In this Acceleration Case Study, learn how Peet’s Coffee, a craft coffee production company, overcame ecommerce and supply chain challenges with a management solution. During the pandemic, Peet’s Coffee experienced a surge in eCommerce sales that it was not prepared for. With a nationwide network of stores and warehouse shipments, the company recognized a need for better inventory management to scale the business as it continues to grow. Read how Peet’s Coffee implemented a new supply chain management software to ensure resiliency with the help of Blue Horseshoe Solutions.
Business Challenge – Network of Stores Nationwide
In 1966, Peet’s Coffee was founded in Berkeley, California. With a sourcing team to vet the beans at its roasting plant, the company claims to be the original craft coffee. It has around 200 coffee shops while selling products to over 15,000 warehouses and stores across the nation. Their eCommerce channel sells blends directly to consumers in various package sizes. Ultimately, combining these different channels creates a complex supply chain that produces nearly a billion dollars in revenue each year.
Since keeping the coffee fresh is crucial to the flavor, they use a roast-to-order production process. The company aims to sell its coffee within 90 days of production. Offering direct store delivery (DSD) is essential, but it also poses significant challenges in the supply chain. Nationwide, Peet’s Coffee has over 700 account representatives that source the product to approximately 100 DSD warehouses. Implementing DSD provided the company with immediate market share, which enabled the company to maintain stock during the pandemic.
Although customers stopped visiting their shops during the pandemic, sales in other channels surged. For instance, DSD enabled Peet’s Coffee to handle a 25% surge within the grocery channel. However, the company was less prepared for the surge in eCommerce.
They made daily calls with merchandising managers across the nation to meet demand. While trying to cope with the pandemic, they were piloting Electronic Data Interchange (EDI). Additionally, they were testing a new system for green coffee. They were also implementing warehouse management tools to streamline operations and boost efficiency. Visibility was becoming a significant issue. They were still using manual processes and spreadsheets despite the sheer size of the business. Trying to scale their business and grow even further was next to impossible without implementing a new inventory system.
Software Solution – Dynamics 365 Finance and Supply Chain Management
Peet’s Coffee decided to use Microsoft Dynamics 365 Finance and Supply Chain Management to improve business operations. This application offered capabilities for warehouse management. The company chose Blue Horseshoe Solutions to be their integration partner.
Peet’s Coffee selected Blue Horseshoe because of their long-term relationship with Microsoft, particularly in developing transportation and warehousing functions for Microsoft clients. Also, Microsoft bought Blue Horseshoe’s transportation and warehousing products back in 2012. A couple years ago, Microsoft licensed even more advanced warehousing features from Blue Horseshoe. Those features are now a critical element of Microsoft Dynamics 365 Supply Chain Management.
Digital transformation was essential in enabling Peet’s Coffee to handle an increase in eCommerce orders. They went from 8,000 per week to nearly 24,000 per week. Blue Horsehoe also played a role in improving the layout of the warehouse. The adjustments made it easier to support eCommerce demand. They added new processes, such as put-to-wall picking and slotting planning as well as a more efficient method to receive and sort inbound operations. These changes not only improved efficiency but also helped the company keep up with such high demand for their products.
Initially, not every manager was happy with the changes. Making modifications is always a big issue while implementing ERP. Trying to keep up with ever-increasing demand while also maintaining social distancing within the plant was another challenge. The company had to add new shifts in response to these demands.
Results – A Look Towards the Future
Due to the circumstances, all these changes to the supply chain to improve efficiency are remarkable. However, the work isn’t finished yet. The company realizes the importance of finding ways to make their supply chain more resilient. They were fortunate not to shut down their roasting plant or distribution center during the pandemic. This helped them keep up with consumer demand. Now, Peet’s Coffee is looking into building another warehouse east of the Mississippi to further improve resiliency in the supply chain.
Peet’s Coffee is also looking to save money with transportation in the DSD supply chain by including mixing centers. They are investigating transportation management and demand management systems. Ultimately, the company is pleased with the initial investments in digital transformation. It has been a challenging year for every business. Partnering with Blue Horseshoe made the entire transition process much easier. Peet’s Coffee looks forward to using Microsoft Office Dynamics 365 to increase visibility and maximize efficiency for the supply chain management.
