Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
During his varsity lacrosse career, Mike Dawson became all too familiar with the unpleasant smell wafting from his sports gloves. After each game, his teammates would gather around the shaving cream or cologne, spraying it on their hands to mask the stench.
When Mr. Dawson graduated from McMaster University as an electrical engineer and said goodbye to his varsity lacrosse days, memories of the problem lingered. So in October of 2015, he decided to tackle the challenge himself. He teamed up with a lab in Montreal and began researching a formula that would kill the bacteria responsible for the smell.
Over 10 months, he tested formulas on more than 100 hockey players. "It wasn't until around the tenth iteration that we finally had a eureka moment and it started doing the trick," he says.
Mr. Dawson soon introduced Fresh Mitts, his bacteria-killing deodorizer. It piqued players' interest, and within four months he'd sold 2,000 jars. The product offers about 75 uses per jar and has a shelf life of more than two years.
Last fall, Fresh Mitts inked a deal with Sidelines Sports, a hockey and sports accessory distributor in Canada that works with the retailers Canadian Tire, Sport Chek and Source for Sports.
But expanded sales – Fresh Mitts is available in 100 stores in Canada and a few locations in the United States – have strained the company's supply chain.
Mr. Dawson's biggest challenge has been securing the empty jars, which come from China. They are flown to the lab in Montreal where they are filled, labelled and boxed up with their displays. He tried finding jars in North America but the prices were not competitive enough.
As a result, it takes eight weeks for Fresh Mitts to fill orders. "I would like to say I can get it cleaned up and streamlined [to] six weeks," says Mr. Dawson.
With the potential for more deals likely as a result of expansion into the U.S., he says he would rather not take any chances with underdelivering.
While big-box retailers are prone to make larger orders, small- to mid-sized stores pose a challenge.
"All these independent stores like Source for Sports and Play it Again, they just order as they run out, so it's not scheduled," he says. "It's really just a matter of trying to get the most accurate numbers, the best I can from my distributor on how things are moving and just trying to stay ahead of it.
"It's all that I know to do right now."
The Challenge: How can Fresh Mitts manage its inventory and ensure supply-chain continuity?
THE EXPERTS WEIGH IN
Opher Baron, professor of operations management, Rotman School of Management, University of Toronto
It's not a simple problem, but he does have some flexibility of ordering more items in the middle of the season.
It sounds like most of the production time is simply shipping – Asia to Montreal to Toronto, then to stores; it doesn't look like the production itself is a bottleneck here. If suddenly he has a bump in demand and needs to fill faster, he could get jars through the North American market. I'm not sure about his specific economics, but if he plans to satisfy 95 per cent of his demand by the most profitable way, then if he does have more demand, having that other source might be something to consider.
Rudy Fischer, partner at small business consultancy RK Fischer & Associates, Whitby, Ont.
Order more often. It's about the costs of shipping and setup. You can mitigate an eight-week time by ordering twice, so you have goods coming in every four weeks. If you find yourself having a little bit of a backup, you rejig your forecast and space out your orders. You'll likely have a minimum level that triggers your next order.
Fresh Mitts needs to recognize which areas are more crucial than others, like the packaging because it comes from the farthest away. Critical components can be stored, and you want to make sure that, long term, you have more sources because you don't want to be handcuffed by a single source.
Steve Davies, president and owner, Winnwell Clean Hockey Inc., Vaughan, Ont.
The question he should be asking is how he can tighten up these lead times to 30 days. Less-than-truckload (small freight) shipments out of Asia are not expensive right now. If your cost of goods was, say, $1.50 and you're selling it wholesale to retailers for $7.50, that's a phenomenal margin and you should be taking an aggressive stance on having more product around. You can't afford not to carry that inventory – once it's out of vogue, it's out of vogue.
There are thousands of third-party logistics companies in Canada that can warehouse his product. Most of them will receive the goods at probably no cost and they'll charge you on a monthly basis per skid. We have two third-party logistics firms in Canada ourselves; it's a more economic way, as opposed to having our own dedicated warehouse.
As an aside, he could look into licensing Fresh Mitts. This is the type of thing a company like ours gets all the time. We have 400 items at Canadian Tire, and someone comes to us and says we have a patent on an item and you're the best facilitator to get shelf space at Canadian Tire, Pro Hockey Life, etc., and we simply come up with a licensing agreement where we pay the inventor or the patent holder a license, a percentage on sales.
THREE THINGS THE COMPANY COULD DO NOW
Set up contingencies
Have a supplier of jars lined up in the U.S. for emergencies.
Order more often
This will help you cope with a long lag time.
Use a third-party logistics company to help cope with inventory.
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Interviews have been edited and condensed.