A clever concoction

by Array

Say you’re a successful small producer of liquid foods. You need to move temperature-sensitive product to and from your warehouse in an efficient way, but you don’t have the buying power of a major player. How do you do it? Deborah Aarts explains Happy Planet’s collaborative approach.

A lot more goes into shipping a bottle of juice from Happy Planet Foods than good vibes.

The British Columbia-based company deals in organic liquids. It has grown steadily since its founders started the business with two juicers and a blender in 1994; today, it ships its juices, smoothies, soups, sauces and concentrated nutrient-rich ‘shots’ across Canada and into some parts of the US.

But at its core, Happy Planet is a niche producer. It has found success processing and shipping out relatively small orders.

It’s a business model that can be tough to support logistically. Finding a cost-effective way to store and transport heavy liquid product—without veering from strict temperature controls and expiration dates—is intimidating for even large companies with dozens of people devoted to the task.

It took time for Happy Planet to develop the right supply chain processes. But today, by mixing together creative thinking and a co-operative spirit, it’s implemented a set of solutions that has everyone smiling.

A sticky situation

The hub of Happy Planet’s logistics operations is a 40,000sqf temperature-controlled warehouse in Richmond, BC. Inside its walls, the company stores the juices and purees that go into its concoctions, as well as racks of finished product.

With the exception of soup (which is processed within the same complex as the warehouse), all product is blended, packaged and palletized at a facility located a 20-minute drive away. With inbound deliveries, outbound shipments and the constant shunting of raw materials and finished goods to and from production, there’s a steady stream of perishable product passing through the warehouse.

This activity falls under the supervision of Nancy Korva, Happy Planet’s director of operations. Korva joined the company not long after it started and worked there for eight years before leaving for two. Upon her return three years ago, she found that the supply chain processes in place left much to be desired.

At that time, the company had outsourced its distribution and warehousing operations, and substantial issues were arising, mostly around the company’s shipping patterns.

“Because we are a small business, and because we often operate in case volumes instead of pallets, working with a 3PL did not give us enough flexibility to serve our customers in the way we wanted to,” she says.

So the company decided to reclaim control of its supply chain. The first step was finding a new warehouse. But the high cost of refrigerated storage space made it difficult for the company to justify the cost of occupying a facility of its own.

The solution, then, was to find some partners.

Come together

Through its connections in the food supply chain, Happy Planet found two companies willing to share space. The first, ColdStar Freight Systems, is a 3PL specializing in temperature-controlled food logistics that Happy Planet has long used for some of its BC deliveries. The second, Liberté Natural Foods Inc, is an organic foods manufacturer that Happy Planet supplies with product.

Today, the three companies share the warehouse space—which is split into freezer, refrigerated and dry (ambient) areas —and the costs associated with it. The lease governs who has control over what space, but the rules are not iron-clad; each company is comfortable asking the others for help on occasion. For instance, if an inbound delivery comes in on an off-shift, ColdStar might unload it if no one from Happy Planet can be there. Or if Liberté needs a little extra storage space, Happy Planet might lend some racking for a few weeks, perhaps in exchange for usage of Liberté’s high-reach forklift.

Such informality may seem risky, but Korva says the arrangement is anything but.

“We have very trusting relationships. In the two years we’ve been there, we have not had one case of product stolen,” she reports.

“I think the fact that we have business relationships strengthens the arrangement. Because Liberté is a customer and ColdStar is a carrier for us, we have common goals.”

Special deliveries

The warehouse gives Happy Planet enough flexibility to handle its unique flow of inbound and outbound deliveries.

Inbound traffic is made up almost entirely of raw ingredients. Some of it, like apple juice, comes from local producers. More tropical fare, like orange juice and banana puree, comes from vendors as far away as Costa Rica.

In the past, much of the juice and puree arrived in steel drums. These drums gave Happy Planet the necessary ability to order small volumes, but presented a number of problems. First, their cylindrical shape took up a lot of storage space—only four, at maximum, would fit on a pallet. Second, they were difficult to transport in a cost-effective way, especially when they were empty. Third, as the price of steel was rising, they were becoming much more expensive.

Over time, the drums became a problem for the company, and it began looking for alternatives. A local distributor—Abbotsford, BC-based Barr Plastics—suggested something entirely different: a collapsible, reusable plastic tote.

Happy Planet was curious, and started testing the tote in question—the Citadel intermediate bulk container (IBC) from Buckhorn Canada—nearly six years ago. Today, the company uses a fleet of more than 100.

Each of the totes holds a food-grade liner, which suppliers can fill with up to 302 gallons or 3,000lb of juice through a built-in valve. Once the juice has been emptied at Happy Planet’s production line, the liner is discarded and the tote collapses. The folded totes are then stacked atop one another for backhaul trips, with six taking the space of one erected tote.

“When you’re shipping juices or liquids, you can only get a certain amount of product on a truck before you’re considered overweight,” explains Eric Kwan, sales manager at Barr Plastics. “This helps offset that. [Happy Planet] can ship the totes full one way, then collapse them. They can ship the collapsed totes back in much less space, or hang onto them until they have enough to fill a truck. Either way cuts transportation costs.”

Jim Morrison, general manager of Buckhorn Canada, adds that the sterile liners protect Happy Planet’s juices from contamination, which provides “substantial peace of mind” in an industry where safety is crucial.

Happy Planet now uses the totes to transport its highest-volume raw material—orange and apple juices—to and from suppliers, the warehouse and production. Korva likes that they’re reusable, and that they stack so well on return trips, but perhaps more than anything, she likes how much space they’re saving in the warehouse. She can now store in one pallet position what took up two in drums.

“That makes a huge difference, especially when you’re talking about refrigerated storage, which comes at a premium. You want to minimize the amount of space you’re using,” she says.

The inventory sweet spot

How Happy Planet will turn that raw inventory into finished goods is determined each Friday, when a team of five meets to go over the inventory on h
and, determine what needs to be sold and plan what should be produced in the coming days.

From that plan, Korva and her team prepare the raw materials for shipment to production. Some, like frozen raspberry puree, must be pulled from the freezer for a controlled thaw. Others, like juices, must be pulled and staged. All is sent to the processing facility just in time to start production on Sunday evenings.

Finished product—palletized and packaged into bottles, gabled packaging or Tetra Paks—usually starts to arrive back at the warehouse on Tuesdays, depending on how quickly a truckload is filled at the plant.

The finished goods are stored in the refrigerated area of the warehouse until customer orders come in. But they don’t sit around for long—on average, the company keeps about 1.2 weeks of finished product in stock.

“We pay a lot of attention to inventory,” Korva explains. “There’s a lot of money tied up in inventory, and that just flies out the door if you don’t manage it properly.”

The warehouse staff conducts inventory checks once a month for raw materials and once a week for finished goods. There are barcodes on the product’s packaging, for use in the retail chain, but the company uses no internal barcoding in the warehouse. Counts are done manually and then fed into an inventory management system called Trax.

It’s a fairly low-tech process, but thanks to systematic double-checking by multiple individuals, it is on average 99.75 percent accurate. That means of the tens of thousands of cases of finished product on hand, Korva’s inventory counts are seldom off by more than five cases in a week.

Shipping out

Finished product leaves the warehouse by truck for delivery to grocers and retail customers.

Initially, Happy Planet’s size made it hard for it to secure outbound transport, as its volumes were considered by many carriers to be too small to bother with. Early on, it managed this by partnering with companies like Liberté to share loads.

As the company’s shipment volumes grew, finding space on trailers became less of a problem. It now regularly books full trailer loads, and, thanks to its co-operative ethos, is saving money doing so.

When it is unable to fill a trailer with its own shipments, Korva will ask the customer she’s shipping to who else it orders from in BC. If the customer is willing to share the details, she will contact those suppliers and offer the spare space in the trailer at cost.

“For us, it’s great, because we fill that space. For the other shipper, it’s great, because we give it to them at cost, which they could never get otherwise.”

It’s a friendly—and mutually beneficial —gesture intended to help Happy Planet’s peers avoid a common small-shipper dilemma.

“I know what it’s like trying to get space for two pallets to Toronto,” Korva shares. “It can be a nightmare.”

When it comes to choosing carriers to move both inbound and outbound product, Happy Planet’s focus is on consistency. The company uses between 10 and 15 trucking companies, and experiences very little turnover. Many drivers are familiar faces; over time, they’ve gained a good knowledge of what the company ships and how it must be handled.

In Korva’s view, this familiarity causes carriers to take extra caution when moving shipments—something that is especially important when it comes to the temperature controls under which Happy Planet must operate. The company’s finished goods cannot be frozen. While she feels most trucking companies’ adherence to cold chain restrictions is dramatically better than it once was, she likes knowing that the drivers care about the business.

Proper refrigeration is a big concern in the warehouse, too. The temperature is checked and recorded multiple times each day, and a few times a week the company’s quality assurance team visits to double-check that things are in order. A backup generator is on hand to sub in if the power fails.

“We take temperature abuse very seriously, because we know that abuse of temperature is going to shorten shelf-life,” Korva says. “And shelf-life is critical for a company like us.”

Outside the comfort zone

Happy Planet’s supply chain is positioned to evolve further. New product lines will add to the complexity and volume of product that has to be managed. The company is considering using rail for some eastbound freight. It is also thinking of expanding more into Atlantic Canada and the US.

Whatever direction the company takes, Korva plans to keep collaboration a cornerstone of the supply chain, both externally with other companies and internally with other departments. “Logistics is not a one-department thing,” she says. “We have to see the bigger picture.

“People now are really looking for ways to save costs and to be more competitive. It’s fantastic, because in a way, it’s forcing people to work together and get outside their comfort zones a bit. I don’t think that’s a bad thing.”

The juice on Happy Planet warehouse:
Inside the company’s Richmond, BC warehouse

Size: 40,000sqf, shared with two other companies

Dock doors: Eight

Warehouse staff: Nine, working one shift, five days per week

Inventory: A mix of raw materials (juices and purees) and packaged finished products

Raw material transportation: Buckhorn Citadel IBCs from Barr Plastics

Software: Inventory management system from Trax

Industrial trucks: Two Raymond forklifts