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Bush Brothers' Tiered Strategy for CM/CP Partnerships

Robby Martin from Bush Brothers uses a layered approach to contract packaging on a new multipack project. He explains the testing and scaling phases of commercialization with several different CM&P partners, and why up-front transparency is crucial.

Bush Brothers is testing a four-pack format of 16-oz cans in a carton. The company already uses 8-pack multipacks for box stores, but this size is more targeted for traditional grocery retail.
Bush Brothers is testing a four-pack format of 16-oz cans in a carton. The company already uses 8-pack multipacks for box stores, but this size is more targeted for traditional grocery retail.

Packaging World: Tell us about your traditional multipack approach, and what you wanted to change.

Robby Martin, senior packaging engineer at Bush Brothers & Co.: We’ve been in club stores with eight-packs and six-packs of 16 oz. cans, which represent the right purchase size in a club store situation. Those are bulk-packed and shipped at the pallet level all the way to the club store location. Whatever the club brand is, it goes all the way onto the floor in that bulk-stack pallet. We’ve been in that format for over 15 years, using a fully enclosed paperboard carton with beautiful graphics that creates a great visual in the store.

But those eight- and six-pack multipacks are a bit too large for more traditional grocery retail, no? Robby Martin, senior packaging engineer at Bush Brothers & Co.Robby Martin, senior packaging engineer at Bush Brothers & Co.

That’s right. While soup and some other categories have been doing some smaller multipacks in grocery retail for years, we never had much luck making that work for our products. Still, we think that there’s a market for multipacks that are more of an appropriate size for opportunities in regular grocery retail, and we just need to get the solution right to succeed.

Why haven’t you gotten these smaller multipacks to work?

When we get down below a certain size—generally a six-pack is the smallest we do—our high-speed cartoning equipment can’t always go down that small. Or, if we get down to a two-by-two four-pack of round cans in a carton, then we remove the opportunity for an interlocking pallet pattern. At that point, you are column-stacking with even smaller containers on a great big pallet for shipping. That’s a problem for us from a secure shipping standpoint, and it’s a problem for a retailer—not for club store, but regular grocery retailer—because they’re not going to put pallet loads of those on the floor the way a club store does. So, we have both palletizing issues to consider on our end-of line, and post-delivery distribution issues by the retailers themselves within their system.

And your existing equipment isn’t up to the challenge anyhow, correct?

Yes, mostly. To date, we didn’t plan for our equipment to run those smaller packs. While our equipment can produce the smaller packs, that’s not the only issue. We’re casing the four-packs into six-packs of four-packs, which gives our retail partner a way to distribute them to their stores once they receive them. So, the goal is to be running cartons through a carton machine then putting them in cases, all automatically. But, we don’t have a line installed to do that today. So, for test purposes, and probably even for any initial rollout that could follow, we’re using contract packaging.

What does the vendor selection look like when it comes to contract packagers?

Obviously, they have to be capable of filling the need to begin with. They need to have capacity, and we need to be able to tolerate the cost. We get those big “C” words out of the way first. 

And we certainly start with folks who we have worked with before. We know enough about them to consider why they would or wouldn’t be a good fit for an application. “Have they done work for us before? Do they do it well? Do we have a good relationship?” Those are pretty high on our list.

After that, it quickly gets into other, more complicated factors, like: How well do our systems work with each other? How do we maintain food safety? How do we maintain traceability? And how do we make sure we know how we’re flowing the cash and maintaining the inventory records that we need to?

Was there anything unique in vendor selection in this four-pack project?

In the case of a test like this one, where we’re re-handling finished product into a different configuration to conduct a test, and possibly even to initially launch, we’re having to then make decisions on some less obvious considerations. We also have to consider where they are located. Because if we’re going to have to move product to them, have it converted, and then get it back, then where they are in relation to our shipping points—which are our two facilities in Wisconsin and Tennessee—is important. And in many of these cases, most of the volume may ship from only one of our facilities. So, where the contract manufacturer is located can be a big factor. Even when they’re relatively close—say 200 to 250 miles—it’s very expensive moving that product back and forth.

Who foots that bill?

In test mode, we eat that cost. We live with the cost because it’s about being sure we execute the test correctly, so we get a good read of the market. But should we decide we’re going to stay in market, or expand that work, then we are far more likely to look harder at how we could do it internally. Or if not internally, we ask ourselves if we have a partner that could handle the greater scale, even if we had to provide some equipment for them to do so. This might be someone that already handles a lot of our outbound shipping, like a local 3PL to our plant. There’s a good chance that we could move it back there.

It sounds like a tiered or graduated network of partners for different phases of product launch. How have you moved work around for this current four-pack project?

The partner supporting our test phase is about 200 miles from our producing plant. We have done some really successful projects with them. They operate manually—literally, they’re manually doing the cartoning—and they’re good at making fixtures to accomplish that. They like to say they supply labor to our problem. They have helped us by completing the initial inventory builds and replenishments for our test.

All manual seems fine for a test, but not to scale. What would be the next phase?

Even if we aren’t sure we have the space or the appetite to spend the capital in our plant to automate this function, we would need to address the over-and-back nature of how we are executing the test phase. With the contract packager, we ship them product in the original primary pack format, they convert it, and we bring it all the way back to our producing plant or a nearby 3PL provider we use for shipping orders. It just incurs too much transportation cost and risk to be a sustainable process in the long run.

One of the biggest factors that doesn’t keep us from testing with a partner—but often keeps us from fully commercializing with that same partner—is systems integration, electronic data interchange (EDI), and the like. A more local 3PL’s ability to actually ship our orders and maintain traceability is a must-have for full commercialization. More complete systems integration is crucial so that we can count on maintaining traceability, accurate inventory records, and keep as many transactional activities as automated as possible.

The 3PL has a lot of factors in their favor, but can they actually make the four-pack formats?

Not yet. Even if we have to get someone up to speed on the actual capability, we still might move to the 3PL where the systems integration pieces are already in place and they transact orders for us every day. But rather than make that investment in-house, or with a 3PL, just for a test up front, instead we take the hit on what it costs to run the tests at a more manual facility. We know it’s going to stay contained to a certain number of stores, or a certain constrained geography where you’re going to distribute the four-packs for the test. During that time, we are just taking the hit on cost, but crucially, we’re finding out what value we have in the marketplace.

Say you move packaging operations to your local 3PL, and the four-pack continues to do well over some time. At what point does a brand owner start to consider taking the project completely in-house?

This isn’t a very satisfying answer, but it really depends. Let’s say we rolled out these four-packs nationwide. That still doesn’t mean we’re going to be shipping entire truckloads of this format, because we’re probably not going to see retailers order full truckloads. So, it’s still going to be mixed product orders, right? Because if it was going to be full truckloads, then we would have spent our money getting our original partner’s systems upgraded to become EDI-capable and system-capable instead. Because they can make the product correctly already.

But since we’re not going to be able to just have them ship only that product, and we’re not going to be able to ship it in the quantities to make that make sense, we have reason to look at bringing it back to our plant, or back to a more localized 3PL even if it changes the investment from systems investments, to physical equipment or other capability investments.

Your contract packaging business moves around from partner to partner at different phases of commecialization. How do you manage taking business away from one partner in favor of another?

Part of the key to making this work is transparency, both from us and from our partners. They tell us, “We may make fixtures, and we may even store a little bit of product, but what we really do is we provide labor. We sell you labor. We do, mostly manually, things you either can’t do, or don’t want to do yourself. That doesn’t mean that we want to grow to the entirety of your scale, because what we’re really good at is getting labor together to attack problems for our customers.”

Because they are transparent with their core competencies and what they do best, we’re able to say, “If this really takes off, we have to figure out another answer.” Up front openness on those conversations is a huge deal.

It’s just an important element to be continually talking about what is, or isn’t, helping this work. We all have to have some agreed-upon understanding of what our pain points look like. What does that trip point look like? What is that triggers you to say, “Hey, we have to make a change here?”The eight-pack carton is a popular seller at club stores, but likely too large a format for traditional grocery. Thats's why Bush Brothers is testing smaller four-packs, using CM/CP partners to help commercialize the project.The eight-pack carton is a popular seller at club stores, but likely too large a format for traditional grocery. Thats's why Bush Brothers is testing smaller four-packs, using CM/CP partners to help commercialize the project.

How’s this multipack project going for you so far?

We’re just now, after a few months of selling in this particular test, beginning to talk about how we are going to solve for next steps. Are we going to add more capital equipment on our own line, so we could at least build the pallet? Since we know that doesn’t work for a retailer, that answer is not the whole solution. Are we going to build pallets, then rehandle it to get it cased? Who is going to do the re-casing part? We’re just starting to think of questions like that now, what we could actually need to tackle as we talk about how we could go bigger, go larger, go more permanent with this, assuming we ultimately make the decision to do that.

It sounds like you have some big decisions on the horizon. How do you handle your vendor relationships as you make them?

It’s important that they [contract packagers] understand up-front what you need them for, what you’re contracting with them to do, and most literally, what you’re using them for. And it’s important for you [brands, CPGs] to understand that at some point, your scale may be out of their comfort zone. They need to have the right to say, “We’ve probably helped you much as we can really help you. We’re not going to dump you, but you’re paying this much, and there’s got to be better ways of doing this.”

We love being important to our partners, but if we’re too important to them, then we can start feeling constrained. If we’re a halfway decent customer—and it is important to us to be a good customer—we’re feeling constrained about how quickly we can pivot away from them. We don’t want a trail of used up, unfairly treated partners in our wake. Because the next one’s going to say, “I know what you did to so-and-so on that four-pack product Packaging World wrote about. I’m not sure I want to take a phone call from you guys.” We don’t want to become that, either.

That’s why mutual, up-front transparency is one of the keys to good relationships between our contract packagers and us.

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