Baldor Specialty Foods has supplied restaurant and retail customers with a full slate of grocery items up and down the East Coast for over 30 years. The distribution business, which emerged from the 105-year-old grocery operation Balducci’s, faced a wide range of new challenges throughout the pandemic as it worked to maintain its vast direct-source produce and grocery supply networks all while grappling with rising inflation, unforeseen supply chain issues and shifting consumer demand.
Emily Murphy, Baldor’s Director of Specialty Procurement, walked us through how the company has navigated these challenges, the impact on the company’s vendor and retail partners and gave us a look into what success looks like inside this specialty distributor’s operations as well as what she looks for in new and emerging brands. This conversation has been edited for clarity.
What are some supply chain management lessons Baldor learned over the past few years? How do current, day-to-day challenges compare to those the company navigated pre-pandemic?
We certainly learned a lot about supply chain kinks during the pandemic! Fortunately, we already had a robust supplier network in place before then. In fact, we’re proud that we were able to keep that supply chain (and our own resources) busy during this time as we pivoted to a home delivery strategy during lockdown.
The pandemic exposed the places where we needed to add more flexibility and build in redundancy so we would be prepared to weather future shortcomings. Being experts in seasonal planning played a significant role in helping us through that time – allowing us to readily assess our offerings, the capabilities of our suppliers to deliver, and the strength to execute an efficient buy-plan even in the face of constantly shifting factors. A few gray hairs later we learned some lessons that continue to inform our operations.
These include: making sure you have first hand info on your supplies’ strengths and weaknesses; being proactive and communicating continuously with all the components that make up your supply chain so you can anticipate hiccups before they blow up; not counting your chickens before they hatch-and certainly not selling eggs before you have the inventory; being honest and transparent with your clients about any shortages that do occur and giving them options or alternative stop-gap items helps you maintain trust with your customers; recognizing that there’s no crystal ball. No matter how prepared you are, you need to be ready to pivot on a moment’s notice.
What categories have you seen be impacted most by supply chain disruptions and have certain areas begun to feel some relief?
For us, we’re seeing the biggest improvement in packaging materials all around. Packaging as a sector is facing a lot of pressure on a lot of different fronts, everything from sustainability to the cost and availability of their raw materials. The good news is they’re finding new pathways to get to market so relief is beginning to be felt. Most notably, manufacturers are opting for tray packs with overwrap vs using full cartons.
How has Baldor dealt with rising grocery inflation as well as increasing labor, freight and fuel costs? How are these added costs distributed?
We are sensitive to the significant bottom-line impact rising prices have on our chef and retail customers, and ultimately the end consumer, and we therefore do our best to advocate for the best prices we can. Because of inflation, we have made cost-of-goods reviews with our vendor partners a continuous practice. We are also trying our best to avoid shrinkflation or the optioning of second-tier product substitutes. At the same time, we’re looking at reducing or eliminating unnecessary expenses such as non-value-added touches.
What are some key characteristics you look for to determine whether or not a brand operating in an emerging category will be successful?
Flavor is, and will always be, Baldor’s number one sourcing criteria. We want to work with producers and growers who are passionate about delivering the very best taste experience and have a great story to tell. But this year, across the board, we’re also gravitating towards responsible sourcing: This includes being sustainable, regenerative, local, and mindful. In fact, I manage a review calendar to ensure we are giving dedicated time to each of these categories. It’s one of the values we apply when evaluating any new brand or category.
Have you seen increased demand for plant-based items from your retail partners and how do you approach sourcing products in emerging, high-demand categories?
Absolutely, plant-based specialty items have clearly taken off. We’re viewing the category with cautious optimism because some items are really taking off with clients – like oat milk for instance — and then others are not yet sticking with customers. We’re listening to what the producers are saying and also what our restaurants and chefs are providing in terms of feedback.
What makes a brand or product successful? Are there consistent issues or mistakes that you see brands repeatedly make when distributing through your network or specialty retail, broadly?
Success is much more than base sales. Sales have to be sustainable, and in order to do that, a company like Baldor has to become a true service partner, not only to end clients, but to our network of suppliers and farms as well. It’s a case of staying on top of consumer trends and industry innovations so that you can educate both sets of stakeholders what to prepare for. Far too many brands are set out in the race to the bottom where the cost of customer acquisition outpaces ROI.
What has Baldor learned about the integration of residential home delivery services into its operations?
Pivoting to home delivery service during the pandemic helped us meet the food needs of our communities while keeping our operations going and our employees working. It also opened our eyes to a totally different market. As more of our restaurant and food service partners came back on board, and at 150% due to pent up demand, we realized we needed to focus our resources on serving these core business partners. That said, we appreciated the opportunity to serve consumers and the loyalty many of them developed to our products, so we wanted to honor that. Towards that end, we partnered with local companies that were experts in the home delivery aspect of the business—including FreshDirect and Farm to People. So home delivery is still a part of the business in terms of fulfillment, we’re just letting our partners do the lifting of delivering at the residential level.