Mikey's Delivery Truck

3 Ways Mikey’s and Factory Worked Together to Cut Costs

Heading into 2021, Mikey’s, like many small CPG brands, was facing some budget and margin challenges. By working closely with key Factory team members across logistics, procurement, and forecasting, the brand was able to streamline processes, leading to substantial cost savings. Joey Piazza, president of Mikey’s, says the experience of working with these departments couldn’t be better. The one word he kept going back to again and again was “proactive.”

“These team members see issues and then proactively go out of their way to find the best possible solution. It’s exactly what a small brand like Mikey’s needs,” Joey said.

1. Logistics

Selling direct to consumers online has always been a challenge for Mikey’s. The products are frozen, so they’re expensive to warehouse and ship. But it turns out it didn’t need to be quite so pricy. 

John Worthy, Factory’s head of logistics and supply chain, took a look at the situation and found a new third-party fulfillment provider that will save the brand $42,000 this year. That’s a 15% savings over gross revenue, according to Joey.

“The best part about working with John is that he is so proactive. He saw an issue and said, ‘I can make this better and save everybody money.’ He did extra work to improve our margins and make the experience better for our customers at the same time,” Joey said.

2. Procurement

Ingredient costs are another big challenge for Mikey’s. As a gluten-free, better-for-you-brand, Mikey’s relies on quality ingredients to make delicious foods consumers can trust, but paying too much for ingredients quickly erodes margin.

Yadira Berrios, Factory’s procurement operations specialist, has been proactive about finding cost savings and efficiencies everywhere she can. By changing up the purchasing process, she was able to save Mikey’s $50,000 on almond flour and lock in cheaper prices on cassava flour, both key ingredients in every Mikey’s product.

“Yadira does her own research and looks into every vendor imaginable. We use a lot of cassava flour in our foods. Yadira noticed that the region where most cassava is grown in South America was experiencing a drought. She foresaw a shortage and was able to procure extra supplies, while also finding alternate suppliers for cassava grown in Africa,” Joey said. 

3. Forecasting

Manufacturing is a major expense for any food brand, and it’s important to match the production schedule with store promotions, seasonal buying trends, and new distribution so that nothing goes to waste—and so store shelves are never empty.

Chad Metzger, director of forecasting and demand planning at Factory, has created dynamic forecasting tools to make sure that Mikey’s production schedule lines up with marketing promotions, trade, and normal sales volume.

“Chad is proactive in finding money everywhere. He looks at the year as a whole and lines up our production schedule with ebbs and flows in sales, which leads to significant cost savings,” Joey said.

 

Does your startup CPG brand face similar challenges? If you think you could benefit from working with Factory, get in touch.