Why Digitalized Supply Chains Matter for Meal Kit Deliveries
To stay competitive in the meal kit delivery industry, Blue Apron needs to invest in its digital supply chain to ensure consistent, on-time delivery of high quality ingredients. Within the realm of digitalization in supply chain, on-demand food delivery businesses are competing for customer trust; even being a day late hurts the brand since the customer relies on Blue Apron to feed their family.[i] With so many players in this space including Plated, HelloFresh, Sakara Life, Amazon and more, it’s imperative that Blue Apron “continually improve its offerings with new recipes and more customization” to retain customers when there are “still faster, cheaper ways to get fed.” [ii]
In March 2017, Nielsen reported that in the U.S., “one in four adults had purchased a meal kit …and 70% continue to buy them after making their first purchase.” [iii] Although Blue Apron has the largest market share in the industry at 40.3%, they are losing customers to their competitors. [iv]
Blue Apron Leads the Market Today – But for how long?
Currently, Blue Apron is building a seamless, digital supply chain to stay competitive. Initially, Blue Apron depended entirely on human labor to source ingredients, determine which ingredients go into each recipe and package the meal kit.[v] The process was prone to errors and inefficiencies; for instance, in order to switch “a line to pack a different kind of box could take hours, leaving workers standing around.”[vi] To reduce idle time, the company created a software that digitizes supply chain, giving full access and visibility to everyone involved. The software “helps turn recipes into manufacturing specifications, record where each ingredient is at all times and assure it is kept at an optimal temperature.”[vii] Now, workers “use computers throughout the facility to find out where build and prepped ingredients are located,” making it easy to quickly find information.[viii] Blue Apron has also equipped workers with iPads to notify a runner to bring over more ingredients, instead of making the request in person.[ix] In the medium term, Blue Apron is opening new fulfillment centers that include state of the art technology to help workers gain better visibility into the supply chain process.[x] These digital initiatives give workers more visibility into the supply chain, empowering them to be more efficient and intentional with their time.
The Future of Blue Apron
In the short term, I suggest Blue Apron minimize the human elements in the existing process. One area of inefficiency is that “sometimes workers neglect to use portable scanners to check ingredients in and out, meaning the database doesn’t accurately reflect how much food is left in inventory.”[xi] Blue Apron can add visual cues and make it a requirement to check out ingredients before transporting the ingredients to the packing station. Blue Apron can save time otherwise spent checking inventory, and improve visibility among workers to reduce confusion and idle time.
In the medium and long term, Blue Apron should invest in automation to make the logistics process of preparing meal kits seamless. Amazon’s talents lie in its ability to deliver goods to customers in a short period of time –to match these capabilities, Blue Apron should identify ways to automate quality control of ingredients, enable customers to see the status of their orders, connect consistently with farmers and create the shipment.[xii] This automation will make operations more efficient and less prone to human error, empowering Blue Apron to deliver quality food, on time.
Food for Thought
In closing, I have questions about the future success of Blue Apron: Should Blue Apron create a more comparable business model to Amazon for competitive reasons (Blue Apron is a subscription business whereas Amazon meal kit deliveries can be ordered individually)? If so, how will Blue Apron need to adjust its supply chain and demand planning efforts? Will they be able to do this in an effective manner – how much overhaul will be required?
(Word count: 800, exclulding subtitles)
[i] Jing Cao, “Inside Blue Apron’s Meal Kit Machine,” Bloomberg, April 10, 2017, https://www.bloomberg.com/news/articles/2017-04-10/inside-blue-apron-s-meal-kit-machine, accessed November 13, 2017.
[iii] “Understanding the Meal Kit Landscape and Consumer Preferences,” Nielsen, March 30, 2017, http://www.nielsen.com/us/en/insights/news/2017/understanding-the-meal-kit-landscape-and-consumer-preferences.html, accessed November 12, 2017
[iv] Rani Molla, “Blue Apron still dominates the market for meal delivery kits but its market share is plummeting,” Recode, November 1, 2017, https://www.recode.net/2017/11/1/16581142/blue-apron-market-share-decline-meal-kit-delivery-hello-fresh, accessed November 13, 2017
[v] “Blue Apron’s Secret Ingredient is a 100-person Tech Team,” Uncubed, June 15, 2017, https://uncubed.com/daily/blue-aprons-secret-ingredient-is-a-100-person-tech-team/, accessed November 12, 2017
[vi] Jing Cao, “Inside Blue Apron’s Meal Kit Machine,” Bloomberg, April 10, 2017, https://www.bloomberg.com/news/articles/2017-04-10/inside-blue-apron-s-meal-kit-machine, accessed November 13, 2017.
[vii] “Blue Apron’s Secret Ingredient is a 100-person Tech Team,” Uncubed, June 15, 2017, https://uncubed.com/daily/blue-aprons-secret-ingredient-is-a-100-person-tech-team/, accessed November 12, 2017
[x] Jing Cao, “Inside Blue Apron’s Meal Kit Machine,” Bloomberg, April 10, 2017, https://www.bloomberg.com/news/articles/2017-04-10/inside-blue-apron-s-meal-kit-machine, accessed November 13, 2017.
[xii] Adam Levy, “Blue Apron’s Failed Execution Just Opened the Door for the Competition,” The Motley Fool, August 15, 2017, https://www.fool.com/investing/2017/08/15/blue-aprons-failed-execution-just-opened-the-door.aspx, accessed November 12, 2017