Her CEO Journey™: The Business Finance Podcast for Mission-Driven Women Entrepreneurs

Weekly show where my featured guests and I explore the financial and business challenges women face on the entrepreneurial journey to success. You'll hear them talk about the money side of their businesses in ways you've always wanted to know about, but wouldn't dare ask. They openly share their disappointments, failures, successes, and everything in-between as they grew sales ranging from 6 to 9 figures. Knowing where your business stands financially helps you make critical decisions with confidence. It's simply the best way to be sure you grow a business that fuels the life you want to live.

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episode 125: Getting Lean: Reduce Waste and Production Costs through Lean Manufacturing - The Journey of Meliora Cleaning Products (Business for Good Series) [transcript]


Businesses exist to provide value to customers while earning profit in the process. Until recently, this approach took the form of pursuing profit at all costs. Nowadays, more businesses are committing to incorporating social and environmental objectives into their plans. It is possible for businesses to grow and profit while minimizing adverse impacts on people and the environment. The key is strategic thinking and innovation.

As the founder of Meliora Cleaning Products, Kate knows this well. A company committed to using safe ingredients in its products, Meliora aims to positively impact the planet. In this episode, Kate discussed the approach she takes to ensure that sustainability is included in all aspects of her business operations. She also talks about lean manufacturing and just-in-time inventory as strategies to reduce waste and increase efficiency. Finally, we discuss the importance of knowing your numbers and determining the right time to hire a CFO.

If you want to know what it takes to maintain a profitable and sustainable business with the help of different systems, then tune in to this episode!

3 reasons why you should listen to the full episode:

  1. Discover the environmental problem that Meliora addresses. 
  2. Find out what lean manufacturing and just-in-time inventory are and how they can help reduce waste and lower costs.
  3. Learn how Kate implements practices, techniques, and changes to grow a sustainable business and achieve her vision for the company.

Episode Highlights

  • [05:56] Meliora’s Roots
  • [08:37] What Sets Meliora Apart
  • [10:53] The Product Manufacturing Process
  • [13:43] The Cash Flow Planning Process 
  • [16:08] Setting Meliora’s Pricing and Costs
  • [18:00] Making Eco-friendly Decisions
  • [19:20] Understanding Lean Manufacturing
  • [23:21] How to Apply Lean Manufacturing
  • [25:26] The Risks of Just-in-Time Inventory System
  • [27:57] The Importance of Understanding the Supply Chain 
  • [29:51] How Lean Manufacturing Helped While Bootstrapping Meliora 
  • [30:45] Vision For Meliora
  • [32:24] When to Hire a CFO 

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Connect With Me

Ready to transform your purpose into an impactful business financial story, profit, and joy? Schedule a chat with me at any time.

Resources

  • Try out the Cash Flow Conversion Calculator to determine if your business is experiencing a cash flow issue. 
  • Check out Meliora Cleaning Products
  • Maker to Manufacturer by Kate Jakubas
  • Visit Christina Sjahli’s website! Learn more about innovating and scaling your business through the Her CEO Journey podcast series.
    • Episode 101: Embracing Purpose Entrepreneurship and Becoming a B-Corp: The Journey of Carla Heim and Kasha Huk


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 2021-07-22  34m
 
 
00:01  Kate Jakubas
From an impact
00:01
perspective, we're here to make
00:03
sure that more and more people
00:03
get access to great products
00:07
that are low-impact that help
00:07
them meet their own desires to
00:10
be environmentally friendly and
00:10
have safe products that they can
00:13
use that are not going to cause
00:13
allergies or other issues.
00:16
That's really what the goal is.
00:16
We've already saved a million
00:20
plastic bottles from ever being
00:20
made, from jugs to cleaning
00:23
bottles.
00:25  Christina Sjahli
Often, we
00:25
don't realize a series of small
00:28
changes in the product that we
00:28
use daily can actually ensure
00:32
toxic chemicals and plastic stay
00:32
out of the ocean. Today's guest,
00:37
Kate Jakubas, the co-founder of
00:37
Meliora Cleaning Products,
00:41
connected the dots between safe
00:41
home cleaning and laundry
00:45
products, and the impact on our
00:45
planet as she was studying
00:49
master's degree in environmental
00:49
engineering. In today's episode,
00:54
Kate shares the thinking behind
00:54
their products and packaging
00:58
that are safe for both people
00:58
and planet, the lean
01:02
manufacturing process that
01:02
allows them to build a
01:05
profitable business, the risk
01:05
and benefit of just-in-time
01:09
inventory, and when is the right
01:09
time to hire a part-time CFO.
01:14
This is part two of three of the
01:14
Business for Good Podcast Series
01:20
featuring female founders who
01:20
are building businesses who
01:23
create the future we want and
01:23
the future we need. All of these
01:28
female founders consciously
01:28
choose long-term viability over
01:32
short-term profits. They
01:32
bootstrapped the business. And
01:35
all of them are building and
01:35
scaling meaningful profit. They
01:39
also choose to be part of a
01:39
global community of 4,000 plus B
01:44
Corp certified businesses.
01:46
Now, if you are not familiar
01:46
with B Corp certification, in
01:50
that case, I encourage you to
01:50
listen to episode 101 at
01:55
christinasjahli.com/herceojourney
01:55
where you can learn about B
02:02
Corp, why it matters, and the
02:02
certification process. You're
02:06
listening to Her CEO Journey,
02:06
the business finance podcast for
02:10
mission-driven women
02:10
entrepreneurs. I'm your host,
02:13
Christina Sjahli. If you are new
02:13
here, a big, warm welcome. If we
02:19
are not connected on LinkedIn,
02:19
please reach out and say hi
02:22
because that's where I hang out
02:22
and share my business finance
02:27
tips. If you have been listening
02:27
to this podcast for a while, and
02:31
you are a regular listener, I
02:31
want you to know I appreciate
02:35
you. My podcast won't be around
02:35
without your support. This is a
02:40
free weekly show where my guests
02:40
and I want to inspires you to
02:44
balance between mission and
02:44
profit. to create an impact in
02:48
this world, and to achieve
02:48
financial equality through your
02:52
business for good.
02:54
At times, having received
02:54
funding from investors can be a
02:59
double-edged sword for the
02:59
founder. It allows the founder
03:02
to have this feeling, a
03:02
comfortable position feeling,
03:06
thinking there is money in the
03:06
bank, so she spend it without
03:10
thinking about whether it is
03:10
really effective, which can lead
03:14
to the wrong decision. And it
03:14
can cover up the bigger problem
03:18
at the operational level. Now,
03:18
on the flip side, when you dont
03:22
have access to too much cash, it
03:22
actually forces you, as a
03:27
founder, to look deeper into the
03:27
internal process and figure out
03:32
where to improve the processes
03:32
daily. Thats exactly what my
03:37
guest talked about today,
03:37
especially if you manufacture
03:41
your own product. Inventory is
03:41
one of the biggest area that you
03:46
need to pay attention to. You
03:46
deal with three level of
03:50  inventories in manufacturing
raw materials, work-in-process,
03:55
and finished goods. This means
03:55
inventory has a significant
03:59
impact on your cash flow; it can
03:59
make or break your cash flow
04:03
cycle. Thats why understanding
04:03
how your inventory fits in into
04:08
your business cashflow
04:08
conversion cycle is critical.
04:12
And often, founder misunderstood
04:12
how cashflow conversion cycle
04:16
works.
04:18
Thats why we have created a
04:18
Cash Flow Conversion Calculator
04:21
to help you determine if your
04:21
business is experiencing a cash
04:25
flow issue. This simple tool can
04:25
also pinpoint where is the
04:30
problem. You can find a way to
04:30
this calculator in the show
04:33
notes. We are here to partner
04:33
with you. We understand business
04:38
finance can be confusing, but it
04:38
doesnt have to be complicated.
04:42
You want someone who is as
04:42
passionate as you are, and takes
04:46
your business to the next level.
04:48
Once you use the calculator, and
04:48
you feel you need further help
04:52
in figuring out your business
04:52
finances, remember that we are
04:56
here to partner with you. We
04:56
understand business finance can
05:01
be confusing, but it does not
05:01
have to complicated. You want
05:06
someone who is as passionate as
05:06
you are, and takes your business
05:10
to the next level. Once we show
05:10
it to you, you will understand
05:14
and trust your financial
05:14
numbers. We also make sure you
05:18
are making business decision
05:18
with your purpose front and
05:21
center. Connect with us at
05:21
christinasjahli.com/let-s-chat.
05:27
Now, lets find out Kates CEO
05:27
Journey. Kate Jakubas, welcome
05:34
to Her CEO Journey. It is such a
05:34
pleasure to have you here today,
05:38
Kate.
05:39  Kate Jakubas
Thanks so much for
05:39
having me. I'm so happy to be
05:41
here.
05:42  Christina Sjahli
Yes, and we're
05:42
gonna talk about a lot of stuff,
05:45
especially just-in-time
05:45
inventory, how you build your
05:47
business. But before we get
05:47
started into that help me
05:50
understand your journey from
05:50
environmental engineering to
05:54
founding Meliora.
05:56  Kate Jakubas
I think we all
05:56
kind of come to funding your own
05:59
business in different ways. But
05:59
for me, I come from very much a
06:02
technical and engineering
06:02
background. I studied material
06:05
science engineering. I studied
06:05
environmental engineering. What
06:08
I learned during my early jobs
06:08
and during my studies was that
06:12
you can use any manner of tools
06:12
to solve things. It's a very
06:15
engineering way to approach the
06:15
world, right? It's all about
06:17
problem solving. Do I use this
06:17
duct tape? Do I use this other
06:20
tool? Do I use this computer
06:20
program to solve this problem.
06:23
But if you start casting your
06:23
thoughts a little wider, you can
06:26
think of business itself as a
06:26
tool. For me, it was really
06:29
interesting to think about how
06:29
you could use business in order
06:33
to solve a social or an
06:33
environmental problem. So coming
06:36
from the engineering, the
06:36
environmental engineering
06:38
background, I really wanted to
06:38
apply the tools of business and
06:42
the methods of business in order
06:42
to solve an environmental
06:44
problem, which in my case, was
06:44
the lack of transparency in the
06:48
ingredients that were in
06:48
traditional cleaning products.
06:50  Christina Sjahli
How did you
06:50
even get started to create all
06:54
of this product?
06:58  Kate Jakubas
I worked for a few
06:58
years when I got out of school.
07:01
At first, I decided to go back
07:01
and get my environmental
07:04
engineering degree. I was in a
07:04
class that was it was a calculus
07:08
class all about how
07:08
environmental toxins get
07:10
distributed. So if you spill a
07:10
cup of coffee, or a barrel of
07:14
oil, what happens to that
07:14
content? What happens to those
07:17
chemicals? We were figuring out
07:17
so much partitions into the
07:21
water, so much goes into fish
07:21
population. This was a very
07:24
technical class, of course, but
07:24
I was in the back of my head
07:27
thinking about the other
07:27
implications of it. Because we
07:30
don't only spill things on
07:30
accident, we spill things on
07:32
purpose. Every time we spray
07:32
cleaner in our homes, every time
07:34
we put laundry detergent into
07:34
our machines, we're
07:37
intentionally releasing things
07:37
into the environment.
07:40
So that really sparked the idea
07:40
of reexamining the products that
07:44
we use every day and trying to
07:44
create a product that had
07:48
ingredients that were safe to be
07:48
released to the environment.
07:52
Turns out there's a lot of
07:52
overlap between ingredients that
07:55
are safe for the environment and
07:55
ingredients that are safer for
07:57
people and safe to be used
07:57
around your home. How do we
08:01
intentionally use chemicals
08:01
every day that are safer for us,
08:06
for people, and the planet? It
08:06
started with me in my kitchen
08:09
mixing up a batch of powder,
08:09
using some soap and some washing
08:13
soda, and then throwing it into
08:13
the washing machine and crossing
08:16
my fingers until the clothes
08:16
came out and luckily you know
08:20
they were clean. So that was the
08:20
first iteration, the very first
08:24
thing that I did that was, "Hey,
08:24
I think maybe this will be
08:27
something that works."
08:28  Christina Sjahli
So there are
08:28
products out there, for example,
08:31
Seventh Generation, the one that
08:31
using safe ingredient, natural
08:36
ingredients. So I am really
08:36
curious, how does your product
08:40
different than those not natural
08:40
ingredients? Are you using
08:45
specific key ingredients in your
08:45
product throughout your whole
08:51
product line?
08:52  Kate Jakubas
If you look at
08:52
other existing green cleaning
08:55
products, such as Seventh
08:55
Generation or Method isn't one
08:58
that a lot of people are used to
08:58
seeing a more green than
09:01
conventional. Those are great.
09:01
We call them stepping stone
09:04
cleaning products or gateway
09:04
cleaning products, if you want
09:07
to think about it another way.
09:07
They are better than
09:09
conventional. What we do is we
09:09
take it even a step beyond that.
09:11
So if you look at products like
09:11
Method or Seventh Generation,
09:15
they still do have a few
09:15
ingredients that can be
09:17
problematic, including things
09:17
like preservatives known as MI
09:21
which a lot of people are
09:21
sensitive to. They do use
09:24
plastic in a lot of their
09:24
products and a lot of companies
09:27
are working to reduce that.
09:28
But our company is completely
09:28
free of single-use plastics in
09:32
our entire product line. If
09:32
sustainability is a journey,
09:35
we're trying to get as close as
09:35
we can to being that destination
09:38
for people, for letting people
09:38
really see like, "Okay, I'm
09:41
trying to get rid of plastic.
09:41
Look at this company that
09:43
doesn't have any plastic that I
09:43
can buy. I can go totally
09:46
plastic free when I buy it. Look
09:46
at this company that has
09:49
entirely A ratings from the
09:49
Environmental Working Group for
09:51
the ingredients. This company,
09:51
all of their products have been
09:54
rated by a third party called
09:54
Made Safe for the ingredient
09:58
integrity." So we have both the
09:58
strongest ingredient screening
10:01
processes in the industry and
10:01
also, the best packaging in the
10:05
industry. We also work to make
10:05
sure that it's price accessible.
10:08
Because when you hear that you
10:08
probably think like, "Oh, it
10:09
must cost a million dollars."
10:09
But we strive really hard to
10:14
make it accessible.
10:16  Christina Sjahli
One thing that
10:16
I noticed with a lot of cleaning
10:18
products that I use, and then I
10:18
started to move away from it,
10:22
it's like the strong scent.
10:22
Sometimes, it's just so strong
10:26
to a point like I feel like I'm
10:26
breathing chemical into my nose,
10:31
right?
10:32  Kate Jakubas
Yeah.
10:32  Christina Sjahli
I started
10:32
going moving away from those
10:36
type of strong chemical scent.
10:36
This is what I noticed, because
10:40
I looked through your
10:40
ingredients, you have main
10:43
ingredients. Then you're also
10:43
using a scent like lavender,
10:48
lemon, clove; those are just
10:48
like natural scents in there.
10:53
But the other thing that I
10:53
noticed, aside from all your
10:56
packaging that are eco-friendly,
10:56
I also noticed the type of where
11:02
you source your ingredients. It
11:02
seems like it's very specific.
11:07
You want to get your supplies
11:07
from... Your glycerin, for
11:11
example, is 100% palm-free and
11:11
vegan. Was that intentional from
11:17
the very beginning, all of this
11:17
planning? Or is it more a
11:20
journey? You started doing one
11:20
thing, and then moving away from
11:24
it. Do more research...
11:26  Kate Jakubas
I would say for us
11:26
the packaging has been more of a
11:28
journey because as a small
11:28
manufacturer, it's very hard to
11:31
get custom product made when
11:31
you're looking at low volumes.
11:34
So even as recently as a few
11:34
years ago, we did have a few
11:37
pieces of plastic that we were
11:37
using regularly. We've been
11:40
transitioning that out. So
11:40
that's certainly a journey is
11:43
that as we've gotten bigger,
11:43
we've been able to source better
11:46
and better packaging that's more
11:46
and more easily recycled or
11:49
composted as we go. But from the
11:49
very beginning, the plan was to
11:53
have that ingredient integrity.
11:53
That was really the founding of
11:56
the business was that product
11:56
we're using, being able to be
12:00
that source for people that knew
12:00
we had really never compromised
12:03
on ingredients from day one. So
12:03
we've never used synthetic
12:06
fragrances, you're talking about
12:06
those really strong scents that
12:08
can give a lot of people a
12:08
headache. Once you stopped using
12:11
them and you go to someone's
12:11
house, you smell their laundry
12:13
room and you fall over.
12:14  Christina Sjahli
Yeah, exactly.
12:16  Kate Jakubas
So that's
12:16
definitely been from day one.
12:19
We've never... We've always had
12:19
that ingredient integrity in
12:21
place. That's one of the reasons
12:21
we actually manufacture in-house
12:25
because it can be really
12:25
difficult, especially, when
12:28
you're small to have the
12:28
influence over a contract
12:31
manufacturer or a supplier that
12:31
makes the products for you.
12:34
Because it's possible that you
12:34
say, "Hey, please don't use XYZ
12:39
ingredients." and the supplier
12:39
says, "Yeah, yeah." Then lo and
12:42
behold, you find out that those
12:42
ingredients are in your product.
12:45
So that actually has happened to
12:45
a couple of so-called green
12:48
products in our industry. It's
12:48
hard to say whether it was
12:51
intentional, or on whose end it
12:51
was intentional, but certainly
12:54
we never wanted that to happen
12:54
to our brand. So that is why we
12:58
literally... We're putting
12:58
eyeballs on every ingredient
13:00
that comes in. We make the soap
13:00
ourselves. We mix the product
13:03
ourselves. We put it in the
13:03
containers ourselves. We're not
13:06
just outsourcing that to a
13:06
faraway manufacturing plant
13:09
where we're crossing our fingers
13:09
and hoping that our ingredient
13:11
integrity holds up.
13:13  Christina Sjahli
Was that your
13:13
plan from the very beginning, to
13:15
manufacture that in-house?
13:17  Kate Jakubas
It absolutely was.
13:17
I think when it comes to
13:20
businesses, everybody comes with
13:20
their own strengths. My own
13:23
strength is in manufacturing. I
13:23
spent my career before I started
13:26
this company in larger
13:26
manufacturing places, learned a
13:30
lot of best practices about how
13:30
to make a product like looking
13:35
for walls, choose the right
13:35
equipment, look at the flows of
13:38
the material through the plant.
13:38
That was really a strength and
13:41
continues to be a strength at
13:41
our company.
13:43  Christina Sjahli
I'm pretty
13:43
sure that you have heard the
13:46
statistic that 82% of businesses
13:46
fail in the first five years.
13:51
That's because of cash flow. How
13:51
did you finance aside, in
13:56
addition to the $5,000?
13:58  Kate Jakubas
We are completely
13:58
bootstrapped. We started with a
14:00
$5,000 grant that I won in a
14:00
business competition. Some
14:04
people are the sort of people
14:04
that leave their job and launch
14:08
a thing. To me, that requires
14:08
the cash reserves that we just
14:12
didn't have access to. So it was
14:12
a couple of years before, I
14:15
think it was two years, before
14:15
Mike was able to leave his job
14:19
and work on the business
14:19
full-time. Then it was another
14:21
year before I left my business.
14:21
We didn't have to worry about
14:25
paying the mortgage; we were
14:25
able to make small mistakes and
14:29
grow slowly because we didn't
14:29
have to immediately provide for
14:34
ourselves. We still had our
14:34
other jobs.
14:36  Christina Sjahli
What does the
14:36
planning process look like in
14:39
terms of cash flow to make sure
14:39
you didn't run out of capital at
14:43
the early stage?
14:44  Kate Jakubas
If you think about
14:44
the problems you need to solve
14:46
for the business, that's it,
14:46
right? That's what kills the
14:49  business
it's cash flow. The
14:49
factors that we looked at were
14:53
really, really, really knowing
14:53
our numbers, literally talking
14:56
about your P&L, your cash flow,
14:56
your balance sheet. Those are
15:00
really, really important
15:00
documents to be able to
15:02
understand, and to know how they
15:02
were structured, and set up. We
15:06
literally did our own books. We
15:06
did our own bookkeeping until
15:09
maybe two years ago, I think. So
15:09
actually being able to
15:13
understand and function and
15:13
operate that part of the of the
15:16
business was really critical.
15:18
That's one reason we were
15:18
confident enough when we looked
15:22
at, "Here's our current cash
15:22
flow. Here's what our profit and
15:25
loss looks like. Here's what we
15:25
know it can look like if we were
15:29
10, 20 times bigger than we are
15:29
today." Being able to see where
15:33
that profit comes from, being
15:33
able to see where that
15:36
accommodation and where the
15:36
sellers can come in to support
15:38
ourselves, to support a team
15:38
that we knew he would have to
15:41
have in order to be big enough
15:41
for it to be sustainable. So
15:45
people talk about a crystal ball
15:45
with business, right? You never
15:48
really know, but understanding
15:48
exactly how it works. If you
15:51
don't understand basically how
15:51
much it costs you to make a
15:53
product, you can't possibly know
15:53
that when you sell X of them,
15:59
then you're sustainable, or that
15:59
you're big enough to move to a
16:01
different space. So really, you
16:01
do have to know your numbers in
16:04
order to make decisions like
16:04
that and make sure that your
16:06
business is healthy.
16:08  Christina Sjahli
Earlier in the
16:08
conversation, you mentioned that
16:11
you want to make sure that your
16:11
product is reasonably priced.
16:15
The fact that all your
16:15
ingredients are natural
16:18
ingredients, and then you are
16:18
making eco-friendly packaging
16:22
and reasonable pricing, what is
16:22
your thought process into your
16:25
pricing and into your costs?
16:28  Kate Jakubas
If we think about
16:28
pricing, we do a lot of
16:29
benchmarking. We look at
16:29
conventional products. We look
16:32
at, for example, a green shelf.
16:32
So if you walk into a store,
16:36
like Whole Foods, what cleaning
16:36
products are on their shelf? How
16:39
much do those products cost? Can
16:39
we make a product that is
16:43
somewhere in the range of those
16:43
existing products? We don't want
16:46
something that's a lot cheaper
16:46
because, of course, if people
16:49
are able to pay more for
16:49
products, that's great for us.
16:52
It makes the business more
16:52
sustainable. But we also don't
16:54
want to be way more expensive
16:54
because we want people to be
16:56
able to afford it. That's where
16:56
a lot of our costing effort
17:00
comes from is making sure this
17:00
is what other people are
17:02
offering.
17:03
If we can't make a product for
17:03
that reasonable price. We don't
17:07
want to introduce a laundry
17:07
product that costs $500. So we
17:10
have had a few products that
17:10
we've decided not to launch
17:13
because we didn't think that we
17:13
could could sell them for a
17:15
reasonable price. The other
17:15
secret that we have, especially,
17:18
compared to other smaller
17:18
companies is we do have that
17:20
manufacturing expertise. So we
17:20
follow something called lean
17:24
manufacturing. It's a set of
17:24
principles. It's a set of best
17:27
practices. If you know much
17:27
about this concept. It was
17:31
founded by a lot like Toyota, as
17:31
a company. These practices that
17:34
really make the manufacturing,
17:34
and even the development process
17:38
really lean. By lean, I mean not
17:38
a lot of waste. So we reduce
17:42
waste throughout our entire
17:42
process. That makes us much more
17:45
efficient. It improves our cash
17:45
flow. It does all manner of
17:49
really wonderful things to our
17:49
business and keeps it healthy.
17:52
So coming in and having that
17:52
lean manufacturing expertise on
17:55
our team has been really key to
17:55
making sure that that
17:58
profitability stays there.
18:00  Christina Sjahli
Before we get
18:00
into the lean manufacturing, I
18:03
look at your laundry product
18:03
instead of liquid, you are
18:07
producing powder. I'm pretty
18:07
sure there is a reason why you
18:11
don't have a liquid, instead you
18:11
choose powder. Can you share
18:15
that reason?
18:16  Kate Jakubas
Yeah, it's really
18:16
simple. It's just to help avoid
18:18
plastic. That's pretty much it.
18:18
If you look at laundry products
18:22
in Europe, it's actually more
18:22
common to buy powder than liquid
18:25
in Europe, but that's not the
18:25
reason. We're not trying to be
18:28
European; we're trying to do the
18:28
right decision for the
18:31
environment. For us, that means
18:31
we want to be able to package in
18:34
non plastic materials. It's
18:34
very, very difficult to find a
18:38
safe material to package liquids
18:38
in. Your options are basically
18:42
glass and metal which can both
18:42
be pretty heavy and expensive.
18:45
We do use a bit of metal here
18:45
and there. Glass, we do a little
18:48
bit with, but we're not... We
18:48
don't want a giant jug that's
18:51
made of glass that we want to
18:51
ship to our customers. So by
18:53
using the powder, it is more
18:53
concentrated inherently because
18:56
again, we're removing that water
18:56
that you're used to with liquid
18:59
detergent. So we're shrinking
18:59
that down. So it's got a lower
19:02
impact as far as shipping goes
19:02
because again, it's very
19:04
concentrated. But we're also
19:04
able to use cardboard packaging,
19:07
which is lighter. It's more eco
19:07
friendly. We can use recycled
19:11
materials. You can recycle it.
19:11
You can compost it. So the
19:14
lifecycle of that packaging is a
19:14
lot friendlier when we use
19:18
powders and solid materials
19:18
instead of liquids.
19:20  Christina Sjahli
Now, let's
19:20
dive into the interesting part
19:24
about lean manufacturing. What
19:24
is this lean manufacturing? How
19:30
did you get started with this
19:30
lean manufacturing in your own
19:34
business?
19:34  Kate Jakubas
I'm lucky that I
19:34
have had that experience, as I
19:38
said earlier, I come from
19:38
manufacturing. So I was lucky
19:41
that I already knew lean before
19:41
I started this business. I had
19:44
worked for several years in
19:44
manufacturing environments where
19:48
I applied lean principles in my
19:48
projects.
19:51  Christina Sjahli
I know we
19:51
haven't mentioned this but you
19:53
have a book, Kate, which is
19:53
talking about all of this: about
19:57
the pull system, the push
19:57
system, and then implementation
20:01
of inventory software and
20:01
businesses needs that. Walk us
20:06
through.
20:07  Kate Jakubas
Absolutely. One of
20:07
the things I like to explain as
20:10
an analogy for lean is actually
20:10
if you go to a restaurant like
20:13
Chipotle. So Chipotle is a fast
20:13
casual restaurant where you can
20:18
walk in the door, and then you
20:18
can have a burrito in your
20:20
hands. That's exactly the
20:20
burrito you wanted in a couple
20:23
of minutes. If you think about
20:23
the restaurants perspective on
20:26
that, they don't have ready made
20:26
burritos just sitting behind the
20:30
counter, right? That would be
20:30
one approach where they just
20:32
have like, "Oh, you wanted
20:32
chicken and rice and this and
20:36
that? Okay, let me find that out
20:36
of the 1000s of burritos that we
20:39
made." That's not how Chipotle
20:39
works, right? Instead, what they
20:42
have is they have a limited
20:42
amount of inventory. So they
20:46
have in lean, we call it
20:46
work-in-process. They've got the
20:48
ready made guacamole. They've
20:48
got the rice. They've got the
20:51
chicken. They have all those
20:51
ingredients that you can look at
20:53
and put into your burrito. But
20:53
then they also have other
20:56
work-in-process; somebody is
20:56
grilling chicken in the back.
21:00
Then they have the raw materials
21:00
that are stored in the freezer
21:03
or in the fridge on the
21:03
restaurant premises.
21:06
So you think about it that way,
21:06
that's very much the same way
21:09
that a good lean manufacturing
21:09
factory works in a setup. So you
21:15
have some inventory and the
21:15
exact amount of inventory can be
21:19
a judgment call based on what
21:19
you're expecting your volume and
21:22
what you're expecting your sales
21:22
to look like, how much you're
21:25
expecting to go through. That's
21:25
always something that we're
21:27
working to optimize as lean
21:27
engineers. But, again, if you go
21:32
to Chipotle and just watch them
21:32
for a while, you'll see exactly
21:34
how they turn over inventory and
21:34
turn over work-in-process in
21:38
order to keep supplying their
21:38
customers with exactly what they
21:41
want, exactly what they need. It
21:41
is very much sort of a
21:44
just-in-time type of approach,
21:44
but with fast food.
21:47
We do something really similar
21:47
with our factory. So we've got a
21:50
number of steps. What we're not
21:50
going to do is get an order
21:53
online, and then say, "Oh, no.
21:53
Let's order the coconut oil in
21:56
order to make this product."
21:56
Right? So we keep those
21:59
materials on hand. We do start
21:59
the process. We have a small but
22:04
functional amount of
22:04
work-in-process so that we're
22:06
able to keep up with orders as
22:06
they come in. The exact
22:10
mechanics of that can vary.
22:10
Again, there's best practices
22:13
that you can set up. But when I
22:13
tell people that we have an
22:17
automated production planning
22:17
system that doesn't require a
22:20
computer, people look at me like
22:20
I'm insane, that it doesn't make
22:23
any sense like, "What do you
22:23
mean? How do you mean it's
22:25
automated?" That's what a
22:25
countdown system is.
22:28
It's basically the same system
22:28
that Chipotle uses. It's like,
22:30
"Oh, look, you're out of
22:30
guacamole." You fill it and then
22:33
you use that empty container to
22:33
say, "Look, wait. If somebody
22:35
needs to make more guacamole,
22:35
somebody needs to peel an
22:38
avocado." We have that exact
22:38
same system set up in our
22:41
factory where I don't have to
22:41
tell people, "Tomorrow, we're
22:44
making lavender soap," because
22:44
they see, "Look, this bin is
22:47
empty, I need to make more
22:47
soap." So it's a system that
22:50
works really well. I don't have
22:50
to guess about what we make. I
22:54
don't have to tell our team what
22:54
to make in the morning. They
22:56
literally have a to-do list
22:56
that's only based on what things
23:00
are empty that need to get
23:00
refilled. It's really great for
23:04
communication. Again, it means I
23:04
don't have to be there first
23:06
thing in the morning telling
23:06
people what we're working on.
23:08
Everyone knows what to work on.
23:08
So that's some of the ways that
23:12
we use some automated planning
23:12
tools, our countdown is what is
23:16
called in lean manufacturing in
23:16
order to keep our processes
23:19
moving really smoothly.
23:21  Christina Sjahli
How can they
23:21
start with this lean
23:23
manufacturing?
23:24  Kate Jakubas
When it comes to
23:24
the factory and when you walk
23:27
in, overwhelmingly we hear
23:27
people, "Oh, it's so organized
23:29
in here. Oh, it's so neat and
23:29
clean in here." That's the
23:32
impression that you want from
23:32
anybody that visits your
23:35
factory. You want them to
23:35
immediately understand what's
23:38
going on in the factory. You
23:38
want them to feel confident that
23:42
they're not getting the wrong
23:42
product because something's a
23:44
big mess. So even just
23:44
implementing the organizational
23:49
tools, you can do before you've
23:49
gotten a single order, right? We
23:52
talked about lean, it's not
23:52
necessarily just one thing that
23:55
you absolutely have to do, and
23:55
then you've done lean. Or if you
23:59
don't do something, then you're
23:59
not doing it right. It's really
24:02
a set of once you learn that
24:02
they feel like common sense.
24:05  Christina Sjahli
What were the
24:05
struggles you encounter for
24:07
yourself or your own business
24:07
when you implement this lean
24:12
process?
24:13  Kate Jakubas
It's a continuous
24:13
process because every time you
24:17
relook at a process, you can see
24:17
something to improve. And that's
24:20
part of the methodologies of
24:20
lean is that you can always make
24:23
things a little bit better. So
24:23
it's not something that you can
24:27
just get your paperwork signed
24:27
off and be done with lean. It is
24:30
something that you have to
24:30
continue to do. It does continue
24:33
to pay dividends. You do keep
24:33
improving which is great, but
24:37
it's not something that is just
24:37
a one and done.
24:39  Christina Sjahli
I understand
24:39
that one of the biggest risks in
24:43
product based businesses, one is
24:43
inventory turnover. That's why
24:48
this is lean is really great,
24:48
because inventory turnover; how
24:51
fast you sell your product. If
24:51
it's slower, it means your cash
24:56
is really tied up in that
24:56
inventory. It's really affecting
24:59
your cash flow. And then the
24:59
second thing is about obsolete
25:02
inventory, which means there are
25:02
certain products your customer
25:05
don't buy. And you want to make
25:05
sure you don't produce that
25:09
before it's too late. And the
25:09
third benefit, I know, it's
25:12
about carrying costs. Because
25:12
the more inventory that you
25:15
carry, it means you need to have
25:15
a place to store your inventory,
25:20
the more space. And then the
25:20
larger size of warehouse you
25:23
need, which is the higher cost.
25:23
So what are the risks of
25:27
just-in-time inventory system?
25:30  Kate Jakubas
Oh, there's so
25:30
many. I really wish that there
25:33
were some better guidelines
25:33
around understanding that it's
25:37
not possible to really do
25:37
just-in-time, and, therefore,
25:40
what is realistic. Some of the
25:40
questions you need to ask
25:43
yourself when you're looking at
25:43
this just-in-time is how quickly
25:46
do your customers demand or need
25:46
an item once they order it. That
25:49
gives you some idea how much
25:49
material you need to keep on the
25:52
floor. You have to figure out,
25:52
too, at what point do you need
25:56
to balance the cost with the
25:56
inventory because you don't want
26:01
your inventory sitting around
26:01
for a year. What if your
26:03
customers decide they don't want
26:03
that product anymore? Now, you
26:05
don't have anything. You've got
26:05
this carrying cost. You've got
26:08
obsolete product on your floor.
26:08
So I think finding your own
26:12
sweet spot between how
26:12
frequently to order, when you
26:15
get your volume discounts, and
26:15
so on and so forth; it is a
26:19
little bit industry-dependent,
26:19
it is a little bit dependent on
26:22
what your cash flow situation
26:22
is. There are a lot of factors
26:25
for it.
26:26
Just to give you an idea so we
26:26
look at ordering enough
26:29
inventory at a time to get us
26:29
about three months, for example.
26:33
So you can target how many
26:33
inventory turns you want, and
26:38
then make your orders that way.
26:38
So we might order more product
26:42
if it's got a longer lead time.
26:42
Our chemical supplier is really
26:45
reliable. And we can just call
26:45
them and get product in a day or
26:49
two. So I'm not going to keep
26:49
three months of inventory if I
26:52
know a supplier has delivered on
26:52
time every time and it takes
26:54
them two days to get me
26:54
something. It's actually one of
26:57
the biggest parts of my job is
26:57
trying to make sure we keep
26:59
products and materials on the
26:59
floor. And then all of that gets
27:03
exacerbated by... Anytime I
27:03
figure out, "Hey, let's... We're
27:07
going through... We make a 1000
27:07
of these products a month." So
27:11
this is how much inventory I
27:11
need to keep on hand. Well,
27:13
guess what? Next month, instead
27:13
of making 1000 that month, the
27:16
demand has gone up. And now
27:16
we're making 5000 a month. So
27:18
everything I just calculated
27:18
goes out the window. Those are
27:22
good problems to have. But
27:22
certainly I talked about it
27:25
being a continuous process. As
27:25
soon as you figure out the right
27:28
amount of inventory to have,
27:28
usually you need to redo it. So
27:32
it's something you need to keep
27:32
paying attention to.
27:35  Christina Sjahli
And then one
27:35
thing that I also learn about
27:38
this process is your suppliers.
27:38
You need to have a good
27:44
communication. And then, also,
27:44
understanding their process in
27:49
creating that product that
27:49
you're going to purchase.
27:52
Because how fast they can create
27:52
that product, like you said,
27:55
it's really important. This lean
27:55
system, I don't think it's going
28:00
to work without working together
28:00
with the supply chain. If your
28:06
supplier cannot commit as well,
28:06
it's hard for you. You may not
28:11
get your raw material deliver on
28:11
time and the right amount.
28:15  Kate Jakubas
Yeah.
28:15
Understanding supply chain is
28:17
really critical. I know there
28:17
are a lot of businesses that are
28:20
very marketing focused, and they
28:20
are outsourcing the entirety of
28:23
the product manufacturing
28:23
process. And there's a lot of
28:25
risk there. I mean, just like
28:25
there's still risk in our
28:27
process, we still have suppliers
28:27
and a pretty large supply chain.
28:30
But like we... Just as an
28:30
example, there was a hurricane
28:34
in the Philippines about a year
28:34
ago. We get a lot of our coconut
28:38
oil through that supply chain.
28:38
So understanding either we might
28:41
have a supply issue, what is our
28:41
floor stock look like? Do we
28:44
need to order some right away?
28:44
Do we need to find a backup
28:47
supplier? Are we expecting cost
28:47
to go up because the supply
28:50
chain gets interrupted? So
28:50
making sure you do understand
28:53
where all these products are
28:53
coming from, all the way, in
28:56
that case, you know, the
28:56
agricultural growth of it, or
28:59
the mining, or wherever your
28:59
materials are coming from that
29:02
helps you do planning. Because
29:02
what I would hate to have happen
29:04
and what could happen if we
29:04
weren't paying attention is like
29:07
la di daa, we wait until we run
29:07
out of coconut oil and then we
29:11
call and they say like, "Oh
29:11
sorry, like there's none to be
29:13
had." Right? And what we saw
29:13
during COVID was that happened
29:17
in a lot of ways. There
29:17
definitely was product where the
29:19
supply chain got really
29:19
interrupted and if you're not
29:22
paying attention to that, you're
29:22
just choking off your own
29:24
supply. Your customers are going
29:24
to be unhappy and then, of
29:27
course, you're losing all of the
29:27
sales because you couldn't keep
29:29
things moving.
29:30  Christina Sjahli
That's why I
29:30
think understanding your supply
29:33
chain working with your
29:33
suppliers are really important.
29:36
Important in all cases, but
29:36
especially if you are applying
29:40
this lean system. You need to
29:40
stay on top of that because the
29:45
delay and the supply change is
29:45
going to create unhappy
29:49
customers. Let's put it that
29:49
way. I know that you have been
29:52
bootstrapping this business all
29:52
the way. The lean manufacturing
29:57
that you put in place, is this
29:57
contribute to your ability to be
30:02
able to bootstrap?
30:03  Kate Jakubas
Yeah, a 100%.
30:03
There's I can't... I really
30:06
cannot imagine being able to
30:06
bootstrap without relentlessly
30:10
looking for waste, and
30:10
relentlessly looking for cost
30:12
saving so that our cash flow
30:12
stays healthy and positive. If
30:16
we had investors, in some ways,
30:16
I think it would make us a worse
30:19
company. Because if you just
30:19
have this money, you can just
30:23
spend without thinking about it;
30:23
thinking about whether it's
30:25
really effective. Sometimes,
30:25
that can be the wrong decision.
30:28
And it's possible to have too
30:28
much money, where it can cover
30:31
up some of the problems that
30:31
you're experiencing. Honestly, I
30:36
think that's the number one way
30:36
that we've been able to be
30:39
successful and we've been able
30:39
to bootstrap is the fact that we
30:42
can look at all of our processes
30:42
and take out the waste
30:44
continuously.
30:45  Christina Sjahli
So what is
30:45
your vision for Meliora from
30:48
both impact and financial
30:48
perspective?
30:51  Kate Jakubas
From an impact
30:51
perspective, we're here to make
30:53
sure that more and more people
30:53
get access to great products
30:57
that are low-impact, that help
30:57
them meet their own desires to
31:00
be environmentally friendly, and
31:00
have safe product that they can
31:03
use that are not going to cause
31:03
allergies or other issues.
31:06
That's really what the goal is.
31:06
We're trying to change the
31:09
industry. When we started eight
31:09
years ago, there was no
31:12
requirement at all to label
31:12
ingredients on cleaning
31:15
products. You could just buy a
31:15
big blue jug and not see a list
31:18
of ingredients. That has been
31:18
changing both through us. We're
31:21
leading the industry in terms of
31:21
our ingredient processes, in
31:24
terms of putting those
31:24
ingredients right on the label.
31:27
There are now some laws like one
31:27
in California that does require
31:30
more disclosure, happy to tell
31:30
people what what the ingredients
31:34
are. So really changing that
31:34
industry making things more
31:37
transparent; that's our goal.
31:37
We've already saved a million
31:40
plastic bottles from ever being
31:40
made, from jugs to cleaning
31:44
bottles. We'd love to double,
31:44
triple, 10 times that impact by
31:48
again reducing our impact and
31:48
continuing to offer product
31:52
that's got that lower
31:52
environmental impact.
31:55  Christina Sjahli
What about
31:55
from a financial perspective?
31:57
What is your goal over the next
31:57
few years?
31:59  Kate Jakubas
In the next few
31:59
years, we're going to get about
32:00
10 times bigger and the next
32:00
four to five years. So scaling
32:04
up everything, basically all of
32:04
our process, right? But from the
32:07
physical processes, the sales
32:07
processes, every process that we
32:11
have needs to scale from today
32:11
to about 10 times bigger.
32:15  Christina Sjahli
With your
32:15
vision to go bigger, 10 times
32:19
bigger than you are now in the
32:19
next four to five years, I am
32:24
curious. At what point you think
32:24
a business is going to need a
32:27
CFO on a part-time basis?
32:29  Kate Jakubas
Understanding the
32:29
finances, especially as a CPG
32:32
company, understanding the cash
32:32
flow of your business is
32:36
something that can make or break
32:36
you. And I think the right time
32:40
to bring someone in is as soon
32:40
as it gets out of your own, out
32:43
of your own capability of
32:43
understanding, right? Depending
32:46
on how close finances are to
32:46
your own skill set; the further
32:50
away it is, the less you really
32:50
understand and know about
32:52
finances, the sooner you're
32:52
going to need to bring someone
32:54
in. If you're not doing it well,
32:54
you can drastically improve your
32:58
business by having someone by
32:58
your side. Mike has an MBA. So
33:03
we looked at that. We were okay
33:03
for a while.
33:05
We currently have an advisory
33:05
board member that is a CPA and
33:09
she does a lot of looking at our
33:09
finances. So we have started to
33:12
bring in outside help, someone
33:12
that can look at our financial
33:15
statements and say like, "What's
33:15
going on here? What are your
33:18
plans?" There's no way to beat
33:18
people on planet friendly as a
33:20
business, unless you're open,
33:20
unless you have that profit. And
33:24
somebody like a CFO, or someone
33:24
that takes on that role can make
33:28
sure that the business stays
33:28
open and stays healthy while you
33:31
work to grow the other parts of
33:31
your business; whether that's
33:33
product development or
33:33
marketing, or what you feel
33:36
you're really good at
33:36
strategically.
33:38  Christina Sjahli
Kate, it has
33:38
been a pleasure to have you
33:40
here.
33:41  Kate Jakubas
I love everything
33:41
that we covered today. I think
33:44
it's been a really fun chat.
33:45  Christina Sjahli
So thank you
33:45
so much. And where can people
33:47
connect with you and Meliora?
33:50  Kate Jakubas
You can check out
33:50
Meliora on our website. It's
33:52
meliorameansbetter.com. My book
33:52
is called Maker to Manufacturer.
33:57
It's available on Amazon.
33:58  Christina Sjahli: I love that
means better because it is
34:01
better.
34:01  Kate Jakubas
It is better.
34:02  Christina Sjahli
Yeah. Thank
34:02
you so much, Kate, for being
34:04
here.
34:06
And that's brings us to the end
34:06
of another show. Thank you so
34:10
much for listening to another
34:10
episode of Her CEO Journey, the
34:14
business finance podcast for
34:14
women entrepreneurs. If you want
34:18
to create a proactive financial
34:18
plan and process for your
34:22
business so you are ready to
34:22
weather the financial storm over
34:26
the next few months, let's chat
34:26
and see what's possible for you.
34:31
Book in a time to speak with me
34:31
at
34:32
christinasjahli.com/let-s-chat.