From Amazon to Cannabis: redefining supply chains for efficiency & compliance
Unlocking Success: The Crucial Role of Logistics in Navigating Cannabis Supply Chain Challenges. (Benzinga)
Given the state-by-state regulation and fragmented nature of cannabis supply chains, logistics play a vital role in overcoming challenges posed by compliance and regulatory requirements, inventory management as well as distribution and transportation.
Managing diverse product inventory with limited shelf life requires precise control and specialized storage facilities, while secure and discreet transportation, compliance with state-specific regulations and maintaining quality present additional hurdles in the supply chain.
The complex and evolving nature of tracking, labeling and packaging regulations necessitates careful logistical operations.
Fragmented Supply Chains
Matt Hutchinson, senior VP and head of logistics at LeafLink and Jake Risman, co-CEO of Leafgistics discussed these issues in an exclusive interview with Benzinga.
With a background in supply chain technology at Amazon and Walmart, Hutchinson recognized the need for better transparency and tracking in the cannabis industry. Risman, with expertise in reverse logistics for apparel and footwear companies like Macy’s and Foot Locker, sees parallels between their past endeavors and the under-standardized cannabis industry.
In June, Leafgistics became LeafLink's exclusive logistics partner in California. Together, LeafLink and Leafgistics aim to bring standardization to the cannabis space.
Synergies To Streamline Cannabis Logistics
According to Hutchinson, synergies between LeafLink and Leafgistics lie in their ability to solve the challenging issues in the cannabis supply chain that are common problems faced by dispensaries.
Leafgistics has developed an infrastructure that standardizes various operating methods in the middle logistics layer, simplifying the last mile for retailers and allowing brands to focus on product development and sales without worrying about the logistics complexities needed to meet their retail customer’s expectations.
Leafgistics provides a centralized distribution solution by having brands deliver products to their warehouse, handling tasks such as scheduling, consolidation and labeling.
With three fulfillment centers across California, Leafgistics offers streamlined operations and storage capacity. The aim is to simplify the supply chain while optimizing the retail experience in the cannabis industry.
“An average dispensary has to deal with 100 brands. The majority of those brands handled their own distribution, meaning they call the dispensary and say, 'Hey, we're gonna drop off our product.' The dispensary has to schedule that product to be delivered, make sure everything's accurate, and potentially label the product if the retailer wants to. And that takes a lot of time from their side," Risman explained.
“The brands deliver the product to our centralized warehouse. We will handle all the scheduling, consolidation, and labeling for you. Then, whenever you're ready, you can place an order across all the brands you want from us, and we will deliver it to your dispensary the next day, allowing you to focus on servicing the customer at the retail forefront."
Tech-Driven Solutions For Cannabis Retailers
The partnership between LeafLink and Leafgistics is synergistic as LeafLink's solutions for retailers and brands streamline the ordering process and provide real-time visibility of inventory across the supply chain.
“Through integrated dashboards and workflows, retailers can track inventory levels, make timely orders, and prevent shortages, while LeafLink's deep integration with Leafgistics' warehouse technology services enhances the level of service offered,” Hutchinson added.
In addition, LeafLink's Buyer Metrics solution empowers retailers to identify best-selling products across various regions, allowing for improved inventory management and capital optimization by identifying stagnant inventory for liquidation.
Benefits For Cannabis Brands
According to Hutchinson cannabis brands receive two key benefits, depending on whether they are our distribution customers or from the retail side.
From the retail perspective, brands can make a consolidated delivery to Leafgistics’ warehouse, which allows for more efficient distribution to retail stores and prevents stockouts. As a result, brands often share in this value created through bulk buy discounts since they no longer have to handle individual store deliveries, reducing their final mile costs.
Risman explained they offer solutions that allow cannabis brands to focus on growth.
“They can rely on us for the distribution aspect of their business, which may not be their area of expertise or something they wish to invest working capital in. By providing an efficient distribution network, we enable brands to concentrate on what they do best," Risman said.
What If…. Interstate Cannabis Commerce Is Allowed
Hutchinson said LeafLink’s goal is to provide a nationwide solution and create a wholesale network that can ship and deliver to every state.
“We want to create an efficient supply chain where companies can focus on their core competencies without worrying about logistics. Similar to how Amazon operates, we aim to streamline the process and reduce pricing for everyone as we scale,” Hutchinson said.
However, he also noted that interstate commerce would introduce new complexities, such as sourcing raw materials, manufacturing and ensuring timely delivery.
“Having a dedicated solution provider focused on optimizing the supply chain becomes crucial for brands to navigate this changing landscape effectively and free up resources for other critical aspects of their business,” Hutchinson said.
