Episode 32: From school of rock to socks: Entrepreneur turned supply chain executive

Brian Weinstein: Welcome, everybody to Sippin’ & Shippin’. I’m your host, Brian Weinstein. We’ll be kicking it here every other Friday, quenching your thirst for an insider’s take to enhance your customer experience. Grab your drink of choice, kick back, it’s Sippin’ and Shippin’ time. All right, welcome, everybody to another episode of Sippin’ & Shippin’. I am your co-host, Brian Weinstein, and I’m here as I am every other Friday and some days in between with my co-host in crime, Caitlin Postel.

Caitlin Postel: Brian, we talked about this. It’s Postel. Didn’t I tell you that when I met you?

Brian Weinstein: You know what? Okay, in fairness, it’s been four years. Postel, Caitlin Postel, yes.

Caitlin Postel: No, in fairness to Brian, so I’m trying this new thing, Postel. Just so all of our listeners know, it’s Caitlin Postel, same co-host, same Sippin’ & Shippin’ but let’s elevate the name.

Brian Weinstein: It’s a whole new [inaudible 00:01:00].

Caitlin Postel: Postel? Yeah, that’s right, Postel. It’s like Target, turned to Target. You Just got to elevate, like let’s kick it up, upgrade it a little bit. Don’t make me go postal. Postel will go postal. It’s a Shippin’ thing. All right, go ahead, Brian.

Brian Weinstein: All right. This week we have with us Alex Albert, or should I say Albert? I don’t know, I’m confused now, Caitlin.

Alex Albert: Albert’s cool.

Brian Weinstein: Albert’s cool. All right. And Albert is Vice President of Operations for Stance Socks. Welcome.

Alex Albert: Thank you so much. Really grateful to be here with you all. Thanks for having me.

Brian Weinstein: No, I appreciate you coming on. We talked about this on our pre-session recording. There’s the whole Whiplash connection to your background is interesting. I mean, you’re in the supply chain industry now. But for the listeners, can you give a little bit about your background, where you came from?

Alex Albert: Yeah, for sure. So I found out a lot in our intro call about Whiplash’s history that I didn’t know. So it’s quite interesting. We all have pasts. I started my career as an entrepreneur, a musician in the apparel industry. I was a drummer for a rock metal band named Project 86. You can go look it up. And I built that band from the ground floor of my garage, because I had a passion for playing music, with three other members to writing and recording five albums, touring, and recording music videos. And we did a bunch of tours. We toured with Sevendust, and POD, and Lincoln Park, all these big bands. It was super fun.

Caitlin Postel: It sounds super fun. From bands to jamming out to Stance Socks. There’s got to be more in between, Alex. There’s got to be more in between.

Alex Albert: I know. I think what we should call this podcast is from Jammin’ to Plannin’.

Brian Weinstein: There you go.

Caitlin Postel: Oh! Watch out, partner. He’s coming for your job.

Alex Albert: I’m coming for your job. [inaudible 00:03:06] heard about this.

Caitlin Postel: Have at it! Have at it!

Brian Weinstein: So Alex, nothing that you just described, by the way, immediately says, “Oh, he must have gone into supply chain from there.”

Alex Albert: This is true. This is true. So bands don’t make money selling records. That’s the problem. They make money touring and selling merchandise. And so as a new entrepreneur, I was the merch guy. And I managed all of the backend merch to make sure we had merch for our tours. So when we got dropped from our record label, we had two albums on Atlantic Records, which is a major record label. When we got dropped, I was like, “What am I going to do?” And so I pivoted and leveraged what I learned as an entrepreneur in the music industry playing drums and making merchandise for the band, to a second career in the apparel industry.

Caitlin Postel: Super interesting. So for those of you that don’t know the tie-in there, similar to Alex, Whiplash was founded as a need to be able to sell merch. So one of the founders was a tour manager for Modest Mouse. And similar to you, Alex, he had to get in and figure out, “Okay, now we have all of this stuff. We don’t want to travel around with it. We don’t want to tour with it. So what do we do? How do we sell it? How do we set up a Shopify?” And then Whiplash was born and then now, Ryder E-commerce by Whiplash. So very interesting to see the tie-in there and the music industry just giving us gems in logistics.

Alex Albert: It’s pretty incredible. I don’t know where Whiplash was back in the ’90s, but it would’ve been incredible if we knew you. Some of the biggest lessons I learned as an entrepreneur were failure and really skinning our knees on trying to do things certain ways. For example, you buy too much merch. And then you come home from tour and you’ve got 40 grand. You’ve been out on the road for 60 days and you come home, you find out you got a merch bill for 30 grand. So people are unhappy. People get really bummed when that happens. That was [inaudible 00:05:24] 10 grand, you’re only getting paid two grand.

So things like that really underscored early on for me as an entrepreneur how to manage cash and inventory in a way that optimized that for the business that I was managing. It took 20 years of working for best-in-class companies and spending thousands of dollars on academics and education for me to articulate that. But at the core, I really learned this lesson.

Brian Weinstein: It’s interesting, because you don’t necessarily think of a band, even one that’s growing, as having the entrepreneurial side. It’s artists and things, but there is a business side to it. And in order to really maximize your success from a financial perspective in the business… You’re entrepreneurial, and it’s interesting that you say that, because when we speak to some of the founders of brands or services, they say the same thing that you just said, which is, “I can’t tell you, I had to fall down and fail in order to pick myself up and be resilient and be better on the other side.”

Alex Albert: A hundred a percent. You couldn’t explain that better. I mean, from my perspective, I learned coming out of that, I really learned the value of planning. You got to have good plans. I learned the value of inventory versus cash and how you manage a small business supply chain to ensure that you don’t spend too much money. I learned the value around capacity management. You can only fit so much merchandise in a trailer. And if you [inaudible 00:07:11] tour, you can’t fill that thing all the way up. And I would say that the most important thing, I learned the value of the customer and why the customer’s most important. And you got to [inaudible 00:07:20] customer happy. So those are all core things that I’ve carried with me, my core operating system, as I went throughout my career and worked for many different companies.

There was a point in time where I came out of band life and I started thinking about, how do I build this career in the apparel industry? So I worked for big brands like Vans. I worked for Vans for almost 10 years. Half the time I worked in sourcing and production and was exposed to a global supply chain and the best practices that go along with that. And then I left for about five years and went and worked with a company that specialized in mass customization, and really integrated planning and boots on the ground over in Asia. Really, gaining that experience and then I ended up going back to Vans. They hit me up and asked me to come back and run global planning for apparel, accessories and hard goods, which at the time, was around a 2 billion dollar business. And I was there when we grew it from 2 billion to about 4.3 billion before I left. And so it was an incredible time, but the point is that really gaining these experiences and learnings from the companies and environments that I’ve worked with. And VF has some of the best-in-class planning and execution strategies that they put into place. So that’s how I got from point A to point B and it’s landed me its Stance today.

Brian Weinstein: So let’s take a step back. So you’re coming out. You’re a rock musician. You’re in that space. And something obviously, was drawing you towards apparel and getting into that space. And so where were you looking first? Or what were you trying to, in your head… Because I think we all have our long-term pictures of what we want to be, especially when we’re younger and coming out, what was it that you were looking to accomplish when you set out on a new career trajectory?

Alex Albert: I’m a big believer with starting with the end in mind. As I left the music world, and that transition was very, very difficult, it’s setting down this passion for work, you’re passionate about the work you do, to resetting and thinking about the long term. And so as I came out of that, I was like, “Okay, I had a good run at music and doing that as a job and making a living off of that.” Just saying, “Listen, all right, well, I’m going to go here now.” And so I set a goal that I wanted to lead a supply chain on the executive level. And I wanted to get an MBA from USC. Those were my two goals. And so I, in the last five years, had been working hard all throughout that process to really get to that stage. And I accomplished both of those. So I was really, really grateful for that.

Caitlin Postel: Vans isn’t too bad of a landing pad for a guy who’s coming off a tour. I mean, Vans are pretty, like skateboard… Maybe it’s just my perception of Vans. I love Vans. I actually have a pair on right now. But you’d spoke about service being one of your pillars, service to the end user. When you were making that transition from Project 86 to Vans, what’s a gem that you picked up there? You alluded to Vans as one of the top folks, merchants, that are able to execute their planning. Can you tell us a little bit about service at Vans?

Alex Albert: Yeah, absolutely. First off, Vans, it’s an incredible brand. Steve Van Doren, just an incredible individual. Had the opportunity to hang out with him a little bit while I was there and just an amazing person. I worked in the Operations area when I was there. And the Operations Team there and the leadership there, just incredible group of people that came from a lot of background in CPG. So for me, I didn’t have a lot of experience in sales and operations planning and all of the nuances that went into being in best-in-class supply chain planning. And so I entered into that environment leveraging the skills that I had, which was an expert understanding of how to manufacture apparel, the sourcing landscape, how it’s planned and executed, and then brought that into the environment where I learned an enormous amount of best practices as it relates to planning. And so as you think about companies, companies are not competing with companies. They’re competing around supply chains. So you have supply chains competing around supply chains. You think of any analogy where there’s a series of events that go into delivering a certain capability, it’s not the capability that you’re competing against, it’s the process in which you get there. And so one of the things that I learned at VF that was very integrated into everything that we do from a sales and operations planning perspective was what’s called the supply chain triangle. And so you think about service, cost and cash. And you think about, “Hey, what is our target service level we’re trying to achieve from the brand or to the customer, whether that’s fill rates, or lead times, or things that we’re trying to do together?”

And then there’s a cost of delivering that service. The logistics cost, the warehousing cost, the [inaudible 00:13:26] cost, the purchasing cost. And then there’s a component of this, like delivering that service requires cash. You have to buy inventory to be able to service customers. And that requires working capital. And so balancing those three elements was what’s called the supply chain triangle, I would say, is one of the nuggets that I carried out of there and put into work in the supply chains I work in today.

Caitlin Postel: It’s such a hard balancing act. And we see it now, especially with brands coming out of these two years and issues around supply chain. People are heavy with inventory. It’s inventory bloat. What are you doing in your role today at Stance to find that balance and avoid that just piling of inventory?

Alex Albert: This is a difficult challenge, not just for Stance, but for everyone. And how you manage this has big implications on the balance sheet, cash flow, all of that. So as I think about inventory, I think about Peter Drucker and he had said, “You cannot manage what you cannot measure.” And I love that quote, because it ties really into my approach or how I think about inventory management. As you’re thinking about inventory, whether you’re a small business or large business, depending upon your go-to-market strategy, whatever your strategies are for how you’re selling to customers, you have to have the appropriate process and the appropriate measurements in place to ensure that you understand what’s happening as it’s happening.

And so there’s a really great sales and operations planning process, or SNOP. There’s an evolved process called IDP. And it’s really a review process that helps align supply and demand along a further out planning horizon, 18 months, and allows you to think about how do you balance supply and demand and also thinking about how to bring new products to market or new product introduction. So I would say, step one around how do you manage inventory is having a good process. And I think SNOP is a great way to bring visibility, bring consensus, and leading into those parts of it.

Brian Weinstein: Alex, I was just going to ask you, so did the planning tools go… Because I really do think there’s a lot of brands out there right now that are suffering. And I’m wondering, did some of your planning tools go out the window during the COVID supply chain issues?

Alex Albert: I would say yes and no. The volatility that we experienced was greater than any other time, at least in my work history, where things would stop and go at the rate in which they did. If you recall, we came into 2020 out of ’19. COVID hits. Everything stops in March. And then all of a sudden, everything opens back up and everybody’s chasing, chasing, chasing. And the consumer shopping behavior with the slowdown, and brick-and-mortar, and the transition to e-commerce and people shopping online, because they couldn’t go out as much, really created this bull whip effect, where the signals were confusing.

So I think some of the best practices that I found was it goes back to measurement and process, is developing visibility, having the right open-to-buy planning, understanding what the financial plan is based on insights from the marketplace. And then tying that to purchasing budgets, within the different channels. Thinking about performance metrics like inventory days, it’s a great metric for you to track and understand how many days in inventory you have in relationship to your revenue plan. And then inventory turns, making sure the inventory’s turning that you’re buying. There’s a whole assortment of metrics, whether it’s forecast accuracy, is super important. The better your forecasts or the more accurate your forecasts are, the less inventory you’ll need to service your customers.

And at the end of the day, everyone has leftover inventory. Being able to chop it up and understand, “Hey, of this inventory, what’s good? And what’s bad?” And thinking about of what’s good, how much of that is aged? You might have a too much of a good thing. You’ve got to re-plan how you execute that. Or on the other side, you might have distressed inventory or inventory that’s obsolete that you can’t sell or you’re going to sell at a discount. You need to be able to plan and forecast for that in order to make sure that you have the most productive inventory to support the business.

But back to your original question, it’s been extremely vulnerable. Most companies are faced with these challenges. I personally think that it’s really around having a great process for review, measurements in place, because the math doesn’t lie. It’ll tell you, if you have a good process in reviewing it, the math will tell you which way you need to roll.

Brian Weinstein: What scared me, and I’ve been at this a long time and I remember 2008, 2009 like it was yesterday and inventory and people just trying to purge inventories that they couldn’t get rid of. And then we come in, we’re in the middle of COVID, and brands are struggling to get product in. And they kept saying, “So we’re going to start bringing in 2022 product early in ’21.” And I’m like, “Well, wait a second. I personally, if I’m a brand, would rather have maybe not quite as much inventory as I wish I had than to catch yourself in a situation where you have too much because,” and I’ve said this with Caitlin and we’ve shared this on a few podcasts where, “inventory kills.”

Alex Albert: I want to quote our CFO, but I’m trying to remember what he said. He said… Oh, my gosh-

Brian Weinstein: Now, I’m curious. You have to remember it, because now I’m curious.

Alex Albert: I remember this quote, it’s something like, “Companies don’t go out of business because they don’t have the right marketing plan. They go out of business because they run out of cash.” And the reality is, is on the balance sheet, inventory represents such a major part of that. You really, really have to have the right controls in place and the right measurements to understand based on what the strategy is and the revenue strategy and the marketing strategy, all the components of the puzzle fit together, what the right level of inventory is. You might choose to have a scarcity strategy, where you’re going to come into the year, or come into the season, or to the market with limited supply. And you plan for that. Or you might come in and say, “Hey, we want to be able to service our customers a hundred percent of the time.”

Extremely costly. You have that abundant inventory availability, but that costs the company. And different models work differently. There’s some companies, from what I’ve seen, that work obviously more lean on inventory and others that make the stock, businesses that need to have inventory available for at-once business all the time.

Brian Weinstein: And just being sensitive to how much you have. If you’re a little bit more, I mean, look, in Stance Socks, you have socks. Probably, if you get caught over ordering a little bit can survive. But if you’re fashion sensitive, seasonal, if you have expiration dates on your products and you’re carrying a little bit more than you should season after season, it’s going to really start to erode your bottom line pretty quickly.

Alex Albert: A hundred percent.

Caitlin Postel: You read my mind, Brian. I’m thinking to myself, “Well, lucky for Stance, socks don’t go out of style,” especially in the Northeast in January. So always a good thing.

Alex Albert: Like any apparel company, we do have seasonality, [inaudible 00:21:59] our product execution strategy. We do have staples business, our core hero styles and that sort of thing. But we also have a lot of seasonal products, partnerships and things of that nature. And so we just have to be mindful, like any company, to your point. If you have shelf life, you’re dealing with scenarios where there’s shelf life associated with your product, whether that’s hard launch dates, or potential obsolescence of that product you’re selling, you have to be mindful of how you plan and execute that.

Sometimes not meeting every sale is a good strategy. And there’s math models out there that help you understand the cost of being under and the cost of being over and incorporating that into a probabilistic demand planning model that helps you associate the right levels of inventory to service your customers in the way that you think they need to be serviced.

Brian Weinstein: Absolutely. Just as we start to wind down here, if you had to point towards just a few different key takeaways that you’ve learned over the years, what would they be?

Alex Albert: I think I have four. I think number one would be you got to ensure you have the right partners in place. Any supply chain needs the right partnerships, that the folks that are working with you have aligned goals and you’re focused on the same things. In today’s day and age, all of our supply chains are elongated. They’re not as much vertical. We’re procuring goods. At least in the apparel industry, and most consumer products, they’re made in far-off places and we’re bringing them in. So having the right partners is critical. For example, Whiplash for Stance, it’s a critical partnership. The way Whiplash works with Stance in helping execute that vision and executing the service expectations, they operate as an extension of Stance. And without them, we wouldn’t be able to do what we do.

Brian Weinstein: So we’re going to allow that shameless plug only because flattery gets you everywhere, Alex.

Alex Albert: I wouldn’t say it if I didn’t mean it. So I think that the folks that are working under the hood, I think, would say the same thing. We’re focused on common goals. So partners would be number one. I think number two, for small entrepreneurs starting their company and trying to get their feet underneath them to multi-billion dollar companies, the supply chain triangle is an excellent paradigm for you to approach the business with to manage service, cost and cash. Because ultimately, the more effectively you can manage those three, the more efficient your supply chain will execute.

I would say inventory is critical. We talk about the process, having a good process, a review process, associating certain attributes to the inventory, the products that you actually sell, that allow you to understand the health of that inventory and allow you to come up with some data to make good decisions about how you want to manage that is really important.

And one thing we didn’t really spend a lot of time on, but I think as you’re thinking about service and you’re thinking about all the variability that we’ve had over the last couple of years, and as we think forward, there’s not a lot of clarity on how this is going to play out, but is in transit variability. You have port congestion. You have all these different factors that are potentially impacting your on-time performance, which is critical to meeting customer expectations. And so I think, I’d say point four is around how do you partner with upstream providers, whether that’s your factories, your logistics providers to control the process at origin so that you can impact downstream performance.

Brian Weinstein: That’s amazing. No, it is very well said. And it’s such a critical component to ultimately winding up in a successful, profitable business.

Alex Albert: Absolutely.

Brian Weinstein: Well, Alex, this has been fantastic. I really appreciate you coming on. We’ll now refer to you as Alex Albert from going forward.

Alex Albert: Love it. Love it.

Caitlin Postel: You heard it here first, folks!

Alex Albert: I’m grateful to Whiplash and for you all for having me on. And hopefully, there’s some fun little sound bites in there and nuts of information that will help some people out there improve some things and drive their business forward.

Brian Weinstein: Absolutely. That’s the goal. That is the goal. Caitlin Postel, you want to take us out?

Caitlin Postel: Sure. Thank you, Alex. Thank you everyone for listening. Make sure you tune in every other Friday on your favorite podcast platform. Have a great day, guys. See ya.

Brian Weinstein: Thank you!