Say What!? Inventory Management, CRMs & Internal Organization PART 1

As I continue to make my rounds in the hemp industry around Oregon there are a lot of things I am coming across that are both surprising and disappointing. It gives mixed feelings about where the industry is headed and what it can become.

On one hand, a lot of the organizations I've been working with for years have refined their SOPs, made a lot of great buyer connections, honed in on what makes them most successful, and in some instances began specialization.

On the other hand, I am having conversations with former employees of well known companies in the space that told me that there was NO inventory management system in place at their former establishments, and they didn't even know the COGS associated with a lot of the products that were coming out of the production line.

Excuse my language, but holy shit!

And we wonder why there was a mass extinction over that last 2 years!

The thought of labs and farms pumping out hundreds of thousands of pounds and kilos without associating any kind of data to the costs of production blew my mind. It also made me think about how far there is still to go in this space for many of the companies participating.

I'm sure I have critics at this point that are sick of hearing me preach about data and numbers. However, I don't stress these themes to point out Amota's success with its implementations. I stress them because my business can't grow as fast if other businesses in the space are not striving for the same type of organization and structure. I want us all to grow fast! Together!

Nothing is more frustrating than hearing from a supplier what they "think" they have in stock, but can I blame them? In this space, we often have to settle for that because farmers are working so hard and so fast to pump this stuff out that the data is an afterthought.

There will be a day when we as buyers can go on a website or platform and see exactly what people have in stock and what "process" it currently is in. I believe that. When that day comes we will be at the highest point in hemps short history as an industry.

There are certainly many companies in the space doing a good job of it now, but it needs to be a full consorted effort for the supply chain to really become reliable and robust. Who knows, it may even sprout a commodity trading index.

The Pool Is Shrinking, But Market Is Growing

After 2019 we saw a lot of processors go out of business or consolidate. Some of the biggest in the country vanished. Distributors and supply chain solution companies scrambled to get a foothold in an environment where there was an absolute flood of product. Everywhere you turned someone was asking for assistance to move their product. It was mayhem.

2020 and 2021 saw many smaller family run farms give it one last go in hopes of seeing a recovery in the market. Sadly, their prediction didn't quite pan out. Some were able to stick around with the realization that they needed to stay within the means of their resources. Others thrived as they had already made this pivot and developed their identities as a branded product with a targeted demographic and a solid team.

Within the smattering of survivors I am seeing many levels of organization. Those that have established a well organized internal management system to seem to be in very good positions. They have well organized shipping warehouses, SKUs are very well thought out and growing, QC is top notch, they know their numbers immediately. They have made transacting very smooth and reliable.

One thing we've seen at Amota is that being "distributor ready" is a key component to having steady flow through on your inventory. As I mentioned before, my frustrations with sourcing partners on the farm/lab side plays right into product distributors frustrations with me if I don't have products jar ready, tubed, pouched, or whatever other type of containers you use. People don't want to wait these days.

Conclusion

I wanted to keep this one short. I think what I am trying to get across here more than anything is that the more we all work towards building a proper supply chain, the more we are all going to benefit. It is not too late, no matter how daunting a task it may seem.

Take the simple fact of what I said at the beginning of the post. Labs, LABORATORIES, or should I say "labs," WELL KNOWN still have no idea what their inventories are or what their costs are of their products. Just let that sink in and use it to remind yourself how nascent this industry still is.