[postcards] Anaheim, CA: 180Snacks Happenings

July 2016

Jangmoneem sat us down in the meeting room at 9:30am this past Monday morning. He had spoken with the CEO and decided to create a small taskforce that would meet weekly and discuss larger infrastructure issues. The company is forecasting strong growth in the next 18 months. The question is whether or not the existing system can handle this surge in sales.

Many interesting points came up. Every department shared the amount of time and troubles they were having with paperwork and accessing real time information about what was being manufactured, what was ready to pack, and what had shipped. It became clear that the need for a new ERP system was pressing. Before this meeting, we were all working in our own spheres simply toughing out the inconveniences of the current ERP system. That single meeting was a turning point as I realized this problem was much bigger than I had thought.

ERP system aside, a very interesting question was asked of us by Jangmoneem.

He asked, “What are the three things that we sell? What are the three things that our profit is coming from?”

Our product was the obvious answer. But we could not nail down the other two answers he was looking for. 

He finally told us.

1) product

2) price

3) service

This isn’t rocket science, but clearly defining the source of our profit’s money in three bullet points does wonders for clarifying the organizations structure and identity. Many people would simply combine product and price. Yet this is a mistake as it neglects a fundamental aspect of the market’s basic principles.  

I realized at that moment that 180 Snacks is not successful because we make good food. There are millions of people that can make good food. 

The competitive advantage of 180 Snacks is our price. No one can make good food cheaper than us. Out of 317 million people in the United States, only a handful have access to the steel behemoths that hum daily as they output thousands of pounds of food every hour. We are not in the business of making good food. We are in the business of mass manufacturing, which is at its core a logistical and mechanical challenge. The item being manufactured merely happens to be good food.

The market is constantly changing and last week we learned that a competitor had secured the Starbucks account that we had been after for quite some time. The troubling thing was that the product that they had sold was similar to ours. Up until this point, no one has been able to replicate the taste and consistency of 180Snack’s products.

I’ve been thinking this past week as to what the long term implications of this means. I realized after the meeting with Jangmoneem that we have two options.

1) PRICE. Invest more in our machines. Bringing in a second and third line and run two shifts so that we can offer an unbeatable price. This is critical to our success as up until this point not even a single competitor has been able to replicate our product.

2) PRODUCT. Develop new products or improve the current one. Simply make something on the market that hasn’t been done before. 180Snacks did this before in 2006 when Snack King entered the cubed trail mix business. We diversified by innovating and developing a new rice based product. Similarly, we can find another product and ride that wave for as long as it is strong and unimpeded by competitors.

It’s marvelous how a simple mental model allows for clear and sharp analysis.