How Winky Lux Scaled Despite Disruption in 2020
Good afternoon, everyone. Looks like we’ve got a great turnout. So, let’s get started. I’m Sarah Moore. I’ll be your host this afternoon for our webinar about how Winky Lux scaled despite disruption. So, let’s jump into our presentation. I’m going to start with an overview of the survey that about 15% of you completed when you registered. We asked four different questions. And the first one was how much has COVID disrupted your business. Seventy-seven percent of you said it was manageable. So, you were disrupted but you got through it. Twenty-three percent of you said you had major disruption. And when we asked what kinds of supplier changes resulted from that disruption, almost half of you said it was a combination of move-ins, move-outs, and cancellations, which is perhaps not surprising.
It’s been super common. And then yet, when we asked, ‘How do you manage those supplier changes?’ Almost three-quarters of you said through email, phone, and traditional methods, which can be super challenging. And I’m sure most of you can relate to how hard it is to keep everybody in sync if you’re using that approach to communication and collaboration. One key part of that that we find is crucially important, but underestimated, is ‘How often do suppliers acknowledge POs?’ And in fact, more than half of you said you don’t know. And the remainder said somewhere between 0% and 50%. So, all of this is really interesting. We’ve been surveying on folks throughout the year and haven’t really seen a change in these results.
Every time we give it, we feel and have learned that everybody’s pretty much in the same boat, which is a great context for our conversation today. I’m joined by Go Kamiyama from NetSuite, Nate Newman, and Giana Tarpey, two supply chain heroes from Winky Lux, the breakout beauty brand from Glow Concepts. And we’re going to kick off with introductions, then Nate will give us an overview of Winky Lux’s business and their incredible story of growth. Then Go and I will provide just a really short overview of the solution that they use today. And as soon as possible, we’ll ditch the slides and open it up to live conversation.
We will do our best to save some time for audience Q&A at the end. Some of you have already submitted questions. We’ve got those ready to go and will weave them into our conversation. And then I want to remind everyone housekeeping. Within the GoToWebinar panel, there’s a little chat window labeled questions. If you post your questions there throughout the presentation, you don’t have to wait until the very end. You can publish them there, and then we’ll have them and be ready to use them at the end. So, with that, let’s jump in. Join me, my panelists. I’ll start with introductions. My name is Sarah Moore. I’m CMO at SourceDay and I’ve spent the last 25 years working with large enterprises and mid-sized companies to embrace technology to help digitally transform their businesses and improve the business’s results. So Go, can you share your background and your role at NetSuite?
Go: Yeah, absolutely. And first of all, thank you so much Sarah and the SourceDay team, as well as the Winky Lux team for having me here. I can never forgo the opportunity to talk about and learn about supply chain from the leading brands. So really excited to be here. But just a little bit about myself. I’m the Senior Manager and Industry Principal for the health and beauty segment over at NetSuite and Oracle. And my charter is to focus on the go-to-market, user adoption, product strategy, and customer success of the overall vertical. A quick little background about myself outside of NetSuite. I have over a decade of experience working within CPG, high tech, and the retail industry, where I helped a lot of clients gain efficiency and effectiveness through consulting and technology, especially focused on supply chain management. So, really happy to be here and excited to be learning a little bit more about Winky Lux, as well as talking about supply chain.
Sarah: Awesome. Thank you. And Giana, can you introduce yourself?
Giana: Hi, I’m Giana Tarpey. I’m the Supply Chain Manager at Winky Lux. I’ve been with Winky Lux for just over three years. I create the purchase orders as well as set up the SKUs, the bills of material in NetSuite. I make sure everything delivers on time and to the right locations.
Sarah: Awesome. And last but not least, Nate.
Nate: Thanks. Hi, I’m Nate Newman. I’m one of the co-founders of Winky Lux and Glow Concept is the parent company. I do all the operations. So, anything that happens after we get a sale is when I take over and I manage that process.
Sarah: Perfect. And then why don’t you share background on the company?
Nate: Sure. So, we launched about five years ago. We just had our fifth-year anniversary in October. And I launched alongside a good friend of mine, Natalie Mackey. We started, you know, developing different products that we wanted to bring to the market that brought the user joy and that didn’t break their wallets and had a good price point. So, they felt like they were getting luxury, just at an affordable price. We’re located in New York in the Lower East Side. We’ve been here since the start. But we’ve already moved three times as we’ve kind of grown out of our spaces. Then the way we really grew quickly, other than having great products is…I think the best part of our products is the price that they are hitting trends. So, we’re fast to market on new trends that come along, whether they’re from the industry, Instagram, and anything that we find that we think that the consumer will really like to use. So that is how I would attribute our success so far. And then logistically, we ship out of here in the Lower East Side. And we also have a location in California that is kind of a partner of ours. We do 3PL service. And we go back and forth to manage that operation as well.
Sarah: Great. And so, through that growth, you face some challenges. And so maybe you could continue the conversation and share… You know, your charter has been to modernize the systems to support all of that scale. But what led you to make the changes that we’re going to talk about today?
Nate: Right when we were getting started, I was kind of thinking, if you wanted to have me on six months ago, our systems would be convoluted. We’d have multiple flows of different data and different purchase orders that were emailed out. Giana will talk about all of this in more detail. But there were so many different parts to getting products into our warehouse. And the reason you’re having us on today is really because SourceDay and NetSuite have changed the way we do business. It’s really helped, and we’ll get into the details of that soon. But yeah, that’s absolutely what it was.
Sarah: So, yours… Yeah, sure. So, prior to NetSuite, your systems were QuickBooks, and Fishbowl, ERP. Is that right?
Nate: So, for eCommerce, we use Shopify. We went to a holder, kind of intranet website where we could do different things with reporting. And then we went from there into Fishbowl inventory, which is a system that sits on top of QuickBooks. And finally, the accounting went into QuickBooks. So, it was a lot of steps. If you needed to change something that happened in a lot of different places, and that’s just the systems and then you could talk… You know, Giana will talk about emails and WeChat, and all that stuff she’ll get into.
Sarah: For sure. And so that leads to wasted productivity, right, and lower visibility, which can always you know, between that and missing updates, you get the fire drills or the chaos that can either be really expensive for a fast-growing business or threaten that worst-case scenario of a stock out or running out of product.
Nate: Yeah. And that expense comes not only from just air freighting inventory that you thought you could send on a boat, but now you don’t have time, but it also comes at the expense of growth. Now we’re further behind in labor, which is just cleaning up mistakes and fixing things.
Sarah: Right. Right. And so, when you did decide it was time to evolve, though, fast-growing business, small team, you didn’t have the time or resource for a massive heavy ERP implementation, right? You were looking for something that would be fast, and lightweight, and agile?
Nate: Yes, definitely. Luckily, a lot of people in the health and beauty space are using NetSuite. And, you know, when we were evaluating, that was a big thing where we wanted to find something that other people told us would work. But when we started to dive into it, we would ask some questions about the functionality, and they would show us how it worked. And it was intuitive, but it was also very… You could add on to it. It was, I don’t think modular is the right word, but you can definitely add on to it, which is, you know, how we found SourceDay, and I can get into that if you’d like.
Sarah: Well, we’ll save that for our conversation. I think the headline here is that you guys have more than doubled the business in the midst of all of that, during a year that has had unprecedented supply chain disruption. And you guys have had some exciting things happen in the business, too, right?
Nate: Most definitely. So, this year, in March, right before COVID really started to take over, we had launched in almost every Target department store in the country. So, this was a large growth initiative that we had been working on for a long time. And right as we launched, COVID interrupted the flow of the future. So, luckily, we did get to launch pre-COVID. But the replenishment and everything that happened from there was very difficult to navigate through.
Sarah: For sure. Well, incredible story of success, despite some adversity. So, as Go said, I sincerely appreciate you guys sharing your story with us today because it’s awesome. All right. So, last thing we’re going to do before we ditch the slides is Go and I are going to give a quick overview so the audience has a visual idea of how these two systems work together, NetSuite and SourceDay. So, this picture is meant to depict at a super abstract and high level how things work. Go, could you kick us off with a description of NetSuite?
Go: Great. Awesome. So, thank you, Sarah, and thank you, Nate. So just for those of you that don’t know NetSuite, just at a high level, we are one of the leading business suites on the cloud. We were born on the cloud and we’ve been on the cloud for the past 20 years. And this typically includes core competencies of a business. So, finance and accounting, order and inventory management, supply chain management, customer relationship management, commerce ready. We also have our commerce product, as well as email service provider. And really, our charter is to help businesses that are typically very similar to Winky Lux.
They’re struggling with a collection of appointed solutions. They have a hard time getting a pulse on their business, as well as getting an instant and accurate view of your company operation, which is very critical to understand how you are doing and what’s kind of that litmus test. And with having all that information in one place, this leads to benefit like true accuracy of your product costs, lead time, better insight and increasing your margin, and also providing more information for companies like SourceDay to work together from a vendor perspective so you can really kind of look at the full lifecycle all the way from what the vendor and your manufacturers are doing, and also plugging that into NetSuite. So really providing that, you know, single visibility in one place kind of working harmoniously with SourceDay.
Sarah: Yeah, awesome. And that’s important because as NetSuite is doing its job with demand planning and inventory management, it determines that materials and parts need to be acquired or purchased from suppliers. And the old way of doing things, like most of you completed in the surveys, picking up the purchase order, either via PDF or whatever format and then literally emailing it or sending it to every single supplier that you need to order products from. And then the nature of the modern supply chain is there’s a lot of change that happens. In fact, when SourceDay looks out across our customers and suppliers, thousands of them globally, we access our data that we process and see that over 40% of PO lines are going to change, either because the supplier can’t meet a date, quantity, price, and maybe the buyer needs to make a change because something changed in their worlds on the customer demand side.
But almost half of the time, there’s going to be a change to that PO. And if you use traditional methods to try to keep all up to date, what happens is they just get lost. PO acknowledgments never happen, the update never happens. And that leads to some of the expensive issues that Nate described a few minutes ago. So SourceDay as Go said, we had a built for NetSuite certified integration. And our job is to take all of that chaos, organize it, and put it in one place in a cloud-based solution that’s super easy to use. And that manages all the fundamental pieces of that collaboration from quote to purchase order to shipment notification. And we keep NetSuite up to date in real-time.
So, finance, accounting, operations, supply chain planning are operating on accurate data, which means fundamentally, in this case, Winky Lux has the materials they need when they need them to meet all of this incredible, fast-growing consumer demand. So that’s all we’re going to cover on the technology side today. I’m thrilled to now ditch the slides, as I said, and let’s jump into our live conversation. So, I’m going to welcome Nate and Giana back to the screen. Awesome. So, let’s jump in. Nate, you gave us a great overview of the business, but let’s dig a little deeper into your supply chain. Tell us more about your suppliers and your customers globally.
Nate: Sure. So, customers, we have our Ecom, direct to consumer channel. We have a couple of stores around the country. We’ve opened in different places, whether they be pop-up or permanent sources. And then we have our main wholesale retail customers like Target, Nordstrom, Ulta, etc. So, that kind of covers the three major channels on our customer side. And then from a supplier side, we have a number of different factories around the world, manufacturing overseas, China, Italy, Germany, and we met manufacturers here in the U.S. as well. And each manufacturer communicates differently, which is how we ended up with SourceDay. But they all have their own methods, and challenges, and delays, and logistics issues.
Sarah: Fair enough. So that’s the complicated situation, Giana, that you’re, you know, in charge of. What kind of lead times do you guys deal with in that scenario?
Giana: So, we typically deal with lead times anywhere from it could be three weeks to about seven or eight months, depending on the item. Sometimes labels and boxes are a little bit shorter. And then if it’s a turnkey item, then they could be a little bit longer, like 17 months. And that’s basically something if we ordered the component, the fill, the formula, the label all from one manufacturer, that could take a lot more time. So just depending on the vendor and the item. And then also, if we decide to airship, that could be about four to five days. And if we boat ship, it could take about five or six weeks. So that factors in fleet time as well.
Sarah: Yeah, really common scenario for any health, beauty, wellness brand. I know we had several that have tuned in today. So that’s going to sound really familiar to them. And it’s super complicated. Tons of moving parts, right? So, let’s unpack the back office a bit. You know, the cat’s out of the bag. You guys use NetSuite ERP. And tell us a little more about why you chose NetSuite to replace QuickBooks and Fishbowl?
Nate: Sure. I can talk about that one. So, I’m definitely very up to date on systems and software. I can dabble a little bit in programming, and SQL databases, and things, and I was pretty confident that Fishbowl and QuickBooks… Sorry, we actually started only on QuickBooks, then we went to Fishbowl and QuickBooks dating back just in the beginning. And I was confident QuickBooks would work, and then I was competent Fishbowl inventory and QuickBooks would work. And it just seems when we grew and we added a whole lot of products, a lot of shipments, a lot of orders, we just outgrew these systems.
We wanted something that would work for us obviously today but would work for us in the future. And I think that’s how we landed on deciding on NetSuite. But just one more thing on the system, we did decide on NetSuite because we were able to do import, export. We could play around with the reporting to get the data we needed. Like a little kind of detail would be in the reports. We can do a calculation. So, you know how sometimes you bring out a report into Excel and you can do this cell plus this cell equals this. You can do that in NetSuite where you can export the actual data you need. And those were some of the things that kind of brought us to NetSuite and so far, we’re very happy with it.
Go: That’s awesome, Nate. And I think a lot of the companies or folks that are on the call today probably are like you, right? You wear many hats. You do a lot of things. I love that you have the technology background. But obviously, that will require you to do a lot of work. You’re super busy. And obviously, especially if you’re going to be moving from one system to another, as you guys are growing at a very rapid rate. So, talk to us a little bit about the implementation. How did it go? What was it like? What are some of the things that you got out of it?
Nate: Yeah, I was a little bit worried about that. The only thing I heard negative about NetSuite was the implementation time. You know, even my cousin’s company was, I think they were months into it. And they were still working through everything. We got it up and running very efficiently, quickly. And we started right as COVID hit. So, unfortunately, we didn’t have anybody come into the office and walk us through the training. We did it all virtual. They worked fine. It would have been nice to kind of walk somebody around the warehouse and show them different ways we do our process flows, like our physical processes. But in general, everything was fine. We launched on time.
To get an idea of what it’s like, I think that it goes in pieces. So, the first part of it is an exploratory phase, where I’m telling them, you know, we have some inventory items. We have some non-inventory items. We do some shipping and they get an idea of how to mold the system to work for what we need. So, after that, we went into the detailed input. So, I had to upload all of our inventory, get all of our chart of accounts in there, you know, do the accounting part of it. And then we deep dived into the training. You know, I could get into more detail, but I think that’s kind of the overview of how it went through.
Sarah: Yeah, incredible that you’re able to accomplish all that remote.
Go: Got it.
Nate: Yeah, it was fun.
Go: I was about to mention, that’s the benefit of having a cloud software. We can’t be in the office, but we make it work. And I think that’s the beauty of what we have here. So, you know, obviously like you guys, we kind of talked about how you do create a lot of products, you’re constantly developing new things, and refreshing some of your promotions and packaging. And obviously, that’s a lot of work, right, especially when you talked about going from Fishbowl into QuickBooks, it was tough to manage all those different SKUs. And then it’s even more important to have an efficient supply chain. So, can you guys talk a little bit about how, you know, a system like NetSuite and SourceDay supported that dynamic nature of your business?
Giana: Sure. So, we’re constantly hitting trends and producing products quickly. So, NetSuite helps us customize certain reports and see exactly what needs to be ordered and when. I know our demand planner uses that feature a lot. And also, some of our items share the same component. So, NetSuite makes it easy to see exactly when we need to order things and figure out all that kind of stuff. So, it’s just very organized and easy to use.
Nate: Yeah, and just from a physical shipping situation, NetSuite helps us, they manage our lock codes, which in makeup could be different runs of the same product, but different years or months or iterations. We definitely change packaging a lot. So, it allows us to see which packaging was used for which and where that’s located in the warehouse. It can get extremely more detailed than we even use it. But the way we use it is detailed enough and we’re able to track everything and make sure we don’t send out the wrong products or make something that we didn’t want to go out to the market.
Sarah: Awesome. Really great background. So, let’s switch gears and talk a little more about supply chain performance. Giana, can you share what it used to be like managing supplier orders in POs?
Giana: Sure. So, before SourceDay, we had emails, text messages, spreadsheets, WeChat, WeTransfer, basically all the different kinds of communication. Things would get lost a lot. And then certain people wouldn’t be on a text message or an email. So, the important people would miss stuff as well. So, it was very stressful and just a little unorganized. So now with SourceDay, it’s just more organized and easier for everyone.
Sarah: Yeah, I think you said you guys even used to use Skype calls.
Giana: Yeah. Skype as well. Yeah. Just so many different forums. And yeah, it was a little messy.
Sarah: Well, you’re not the only one. I mean, we heard at the top, that’s how most people are still doing it today. And so, beyond the obvious stress that that causes, it makes my heart rate go up just to hear you describe it. What are the financial impacts that you guys saw?
Giana: So, there was actually one time when China missed something from our end just because of all the different forms of communication. And they printed the wrong artwork on one of our new product launches. So, we had to have China redo all of the boxes for everything. So, we had to pay for all of that. And then we had to airship it in and then not only that, we missed our launch. So, we had to push that as well. So, some financial issues there.
Sarah: Yeah, that can be expensive, really expensive.
Nate: Yeah. And also, I was talking a little earlier, just about shipping the orders and going by boat, just to give a context for anybody that doesn’t do this, it might be a couple of thousand dollars to ship by boat. And that same shipment might be 15,000 to go by air. So, that is a huge, you know, tangible cost that definitely comes up. And then I talked about labor costs a little bit, but you have so many departments affected by that. You have, you know, sales that has that ready to go, and now they have to delay or cancel. It just depends. So many different things have happened over the years. And if there’s other entrepreneurs or managers on the call, it’s going to happen, but what you do with it and how you stay organized, I think, is really what we’re talking about today. And so far, so good, I think.
Sarah: Yeah, and missing the opportunity to ship and meet consumer demand means you’re losing revenue to competition, potentially, right?
Nate: Yeah, definitely. We also don’t want to be that company, which we actually experienced early in our lifecycle. We were with a smaller, big-box retailer. And they kept saying, you know, you guys can’t be late on things. You can’t be late on things. And somehow, we were just so unlucky with that one customer. I think they were doing the special-order thing. And it just went wrong here. It went wrong there. So, you can’t get it wrong. You have to be on time, especially in today’s world.
Sarah: Because of the fast-growing business, you need the revenue, you need to protect margin. So, you had the resources to fund growth and scale.
Go: I think that’s a great comment there. Right? And obviously, at the end of the day, it’s your end customer that matters. And if they are not getting their products on time, and then when they have all the marketing up on their store, whether it’s e-commerce or in the retail store, you’re affecting their business as well. And the inherent implication, especially if you’re working with big-box retailers are the chargebacks. Right? If you don’t put it in the right shipping window, with the right lot expiration date, those are all inherently going to come back to you.
And it sounds like you guys manage that by having it all in one system. But also, having that accuracy and data as well as having the predictability will give you guys some buffer in time to be able to go left or right. To your point, Giana, you know, sometimes you’re late, you have to airship it instead of doing it by boat, that’s just kind of the reality of it. But by having the ability to have those conversations digitally through the system, that you guys have, you can manage that. So, it’s really good to hear that you guys are leveraging the system in that way.
Nate: Definitely. And just one quick cost, if it was for a season or for a time period that you’re on a shelf, and you deliver late, now you’ve delivered, let’s say 20,000 units, and they don’t have time to sell all 20,000, they sell 10,000, now you’re getting back 10,000 units that you thought were going to sell through that you had to pay for so there’s always reverberations that come from things being late.
Sarah: Yeah. Wow. Well, in fact, Gartner recently released a cool vendor report where they predicted that 80% of organizations are going to scrutinize their procurement technology for some of these reasons, and by 2022 will have ditched the old, slower status quo type systems and processes for more modern nimble best-of-breed solutions. And you guys already had a curb because you’ve done that already with NetSuite and SourceDay. So, let’s shift gears to the SourceDay side of this decision. Nate, how did you come to the decision to use SourceDay?
Nate: Yeah. So, Giana and I definitely dove deep into SourceDay. We had a meeting with every party that was involved with getting products in-house. You have the product development team. And once they make the product, Giana takes over and she makes sure that it gets here. So, we all sat down and looked at all the pain points that we had. We knew it worked with NetSuite, which was definitely the first thing. I think we actually found it through the NetSuite App Store that they have, and it integrated well, from what I understood. So, we started diving in. I think that was kind of the beginning of it.
We went through a demo, and we started asking questions and we said, you know, “What about this? Can SourceDay handle this?” And the presenter that was showing at SourceDay just clicked on where we go, and we’re like, “Oh, okay, I guess that works.” And then, you know, Giana would ask, “Well, I usually run into this problem” and they would show us exactly how to solve that. So, we got our questions answered pretty quickly. We definitely weren’t sure we were going to go with any kind of sourcing software. We didn’t really know why we would need it. We have the purchase orders in NetSuite. You know, NetSuite is an ordering system. So, we didn’t know why we would need any bells and whistles, and we started diving into SourceDay. And it was quickly understood what kind of advantages we would have by going with that.
Sarah: Right. Because NetSuite can only run as effectively as the data that’s inside of it. And a huge part of the data because of everything you just talked about depends on external third parties, lots of them. And we’re obviously thrilled that you made that decision. I’m glad to hear that you thought it was easy. Along those lines, fast-growing business, any business, IT teams are incredibly slant. And the last thing IT teams… I mean, the answer we get is like la, la, la, la, when we ask an IT team to take on this project, that’s the last thing they need is something new to do. So, tell us what the SourceDay implementation was like? I think you said NetSuite was just a few months, didn’t take long. You hit your deadline, even though you were in the middle of COVID, even though you had to do it from home. What was it like with SourceDay?
Nate: Yeah, so the implementation process was very easy. I don’t want to compare it to NetSuite because it’s not the same kind of implementation. SourceDay, yeah, I think it took 30 minutes or an hour for somebody to do a screen share or login to our NetSuite instance. And they just installed the software. And then we had some testing. I think Giana just went through with kind of a training professional. She clicked on everything that we would want to click on. And I wouldn’t even say it was an implementation period. I think it was just kind of like an install period. And then it was more on the training process. So, I think that Giana knew exactly what she had to do in the system, but where to click was what she had to learn. So, there was more of the training process than it was from a tech point of view is very quick to get up and running.
Sarah: And so, what was your experience like, Giana, and what’s life like now?
Giana: So, SourceDay is extremely user-friendly and organized. We really like how we can upload artwork to each item if we want. Our supplier can also go in there and change prices, change quantities, and then I can either accept or reject them, and then it’ll just flow right over into NetSuite. Which is nice because there is less room for an error on my end if I type the wrong price. So, that’s a really good part of it. And also, yeah, that’s pretty much it. So, it’s very helpful.
Sarah: Yeah. And many organizations are really skeptical of, yes, the data lives outside the organization, but my suppliers are never going to use it, like it won’t work. What was the supplier onboarding process like for you?
Giana: So, we had training weekly. We got to choose like how often we wanted to have training, but we just did about, like, four weeks of training with the supplier. So, we were able to ask whatever questions and then somebody from SourceDay shared their screen and would show us exactly how to do everything. And then even now, like, if we have a question, we could still call in, and they could just show us how to do it and set up a quick meeting. So, it’s very user friendly and easy.
Sarah: Oh, we love that…
Nate: We were worried that the suppliers might not be comfortable or we wouldn’t be comfortable with the flow. So we were used to just shooting off an email with a purchase order on a PDF and we weren’t sure that they would know how to login to SourceDay or don’t even want to log in and do this new process. Some of them are kind of old school. some of them are tech-oriented. You just never know what the supplier is going to do, but I don’t know, Giana, we didn’t have any problems with getting people up and running, right?
Giana: Nope, no issues at all.
Nate: Yeah, that was really the biggest thing we were worried about, and that worked out well.
Sarah: Awesome. So, the third topic is the elephant in the room: COVID. You shared a little bit of a story. You had to get NetSuite Live from home, but how else has COVID impacted your business?
Nate: So, we started with SourceDay, I’d say, probably right after China started to come back to work and things started to get normal again. So, we were still on the old system. We were… I wouldn’t say that things weren’t running okay, but we were just really hit with like this external force that came out. China, if you remember, was the first to shut down. And we had a lot of products coming out of China. And we thought we were going to be okay because we were going to manufacture the other products in the U.S. and in other countries, then all of a sudden, those started shutting down. And China actually came back somewhat quickly and safely before the other. So, it was really hard to kind of add-in flow with everything that was going on. Luckily, I think everybody was dealing with it, which is different from some of the other problems that might arise is you try to explain it to the retailer and they don’t want to hear excuses. But for COVID, I think it was a little easier. But that doesn’t help financially. It doesn’t help with sales. It doesn’t help with growth. So, it was a struggle for sure.
Giana: Yeah, definitely. And also, in the beginning of COVID, was Chinese New Year. So, we had planned for that. So, we did buffer our POs a little bit, but we obviously didn’t plan for COVID. So, a lot of our components come from China. When they closed, we couldn’t really feel anything. We went out of stock on a lot of items. And then, like Nate mentioned, we didn’t expect Germany and Italy and Canada to close down as well. And when they closed down, we were really affected. And then when they actually did come back, it was only about 25%, then it moved up to 60%. So, it took a couple of months for them to get back to 100% working. And then we had to air in a lot of our items, which was a big expense. And we couldn’t vote anything in for a while. So, even that there were like so many issues with airing. There were so many delays with that as well. So instead of a typical week, it would even take up to three or four weeks just to air something in.
Nate: Yeah. Remember, you couldn’t book a shipment because the planes were all full, the limited amount. Yeah. And FedEx and UPS canceled economy service. All they have is priority. I think that’s still…because we just shipped something, that’s still in place, it’s been crazy.
Sarah: Yeah. Wow. And yet you had this massive business opportunity with the Target placement, and they were one of the only retailers to stay open, right?
Nate: Yeah. That was definitely great for us to have a partner like Target.
Sarah: Sure. But the fact that you’re able to deal with all of that chaos and still ship product, and not run into a stock out situation or anything has helped mean that you’re getting through this challenging time and still growing the business, right?
Nate: Yeah, and one thing that I didn’t mention before was Target actually outsold the pace that they were predicting. Not only did we have to get our normal replenishment order, and we had to figure out a way to order more than we anticipated to cover those sales that were beating expectations. So, it was very exciting. Very scary, very difficult to navigate, but all of it, hopefully, it’s going to work out the best it can.
Sarah: Oh, it’s so great to hear a positive story, though. It’s awesome. Congratulations, really.
Nate: Thank you.
Sarah: Go, you had some stuff you wanted to follow up here?
Go: Yeah, absolutely. And Giana, just quick question to you, right, you know, working with SourceDay and NetSuite, I think some of the things where we can provide from a system perspective is predictability and be able to really think on the spot instead of getting a phone call three weeks later and figuring things out. So, you know, you mentioned, air freight versus shipping, right? How did you make those kind of determinations and what are the conversations you had to make one go one way or the other to meet the demand that you guys had?
Giana: Yeah, so I worked a lot with our demand planner to see exactly what was going to go out of stock, and what was priority, and what was selling the most in Target. So, we basically based it off the high seller SKUs. We had to air them in. And we pretty much aired in the amount of time that it would take like a boat to get there, enough to cover us until the boat delivery got there. So that was like what we had to pretty much do with all of our SKUs, especially the high seller ones.
Sarah: Wow. Wow.
Go: Gotcha. That’s great. Yeah. And then I think the other notable thing if you guys don’t mind, is just the fact that you guys had vendors and manufacturers really sporadic all over the place. One of the important things with a lot of companies now is the idea around redundancy of supply chain, making sure that you have the manufacturers across different geographies, to make sure you can avoid some of these things. Was this something you guys planned for, or did it happen organically? How did you guys end up in that situation, Because a lot of folks did struggle with that.
Nate: Yeah, I don’t mind answering that one. I know Giana works with these suppliers. But we have always tried to, well, for a couple of reasons, but that is one reason we’ve tried to have suppliers in different places because we wanted to have…we don’t want to rely on one area, one situation. I think, a few years ago, there were some tariffs that were put on China. So, there’s different things that can happen along the way, that it’s safe to go in different places. But we also want to choose factories. Our particular company wants to choose factories that work well for what we’re trying to accomplish.
So, if we’re trying to create a lipstick that has a more creamy feel we go to different factories, look at their machinery, and what their capabilities are. And we just happen to find different places, different manufacturing facilities, that would work for what we needed to accomplish. So, it’s kind of a little of both. But one funny thing is, you know, we wanted at the beginning of COVID, to get out of China, and just have a different option there. And then now, we kind of wanted to go back to China with everything because they were quicker. They had better safety protocols ready for these kinds of things. So, it’s kind of funny how it moves around, just depending on…well, definitely during COVID. But in general, different places offer different advantages.
Go: Right. Yeah, and just having the option is definitely really critical that you guys have set up for for the future, right? I mean, whether you guys… You know, obviously, no one could have predicted this, but you did really think about those redundancies and potentially a contingency plan. So, very impressive that you guys already kind of had that in place.
Nate: Yeah, thank you.
Sarah: So, this will be the last section of our shared conversation. Reminder to the audience, if you have questions, go ahead and drop them into the questions panel in the GoToWebinar section. Our final topic is lessons from this year. What are some of the key takeaways and things that you couldn’t have predicted that happened this year? Nate, what are some of your takeaways?
Nate: There’s been a lot of COVID takeaways, in addition to COVID. Like we said, we doubled our businesses here with the Target initiatives. So, we had a lot of challenges. COVID definitely brought us new challenges that we had never faced, but they’re also similar. You know, it really comes down to the nuts and bolts, to how quickly you can iterate artwork and develop the product, and then how quickly you can communicate that and stay on track with the supplier. That’s really what SourceDay does for us; it allows us to keep everything in one place. NetSuite as well, you know, from outside of the purchase order part of it, we really needed to be on top of things because this year was much different from the other years. And, cost-wise, it was definitely higher. There was no way to avoid the costs that came from COVID. So, there’s a lot of takeaways, I think that they’re all good, you know, financially a little tough and logistically a little tough, but they’re all good because I think that it allowed us to really button things up along the way and force us to use the tools that we have.
Sarah: Well, it’s just a great example of building a supply chain that was designed to scale in going ahead and writing the bullet, not waiting. Many organizations have decided, “Hey, we’re going to hunker down and just wait until this is all over.” But because you guys didn’t take that approach, you embraced change and evolution and modern cloud-based technologies, it put you in a position to double the business, which means you’re going to come out of this with a much healthier, stronger position than any of the competitors who decide to stick with status quo.
Nate: Yeah, and we also are in place for the next doubling of our company. We’re not going to have to worry about implementing any new systems. We’re going to be able to scale from where we’re at now, which is a really important thing as a COO to make sure your company’s ready to go to that next level.
Sarah: For sure. How about you, Giana? What are your takeaways?
Giana: I would say that anything’s possible. You never know exactly what’s going to happen. So, when something does happen, always try to look to a different solution. What you have in mind might not always work out. So, try to think of different ways that you can do something and get basically the item from point A to point B.
Sarah: And you have such a calm demeanor. I mean, as Nate is still in the story, I mean, you’re not going to offer this, but my takeaway is make sure you have a calm person sitting in the boat right next to you, right?
Nate: My business partner has known me for about 15 years. And she always says and even people in the company have seen I’m a very calm… Just tell me a problem, let’s solve it. And then you add Giana to the neck. She’s so data-oriented. She says, “All right, well, which tracking number do you need? Which factory do you want me to contact? Just tell me the problem. Let me handle it.” So, I’m pretty happy with the way we’ve handled this year so far.
Sarah: Awesome. And Go, you work with brands like Winky Lux all the time and this is your area of expertise. What are your takeaways for this crazy year?
Go: It’s been a crazy year. But I think there’s a couple of things, just even listening to the story with Winky Lux, I think the scene that I’m seeing a lot across a lot of these companies is the ability to pivot, right, and being ready for the unknown, building a contingency plan. When you look at what Nate and Giana have done, they did build that, whether they intended for a COVID plant or not, they really thought about what are the things that are going to affect them. So, number one, making sure that there’s a system that they can trust, right? Data is number one, being able to understand how your company is doing, where things are, is really important. Not always from just a supply chain perspective, but financially, cash flow, keeping that in mind, whether you can airfreight it or you can do it through a boat or not.
And then I think, more than ever right now, leveraging tools like SourceDay, having a clear communication with your vendors and manufacturers overseas, where things are is really pivotal, right? Because if they can’t produce something, you want to be able to have a contingency plan to move somewhere else or you might have the ability to look at, you know, basically doing vertical manufacturing and sourcing ahead of time. So those are all the things that you can get ahead of to make sure that you can pivot and have a contingency plan for, and those companies that had that ahead of time and always thought about what may or may not happen has been very successful. Just looking at Wink Lux, they’re a perfect example of that. So that’s kind of the thing that I’ve definitely seen.
Sarah: Interesting. Okay. So, one last question before we open it up to the audience, as you look at the road ahead next year, is there anything that you’ve learned…or what can you share? I mean, obviously, there’s some secrets you’re not going to share. But what are the…? What does the future hold for Nate Newman, Giana Tarpey, and Winky Lux?
Nate: Yeah, I think we have a lot of possibility for growth. We’ve seen growth this year. We dove right in. I think we’re handling it effectively, efficiently, definitely through COVID. But just outside of COVID. We feel very confident now that if we add 50 purchase orders, 20 factories, 10,000 customers, 100,000 customers, we’ll be prepared because we’ve set up those systems like I was talking about before. And I did want to just mention, to Go’s point into all of what I’m saying. We have to decide to go to a NetSuite base for the cost. I would have gone to NetSuite in the first year if it was the same price as QuickBooks. But I just grabbed that off the shelf and we got started as a small business.
It wasn’t until we started to see some problems in our current systems that I started looking at NetSuite and the cost is higher, but the ability to grow, set yourself up for the future and the amount of problems that I personally went through, and it really affected the business because I spent most of my time trying to fix inventory issues. We had inventory costing problems that we didn’t notice until later, based on the system we were using, which was Fishbowl. And before that QuickBooks, we had QuickBooks crash on us. I think there were probably three to four major times that we had to deal with that. So, the cost while the sticker price is higher, really, you should look at, if you’re making this decision, you should look at the entire aspect of your business, and how you can set yourself up for growth, and avoid the costs of not having a system that works well for you.
Sarah: Such an excellent point. Something that many companies don’t realize is status quo, it’s easy to get complacent, and just things like switching freight is a cost of doing business, having to scrap material that was misprinted is the cost of doing business. You know, having to rush things because the supplier never acknowledged the PO. It means you buy extra inventory, then you can actually sell through just to ensure you never stock out, that software can maybe seem expensive, but it’s not nearly as expensive as status quo turns into when you consider all the implications.
Sarah: Yeah, sorry, I couldn’t help myself. So, it’s time to turn to the audience questions. We’ve got a bunch to dig into. And the first one, I am guessing is coming from one of our folks out in your industry, health and beauty or wellness because it is “What trends are you seeing right now that are exciting, even during COVID?” This is got to be consumer trends that you all are seeing.
Nate: Just find consumer trends?
Sarah: Yeah, I think that’s what this person’s getting at.
Nate: Yeah, we do this all day. We use different software to look at what people are searching for. We go through Instagram, Facebook, TikTok. We try to stay on top of what people… And it’s not just product, it could be ingredient. It could be sustainability. So, I think the question is, what is fun? And I think you’re going to have to stand by, we are launching a bunch of products this fourth quarter. So, if you continue to check, winkylux.com, we are definitely coming out with a lot of fun things that are on-trend and I really hope that people like them.
Sarah: Giana, you’ve got anything to add to that?
Giana: I would say… Let’s think. Just kind of like what Nate says, a lot of the times people are into, like, going green and stuff like that. So, it might not be an actual item, but more, ingredients and stuff like that. That’s becoming very popular right now.
Sarah: Yeah, really true. Really true. Okay. Next question is, do you still cut POs from NetSuite or do they come from SourceDay?
Giana: So, I’m currently cutting them in NetSuite and then they flow over to SourceDay, within that day, and then our supplier will accept it in there. And then once I see that they accepted it, they’ll let me know if there’s any pricing issues or quantity issues, but from there, everything’s usually good to go.
Sarah: And then, which modules are you using in SourceDay?
Giana: So right now, we’re pretty much using everything. The only thing that we haven’t used yet is having our suppliers add the packing lists onto the POs. But I know that they’re going to start doing that soon. And then once we do that, we’ll pretty much be using everything.
Sarah: Another question for you, Giana. “What level of bill of materials are your products? And do you foresee issues for bill of materials items up to six levels?” It’s a very deep question.
Giana: I’m not exactly sure what a level is.
Nate: Perhaps maybe we build something and then build it again.
Giana: Oh, okay, so that’s usually about two, then.
Go: Yeah. Then the idea around sub-assembly, right? So, assembling one item and then going into another, six levels of that.
Giana: Yeah. So usually, one assembly could be an item that’s unboxed. And then we use that item for the boxed assembly. So, it’s really just two levels right now, for the most part, maybe three for some, but that’s pretty much the extent of it.
Nate: And Go, I believe you can do an auto assembly on those different levels. We don’t do it because we do it ourselves manually. But I think you can auto assemble the child, can’t you?
Go: Yeah. So, there’s a system dependency that effectively allows you to go down as many levels you want. Obviously, you want to stay around two to three because as you go further down, it’s like one of those mazes that you can’t get out of. But everything is… The beauty of having a system like NetSuite or ERP that supports bill material is that they’re dependent. So, if you have a top-level assembly item and you want to create 100 of them, the system will break that down based on how you set up your bill material and it will create that demand for you. And that’s where you want to move into an ERP instead of doing it in spreadsheets because you’re going to be looking at seven different spreadsheets trying to manage that. And it becomes unbearable and it’s not going to be efficient at all.
Sarah: And then a follow-up, how do you manage your multiple versions of packaging, does planning total up all versions of inventory?
Nate: We wouldn’t order the older packaging anymore. But I guess we have to… It really depends on the product. So, there are times where we do use older packaging and newer packaging, just depending on where it’s going, what it’s used for. But yeah, we sort of just have to get a picture of our inventory, which is what we’re able to do much easier now in NetSuite, a picture of each part that goes into our final product and then, of course, our final product.
Sarah: Okay. This is an interesting question. Did you have Winky Lux employees who were reluctant to embrace new technology or (this is a common one) like getting the software implemented, happy to hear it was easy for you. Because that’s what we always strive for. Sometimes the behavior change is a bigger part of the challenge, but did you face that at all this time?
Nate: Yeah. And I mentioned a little bit about SourceDay, specifically with the suppliers. So that’s definitely something we were worried about. Giana doesn’t think we had really any problems, which is great that that’s how it went down. But from a NetSuite side, we had our internal employees that all had to learn how to use this new, you know, in-depth, I wouldn’t necessarily call it complicated, but in-depth system. And NetSuite takes you through an extensive training process. So, I think before they got worried, they were brought through and handheld through where to click, what to do, and what the screens look like. So, although it was definitely complicated to learn everything that you wanted to do, you know, they all picked it up pretty quickly. And along the way, we’ve learned how to do more advanced things.
Go: Yeah, and I think the important part about that, Nate, is, you know, I think you were the one kind of charging towards making change. And it’s really important if anybody is evaluating software, if you’re a stakeholder or if you’re the owner of the business, you want to be behind that, right? You want to talk about, why are we doing this? Why is this going to make sense for our future? And then eventually, your employees are going to follow you because you’re the leader of the company. So, change management is really, really critical to anything around implementation. So, I just want to make sure I leave that.
Sarah: Absolutely true. Yeah, we talk about that a lot at SourceDay, too. And next question, is there a cost for the suppliers to gain access to SourceDay? If so, who covered the cost? I’ll let you guys answer that one.
Nate: I mean, there’s no cost for the supplier side. We definitely think that some of our suppliers that also source raw materials might want to look at using SourceDay, but just for our company. So, we’ve suggested it out to other people, but for our company, no, the suppliers don’t pay. We get all of our suppliers on there for free.
Sarah: Yep. Great. Okay. So, in the final minutes, we have more questions rolling in folks. And my apologies to the audience, I need to respect everyone’s time and end early. You can certainly find us at sourceday.com. Go, if folks have questions for NetSuite, how should they reach you?
Go: Netsuite.com is a perfect place to go and we have some chat representatives, they’ll start you off, and then you can get in touch with somebody that can help you kind of guide through that process.
Sarah: Awesome. And, you know, another last final word, we’ve recorded the session. So, everyone who tuned in today will get a copy of that recording as soon as it’s available either later today or tomorrow. We need to finish with some really deep gratitude again to Nate, Giana, and our partner, Go. We really appreciate you and are thrilled with your success. We’ll continue to cheer you on from the sidelines and do anything we can to help.
Nate: Great. Thank you so much.
Giana: Thank you.
Go: Thank you.
Sarah: Take care, everyone. Stay well.
Nate: Take care.