This wasn’t the same company Jim Beck had joined right out of high school back in 1972.
Beck had married into Nature’s Best, a distributor of vitamins and health and beauty aids. It was owned by the family of Beck’s wife and he went right to work as the company’s technology guy.
“I was responsible for all the major technology initiatives that supported the business,” Beck says. “And in the early 2000s, from my technology perspective at an executive level, I started to become aware that our processes for warehousing no longer fit our business.”
In Beck’s words, Nature’s Best had evolved from “selling bottles of vitamins to selling pallets of groceries.” The health food craze was quickly gaining steam and people were looking for natural and organic food, and food without genetically modified organisms wherever they could find it.
“As the industry matured and consumers got educated about natural foods and organics and the non-GMOs, the business took off,” Beck says. “Our business really grew, and we outgrew our warehousing system. Here we are, a full natural food, grocery-type distributor, but with small-order vitamin kind of technology and systems. We had to completely re-engineer everything we do from the time we receive a case to the time we ship a case.”
In other words, Nature’s Best could ship bottles of vitamins better than anybody. But when it came to moving frozen foods, chilled products and the bulk packages that natural food buffs crave, it just wasn’t working.
The equipment in the warehouse wasn’t the only problem. The location of the warehouse space was also causing a lot of angst at Nature’s Best.
“We were operating out of four buildings because as we grew, we took the building next door and the building next door to that and then the building next door to that and every time we did that, we became less and less efficient,” Beck says. “The company was getting bigger and bigger and for every incremental sales dollar we brought in, it was costing us $1.01 to touch the case 17 times before we shipped it out the door.”
The industry was on the rise and Nature’s Best was watching its customer base stretch beyond its roots in the state of California. But if Beck, who was named CEO in 2005, couldn’t figure out a way to manage all this growth, it was going to be nearly impossible to reach the business’s full potential.
“It was a really challenging time, a scary time,” says Beck, who also serves as president. “But you’re a hero when it works and in this case, what we did worked.”
Here’s a look at what he did to secure Nature’s Best’s place as a leader in the natural foods industry.
Make the tough call
A more efficient way of packing and shipping materials at Nature’s Best could not come soon enough for the people who had to pack, unpack and repack shipments again and again in the warehouse.
“All the cases came down via conveyor belt and the guys would build the pallets,” Beck says. “They’d be done building the pallets and go, ‘Uh-oh, we’ve got 28 pallets and we can only get 24 on a truck. We have to rebuild it to make it 24.’ That could take hours. The mistakes that were made and the labor it cost and the truck that was delayed — it was just horrendous under the old system.”
Beck needed a more efficient system to pack items and pallets so that they could go right on the truck and out the door the first time without having to be adjusted. But as he thought about how to fix the setup of the warehouse, he came to the conclusion that it wasn’t a fixable problem.
“The thing that really hit me like a ton of bricks was we can’t replicate what we have,” Beck says. “It was too complicated. Everything was wrong about how we were doing things at that time to support us putting a distribution center in Dallas or one in Sacramento or one in Seattle. We just weren’t going to be able to do that. We needed a warehousing model that we could replicate over and over.”
Nature’s Best is a distributor for more than 3,000 retail outlets in the western United States. It’s a diverse group ranging from small vitamin shops and corner health food stores to 150-store chains.
Beck had his eyes on growth and wanted to build the organization in such a way that the company could reach to the other half of the United States. But he needed to be strategic in addressing the warehouse situation in order to make that happen.
“A truckload can be anywhere from two to three stops all the way up to 25 or 30 stops,” Beck says. “One thing that is really important in our business is that the transportation and delivery part of our business is efficient. It doesn’t make sense to be sending half truckloads out. Every truck has to be as full as possible and it has to be loaded in such a way that it is very efficient for the truck driver so he can be speedy and efficient when he is making that delivery.”
With his technology background, Beck launched a diverse team at Nature’s Best to find a technology solution to the company’s problem.
“We had a kickoff meeting,” Beck says. “The guys from operations were guys who came to us who started with the company by driving a forklift or picking orders. These were guys on the team who led the team from a design standpoint. We wanted their fingerprints on how this stuff was going to work for them.”
Beck wanted to monitor the process, but he wasn’t going to lead this critical change at Nature’s Best.
“You, as the CEO, really need to stay in a strategic role,” Beck says. “You need to be out on point understanding what the strategic direction is of the company and where the company is on that flight path of competition, growth and culture. If the CEO gets dragged down into an initiative like this, it will soak up all your time and the company can lose direction.”
So he appointed a project manager that could lead the effort while he kept his eye on the big picture.
Poised for growth
A thorough review of every step of how things are done at Nature’s Best provided a lot of data and information to sort through and ultimately led to the company seeking out a top-tier software supplier for companies with warehousing operations.
“It does all the mathematical computations it needs to do to create pick assignments for the warehouse so when they are done picking a pallet, all they have to do is wrap the pallet in plastic and load it on the truck,” Beck says. “Every one of those pallets is built for absolute efficiency from a picking standpoint and a truckload standpoint. We took it from 17 touches down to four and it became very efficient, very accurate and something we could really grow with.”
But the toughest part was still to come. It’s great to build a new warehouse, but how do you move $40 million worth of food inventory and millions of cases of product to the new warehouse without skipping a beat?
“That was such a monumental, gigantic effort by so many people to manage that much inventory in such a short window of time,” Beck says.
Shutting down operations for even one day was not an option, Beck says.
“The consumer is very unforgiving when they go into the natural food store and the product is not on the shelf,” Beck says. “That consumer goes to the other store. The supply chain is very unforgiving.”
So the plan was to take a series of weekends and divide everything. Move the frozen product, the chilled product and then the dry grocery products from the old warehouse to the new one on successive weekends.
To make a long story short, it worked in 2008 and worked again when a new facility was opened in Dallas. The company has gone from 250 employees to 800 employees today and the sky is the limit for Nature’s Best.
“We just got up every morning and did the right thing and did all the detail work to make this thing happen,” Beck says. “But at the end of the day, the guys that made it happen are all the guys who run the place. The pride of ownership and pride of success that came out of it for those people was probably the most rewarding thing for me because they did it. That team worked so hard and dove so deep into the weeds of the details of the whole process. It was their baby.” •
Takeaways:
- Be honest about your needs.
- Keep the future in sight.
- Trust in your people.
The Beck File:
Name: Jim Beck
Title: President and CEO
Company: Nature’s Best
Born: Santa Monica, Calif.
Education: I’m self-taught in computer science. I was on my way to a professional motocross career when I met my high school sweetheart. We got married and I went right to work for my wife’s family business.
Who has been the biggest influence on you? My wife, Lori. I have a very strong, competitive team and the relationship I have with her is such that she supports that and motivates it. She knows how competitive I am and she cultivates that in our relationship.
What one person would you like to meet and why? Steve Jobs. I’d like to talk to him about his process of strategy, strategic thinking and long-term vision.
Beck on separating the corporate office from the new warehouse: I still know many of the truck drivers and talk to them about their families. We all were very concerned about how it was going to be. I’m not going to be able to go out and talk to Jose and see how he is doing and hear about the family. We’re not going to have that hands-on relationship. We had hours and hours of debate about the cultural impact of being split up.
We finally came to grips with the fact that the 10-year plan was to have multiple distribution centers: one in Dallas, one in Sacramento, one in Seattle, one in Denver. We needed to learn how to not be connected to the warehouse because we’re not going to be connected to all the warehouses. We said we’re just going to have to go out to the warehouse and talk to people.
