August 2, 2019

Retail is Detail: Building the Seventh Sense Supply Chain

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A key part Seventh Sense’s rapid growth has been the smooth-running supply chain behind it. Logistics strategist Tom Clements discusses how the Green Growth Brands team built a system of sourcing, warehousing and fulfillment in just five months.

To the average consumer, stocked shelves in a store are simply a given. It just kind of happens. Behind the scenes, of course, is a complex system of suppliers, shippers, warehouses and managers who negotiate and engineer the delivery of thousands of items with the precision of a Swiss timepiece.

For Green Growth Brands’ Seventh Sense chain of shops, establishing a supply chain from the ground up presented challenges both typical and unique. The primary issue was time: Retail supply chain veterans Tom Clements and Suresh Patel helped Seventh Sense build its supply chain in less than five months. When the Farm Bill passed in December 2018, allowing CBD products to be produced and sold nationwide, Clements’ team had to be ready—Green Growth Brands’ merchandising strategies were in place and ready to activate.

Clements’ established history in the beauty category was an advantage to getting up and running quickly. “Providers knew us and wanted to be a part of the journey,” he says. But some weren’t quite ready for this new, now-legal product category. “We started talking to shippers in October of last year and nearly closed a deal with a major operator. But they changed their mind in November.” As a publicly traded company, the operator’s board wasn’t yet comfortable with the CBD category. The Farm Bill passed just weeks later, and GGB found success working with smaller, private companies that could move faster.

Reassuring Key Partners

Because CBD products were so new and often misunderstood, municipalities and supporting business alike were initially reluctant to get onboard. A dedicated education effort, says Clements, was key to reassuring markets and partners that Seventh Sense products were legitimate—and entirely legal. “They needed to know insurance and banking was in place, and that we could provide the multiple sign offs they would need,” Clements says. Green Growth Brands had done its homework, with legal structures that separated CBD from THC operations. “Those details were critical for the speed we needed to go. There were no written processes; we were doing it on the fly. And when we were able to handle it, it was exciting.”

With reliable logistics in place, Seventh Sense retail operations were free to grow quickly. “The supply chain’s ability to respond to larger inventories, shipping to more than 75 locations today and anticipating 230-plus stores by end of year, has been essential,” says Green Growth Brands CEO Peter Horvath. “It’s built enormous faith in Seventh Sense from both our consumers and retail partners.”

Lots of Shops, Fewer SKUs

Clements describes the brand’s growth as “a crawl, walk, run” model, where the limited number of products allowed Seven Sense to establish reliable systems with third-party (3PL) partners and scale them up at an unprecedent rate. “One advantage we had was our relatively small number of SKUs, about a 100,” he says. “The brand will grow, obviously, but it’s a less complex challenge than supplying thousands of SKUs to a larger retail operation. It gave Seventh Sense time to understand special handling requirements, timing and other factors that can make or break an operation.”

Continuous Improvement

Clements is well aware they’re just at the beginning of the Seventh Sense and Green Growth Brands story. Many changes lie ahead. The company will continue to evolve packaging, add new product lines, introduce new price points and expand its presence through stand-alone shops, retail partnerships and, of course, e-commerce. All while making sure the little details—such as minimizing damage during transport and reducing waste whenever possible—continue to improve. And he’s anticipating an eventual move from the current distribution center in California to a more central location, reducing delivery times to the midwest and eastern United States.

The best part of solving challenges for new brands? “Our whole organization is vertical,” Clements says. “In a small operation, you’re aware of everything that’s happening. We’re making it, we’re testing it, we’re designing the shops. We work in an open environment, so we’re very close. We can make decisions very quickly.” And he’s quick to credit the professionalism of the people around him. “The energy level, the mix of experience in the organization, is just amazing,” he says. “They’re a blue flame. Combined with Peter Horvath’s vision and (CAO) Ed Kistner’s steady hand, it’s a great combination.”

In some ways, Clements was uniquely suited for the fast-paced, all-hands vibe he’s encountered. “I started at Bath and Body Works in the early days, where we used a hair dryer to shrink wrap gift bags,” says Clements.  “Retail is detail. We’ve seen it all since then. We were ready for this challenge.”

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