re not getting in from any countries, they’re sitting in water. But in general, we come from China and Taiwan is where we mainly have manufacture in the past from our business. And yeah, it’s definitely a challenge here for supply chain for many directions.
Joe Valley 1:09
Yeah, so Pat owns BuyHappyFeet.com. For those that don’t know already. He was on Shark Tank did a deal with Robert, you should check it out. Because the cool thing when I watched it, Pat was that Robert was out. You reeled him back in he then he jumped back in and made you an offer that you quickly accepted. And, and it’s pretty, it was pretty fun to watch, let’s say say that. So supply chain issues are in everybody’s mind. It’s a huge problem. And that’s why we’ve got Francois Jaffres from Noviland on with us. He’s the director of business development for Noviland. He’s also a co host of the podcast Link Up Leaders. That’s how we connected he had me on his podcast for the EXITprenuers Playbook. We’re just gonna jump right into it, Pat, if that’s all right with you and Jeff Francois, welcome to the Quiet Light Podcast. How are you today?
Francois Jaffres 2:00
Hey, guys, glad to be here. I’m doing great, excited, very excited.
Joe Valley 2:05
It’s such a timely interview. And you know, timely as in any time in q4, or q1, this is the time to talk about it maybe anytime in 2021, maybe even into 2022. So let’s start with that prediction. Francois in the space that you live in, how long are the supply chain issues going to last crystal ball?
Francois Jaffres 2:30
Oh, well, anyone that has a crystal ball would make a lot of money right now. But when it comes to just predictions, I don’t think that things are going to necessarily get better. I think certain components are going to get easier. Pat, you know, you mentioned that you’re having trouble getting products into the US, for example, right? I think a lot of companies are also feeling the exact same issues Port of Long Beach, even the ports of Savannah where there’s a few vessels backed up or to Houston missing, you know, delays as well. I think the port congestion is going to start to die down as we get through Chinese New Year. So give them maybe about a month or two to actually start to work through a lot of those containers. I mean, a big issue is understanding how those ports even work. And today in the conversations that we have, it seems like there might be a bit of a lack of education, there are a lot of companies that think, you know, if I take a container, I just give it back to them. And that’s the end of story. Well, you know, understanding how the ports work. Number one is key. But when we start to work more downstream, so the ports might start to get you know, decongested, but then we have to start thinking about the warehousing start thinking about the shelves start thinking about the seasonal products, where are those going to go? What’s going to happen to them? If they don’t get in in time? I think there’s going to be larger conversations that have downstream more into 2022, q2, q3. And I mean, I think this is tossing it out of whack for a lot of companies when it comes to resiliency and supply chain. I think that should be a big topic today, too.
Joe Valley 3:59
Okay, so what you just said in the way you said, it just shows your credibility and who you are and what you do. And I want to jump into that for that reason. But for those that don’t understand your business and your company, can you give us an overview of who you are and which company does.
Francois Jaffres 4:14
Yeah, yeah. So as you mentioned, I’m the Director of Business Development here at Noviland. It’s just a title. I think a lot of companies just hold titles, particularly startups, doesn’t mean much. I kind of oversee marketing I see oversee, I helped build a lot of the operations both overseas as well as here in the US, as well as just the general business development. So working with a lot of our larger clients, big box retailers, big, larger importers as well. And we were founded back in 2016, under an idea that our founders had of making supply chain simple and accessible for all sized businesses. So not just the larger businesses that could be resilient but also SMBs and particularly upscales for SMBs. Those are working towards You know, growing their operations growing out better supply chain management tools as well. And back in 2016, we ran more of just an agency, it was, hey, come to us with your project, we’ll let you know which factories to work with will oversee some of the communications. And we were working to build a platform. So back in 2018, we actually launched the first market platform for supply chain management as a whole. So it is a all in one platform where you just go on there, let us know your project, let us know the key details and your request for quotation, which is different than a request for proposal or just a general proposal or an RFP. And then we oversee, you know, selecting the right factory. So we’re onboarding over, we’ve on boarded over 5000 factories in the past five years, into our network all medium to large sized factories that will are willing to take on newer projects. And then we oversee factory communications, quality control, management, production, oversight, logistics management, of course, factory relationships, I mean, it’s the whole nine yards from start to finish. And I think this is a very timely time for us. But back in 2016, we did see that there was already that gap, there was already issues with businesses, particularly larger businesses, that were encountering supply chain issues, let’s say with the trade war, and they didn’t know how to effectively manage it, even with the most experienced people, you if you have, you know, 510 people here in the US. What about overseas? What about the conversations that you’re going to have with your suppliers? How do you fix the problems quickly? Right, so working nimble, and our team has grown from I was the third person on the team, part of the founding team, to over 100 employees now. So Holy cow.
Joe Valley 6:41
Time. That Pat, how many manufacturers do you have?
Pat Yates 6:45
We’ve worked we’ve worked with for any one time and for different countries. You know, it’s interesting, because I think the one thing, there’s been so much information out here, Francois about all the supply chain issues, I’d love to hear your thoughts on what you think the biggest issue is, you’ve heard people say, China ports are congested that coming over, that the US ports are congested that the union’s only work till three and then there’s not enough truckers and then some people say with COVID and closings in China, this was bound to happen, it was gonna back up regardless, just a matter of when What’s your true view on what the root cause is right now, if you had to estimate the biggest issue?
Francois Jaffres 7:22
Yeah, I don’t think there’s necessarily one root cause I think this goes to fundamentals. I think a lot of supply chains were built to not be the most resilient but maybe to be the most optimal at that time. So they’re built to let’s say, work with a few manufacturers to work on certain trade lanes to work with just certain three pls or distribution centers to funnel their products only work with let’s say marketplaces like Amazon to sell their products and not prepare themselves for omnichannel not getting the right partners in and not understanding supply chain as a whole. So again, we were just talking about the port’s but you know what’s going on with three pls and carriers, let’s say FedEx ups, how are their rates affecting your business? Working upstream? What’s going on with raw materials? Right across the board? Is it better to manufacture in Taiwan? Is it better to manufacture in China? Is it better to manufacture in Vietnam or Mexico? And so I don’t think there’s one thing that you can pinpoint. And I think that is the issue. I think a lot of this is being siloed into, well, there’s a lack of trucker tracking in my product. But what if you put more truckers on there, and the ports are backed up, they can’t take empty containers, because there’s no chassis to put the empty containers, or take the containers off of because there’s no port yard storage. So there’s no chassis is to pick up the full containers to take to your three PL warehouse where your three PL warehouse only works from, let’s say, 6am to 8pm. Well, what happens in those, you know, 10 hours that they’re closed? Right, I think it’s really understanding the fundamentals of supply chain. And that’s how you’re able to, let’s say, address a very specific problem. But I don’t think it should be looked at in silos, and a lot of these conversations are just very siloed.
Joe Valley 8:54
Yeah. And it’s, it’s, it’s, it’s too narrow to do that on a broad basis. You’ve got, you’ve got lots of clients that are dealing with the same issues. Can you give us an example of how your company is helping your clients with the supply chain issues?
Francois Jaffres 9:09
Yeah, I mean, I think really, it’s the conversations that we’ve started having about 1819 months ago, right at the start of the pandemic, when we started to see supply chain issues upstream, right with manufacturers being delayed with a lot of our clients telling us what we’re not sure how much we should be ordering and us telling them very frankly, what’s going to happen if you don’t place those orders, everyone’s going to place larger orders at the same time in six to eight months, right? The economy is eventually going to open back up nothing new
Joe Valley 9:35
when you make that suggestion to them, but they don’t have enough cash to place those orders. Do you have a partner pages resources where they can go out and get inventory funding or anything like that? Because it’s finding those solutions for them to it is finding the solutions for them. Okay. All right.
Francois Jaffres 9:51
So I was also looking for solutions with their suppliers, let’s say and looking for solutions with their inventory itself. Can their supplier manufacture the product because it’s a very Non customized product where it has customized colors or logos on it, but it’s not a super customized product to the market. Right? So it’s understanding what solutions there are available. Maybe their, their manufacturer can produce six months of inventory and only charge them for three and give them net 60 terms for the rest of it. Well, these are like actual conversations that we’re having with them, can they store at their warehouse? Can they store it at the port warehouses? Can they store here in the US, and that’s where we’re opening up more fulfillment centers, distribution centers for them to give them those options. So you are
Joe Valley 10:36
like the manufacturers that you work with? They’re understanding that you’re one organization that has lots and lots of clients. And when they deal with you directly? Do they do it in a way that maybe will help them win additional businesses as well. So they’re going to pay more attention to you, as a company that deals with hundreds of clients that may become their clients? Or are they going to deal with Pat, in a different way? Because it’s just Pat, and buyhappyfeet.com. He’s one guy, one product versus Noviland And that’s, you know, one company hundreds of products, is there a strength in numbers with you, and that communication that gets you better terms, let’s say then Pat would be able to get individually
Francois Jaffres 11:18
100%. So we do vouch for our clients. And that’s why we go through a thorough vetting process, even our clients when they upload, let’s say they create an account today, they can’t act, we won’t work on any of their projects, until we understand their business until we understand what are they expecting to get out of this? What are their problems that they need solved. And when we approach the factories and say, Hey, we have Pat, that are producing, let’s say, they need 100,000 of this type of slipper a month. And Joe needs something in about six months, we can work with their production schedule and say, Well, you know, where can we prioritize the different orders? And how should we prioritize them into your production schedule? How can we work out those payment terms, they’re both ordering a decent sized quantity they’ve, they’ve been clients of us for, let’s say, a year, two years, sort of payment terms, can we give both of them because they give us those payment terms, and we can give you those payment terms at the end of the day. So negotiations do tend to be a lot easier. And even pricing. At the end of the day, if we’re able to bring them more clients, they will end up end up giving us better pricing. One because we’re easier to work with, we have boots on the ground that can actually communicate and streamline the process itself. But to when it comes to payments, we can actually simplify a lot of those payments that are portal and paying them let’s say in lump sums, or pay them ahead of time, and then we’ll collect the funds from you later on. Because we can vouch for you.
Pat Yates 12:40
First of all, let me ask another question, what’s let’s say that someone gets an order, they develop a product, they ship it out of China, it gets in there and it gets its, let’s say a port. But then there are no trucks talk a little bit about do you all do full service help to be able to help people, for instance, I have situations where we transload into trailers to get them straight over versus on the rail to save time, super expensive. But do you have options that you give clients to be able to get things in different manners once they hit the United States to help with that timing issue that they’re
Francois Jaffres 13:07
probably dealing with? Yeah, I mean, that’s a similar process that I think a lot of companies are trying to go to right now. Trying to translate them at the ports themselves, right nearby warehouses even. It’s a solution that we’re able to provide on a one on one basis, it’s not a in the reason that, for example, you go to our portal or you go to our platform, and it’s not just click a button and you’ll receive the service is because it’s tailored to everyone supply chain. Right, let’s say you’re working with your marketing team, and you said, I have a campaign in six months. So it’s not a top priority to me, and we have 20 trailers that we can actually book in that week. Well, we’re not going to probably give you one of those trailers immediately, we’ll let it sit at the port for a little bit, or we’ll work with you to see, hey, can you store it at one of our other warehouses for a short bit until we have more trailers to get to you? A lot of that was actually based more upstream. So into China, when we have those conversations with suppliers, it’s Hey, can you store these items for XYZ customer for three months, and we’ll pay you in three months for that product. And they know that we’re good for it because we’ve been working with them for years. And we’re establishing those relationships with them. So when it comes to that specific solution, yeah, it can definitely be done. It’s it’s just conversations, it’s conversations that honestly are had too late. And that’s the issue. It’s, hey, I’m looking for a new truck or I’m looking for a new company or I’m going to book online and it’s just a one click solution. It doesn’t really work that way at
Joe Valley 14:40
all I’m sorry. It sounds like it’s almost too late for people to solve the problem if they’re if there’s their product is stuck on a you know, shipped somewhere. There’s not a whole lot that you’re going to be able to do to solve that but people are feeling pain now and they’re understanding the benefit of planning right every Buddy hates Exit Planning. But, you know, once they get into it, they realize they should have done it 12 months ago, because they would get more value for the business. I think that’s the same with what you do. How important is it for somebody to think in advance? Like, if they want to work with you have a what are the benefits gonna be? How long should they be thinking about it, it’s discussing it with you, and how important are the relationships that you have with suppliers and manufacturers to help reduce the freight charges to reduce cost of goods sold to get better terms and things of that nature? That was a lot in one question. But start with relationships, how important are the relationships that you have with your suppliers, manufacturers, you know, freight forward carriers and things of that nature?
Francois Jaffres 15:46
I think they’re extremely important. I don’t think they’re just important for us. But I think they’re important for every business across the board. And I think effectively managing those relationships are what a lot of companies struggle with, a lot of times it tends to be, you only reach out to them if there’s a problem. Or if you want something from them, it’s not necessarily to check in and say, hey, just how are you doing? These? Are my plans for the next six months? That you have something? No, no, you’re fine. No. Um, and so understanding, you know, what to our clients need, and really relaying these to our partners to our freight forwarders. To directly to Costco, let’s say for, we need 30 containers, because we have 12 clients that are used utilizing this much container space per month, well, we’ll lock in those contracts, we’ll be able to get better rates with them at the end of the day, and we can pass on those better rates to our clients, understanding, you know, the relationship both ways, not just with the suppliers, or let’s say the freight forwarders, the shipping carriers, the manufacturers, but also with the customers with the clients that we have is very important, and understanding their forecasts, understand their marketing plans, understanding the struggles that they have, so we can effectively pass on those communications is just as important. I do have a question
Pat Yates 16:58
for him. So I have one thing that I was really miffed about in a lot of people that are, you know, other business owners that have done import for decades, for that matter, that you see container costs go from 5000 to 20,000. in like a week, I know that a lot of people speculated and some people call it off for mystics, some people look to the United States administration, which a lot of things go into this, tell me what your thought is on why that happened that quickly. Because this is going to become a real financial decision for a lot of people, they’re gonna be selling business with their Quiet Light in 2022, how they handle this increase if it goes back down. So I’m curious to hear what you think started that, and if you think it will, slow in the in the future months coming up?
Francois Jaffres 17:36
Yeah, I mean, I think it’s important to remember that we live in a capitalist society, right? When they see the demand start to skyrocket, and they’re going to jump on those opportunities, everyone’s in this to make money at the end of the day, it all comes down to the relationships that you have with, let’s say, the freight forwarders, with the carriers with the manufacturers to get better rates to maybe secure more a better cargo space for you. But at the end of the day, the pricing itself is not something that can easily be manipulated, right, a lot of times that we see new clients that we have come to us with the problem, specifically what you’re talking about, hey, this $20,000, I need for cheaper. A lot of times, that’s the wrong conversation to have, it’s, Hey, this is $20,000. But I need my product here in three months, otherwise, I’m going to be out of stock or I can’t run certain marketing campaigns, or I can’t take over certain market share, because my competitors are also suffering, everyone’s feeling the same pains. Right. So it’s, I think, looking at it from a different perspective. Now, when we come when we talk specifically about those rates being $20,000. Are we having the conversation about which ports are the best ones to go to? Are we having conversations about you know, it’s what is your priority? Is it your inventory first, or is it to get the cheapest price. Now, if it’s to get the cheapest price, we can probably wait or we can try to find better routes for you that’s going to take longer and get you that cargo, maybe a few $1,000 cheaper, it’s going to take longer 100% Or we can spread out your shipments and LCL shipments and try to find cheaper, smaller freight forwarders that can handle those. But if you need your inventory, and if you’re actually planning to scale up, then costs should be you know, second bottommost you need to have inventory to sell otherwise, you’re going to go under with that product line.
Pat Yates 19:22
That’s true. But in this case, playing devil’s advocate, you know, for someone that carries high, large products like me, I can only get 8000 A container a $15,000 increase is $2 a unit that is a massive increase for some people, not your fault when I’m trying to dive into is if that if that is going to go away from 20 closer to the five or was it just a reset to get this at a higher price because you talked about competitive which is great, but no one is selling off cheap, which some people would eventually do to get business. So do you see that going into the budget first and second quarter? Probably maybe normalizing a little bit?
Francois Jaffres 19:54
I think so. I don’t think $20,000 is the new normal by any means but I think we You’re gonna have a new normal. Now, no one’s going to have the crystal ball that we talked about at the beginning of the other podcast of where’s this exactly going to go? Is it going to normalize at 10,000? Is it going to normalize at 15,000? I highly doubt it’s going to normalize at 20,000. It’s unsustainable, it’s unsustainable for the suppliers, it’s unsustainable for the consumers, right? We’re only going to be willing to pay so much more for certain products at the end of the day. And so I think everyone’s going to realize that freight forwarders are shipping carriers at at a certain point, they’re going to have the conversation of let’s start to de escalate some of these issues. And it’s going back to 2000, the beginning of the pandemic, so 2000, end of 2019, beginning of 2020. What conversation were the carriers having? Well, they were having the conversations based on the consumer, the consumer standpoint, right? The brands and the big box retailers, were saying we’re not going to order a lot. So you should limit down how many containers you’re putting out there. Because we don’t think our consumers are going to be buying more. But what did we see happen? The opposite now that they limited how many boats around the water that can actually take in containers, that demand is starting to escalate. But also the number of containers they have out need to start to rise little by little. So it’s a it’s a game of catch up? And when we talk about the price, maybe we’ll see it normalized somewhere around 10,000 $12,000. Hopefully not more than that. But I think 2022 is still going to be an elevated cost across the board.
Joe Valley 21:28
Is that still a five time increase in shipping container costs, though, right? If it was a an average of two, you’re talking about $10,000?
Francois Jaffres 21:37
Well, and here’s another thing, when I have these conversations, a lot of times we need to measure apples to apples, we need to make sure that we’re talking about from the manufacturer to the place that it’s being delivered and not just the port, the port cost. Because a lot of times we have conversations with clients that say hey, I’m looking at it on Fritos, or anywhere else, and they see $14,000. So like, I want it for $14,000. But what they don’t realize is well, let’s talk about damage and drainage from the port to the actual warehouse itself. How much do those trailers cost? How much are truckers charging? Can they return the container on time? If not, we’re talking about 1000s of dollars, potentially a week, and just having your container sit there because they can’t deliver it back. So it’s, I think, looking at it from the whole picture and not just saying, hey, this one aspect needs to come down. It’s kind of the concept of free shipping. Right? We talk about free shipping across the board, we say hey, this, this mug is $10. But free shipping, or you could say it’s $8 with $2 shipping. At the end of the day, consumers still eating that cost, the brands and the big box retailers, they’re still eating those costs, it’s just a matter of where are they eating those costs?
Joe Valley 22:45
So Pat, in your situation, your cost of goods sold because of the freight, the container cost has gone up by $2 a unit? Are you are you jacking your price up by $2 unit.
Pat Yates 22:56
I personally did not move our prices, we’ve had very good success with our customer base in many, many years. We didn’t move it at all, anything we discounted more to help with the inflation the United States. So it’s going to be a loss, I pretty much know that it’s it’s going to be you know, 10s of 1000s of units times a couple of bucks. But you know, hopefully it normalizes our customers are much more important that so
Joe Valley 23:17
that’s why you haven’t talked about your your fulfillment as part of what services are. Let’s touch on that a little bit. As part of what you provide to your clients, I think yes,
Francois Jaffres 23:29
yeah. But Pat, look at a curiosity, the cost itself, because this is a conversation that we’re also having every day, why not bring up this cost by a few dollars and have the loyal customers that you have and explaining to them, Hey, this is what’s going on. And this is why we need to increase some of our costs,
Pat Yates 23:46
I can tell you that I could give that explanation. I could put a video on my website, and salespeople are going to call and complain. It doesn’t matter anything that goes on, it’s difficult to pass any kind of cost along to a consumer, especially in this year. That could have been years where you would and I believe all these price changes are going to be fixed in people that are talking about inflationary increases in consumer products, they’re going to stay a lot of it has to do with the amount of money they’re paying people United States and the wages and things like that. There’s a lot of reasons but we just felt like that we want to do a better job servicing the customer service and the customer first and have a good price on an on a fun product that we have could squeeze another dollar out. Yeah. But it just didn’t seem right in this season. And I think that if it continues we’ll have no choice obviously. But it right now we just don’t want to do though.
Joe Valley 24:32
Now one thing to note here Francois that Pat’s not in a normal situation as an entrepreneur, right? He owns Happy Feet. He’s got family running it. It’s not paying his mortgage and you know, putting food on his table, necessarily. It’s it’s there. I think, Pat now as a real big bonus because your role at Quiet Light is you know, the income that one of them is irrelevant, right because you’re You’re getting kind of Quiet Light that is generating enough to pay you well, you’re not in a situation where you have to increase prices, because you’re living off of the business. Is that Is that a good assessment path?
Pat Yates 25:12
I would think it’s a good assessment, I’m in a position that some people are not in to be able to move in. I know my margins are really high to start with. So I feel comfortable that absorbing a little bit was the right decision this year, I don’t know that it would be in the future. Yes, that’s, that’s 100% the case. So we don’t concentrate on that portion a little bit. And we can eat some of it. But my plan, so the people that are Quiet Light that, understand businesses where I’m starting to understand this, as I’m accounting for it on a different line versus landed cost of goods sold on normalizing it against the normal prices, looking at the uptick and putting it on another line. And that could be something if it goes down, that there could be potentially add backs for people that spent that money in the in reverse. So I’m actually looking at it from a practical standpoint alone, as well as the other businesses I’m looking at as to whether something will change. It was better just to keep the price in the same for our customers who come in every year.
Joe Valley 25:59
Where are you putting that in your p&l? And
Pat Yates 26:00
what are you labeling it putting on a on a freight and duty import increase line, and then I’m going to go back and allocate it against the unit cost of what we imported for the actual taxes. But I’m going to keep it on a line that I know exactly an isolate what that increase was for what period of time.
Joe Valley 26:16
So in theory, folks, if Pat were to sell his business in q3 of 2022, he and the cost have come back down, or down to a lower level France was let’s say, they came down to 10,000, instead of 20,000 that he’s paying. He’s got that data right there in the p&l. And you can do an add back for that increase of that 10,000. Let’s say it normalizes that at 10,000. But he made three, let’s say he’s got 30 containerships, where he had an increase, I need to do better math here. 10 containers where he paid an extra $10,000, that’s an add back, right on that p&l, and that’s why he’s keeping that line separate. So you can easily identify it make an adjustment to an add back schedule. And if it’s a difference of $100,000, in terms of add back, and he sells his business for five times, that’s a half a million dollars added to the list price of the business. That’s really complicated. I’m sorry, for that. Francois fulfillment center, you got a million square feet, is this right?
Francois Jaffres 27:15
Yeah, that’s what we’re shooting towards. In the next few weeks, actually, we’re getting finished building up another one in just north of Atlanta, that’s going to add another 280,000 square feet of fulfillment space. And we’re working closely actually with the Port of Savannah. And that’s one I mean, when it comes to fulfillment, and three PLS, I think we’ve seen a lot of pop ups, right? When it comes to just the pandemic, because everyone’s looking for new three pls. It’s important to know who you’re working, it’s important to know what resources they have. We’re, for example, working with the Port of Savannah to actually understand the allocation that come to our space and getting the containers back to them and working on rates and working on timing. And they tell us, for example, with their KPIs are, you know, how quickly can they actually unload a lot of these containers? And we work that into our model of okay, when it comes to, let’s say, drainage? Should we be allocating three days of the container sitting in yard? Well, that has to be factored into the cost. A lot of the pop ups nowadays, I think, are not necessarily opportunistic. But I think they are not seeing the whole operational picture. And I think we will start to see the cost of three pls rise over the next few years. The cost of real estate by itself for three pls are skyrocketing. Right? I mean, we were putting out bids for different warehouses, and they’re coming in way over asking price, stuff that just seems abnormal. But at the end of the day, I think they’re going to start to increase their prices, I think, in this is where it gets complex. And I was asking you those questions about about, you know, you not raising those prices to the consumers is because I think the trickle effect of all of these issues with the upstream supply chain through the downstream supply chain are going to cause those costs to rise naturally. And I think for example, UPS and FedEx for oversized items, they’re increasing the cost by like 16%. I think in Jan, on January 1, they’re increasing their their standard rates by about 6%. And so you know, when you understand all these operational costs, and factor those into your pricing, it’s like, well, me as a consumer, if I’m seeing that everyone else is starting to increase the price. I’m probably willing to pay a little bit more for that product, especially with the conversation of inflation going around the board. It’s how bad do I need slippers and I need slippers pretty damn bad. I do. I do. So I’ll probably get some after this. But yeah, I mean, three pls. It’s through pls and fulfillment. I think it’s finding the right partner for your business and understanding your business at the end of the day. What are you trying to do? Are you just selling on Shopify? Are you just selling on Amazon? Are you planning to do both? Are you planning to go into Walmart or planning to go into Wayfair with furniture overstock with furniture or whatever the case is, and having those conversations with your three PL, we tackle that in a very similar fashion that we do to sourcing in the fact that we just learned everything about your business first, where do you plan to be in the next year or two, and then we can start working together. Otherwise, it’s just not a good
Pat Yates 30:17
fit. And make sense. First of all, there’s a lot of people out there that may not understand if they’re new entrepreneurs are starting to build products or getting a business to market now, for that matter. They don’t really understand what a three pill is, and I understand it, maybe you can tell them a little bit about how you’re set up maybe how small someone can be. I don’t know, if you do drop ship via email, if it’s all via EDI, if you send over batches and people and you download and ship them. Tell them a little bit about the flexibility if they’re trying to start a company what they can do, you know, coming into your warehousing.
Francois Jaffres 30:45
Yeah, I mean, we typically work with more established businesses for three PL, typically if you’re shipping anywhere between three and 500 units per week, at least. But we’ll take you on as a three PL client. Now, if you’re using us for sourcing all of that comes, you’re able to use our Threepio no matter what your sizes, and our sourcing size is somewhere around at least $10,000 for an initial project. And that’s also mostly because medium to large factories don’t tend to look at a project unless it’s at least $10,000. And so I guess when it comes to sizing, shipping out at least 300 to 500 units per week, the more the better, you get better rates at the end of the day. And for sourcing somewhere around $10,000 for an initial project at least depends on Customize. Now someone coming right out of the gate that’s just starting, you know, to get their feet wet with product development, for example, I think it gets trickier because we do have to educate them a bit more, for example, ideas and creations that seem very simple. It’s let’s say taking this bottle and adding a bigger handle to it. Because they think that you know, hand sizes are a little bit bigger. They might think that’s a very simple and easy change to do because the manufacturer already makes it but then we have to have the conversations of molding and tooling. Right? And who owns that? How much is that going to cost? How much do you have to produce per year for that to even make sense?
Joe Valley 32:08
There’s nobody have access to industrial designers to make those changes. Now it’s time No. Okay, so would you do outsource that to gamba? or inventus or something like that? Or? Or does the product owner have to come with the design changes already?
Francois Jaffres 32:23
Yeah, a lot of our product owners, we will try to work with them if they’re working with let’s say a fiber artist or an in house design product designer. I know gamma does offer that level. We don’t
Joe Valley 32:36
and Ventus does down here in Charlotte as well. They’ve been around for 20 plus years and Ventus yet.
Francois Jaffres 32:42
Okay. And they handle the upstream supply chain as well. The manufacturing and
Joe Valley 32:46
they can do some of that. Yeah. Yeah, you can. Yeah, I think they can do individual projects or all in one just like gamba. Does. They’re both good companies, good people behind them as well.
Francois Jaffres 32:57
Yeah, yeah, I heard gamba when I was on global sources a few days ago, they seemed like an awesome company. And, you know, a lot of I got some questions from some of the people in the company. Why are you why are you friendly with a lot of our competitors, why I think there’s enough space to innovate here in the supply chain. I think that’s the most important part, innovation and changing the way that supply chain solutions are looked at. Even they’re not just an added cost, but they’re a value add to your business. Finding the right partners, I think is extremely important. Especially if you’re looking to exit your business. If you’re looking to scale in the next 12 to 24 months, and you should be looking at the right partners not trying to do everything yourself. It’s a lot to manage at the end of the day.
Joe Valley 33:37
So what kind of clients do you guys work best best with? Is there any particular niche or product size or category?
Francois Jaffres 33:45
Yeah, anything I would say that’s non consumable. So no supplements, no food, products, anything that might go through the FDA also, we’re not very strong with. When it comes to the size of the company, I think if they at least have five to 10, product lines, or SK use, I would say they’re typically a great client for us anything more than that, even better, they typically have a lot more benefits of using our platform sort of this all in one system, less than that we will take on, it’s not that we won’t, it’s just that the projects do tend to take longer, first of all, because there is a lot more education that come into them. Right. So for example, if you’re designing new slippers, you have to typically come with a design pack and let us know Hey, these are how the actual slippers need to be made. Unless you’re just sourcing something off the shelf. Then we’re also capable of doing that just keeping in mind that project size somewhere around $10,000. Initially is is typically key.
Pat Yates 34:42
Francois I used to watch. So if you took any product, let’s say it’s a widget someone is sitting in their office saying I’ve invented this widget I want to make it I want to distribute I used to watch Road Runner so let’s use an anvil as an example. So I wants to make a really good anvil and they want to bring it to the United States. They don’t know how to start to make it import it or get it on the shelves and all they want to do is build a site and sell it, you can help start to finish provided the product fits in the volume is there that they can help start to finish get their entire supply chain set up is that basically what your model is? If someone out there is looking to do
Francois Jaffres 35:13
that? If they have product design, as long as they have product design for the anvil itself, then yes, we 100% can, we don’t work on the product design yet. It’s something that we might be looking into in a few years. It’s just the majority of our clients tend to work better with their own product designers and industrial designers to also look at the market. For example, if the child’s product, what certifications do you need, both in the US and in the EU. And in Australia, it’s it’s operations that were not the strongest step. And so we don’t want to really put our hand in something that we’re not extremely strong in. As soon as you have your product design and everything that goes into an RFQ or request for quote, let’s say quantities, target price point, product specifications, potential materials that you might want to use quantities where they’ll be distributed, what sort of certifications you might need, coming to us with that is essentially going to any other supplier and just saying, Hey, this is what we need. If you’re already talking to a supplier, for example, getting another quote on that doesn’t hurt, and it’s free. So it’s always worth just looking at diversifying your portfolio of potential suppliers.
Joe Valley 36:19
Right? Yeah, I think it’s critical when they especially if they know they’re competing against other suppliers, they may be a little bit more aggressive than their prices or terms, I would think that allows you to buy more inventory, and not run out and end up paying a higher cost because rates have gone up.
Francois Jaffres 36:35
And all that comes with scale.
Joe Valley 36:37
Because of scale. Exactly, exactly. How important last last question in terms of the relationships individually, you know, I keep I historically have always heard the best way to you get the best deal is to go to China and have dinner and drinks and get to know them and drink and drink and drink and drink and then ask for what you want. Do you guys have boots on the ground over in China, Taiwan things of this nature? Or do you just have these relationships? And you yield? We’ll the biggest word because you’ve got so many clients?
Francois Jaffres 37:06
Yeah, we’ve got over. At this point, I want to say about 6570 boots on the ground overseas in China, specifically Mainland China. And then chains where we have all of our manufacturers now we do have another office in Ho Chi Minh and Vietnam, setting up the supply chain there, it’s proving to be a lot more difficult than one might think a lot of times you think, oh, it’s China, Vietnam is right there, they are very similar supply chains will you have to look at the infrastructure, you have to look at their raw material suppliers, you have to look at the relationships they have with China at that time. A lot of it even is political. It’s understanding the politics behind what’s going on. Right. So we do have a lot of boots on the ground, they do form new relationships with suppliers every week. But we do have this, you know, essentially this this network of over 4000 5000, manufacturers factories that you can actually work with. And we handle all the communications with them for you. So it’s just a matter of, hey, I need this. And this is what’s part of the project. This is how many I need will get you a quote. Awesome.
Joe Valley 38:07
Awesome. Well, Pat, you have any more questions? I think, a lot of the questions for this for this podcast. I think it’s timely necessary. I think the clients that are out there listening to this podcast that how our E commerce business owners great resource for years Noviland, and getting a quote and seeing what it’s like making sure you’ve got a partner on your side to get better prices, better coordination, better planning better relationships, diversification, things of that nature. Pat, you got any last thoughts?
Pat Yates 38:37
No, I’m 100% agree with what Francois says. I think that those relationships are really, really big. And it can help. I think sometimes in the short period of time, everyone had to react when all this stuff came up this year was going to be difficult. The prices have been difficult for people really getting harder. The small businesses, you know, the bigger companies obviously have contracts that they’re booked out. But hopefully next year, it normalizes a little bit in Francios while you got a great business model and be able to take people from start to finish in the supply chain is an amazing thing. And I wish you the best with it.
Francois Jaffres 39:04
Thank you guys, I really appreciate it.
Joe Valley 39:05
I think it’s totally necessary because some of us, actually, most of us as entrepreneurs, we’re good at getting started. We can see to finish. It’s all the stuff in between that we get challenged with. And that’s the detail oriented stuff. And that’s what no VLAN does. So Francois, I’m excited that you guys are doing what you do. And we’ve connected both through your podcast on ours now. Can you tell the audience the best way to find you to reach you and connect with you?
Francois Jaffres 39:30
Yeah, if you want to ask me questions, personally, my LinkedIn is always available. There are actually not that many Francois Jaffres’ out there.
Joe Valley 39:38
I saw last name. Jaffres is actually right.
Francois Jaffres 39:42
Yeah, yeah. So if you look me up on LinkedIn, I should be the first one to pop up chat me connect with me. I’d love to talk all things supply chain so there’s no single problem that I probably haven’t heard over the past six years. But aside from that, if you want to get started start getting quotes you can talk to our sales team. If you want just go to Noviland.com you can create an account, it’s completely free to use and submit a request for quote, again, we are going to have to get on that call. It’s no matter your size. We hop on the call, no matter what for sourcing for three PL for logistics, whatever your need might be, we have to understand your needs. Anyone that offers a one click solution, I think it’s going to be very tricky, especially right now. So yeah, I would just come prepared, you know, let us know your problems, and we’ll let you know what solutions we could find for you.
Joe Valley 40:28
I will put the LinkedIn profile in the show notes and Noviland is and Noviland.com That’s why thanks for joining us on this episode of The Quiet Light Podcast.
Francois Jaffres 40:41
Thank you guys.
Today’s podcast was produced by Rise25 and the Quiet Light content team. If you have a suggestion for a future podcast, subject or guest, email us at podcast at quietlightbrokerage.com Be sure to follow us on YouTube, Facebook, LinkedIn, Twitter and Instagram and subscribe to the show wherever you get your podcasts. Thanks for listening. We’ll see you next week.