Working Like a Dog to Fill Pet Food Surge Orders
When significant growth at all-natural pet food company The Honest Kitchen compelled leadership to rethink its omnichannel logistics strategy three years ago, the company turned to long-time partner Saddle Creek Logistics Services for solutions.
More to the Story:
The Honest Kitchen, a manufacturer of minimally processed, human-grade, all-natural pet food, offers nearly 80 product options for dogs and cats. The company sources ingredients for its pet foods, toppers, treats, and supplements from the human food supply chain and manufactures in human grade-approved facilities.
Saddle Creek Logistics Services is an asset-based, third-party logistics provider headquartered in Lakeland, Florida. It specializes in designing and delivering omnichannel logistics solutions for manufacturers, retailers, and e-commerce companies.
That was a fortuitous decision considering how COVID-19 upended the company's business in the second and third quarters of 2020. Working side by side to make daily decisions in a dynamic environment, the pet food company and its third-party logistics (3PL) provider filled a record number of orders safely by leveraging the flexibility of the system they had implemented earlier.
The Honest Kitchen has been nimble from its start in 2002, when founder and chief integrity officer Lucy Postins followed a hunch that nutrition could help her dog's health problems. Turns out she was right, so she began selling healthful, homemade people food for dogs from her San Diego, California, home under The Honest Kitchen brand.
During the next three years, staff doubled—to two—as the company added grain-free meals and treats, and received approval to use the term "human grade" on its products.
Today, with more than 50 employees, The Honest Kitchen offers nearly 80 options from five product lines for dogs and three product lines for cats. The company sources its ingredients for pet foods, toppers, treats, and supplements from the human food supply chain and manufactures in human grade-approved facilities. While it co-manufactures most of the products in the Midwest, the company recently opened a West Coast manufacturing operation to produce its Whole Food Clusters, a dry dog food line.
The company partnered with Saddle Creek back in 2006 when order volume grew to the point where Postins knew she couldn't keep filling orders from her kitchen. The logistics company assumed fulfillment in its San Diego facility.
The two nimble and entrepreneurial companies grew together. Today, Saddle Creek fills The Honest Kitchen's food orders from its larger Buena Park, California, and Joliet, Illinois, distribution centers.
Small But Mighty
As e-commerce has grown in recent years, so has The Honest Kitchen's business. While maintaining its commitment to small, independent pet stores, the company has grown through sales on Amazon and Chewy.com. It also offers direct-to-consumer sales on its branded website.
Jeff Jones, Saddle Creek's vice president of business development, wasn't surprised to see the pet food brand's sales take off online. "Consumers are passionate about their pets. They'll feed their dogs before they feed their kids," he jokes.
In 2017, with double-digit year-over-year growth, The Honest Kitchen worked with the 3PL to devise a strategy that would allow Saddle Creek to optimize warehousing and fulfillment for omnichannel distribution. Jones' team managed the growth strategically, with an emphasis on pairing the brand's expanding profile with the most appropriate options among Saddle Creek's now 49 locations.
"Each facility has its own capabilities and personality, so we look to ensure a good mutual fit," Jones says.
And then came COVID
That strategy has worked. "Through our partnership with Saddle Creek, we're able to facilitate best-in-class fulfillment that supports our growth," says Jake Fuller, chief financial officer at The Honest Kitchen.
The omnichannel expansion support was in place and on autopilot when COVID-19 hit in early March 2020. That's when all projections, business rules, and expectations went out the doggy door.
"In March, we saw a dramatic increase in order activity across all channels—from our online partners, but also from independent pet stores," says Fuller. "We faced an unprecedented challenge: How do we fulfill and ship a great number of orders in the expected time frame to support our customers' needs and demands during a difficult period?"
"We saw record online orders as people stocked up during the early days of the pandemic," says Jones. "There was also a lot of disruption with retail customers as volume migrated away from stores to e-commerce."
The partners strategized frequently, making decisions in a constantly changing environment. For instance, the team continuously reprioritized orders to best meet customer needs across all channels.
Other changes included constantly shifting inventory levels across the 3PL's distribution centers and filling orders based on product availability and which facility had enough in stock to ship complete. The strategy wasn't optimal, but it worked.
Business decisions weren't limited to inventory levels and locations or how to prioritize orders, though. Saddle Creek had to keep staff safe, too.
"Many early conversations were about our facilities," Jones says. "The safety of associates was our first priority."
Concerned initially about staff level, the 3PL was able to maintain 95% associate attendance throughout the crisis. Without knowing what was to come initially, however, the company needed contingency plans in case there was an outbreak in any of its facilities, including the two serving The Honest Kitchen.
"We had to plan for events like trucks not being able to pick up orders," Jones says.
Adjusting to disruption
COVID-19-related changes at Saddle Creek facilities included reorganizing on the floor to increase distance between employees, staggering shifts and breaks, and providing staff with personal protection equipment. While there was always pressure to keep filling orders, facilities had to plan for regular deep-cleaning, too.
"We took a slight productivity hit early on, but we adjusted accordingly and quickly got back to our normal high degree of service," says Jones.
Joey Smits, director of inventory management and logistics at The Honest Kitchen, appreciates how Saddle Creek could bring in staff usually assigned to other clients as needed.
"Saddle Creek could be flexible and nimble because their staff is cross-trained across various clients that use systems that are similar to ours," Smits says. "During unprecedented times, it was good to know that they had the option to go with the flow and support us."
The partners acknowledged early on that the 3PL wouldn't always be able to meet service level agreements during the pandemic. When the original assumption is 1,000 orders per day and volume jumps to 5,000, something has to give. So, they put the focus on understanding the situation and discussing how to prioritize the workload when making decisions about specifics, such as whether to emphasize receiving inventory or processing outbound orders.
Because the pandemic didn't significantly disrupt the raw material supply chain or the co-manufacturing operation, the pet food company could replenish inventory and even introduce new products. What's more, in addition to meeting existing customer demand, the brand also acquired new customers from companies that struggled to fill orders.
Today, both companies are well positioned to weather any future pandemic-related shutdowns. With a stable situation now, they're returning to collaborating on various projects, including building variety packs for the pet food brand's new Pour Overs, Butcher Block Pates, and One Pot Stews.
For instance, the 5.5-ounce Pour Overs, known as "toppers," are sold in cases of 12. When The Honest Kitchen began thinking about how to let customers sample the three different protein flavors before committing to a case, it discussed options with the 3PL. Saddle Creek now bundles the product into three-flavor variety packs for e-commerce.
"We started by telling Saddle Creek that we don't know how much product we need, and we don't know how well it will be received, but we need your help," says Fuller.
Saddle Creek assembled a small number of variety packs to start as the brand tested the idea. "Now we kit thousands monthly," he adds.
The long-standing relationship and shared entrepreneurial spirit make these successes possible. While Jones notes that his company continues to look for ways to help The Honest Kitchen provide value to customers, Smits sees the 3PL as an important part of the pet food company's team.
"The Saddle Creek team is a natural extension of our business," says Smits.