July 9, 2024 • 30 mins
In this episode of Experts Uncut, we look behind the scenes of the Food Supply Chain with Howard Graham, a food entrepreneur turned consultant who has worked with some of the world’s largest food manufacturers, distributors, and investors.
Howard discusses how consumer trends have evolved over the last 30 years and the impact that has had on how companies buy, ship, store and sell food products. He also shares some of the techniques he and his team of experts have used to simultaneously reduce food supply chain risks and costs.
Whether you're starting your own food or restaurant business or responsible for hundreds of millions of dollars of food and beverage spend for a large corporation, this interview with Howard is absolutely worth your time.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
The expectations of food are higher than they've ever been. Food TV,
celebrity chefs, and all these things are really mature concepts now,
but we think about our generation where you ate what mom put on the table. Yeah. That's changed.
We want everything to be more sustainable, healthier in general,
right? But we also want more availability and we want it now.
Interest and taste want interesting food, healthy food, innovative food.
(00:24):
You know, thinking about how to eat food on the move. It's an initiative that's
always alive within all of my clients.
How do you create food that can be eaten on the move? We're on the move as a society.
How you interact with food and how it's consumed affects all of us.
And we all have our own interesting nuances as to how we like to consume it,
when we like to consume it, and where we like to consume it.
(00:47):
Hey everyone, welcome to another episode of Experts Uncut here with your host Simon Rycroft.
I'm excited to have with me actually a colleague from Tenzing,
but a deep expert in our network on food, and the restaurant business.
So appreciate you coming on, Howard. How are you?
Great. Happy to be joining you, Simon. Awesome. All right.
(01:08):
Well, let me always go into a bit of background on who you are,
and then I'll pass over the mic.
Howard Graham is a long-term member of Tenzing. He's actually a director and
a practice leader here for us at the firm, but his background is pretty unique.
So he's worked in the grocery business. He's run restaurants.
He actually operated an internet based seafood specialties business.
(01:30):
So I'm going to ask some questions about that when we get into it.
But uniquely, he's also published a book and sold cookbooks on QVC, which is kind of cool.
Howard works with us across clients and focuses on areas like buyouts,
financial stress, entering new markets, optimizing operations,
but generally with a focus on food and beverage.
(01:53):
Howard's also taken on interim executive roles in the past, including interim
chief supply chain officer at Feeding America,
the large nonprofit in the U.S., where he helped them launch a nationwide network
of regional produce cooperatives, helping those most in need gain access to healthier food,
(02:14):
which I think is admirable and pretty cool.
So excited to have how it on and it is a friday i
don't know when we've edited this if it will be going out on a friday so
i'm catching him at the tail end of a pretty pretty extensive
and busy week so i appreciate your time but let's
kick into it i think you know when you and i first met you know we we were just
(02:36):
talking about general food procurement food supply chain and you just went off
on another whole direction and path i think i hadn't really even thought about
and it's one of the things I love about our,
Tenzing platform is the depth of expertise and the very background of people
that operate in our network.
But how did it all get started, right? I'm sure you necessarily only your first
(02:59):
restaurant when you were 15.
And then it's, you know, never look back. I mean, how did you first get into the food business?
Yes, I think it's an interesting confluence of one sort of hands-on experience.
One, starting as an early teenager, my cousins were very successful in the Italian
and grocery, wholesale business, they also had retail storefronts in Pittsburgh,
a lot of notoriety around their business.
(03:21):
And it was a very exciting place to work as a young teenager, right?
For example, when Luciano Pavarotti came to Pittsburgh, the first stop on his
tour was Sinceri's grocery store, right?
So when Reggiano Parmesan, when the largest wheel of Reggiano Parmesan cheese
was ever created, where did they display it? They displayed it at Sinceri.
(03:41):
So right there's this very romantic sort of nostalgia around having worked in
that business and as you know from the firm right everyone mentions oh my god
you know howard's part of that extended.
Family it's very it was a very exciting place to be
and also too to you know have the mentorship
of just sort of an appreciation of food right
(04:02):
so you know we're in this very commercial cost-driven efficiency-driven
part of the business but the original passion was you
know being around folks who could really
teach me what fine food looks like not not culinary
but just in its raw form this is a
great piece of restricted department this is
a great piece of cheese right and and taste this right and enjoy and see the
(04:27):
difference between the the milk from a goat versus the milk from a cow those
kind of things right i mean it was really interesting to be in that environment
and continually learning about the different qualities and nuances of food.
And then I get into consulting after business school, right?
And I learned this heavy commercial bent of consulting and cost optimization
(04:50):
and these types of things.
And then spent some time in the restaurant business, actually built five restaurants,
started a specialty foods business, had some success selling cookbooks on QVC.
So the journey Journey continued, right? And then as I transitioned back to
management consulting, it was a natural place to hang my hat.
I'll actually circle back to one other thing too. My undergraduate education was in economics.
(05:15):
And you think about really something that is an example of economics,
basic supply and demand,
true commodities like food, ingredients, crops, are an incredible reflection
of true supply and demand at all times, right?
It isn't, there isn't a ton of margin in it. The prices are constantly moving.
(05:35):
There's tons of market, there's tons of transparency in those markets.
So that part of it resonated with me as well, right?
So I take this passion for the food business that developed an early age.
I have some formal education and forms and an additional layer and lens to my
point of view. And then you layer in management consulting.
And then as I transitioned back to management consulting, I've said,
you know, it's the one area within the firm or within large firms where the
(05:59):
expertise isn't truly resonant.
There aren't a lot of people that, there's lots of people in sort of financial
services, insurance, even manufacturing, lots of folks there.
But in the food business and sort of a deep understanding of agricultural commodities
was something that wasn't there.
And I said, that's where I'd hang my hat, right? Was I'll be the foods guy,
(06:22):
right? I know enough, I have this hands-on experience.
I'll be the foods guy and that'll be my entry point back in the consulting,
right? And of course, the firm grabbed onto that, right?
Tom saw that opportunity to say, wait a second.
This guy has a very unique set of experiences, unique point of view.
Let's see how far we can run trying to pick up more clients in this space.
(06:44):
And certainly, it's only enriched my point of view, right? We see some very
interesting situations.
I have access to very interesting people.
And I say, it's only continued to enrich my understanding of the business and
the nuances that I continue, or I should say, only reinforce my belief.
It's a really unique place to operate. You know, thinking about the agricultural
(07:05):
supply chain and how you go from, as Tom likes to say, from barn to belly is
the Tom McLeod phrase, you know, sort of field the table type approach.
And that learning that really there's a unique culture within the business.
There's more paradigms of cooperation and cost optimization are far more prevalent
(07:26):
than just competitive pricing paradigms, right?
The parties in the value chain tend to work together in a much more integrated
way because the producer faces so much risk, right?
Pestilence to crops, crop loss, all these things, that affect availability.
Look at the effect of organic crops in Ukraine, right?
(07:48):
We have a war in Ukraine that wiped out a large supply, a large portion of the
supply of organic grains for the world, right?
So this sensitivity to the producer and the pressures that they face,
sort of engenders a sense of respect among the other parties as to how they're
(08:09):
going to operate within the culture of this industry.
And knowing that the margins are tight and they can be quite variable.
Thinking about our approach as a firm, or as I was asked to say,
what is our approach? How are we going to do this differently than big firms?
How are we going to put you in front of clients and have an original point of
view? And I said, it's really about efficiency, right?
(08:31):
You can't extort the different actors in your value chain.
You actually have to figure out what is the optimal design?
Who are the right partners at the right time? And how do I get them to work
together to go from the field to the back door of my restaurant or the back
door of a retail grocery outlet or whatever it may be,
(08:52):
or the back door of a factory where those raw materials are then going to be
turned into finished goods.
So it's been an interesting place and an interesting time to operate.
And I like, I mean, I've had an interesting opportunity to build a practice
around some unique skills and unique perspectives.
We've taken up a habit of sort of creating code names and nicknames for my experts in different areas.
(09:14):
We've got the milkman. We've got the chicken man, the multi-billion dollar poultry buyer. We've got Mr.
Eggstradinary, who sold his egg farm for $500 million to the largest publicly held egg company.
So it's been a fun place within the firm. And those names are out of respect.
It's not something that diminishes. It's sort of code names
(09:37):
we go these are really extraordinary people that have extraordinary insights
and skills that are now sort of resident within me right it's the benefit of
of how we work right i'm learning from folks every day that's enriching yeah
no i i love that backstory and fast forward to you know there's some of the
other people in the network that go down to the,
(09:57):
specific item the product group even you know the the the protein.
I've enjoyed having some conversations, even early stage with clients,
and they haven't chatted with you before. And I say, okay, you've got to meet this guy.
If food and beverages is a product group, or there are certain subcategories
that you want us to look at, or you need some different perspectives on.
(10:22):
Like this guy ran restaurants.
He's run distribution in the past he knows the
sea levels across across the supply chain that
you're likely working with and oh guess what he also you
know he's the author of a book and has been on qvc i just i
love ending with that because you rarely bring it up you give an
overview of your background but i think it's pretty
(10:43):
cool and unique we were even talking about this was
two weeks ago and you you often send me down a rabbit
hole you talked about the origin of of chicken
wings because i think we were talking about protein is it protein efficiency
or protein optimization so i i was googling
you know where did chicken wings come from and there's the whole elaborate
story and you know in uh in new york
(11:04):
where someone is running a pizza restaurant ordered ordered chickens
and then accidentally ordered chicken wings by mistake
and then just decided to cook them up that evening for
for her kids i mean it's just there's so
many things people don't necessarily know about
things like food that they you know obviously they
interact with and eat on you know three days
(11:25):
three times a week or three times a day sorry but
what's been uh because you've
worked in broad supply chain and transactions as well what's been a kind of
a fun story or you know a cool client obviously you know confidentiality can't
share names but a kind of a cool program or project that you've worked on that's
(11:45):
that's looked broadly across supply chain Yeah.
So I think the one I'll lean on the most that was the most fun and it pulled
in all the elements of food supply chain was the merger of two of the largest
casino operators in the United States.
And they wanted to, as the two companies were coming together,
(12:05):
both had a culture of allowing the individual properties to have a lot of freedom
to buy what they want as long as they're making their margins and the general
manager at the property was making his P&L targets, everything was fine.
But as the businesses merged, there was a thrust to say, hey,
let's really professionalize food and beverage.
(12:28):
We know there's a lot of low-hanging fruit here. We think there's opportunities
to just institutionalize a better way to buy food food and beverage and haven't
moved into our individual properties. And-
What was fun about it was that there was so much sort of training.
I don't like to use the word education, but so much sort of illuminating for
(12:52):
them. How does the food supply chain really work?
And where do we want to buy it? How do we want to move it? Where do we want to store it?
And that's how we'll optimize cost instead of just negotiating prices for,
for example, all the casinos had a big Mother's Day promotion with chocolate-covered strawberries.
Strawberries well they were buying strawberries at the
(13:14):
peak of the market and then trying to
measure savings on something that the market is going up right
so how if i if i from the month of april through the month of july your prices
are going to are your prices are going to continue to escalate through that
period simply based on supply and demand and so helping them think through well
(13:35):
what we need to do is think about when to buy them or when to contract them versus just,
buying them right before the Mother's Day promotion so we can put chocolate-covered
strawberries in every casino.
And then two, helping them think about the simple philosophy of,
I call it full truckloads in, full truckloads out.
Don't buy anything that doesn't move in a full truckload because basically you're
(13:56):
subsidizing the empty capacity of truck.
So teaching them, okay, instead of asking the supplier for a price on a product.
We're going to go to the supplier and say, where do you ship full truckloads?
And we're going to buy it from there.
And then ideally what we're going to do was consolidate the freight portion of it, right?
(14:17):
Let's only buy products from suppliers who ship full truckloads into US Foods
or Cisco or one of the top distributors, right?
And sort of flipping the paradigm on its head instead of fighting for cost all
the time, let's look for the efficiencies in the system.
And it's had its challenges kind of getting folks to think.
(14:39):
But in the end, when we'd run those workshops with the individual properties
and say, okay, here's your new catalog, You no longer have 20,000 SKUs to buy. You have 2,000.
We went from 20,000 to 2,000 at each property and still service the business.
So folks are buying things of different prices and different quality.
(15:03):
And we were able to say, hey, if we set up a framework for sort of a good,
better, best, and then we properly catalog and you buy according to the program,
we're going to drive cost out of the system.
And the big takeaway was that suddenly what they didn't realize was they thought
because they bought a lot of stuff from a supplier, it made them a valued customer.
(15:23):
What made them an even more valued customer than distributors was,
is this a valuable piece of business because it's efficient for me?
Are they buying stuff? Do I have to go move a quarter truckload of some rare
product into my distribution center and then move it and sell and then sit on dead stock,
right from time to time it's like no if you will buy from me all the stuff that
(15:47):
moves in in full truckloads and then you guys buy big enough you're moving full truckloads of property.
We're doing full truckloads in, full truckloads out. And then because the business
was so attractive, the distributors were willing to pay to acquire the business, right?
Instead of us just negotiating better prices on products, which we did,
they were also willing to say, oh, wow, this is a piece of business that we'd
(16:11):
like to have for the next five years in this structure because we know we can
make money doing it, right?
And it was a very interesting paradigm to sort of flip that on its head with
a large team across the entire country.
And there was even a sort of end on one funny note as we were rolling that program out.
There was one week. So I had to hit the property.
(16:32):
We sort of grouped properties and I flew from my home in Savannah to Pennsylvania,
to Kansas City, to New Mexico.
To Las Vegas, to Chicago and home just to go and roll out these workshops and
help the properties he's adopted. And it was kind of funny.
I designed that trip because I wanted it to be like running the gauntlet and helping the team.
(16:57):
It was a memorable experience, great client.
And it brought together all the elements of as we worked every single food category.
Who's the best? Who should we be buying beef from? Who should we buy poultry
from? Who should we be buying every single skew?
And that piece of work still remains sort of
a really cornerstone piece of work within the firm we we distribute
(17:18):
that as an example of what a really good
skew rationalization product rationalization efficiency driven approach to procurement
looks like i'm very proud of that piece of work and i think skew rationalization
is is is i mean it's it's an initiative that's used in manufacturing right it's
kind of it's a i'd say this is a quote-unquote lever or
(17:41):
a way to optimize spend for spare parts management, right? If you're an e-com company.
But in the food space, it's somewhat unique because just taking out cost is
wrought with risk, right?
I mean, if you're in the restaurant business, you've got to deal with culinary
strategy and culinary operations considerations, unpredictable customer demand,
(18:08):
changing customer needs, right?
Competition, all those types of things.
But I think the work that you did there from a skew rationalization,
I could see as being, and I know you've done this in other sub-industries, but relevant in...
Grocery right you know hotel broader hospitality food service distribution,
(18:30):
restaurant groups even facilities management you know companies that are delivering
catering for their own end clients right just i can't remember who the chef
was i remember you know one of these tv shows where the chef goes in and helps
you know the restaurant's about to close down.
And you know the chef will look at the menu and come up with
(18:51):
innovative ideas to kind of improve the margin i remember one where
i think they cut the scallops in half and
then just said you know turn it on its side the end customer won't know
the difference and you've half the cost on you know on the
individual plate like those things do happen but
they do at scale year over year
right and then exchanging out the
(19:11):
quality of the product there's risks if it's
not done properly so many different stakeholders that
need to be involved and and nuances so you
know i think your your approach to it you know in
the way that you've done it with some of these key experts for clients i think
is uh it's it's kind of cool what was
the has there obviously been if i go to a grocery store you just turn over some
(19:35):
of the packages right and there's every country in the world right and it's
always amazing to see that have you seen uh we see reshoring in other parts
of the business right people moving more closely because of supply chain challenges and risk that,
everyone, irrelevant of where you live or industry you're in,
if you're buying products, has been a consideration in the last four to five years.
(19:58):
Have you seen a reshoring and people looking for closest agricultural sources across your clients?
Is that a big shift or is that something that's just starting?
Yeah, so I would say the shift is, one, in agriculture, the shifts have occurred.
It's more about the source of supply. So when we think of reshoring,
we think a lot about where the product is going to be made versus where I'm
(20:23):
just going to source materials.
I think in the food business, it's largely driven by where am I going to source materials?
Well, you source materials where it's in season, where it's actually growing
and available at that time, and two,
is not affecting foodborne illness or other effects like the war in Ukraine
(20:43):
that would drive shortages. So...
The business has been in culture to kind of move around the globe at all times,
trying to find places to get raw materials, meaning produce even animal protein
and so forth, wherever the benefits are.
For example, you create example, but even in a domestic example, Avion Flu.
(21:05):
I had an egg client during Avion Flu, a shelled egg company during Avion Flu.
They were having to kill large, large parts of their flock just to service the business, right?
And then birds just don't suddenly grow.
You know, they've got, the bird doesn't grow to a producing level tomorrow.
I mean, that's the same with all animal protein, right? There's a replacement cycle.
(21:29):
Now, certainly good, we call it flock management, right?
There's flock management where you're, you're growing new birds into the flock
at all times. But just managing through those risks, and I think on an international
level, the organic grains risk with Ukraine, it's not something new to food.
It's something that goes on all the time. For example, they had fires in Chile
(21:51):
that wiped out a large portion of the grape crop in the mid, I'd say, 2015 or 2016.
So there's this total shift in where people were buying grapes to make wine.
Things of that nature are real and present in the industry. I think production
continues to be domestic.
I think the other element is the U.S. is still feeding a large portion of the world.
(22:14):
Our food production system and our supply chain is sophisticated enough here
in the world that we export a lot of food.
And the impacts of international trade and how we export are very real.
And it's not just if other countries that we are suddenly exporting tons of
(22:35):
our corn and our soybeans and other things to assign tariffs to that,
it's almost the forefront of economic warfare.
It's frightening to use that word, but as we enter a world where there's a very
adversarial global approach to where the economic alliances are forming.
(22:56):
How that stuff plays out has a real impact. And two, that's why you see,
you know, people talk about farm subsidies and how much, how much money our
government puts into farm subsidies, right?
And in times when things are going really well, everyone's like,
oh my God, you know, the farmers are, they're, they're fattening up on federal subsidies, right?
(23:17):
And they create tons of inefficiencies. Well, you know what?
Think about the risk of not having a viable supply chain, right?
The so-called most, the largest economy in the world not having a viable food supply chain.
Well, we're feeding ourselves, but we're also exporting a large portion of our
(23:40):
food production around the globe and helping feed other countries that don't
have the advancements in agriculture that we do, don't have the sophistication of supply chain.
So I think I think as Americans, we can take pride in the fact that our supply
chains help feed the world and do good things around the globe as well.
So that's an interesting point around the supply chain.
(24:03):
Ultimately, the risks are real. They happen all the time.
And it's business as usual, right?
Constantly looking for new sources. sources, presumably, you know,
changes in temperatures around the world are shifting where a lot of those ingredients
are optimal to grow and farm, right?
(24:25):
Which also shifts, you know, the need to look for alternate sources on a regular basis.
And there's global disruption, you know, politics at play as well as economics.
I mean, that kind of makes it a lot more interesting than people would generally realize.
But also a need to...
Have different experts available at different points in time,
right, to battle with those challenges, potentially,
(24:49):
that have nuanced insights around certain parts of the world that perhaps you
or your team haven't sourced from in the past, that maybe have interesting ways
of looking things from a skew rationalization standpoint.
And I've done those kind of end to end skew rationalization cost optimization
programs across a group of stakeholders that,
(25:11):
you know, don't normally necessarily talk to each other from,
you know, from chefs to the facilities management organization to the supply chain team, et cetera.
You know, so I think, I think that makes it, it's, it's a complex topic,
complex subject, but one that needs, needs deep expertise, which I think is cool.
So we'll just, we'll wrap up cause we're keeping these, uh, these things relatively short.
(25:32):
What's your, if you had to look out 12 to 24 months, what do you see coming down the pipeline,
if, you know, if organizations out there, you know, just looking for some general
guidelines or tips on, you know, on trends that might appear that they'll need
to be prepared for from a food supply chain perspective.
(25:53):
Is there anything that hasn't happened before that you see potentially coming
down the pipeline, or maybe something that's already happened before that you
just think is something they need to keep top of mind and be,
you know, be prepared for?
Yes, I won't say that there's something that folks haven't seen before,
but I'd say there's a couple accelerants that will continue to affect the world,
(26:14):
are increasingly affecting the outlook today,
and will probably continue to affect, even through different political regimes,
affect going forward, right?
The effect of a lot of the environmental initiatives on the ability to produce...
Fertilizer, right? This is a very real, there's a lot of pressure on food production.
(26:38):
The perception that food production has a large environmental footprint,
and the pressure being placed on agriculture to reduce its environmental footprint.
And I think, right, we're all supportive of being good stewards of the environment,
but I think there has to be an understanding of the impact that we're seeing
(27:00):
pushback in Europe, we're seeing pushback here in the US on some of the regulations.
And I think that's going to continue to be a hot area to monitor, right?
I think we're at the, as I like to say, we're sort of at the,
I don't want to say the apex,
but the food TV and celebrity chefs and all these things are really mature concepts now.
(27:26):
But the expectations of food are higher than they've ever been, right?
What people expect from food products and quality,
and then you layer in, you know, I want to understand the ESG type components
and DEI type components of how my food is made and where it comes from and things like that.
I think those are really, you know, sort of keeping your finger to the wind.
(27:51):
I think a lot of companies have to continue to keep their eye on it.
They want to run their companies in the commercialized food production type
of way that we've become accustomed to, but there's some challenges there.
It's a place where the business has weathered other challenges in the past,
(28:12):
and the players in the value chain are accustomed to the variability of different
economic and environmental conditions.
And if any industry is equipped to kind of weather and adapt,
it's the parties in the food's value chain that I would say.
They're hardy it's a hardy group and they'll find new ways to bring new products
(28:34):
to market find new ways to optimize cost and and find new ways to to feed the
world we live in today pretty innovative as well if you think about the new
types of products right lab grown me just the,
the availability of certain product groups or choice i think as you were saying
that i mean i just it resonates with me at any grocery store you now go to in
(28:55):
north america and you know most Most countries around the world have organic options, right?
Whereas previously it was only specialty stores, limited availability.
And yeah, we're constantly asking for more. We want everything to be more sustainable,
healthier in general, right?
But we also want more availability and we want it now, right?
It's kind of the consumer demand doesn't always go in the direction that people might think.
(29:19):
We think about our generation where you ate what mom put on the table,
right? Yeah. That's changed, right?
Folks of all ages and interest in taste want interesting food,
want interesting food, healthy food, different, innovative food.
And people are consuming in different places and at different times than ever before.
(29:40):
You know, thinking about how to eat food on the move is an initiative that's
always alive within all of my clients.
How do you create food that can be eaten on the move we're
on the move as a society so those types of
i mean it it comes very close to the person right how
you interact with food and how it's consumed affects all
(30:01):
of us and we all have our own interesting nuances as
to how we like to consume it when we like to consume and where we
like to consume this has been a great discussion simon i really appreciate
the time all right thank you uh anyone who's
listening or seeing this uh seeing this on the recording audio
or video any questions topics to discuss that might be relevant to your organization
(30:22):
anything food literally anything food or supply chain related howard will definitely
have a point of view and be willing to are willing to chat through so feel free
to to reach out direct appreciate your time how thanks for coming on thank you son have a great weekend.
The expectations of food are higher than they've ever been. Food TV,
celebrity chefs, and all these things are really mature concepts now,
but we think about our generation where you ate what mom put on the table. Yeah. That's changed.
We want everything to be more sustainable, healthier in general,
right? But we also want more availability and we want it now.
Interest and taste want interesting food, healthy food, innovative food.
(00:24):
You know, thinking about how to eat food on the move. It's an initiative that's
always alive within all of my clients.
How do you create food that can be eaten on the move? We're on the move as a society.
How you interact with food and how it's consumed affects all of us.
And we all have our own interesting nuances as to how we like to consume it,
when we like to consume it, and where we like to consume it.
(00:47):
Hey everyone, welcome to another episode of Experts Uncut here with your host Simon Rycroft.
I'm excited to have with me actually a colleague from Tenzing,
but a deep expert in our network on food, and the restaurant business.
So appreciate you coming on, Howard. How are you?
Great. Happy to be joining you, Simon. Awesome. All right.
(01:08):
Well, let me always go into a bit of background on who you are,
and then I'll pass over the mic.
Howard Graham is a long-term member of Tenzing. He's actually a director and
a practice leader here for us at the firm, but his background is pretty unique.
So he's worked in the grocery business. He's run restaurants.
He actually operated an internet based seafood specialties business.
(01:30):
So I'm going to ask some questions about that when we get into it.
But uniquely, he's also published a book and sold cookbooks on QVC, which is kind of cool.
Howard works with us across clients and focuses on areas like buyouts,
financial stress, entering new markets, optimizing operations,
but generally with a focus on food and beverage.
(01:53):
Howard's also taken on interim executive roles in the past, including interim
chief supply chain officer at Feeding America,
the large nonprofit in the U.S., where he helped them launch a nationwide network
of regional produce cooperatives, helping those most in need gain access to healthier food,
(02:14):
which I think is admirable and pretty cool.
So excited to have how it on and it is a friday i
don't know when we've edited this if it will be going out on a friday so
i'm catching him at the tail end of a pretty pretty extensive
and busy week so i appreciate your time but let's
kick into it i think you know when you and i first met you know we we were just
(02:36):
talking about general food procurement food supply chain and you just went off
on another whole direction and path i think i hadn't really even thought about
and it's one of the things I love about our,
Tenzing platform is the depth of expertise and the very background of people
that operate in our network.
But how did it all get started, right? I'm sure you necessarily only your first
(02:59):
restaurant when you were 15.
And then it's, you know, never look back. I mean, how did you first get into the food business?
Yes, I think it's an interesting confluence of one sort of hands-on experience.
One, starting as an early teenager, my cousins were very successful in the Italian
and grocery, wholesale business, they also had retail storefronts in Pittsburgh,
a lot of notoriety around their business.
(03:21):
And it was a very exciting place to work as a young teenager, right?
For example, when Luciano Pavarotti came to Pittsburgh, the first stop on his
tour was Sinceri's grocery store, right?
So when Reggiano Parmesan, when the largest wheel of Reggiano Parmesan cheese
was ever created, where did they display it? They displayed it at Sinceri.
(03:41):
So right there's this very romantic sort of nostalgia around having worked in
that business and as you know from the firm right everyone mentions oh my god
you know howard's part of that extended.
Family it's very it was a very exciting place to be
and also too to you know have the mentorship
of just sort of an appreciation of food right
(04:02):
so you know we're in this very commercial cost-driven efficiency-driven
part of the business but the original passion was you
know being around folks who could really
teach me what fine food looks like not not culinary
but just in its raw form this is a
great piece of restricted department this is
a great piece of cheese right and and taste this right and enjoy and see the
(04:27):
difference between the the milk from a goat versus the milk from a cow those
kind of things right i mean it was really interesting to be in that environment
and continually learning about the different qualities and nuances of food.
And then I get into consulting after business school, right?
And I learned this heavy commercial bent of consulting and cost optimization
(04:50):
and these types of things.
And then spent some time in the restaurant business, actually built five restaurants,
started a specialty foods business, had some success selling cookbooks on QVC.
So the journey Journey continued, right? And then as I transitioned back to
management consulting, it was a natural place to hang my hat.
I'll actually circle back to one other thing too. My undergraduate education was in economics.
(05:15):
And you think about really something that is an example of economics,
basic supply and demand,
true commodities like food, ingredients, crops, are an incredible reflection
of true supply and demand at all times, right?
It isn't, there isn't a ton of margin in it. The prices are constantly moving.
(05:35):
There's tons of market, there's tons of transparency in those markets.
So that part of it resonated with me as well, right?
So I take this passion for the food business that developed an early age.
I have some formal education and forms and an additional layer and lens to my
point of view. And then you layer in management consulting.
And then as I transitioned back to management consulting, I've said,
you know, it's the one area within the firm or within large firms where the
(05:59):
expertise isn't truly resonant.
There aren't a lot of people that, there's lots of people in sort of financial
services, insurance, even manufacturing, lots of folks there.
But in the food business and sort of a deep understanding of agricultural commodities
was something that wasn't there.
And I said, that's where I'd hang my hat, right? Was I'll be the foods guy,
(06:22):
right? I know enough, I have this hands-on experience.
I'll be the foods guy and that'll be my entry point back in the consulting,
right? And of course, the firm grabbed onto that, right?
Tom saw that opportunity to say, wait a second.
This guy has a very unique set of experiences, unique point of view.
Let's see how far we can run trying to pick up more clients in this space.
(06:44):
And certainly, it's only enriched my point of view, right? We see some very
interesting situations.
I have access to very interesting people.
And I say, it's only continued to enrich my understanding of the business and
the nuances that I continue, or I should say, only reinforce my belief.
It's a really unique place to operate. You know, thinking about the agricultural
(07:05):
supply chain and how you go from, as Tom likes to say, from barn to belly is
the Tom McLeod phrase, you know, sort of field the table type approach.
And that learning that really there's a unique culture within the business.
There's more paradigms of cooperation and cost optimization are far more prevalent
(07:26):
than just competitive pricing paradigms, right?
The parties in the value chain tend to work together in a much more integrated
way because the producer faces so much risk, right?
Pestilence to crops, crop loss, all these things, that affect availability.
Look at the effect of organic crops in Ukraine, right?
(07:48):
We have a war in Ukraine that wiped out a large supply, a large portion of the
supply of organic grains for the world, right?
So this sensitivity to the producer and the pressures that they face,
sort of engenders a sense of respect among the other parties as to how they're
(08:09):
going to operate within the culture of this industry.
And knowing that the margins are tight and they can be quite variable.
Thinking about our approach as a firm, or as I was asked to say,
what is our approach? How are we going to do this differently than big firms?
How are we going to put you in front of clients and have an original point of
view? And I said, it's really about efficiency, right?
(08:31):
You can't extort the different actors in your value chain.
You actually have to figure out what is the optimal design?
Who are the right partners at the right time? And how do I get them to work
together to go from the field to the back door of my restaurant or the back
door of a retail grocery outlet or whatever it may be,
(08:52):
or the back door of a factory where those raw materials are then going to be
turned into finished goods.
So it's been an interesting place and an interesting time to operate.
And I like, I mean, I've had an interesting opportunity to build a practice
around some unique skills and unique perspectives.
We've taken up a habit of sort of creating code names and nicknames for my experts in different areas.
(09:14):
We've got the milkman. We've got the chicken man, the multi-billion dollar poultry buyer. We've got Mr.
Eggstradinary, who sold his egg farm for $500 million to the largest publicly held egg company.
So it's been a fun place within the firm. And those names are out of respect.
It's not something that diminishes. It's sort of code names
(09:37):
we go these are really extraordinary people that have extraordinary insights
and skills that are now sort of resident within me right it's the benefit of
of how we work right i'm learning from folks every day that's enriching yeah
no i i love that backstory and fast forward to you know there's some of the
other people in the network that go down to the,
(09:57):
specific item the product group even you know the the the protein.
I've enjoyed having some conversations, even early stage with clients,
and they haven't chatted with you before. And I say, okay, you've got to meet this guy.
If food and beverages is a product group, or there are certain subcategories
that you want us to look at, or you need some different perspectives on.
(10:22):
Like this guy ran restaurants.
He's run distribution in the past he knows the
sea levels across across the supply chain that
you're likely working with and oh guess what he also you
know he's the author of a book and has been on qvc i just i
love ending with that because you rarely bring it up you give an
overview of your background but i think it's pretty
(10:43):
cool and unique we were even talking about this was
two weeks ago and you you often send me down a rabbit
hole you talked about the origin of of chicken
wings because i think we were talking about protein is it protein efficiency
or protein optimization so i i was googling
you know where did chicken wings come from and there's the whole elaborate
story and you know in uh in new york
(11:04):
where someone is running a pizza restaurant ordered ordered chickens
and then accidentally ordered chicken wings by mistake
and then just decided to cook them up that evening for
for her kids i mean it's just there's so
many things people don't necessarily know about
things like food that they you know obviously they
interact with and eat on you know three days
(11:25):
three times a week or three times a day sorry but
what's been uh because you've
worked in broad supply chain and transactions as well what's been a kind of
a fun story or you know a cool client obviously you know confidentiality can't
share names but a kind of a cool program or project that you've worked on that's
(11:45):
that's looked broadly across supply chain Yeah.
So I think the one I'll lean on the most that was the most fun and it pulled
in all the elements of food supply chain was the merger of two of the largest
casino operators in the United States.
And they wanted to, as the two companies were coming together,
(12:05):
both had a culture of allowing the individual properties to have a lot of freedom
to buy what they want as long as they're making their margins and the general
manager at the property was making his P&L targets, everything was fine.
But as the businesses merged, there was a thrust to say, hey,
let's really professionalize food and beverage.
(12:28):
We know there's a lot of low-hanging fruit here. We think there's opportunities
to just institutionalize a better way to buy food food and beverage and haven't
moved into our individual properties. And-
What was fun about it was that there was so much sort of training.
I don't like to use the word education, but so much sort of illuminating for
(12:52):
them. How does the food supply chain really work?
And where do we want to buy it? How do we want to move it? Where do we want to store it?
And that's how we'll optimize cost instead of just negotiating prices for,
for example, all the casinos had a big Mother's Day promotion with chocolate-covered strawberries.
Strawberries well they were buying strawberries at the
(13:14):
peak of the market and then trying to
measure savings on something that the market is going up right
so how if i if i from the month of april through the month of july your prices
are going to are your prices are going to continue to escalate through that
period simply based on supply and demand and so helping them think through well
(13:35):
what we need to do is think about when to buy them or when to contract them versus just,
buying them right before the Mother's Day promotion so we can put chocolate-covered
strawberries in every casino.
And then two, helping them think about the simple philosophy of,
I call it full truckloads in, full truckloads out.
Don't buy anything that doesn't move in a full truckload because basically you're
(13:56):
subsidizing the empty capacity of truck.
So teaching them, okay, instead of asking the supplier for a price on a product.
We're going to go to the supplier and say, where do you ship full truckloads?
And we're going to buy it from there.
And then ideally what we're going to do was consolidate the freight portion of it, right?
(14:17):
Let's only buy products from suppliers who ship full truckloads into US Foods
or Cisco or one of the top distributors, right?
And sort of flipping the paradigm on its head instead of fighting for cost all
the time, let's look for the efficiencies in the system.
And it's had its challenges kind of getting folks to think.
(14:39):
But in the end, when we'd run those workshops with the individual properties
and say, okay, here's your new catalog, You no longer have 20,000 SKUs to buy. You have 2,000.
We went from 20,000 to 2,000 at each property and still service the business.
So folks are buying things of different prices and different quality.
(15:03):
And we were able to say, hey, if we set up a framework for sort of a good,
better, best, and then we properly catalog and you buy according to the program,
we're going to drive cost out of the system.
And the big takeaway was that suddenly what they didn't realize was they thought
because they bought a lot of stuff from a supplier, it made them a valued customer.
(15:23):
What made them an even more valued customer than distributors was,
is this a valuable piece of business because it's efficient for me?
Are they buying stuff? Do I have to go move a quarter truckload of some rare
product into my distribution center and then move it and sell and then sit on dead stock,
right from time to time it's like no if you will buy from me all the stuff that
(15:47):
moves in in full truckloads and then you guys buy big enough you're moving full truckloads of property.
We're doing full truckloads in, full truckloads out. And then because the business
was so attractive, the distributors were willing to pay to acquire the business, right?
Instead of us just negotiating better prices on products, which we did,
they were also willing to say, oh, wow, this is a piece of business that we'd
(16:11):
like to have for the next five years in this structure because we know we can
make money doing it, right?
And it was a very interesting paradigm to sort of flip that on its head with
a large team across the entire country.
And there was even a sort of end on one funny note as we were rolling that program out.
There was one week. So I had to hit the property.
(16:32):
We sort of grouped properties and I flew from my home in Savannah to Pennsylvania,
to Kansas City, to New Mexico.
To Las Vegas, to Chicago and home just to go and roll out these workshops and
help the properties he's adopted. And it was kind of funny.
I designed that trip because I wanted it to be like running the gauntlet and helping the team.
(16:57):
It was a memorable experience, great client.
And it brought together all the elements of as we worked every single food category.
Who's the best? Who should we be buying beef from? Who should we buy poultry
from? Who should we be buying every single skew?
And that piece of work still remains sort of
a really cornerstone piece of work within the firm we we distribute
(17:18):
that as an example of what a really good
skew rationalization product rationalization efficiency driven approach to procurement
looks like i'm very proud of that piece of work and i think skew rationalization
is is is i mean it's it's an initiative that's used in manufacturing right it's
kind of it's a i'd say this is a quote-unquote lever or
(17:41):
a way to optimize spend for spare parts management, right? If you're an e-com company.
But in the food space, it's somewhat unique because just taking out cost is
wrought with risk, right?
I mean, if you're in the restaurant business, you've got to deal with culinary
strategy and culinary operations considerations, unpredictable customer demand,
(18:08):
changing customer needs, right?
Competition, all those types of things.
But I think the work that you did there from a skew rationalization,
I could see as being, and I know you've done this in other sub-industries, but relevant in...
Grocery right you know hotel broader hospitality food service distribution,
(18:30):
restaurant groups even facilities management you know companies that are delivering
catering for their own end clients right just i can't remember who the chef
was i remember you know one of these tv shows where the chef goes in and helps
you know the restaurant's about to close down.
And you know the chef will look at the menu and come up with
(18:51):
innovative ideas to kind of improve the margin i remember one where
i think they cut the scallops in half and
then just said you know turn it on its side the end customer won't know
the difference and you've half the cost on you know on the
individual plate like those things do happen but
they do at scale year over year
right and then exchanging out the
(19:11):
quality of the product there's risks if it's
not done properly so many different stakeholders that
need to be involved and and nuances so you
know i think your your approach to it you know in
the way that you've done it with some of these key experts for clients i think
is uh it's it's kind of cool what was
the has there obviously been if i go to a grocery store you just turn over some
(19:35):
of the packages right and there's every country in the world right and it's
always amazing to see that have you seen uh we see reshoring in other parts
of the business right people moving more closely because of supply chain challenges and risk that,
everyone, irrelevant of where you live or industry you're in,
if you're buying products, has been a consideration in the last four to five years.
(19:58):
Have you seen a reshoring and people looking for closest agricultural sources across your clients?
Is that a big shift or is that something that's just starting?
Yeah, so I would say the shift is, one, in agriculture, the shifts have occurred.
It's more about the source of supply. So when we think of reshoring,
we think a lot about where the product is going to be made versus where I'm
(20:23):
just going to source materials.
I think in the food business, it's largely driven by where am I going to source materials?
Well, you source materials where it's in season, where it's actually growing
and available at that time, and two,
is not affecting foodborne illness or other effects like the war in Ukraine
(20:43):
that would drive shortages. So...
The business has been in culture to kind of move around the globe at all times,
trying to find places to get raw materials, meaning produce even animal protein
and so forth, wherever the benefits are.
For example, you create example, but even in a domestic example, Avion Flu.
(21:05):
I had an egg client during Avion Flu, a shelled egg company during Avion Flu.
They were having to kill large, large parts of their flock just to service the business, right?
And then birds just don't suddenly grow.
You know, they've got, the bird doesn't grow to a producing level tomorrow.
I mean, that's the same with all animal protein, right? There's a replacement cycle.
(21:29):
Now, certainly good, we call it flock management, right?
There's flock management where you're, you're growing new birds into the flock
at all times. But just managing through those risks, and I think on an international
level, the organic grains risk with Ukraine, it's not something new to food.
It's something that goes on all the time. For example, they had fires in Chile
(21:51):
that wiped out a large portion of the grape crop in the mid, I'd say, 2015 or 2016.
So there's this total shift in where people were buying grapes to make wine.
Things of that nature are real and present in the industry. I think production
continues to be domestic.
I think the other element is the U.S. is still feeding a large portion of the world.
(22:14):
Our food production system and our supply chain is sophisticated enough here
in the world that we export a lot of food.
And the impacts of international trade and how we export are very real.
And it's not just if other countries that we are suddenly exporting tons of
(22:35):
our corn and our soybeans and other things to assign tariffs to that,
it's almost the forefront of economic warfare.
It's frightening to use that word, but as we enter a world where there's a very
adversarial global approach to where the economic alliances are forming.
(22:56):
How that stuff plays out has a real impact. And two, that's why you see,
you know, people talk about farm subsidies and how much, how much money our
government puts into farm subsidies, right?
And in times when things are going really well, everyone's like,
oh my God, you know, the farmers are, they're, they're fattening up on federal subsidies, right?
(23:17):
And they create tons of inefficiencies. Well, you know what?
Think about the risk of not having a viable supply chain, right?
The so-called most, the largest economy in the world not having a viable food supply chain.
Well, we're feeding ourselves, but we're also exporting a large portion of our
(23:40):
food production around the globe and helping feed other countries that don't
have the advancements in agriculture that we do, don't have the sophistication of supply chain.
So I think I think as Americans, we can take pride in the fact that our supply
chains help feed the world and do good things around the globe as well.
So that's an interesting point around the supply chain.
(24:03):
Ultimately, the risks are real. They happen all the time.
And it's business as usual, right?
Constantly looking for new sources. sources, presumably, you know,
changes in temperatures around the world are shifting where a lot of those ingredients
are optimal to grow and farm, right?
(24:25):
Which also shifts, you know, the need to look for alternate sources on a regular basis.
And there's global disruption, you know, politics at play as well as economics.
I mean, that kind of makes it a lot more interesting than people would generally realize.
But also a need to...
Have different experts available at different points in time,
right, to battle with those challenges, potentially,
(24:49):
that have nuanced insights around certain parts of the world that perhaps you
or your team haven't sourced from in the past, that maybe have interesting ways
of looking things from a skew rationalization standpoint.
And I've done those kind of end to end skew rationalization cost optimization
programs across a group of stakeholders that,
(25:11):
you know, don't normally necessarily talk to each other from,
you know, from chefs to the facilities management organization to the supply chain team, et cetera.
You know, so I think, I think that makes it, it's, it's a complex topic,
complex subject, but one that needs, needs deep expertise, which I think is cool.
So we'll just, we'll wrap up cause we're keeping these, uh, these things relatively short.
(25:32):
What's your, if you had to look out 12 to 24 months, what do you see coming down the pipeline,
if, you know, if organizations out there, you know, just looking for some general
guidelines or tips on, you know, on trends that might appear that they'll need
to be prepared for from a food supply chain perspective.
(25:53):
Is there anything that hasn't happened before that you see potentially coming
down the pipeline, or maybe something that's already happened before that you
just think is something they need to keep top of mind and be,
you know, be prepared for?
Yes, I won't say that there's something that folks haven't seen before,
but I'd say there's a couple accelerants that will continue to affect the world,
(26:14):
are increasingly affecting the outlook today,
and will probably continue to affect, even through different political regimes,
affect going forward, right?
The effect of a lot of the environmental initiatives on the ability to produce...
Fertilizer, right? This is a very real, there's a lot of pressure on food production.
(26:38):
The perception that food production has a large environmental footprint,
and the pressure being placed on agriculture to reduce its environmental footprint.
And I think, right, we're all supportive of being good stewards of the environment,
but I think there has to be an understanding of the impact that we're seeing
(27:00):
pushback in Europe, we're seeing pushback here in the US on some of the regulations.
And I think that's going to continue to be a hot area to monitor, right?
I think we're at the, as I like to say, we're sort of at the,
I don't want to say the apex,
but the food TV and celebrity chefs and all these things are really mature concepts now.
(27:26):
But the expectations of food are higher than they've ever been, right?
What people expect from food products and quality,
and then you layer in, you know, I want to understand the ESG type components
and DEI type components of how my food is made and where it comes from and things like that.
I think those are really, you know, sort of keeping your finger to the wind.
(27:51):
I think a lot of companies have to continue to keep their eye on it.
They want to run their companies in the commercialized food production type
of way that we've become accustomed to, but there's some challenges there.
It's a place where the business has weathered other challenges in the past,
(28:12):
and the players in the value chain are accustomed to the variability of different
economic and environmental conditions.
And if any industry is equipped to kind of weather and adapt,
it's the parties in the food's value chain that I would say.
They're hardy it's a hardy group and they'll find new ways to bring new products
(28:34):
to market find new ways to optimize cost and and find new ways to to feed the
world we live in today pretty innovative as well if you think about the new
types of products right lab grown me just the,
the availability of certain product groups or choice i think as you were saying
that i mean i just it resonates with me at any grocery store you now go to in
(28:55):
north america and you know most Most countries around the world have organic options, right?
Whereas previously it was only specialty stores, limited availability.
And yeah, we're constantly asking for more. We want everything to be more sustainable,
healthier in general, right?
But we also want more availability and we want it now, right?
It's kind of the consumer demand doesn't always go in the direction that people might think.
(29:19):
We think about our generation where you ate what mom put on the table,
right? Yeah. That's changed, right?
Folks of all ages and interest in taste want interesting food,
want interesting food, healthy food, different, innovative food.
And people are consuming in different places and at different times than ever before.
(29:40):
You know, thinking about how to eat food on the move is an initiative that's
always alive within all of my clients.
How do you create food that can be eaten on the move we're
on the move as a society so those types of
i mean it it comes very close to the person right how
you interact with food and how it's consumed affects all
(30:01):
of us and we all have our own interesting nuances as
to how we like to consume it when we like to consume and where we
like to consume this has been a great discussion simon i really appreciate
the time all right thank you uh anyone who's
listening or seeing this uh seeing this on the recording audio
or video any questions topics to discuss that might be relevant to your organization
(30:22):
anything food literally anything food or supply chain related howard will definitely
have a point of view and be willing to are willing to chat through so feel free
to to reach out direct appreciate your time how thanks for coming on thank you son have a great weekend.
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