Using supply chain software, Headset Bridge, to build resilience in a tough economy

Risky business

In the cannabis industry, we’re all very aware of the risks we take to move the needle forward. Financial risks are especially top of mind, as we feel the direct and trickle-down impacts of industry-wide pricing compression. Unfortunately, financial hardships are quite common for industry goers — but as we approach the end of 2022, sinking prices present a new layer of uncertainty to an industry that already makes it incredibly difficult for businesses to stay afloat. Weathering this latest storm will require operators to double-down on data-driven strategies. For cannabis retailers, that means finding ways to maximize operational efficiency and minimize financial risks, like costly product stock-outs and spoilage — and for cannabis brands, that means taking ownership in helping manage this risk.

California powerhouse, Claybourne Co., the state’s third-best selling flower brand (Headset, 2022), places risk management at the forefront of their retail partnerships. And they’re not just helping retailers manage risk — they’re confronting it head-on. But what does “risk management” actually look like in practice?

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Fine-tuning inventory management

Through Headset’s Bridge software, Claybourne helps their retail partners sell more, faster — and to that end, they’re helping reduce their partners’ risk of potential stock-outs and product spoilage, a win-win for both parties. Modeled off of a common inventory management practice known as VMI or vendor-managed inventory, Headset Bridge gives brands like Claybourne the insights to pinpoint supply chain inefficiencies (e.g. stock-outs, surplus inventory, stale product). In fact, Headset analysts found that brands using Bridge help reduce stock-outs by an average of 19.6%, which translates to $131,000 in yearly savings for the median retailer. When Bridge exposes certain performance gaps, brands can then work hand-in-hand with their retail partners to proactively address them. Claybourne’s Regional Sales Manager, Lauren Marshall, notes that they’re willing (if not, happy) to do most of the heavy lifting when working with retail partners: “If things are trending slowly, we’ll pay attention to it for 30 days, and at the 30 day mark, we’ll start helping discount out and running a deeper promo to clear it out…let us be responsible if something isn’t selling.”

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Brand Support

From the retail perspective, Headset Bridge relieves the pressure for purchasing teams to manage inventory alone — instead, retailers can share that responsibility with their brand partners. Chelsea Hawkesby, VP of Operations for California-based retailer Kind Delivery, hopes that more of their brand partners will start leveraging Bridge. Bridge not only saves them time when purchasing products, but Chelsea says it also saves her time on inventory reconciliation: “Having your brands come in and provide that support is a huge time-saver…if more brands were using Bridge, I would easily save 6 hours per week.” When interacting with brands using Headset Bridge, Chelsea lets the brand build purchase orders and recommend promotional strategies for slow-moving products — and though brands can make these suggestions, Chelsea ultimately has the final say: “At the end of the day, you don’t have to take anything you don’t want…nothing is set in stone, the power still lies in the buyer’s hands.”

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“At the end of the day…the power still lies in the buyer’s hands”

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Selling more, faster

To get started on Bridge, brands send retailers an invitation to connect; it’s ultimately up to the retailer to then accept or decline the invitation. In September of this year, Kind Delivery approved Claybourne’s request to connect. Within their first month of using Bridge, Kind Delivery saw a whopping 4.41x increase in Claybourne-specific sales*. Though stock-out avoidance is a key outcome of Bridge, Lauren notes Claybourne’s foremost commitment to maximizing revenue for their retail partners: “When the data shows cultivars moving at high velocities, we have the ability to allocate inventory to our partners in real time to ensure they maximize inventory turn, revenue, and profit...their success is our success.” In addition to selling more product, Chelsea from Kind Delivery noticed immediate improvements to their operational flow: “There were gaps in our inventory before…but after onboarding Bridge, Claybourne has been able to address them.” And when new gaps surface or certain products idle on the shelves, Lauren says that they’ll take full ownership: “If you do this type of partnership with us through Bridge, we’ll take responsibility for the inventory that doesn’t move, and we’ll eat the cost. We never want a retailer to feel like there’s a risk in trying out Claybourne on their menu.”

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Opting-in

So what’s the catch? Retailers run zero risk when signing up — there’s no catch, no fee, and retailers that opt-in to the Bridge network can sever their brand connection(s) at any time. In this challenging economy, retailers must leverage their brand partners to help drive more efficient workflows and eliminate costly inventory mistakes. Every other mature CPG (Consumer Packaged Goods) industry uses a similar Bridge solution to manage their supply chain, in which brands build purchase orders and assume the responsibility of product performance. And not to say that we’re “every other” industry (because we’re definitely not), but it’s a tried-and-true model that clearly works.

Strong relationships better your business - move towards transparency with your partners and unlock the benefits of Headset Bridge. For retailers looking to opt-in to the Bridge network at no cost, reach out here to get started.

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*Comparing September Net Revenue to August Net Revenue at Kind Delivery. For context, California sales declined from August to September (Headset, 2022).

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