When you are responsible for the supply chain of a company known for making the impossible possible, you strive to do a little magic of your own to keep up with growth that last year alone required the quadrupling of the company’s supply chain capacity.
Sheetal Shah joined Impossible Foods in May 2019 as senior vice president, product and operations, where he directs several mission-critical business units, including product, operations, manufacturing, supply chain, and logistics. Impossible Foods makes plant-based foods that taste like and compete with meat. The product that is probably most familiar to consumers is the Impossible Whopper found at Burger King restaurants.
The company has been growing quickly, thanks to new products including Impossible Pork and partnerships that help get them to market. Impossible Foods employs about 350 people in its Redwood City, California, headquarters and at its manufacturing facility in nearby Oakland.
Before joining Impossible, Shah was chief operations officer at electronic-payment technology company Verifone, where he oversaw global operations and the company’s supply chain. He also served in various management roles at Motorola Mobility, where he began his career as a software engineer. Shah holds multiple patents and has bachelor’s and master’s degrees in electrical engineering from the University of Florida. He spoke recently with DC Velocity Editorial Director David Maloney.
Q: As a company, Impossible Foods states that its goal is to compete against beef from cows in the areas of taste, nutrition, sustainability, convenience, and affordability. How does that shape the way your company goes to market?
A: One of the great things about Impossible Foods is the passion for our mission. Our mission is to end animal agriculture as a food source by the year 2035. We are working on meat today in the form of the Impossible Burger, Impossible Pork, and Impossible Sausage, but over time, we will work on dairy and fish products as well because that is the only way we are going to achieve our mission.
When our founder, Pat Brown, decided to tackle this, he wanted to create a product without compromise. The product that he came up with is the Impossible Burger. It has gone through a couple of iterations, but it doesn’t compromise on taste, nutrition, or versatility. Ninety-five percent of our consumers eat meat on a regular basis. It is important that when they have our product, that they are doing it without compromise. It starts with taste. That means that right from the ingredients that we select, the manufacturing process that we select, everything around the product’s quality, we make sure that we are delivering on that promise of taste.
Q: So how do you get a vegetable product to taste like a hamburger?
A: One of the things that Pat and the team discovered a long time ago was that there is an iron molecule called “heme” that is naturally found in animals as well as plants. This is the key ingredient that makes meat taste like meat and gives it that flavor and texture people crave. Back then, we were creating heme in very small quantities, but now we create heme through a standard fermentation process using a strain of yeast that our scientists developed and have continued to improve on over the years. That is what we use in all of our products— whether it’s the Impossible Burger, Impossible Sausage, or Impossible Pork—to deliver on that taste.
Q: Since this is a processed product, does it have the nutritional value of beef?
A: Yes. We are very transparent about the ingredients that we choose, and we are very deliberate as well. Nutrition is a key part of our product offering. When you look at our quarter-pound patty, it has zero milligrams of cholesterol. So, from a cholesterol perspective, it is much better than the animal equivalent. It contains no gluten, no animal hormones, no antibiotics. So overall, when you are comparing it with patties from cows, it is much more nutritious.
Q: What kind of vegetables go into your products?
A: Our ingredients are on our labels—we’re very transparent about it. We use soybeans from the U.S. Midwest. We use sunflower oil and coconut oil to give some of the “fat” aspect that people are looking for. It took a very long time to find the right set of ingredients, particularly the right type of soy that interacts with our heme in order to deliver on our taste.
Q: Sustainability seems to be very important to your company. In fact, I understand that one of the reasons why you’re looking to replace animals as a food source is the environmental impact of raising animals.
A: Yes. It is well documented that relying on animals in the food chain is the top cause of the greenhouse gases that have ultimately led to the challenges we face with climate change. When we compare our product with beef from cows, we use 87% less water and 96% less land, and produce 89% fewer greenhouse gas emissions. We do lifecycle analyses of every single one of our products. The message we want to convey to consumers is that our product is not only healthy for you, but it is also healthy for the planet.
Q: So, your goal is to eventually put a lot of cows out of work?
A: That land that is currently being used for raising cattle and livestock can be repurposed for plant-based products, such as soy. As we look at the demand for our product today as well as demand some three to five years into the future, we are going to need a significant amount of ingredients such as soy in order to help us achieve our mission.
You know, our society is pretty innovative. You see examples of technology becoming obsolete and new technologies being created. Blockbuster to Netflix is a great one. VHS cassettes to DVDs to online is another one. So, I think there are good examples of how people figure out ways to innovate as new technology becomes available.
Q: Let’s talk about the supply chain behind the product. Could you tell us about your infrastructure?
A: Yes. Our headquarters are here in Redwood City, California. Our first manufacturing facility is actually just about 30 minutes away in Oakland. This is where the first Impossible Burgers came out, and we continue to do production there today, using ingredients sourced from both international and domestic suppliers.
Then in July of last year, we announced a partnership with one of the largest food manufacturers in the world—the OSI Group. They are now part of our supply chain. We will have other co-manufacturers as part of our supply chain, but when we signed the deal with OSI last July, we did so with an eye toward quadrupling our production. I would say one of our ongoing projects is constantly expanding our production to meet the needs of consumers.
Q: How is your distribution handled?
A: From a distribution center perspective, we tend to have distribution centers through partners very close to our facilities. Here in Oakland, we have a facility close by that primarily handles distribution for the West Coast and markets west of Mississippi. We also have distribution centers in the Chicago area that serve other parts of the United States.
We are cognizant of the number of nodes in the supply chain because ultimately, what we are trying to do is go right off the manufacturing line to the consumer’s plate. We think about that cycle time. We think about minimizing the number of touch points in order to do that.
Q: So, you look for third-party service providers and partners to help with your distribution? Why did you choose to go that route as opposed to building your own distribution infrastructure?
A: Well, one of the things that we focus on is the order-management process—visibility, making sure that we are meeting customer delivery times and fill rates, and all of those important performance metrics. So, the thinking was that in order to optimize our speed, it made sense to use an existing physical infrastructure. But it was important that we build the correct digital infrastructure so that we maintain touch points with our channel partners, operators, and distributors to make sure that the flow of product is happening correctly.
Q: I would imagine that with the growth you’ve had—you mentioned quadrupling capacity last year—that working with third-party providers allows you to scale very quickly using the 3PLs’ infrastructure?
A: Yes, as we go through a supplier selection process and the various criteria, whether it is quality, capacity expansion, cost, or reliability, scale kind of jumps out as one of the things that we think about. If our partners are not able to scale with us, we are just not going to be on the path to achieving our mission.
Q: I assume you distribute to food wholesalers, but do you also count supermarket chains and restaurants among your customers?
A: Ultimately our customer is a consumer, so that is why when you hear us talk about taste and nutrition, it is really important that we deliver a product that is targeted toward our end consumer, which is you, which is myself. But, yes, we do work with quick-service restaurants. I’m sure you have seen our partnership with Burger King. We also have a partnership with White Castle. I think today we are in over 17,000 locations here in the U.S. and that is a combination of restaurants and retail. Now in retail today, we are working with a fairly small number of folks, but over the next 90 days, you are going to see us make a big push into grocery stores and into retail because that is going to be the next step in our expansion, which we are pretty excited about.
Q: Will you be shipping directly to those stores’ DCs as opposed to going through distributors?
A: Yes. Each grocery store has its own distribution network and an existing infrastructure that we will just plug into. We’ve got a lot of those partnerships already set up. It is just a matter of our scaling up our production now.
Q: We talked earlier about your company’s focus on sustainability. Does that extend to your supply chain and distribution operations as well?
A: Absolutely. It starts with supplier selection. Having a sustainability program and a commitment to sustainability is something that is important to us. Even in our manufacturing facilities, we think about water usage. We think about zero-waste programs. Then with distribution, we look to minimize our carbon impact as we are getting product to consumers. One example is making sure that we have full truckloads versus partial truckloads and making sure that we are using the infrastructure to its full capacity.
Q: Your company recently announced that it was cutting prices for distributors by 15% on average due to efficiencies and economies of scale. Were some of those efficiency gains related to your supply chain?
A: Yes. It is the indirect result of our continued month-over-month improvement in production, increases in production, and improving our yield. I talked to you about reducing touch points in the supply chain, so it is just going right from the selection of the suppliers and tracking every single touch point—whether it is our ingredients, our manufacturing process, or our distribution process. It is really just looking at all that and minimizing the touch points without, obviously, compromising on the quality of the product in any way, but seeing if there are other ways we can take cost out of the process. Ultimately, our goal is to pass on the price reduction to our operators, to our distributors, and then hopefully it will get passed on to consumers.
Q: In January, you unveiled Impossible Pork. Pork is the most-consumed meat worldwide. I know that you learned a hard lesson last year when demand for your beef product outpaced your ability to produce it. Can you explain what you learned that you are now applying to the rollout of Impossible Pork?
A: That is a great question. Just to touch on pork really quickly. Thirty-eight percent of the meat consumed globally is pork. So, without an Impossible Pork offering, we just won’t be able to achieve our mission. It is a really important product for us.
Now, when we talk about some of the challenges we’ve had in the past, we just did not forecast the potential of what the Impossible Burger could achieve. From a production perspective, we were caught short-handed. So, what are we doing differently now? Today, when we forecast, we actually recognize that there is a range of outcomes. We use a stochastic process and Monte Carlo simulations. We are looking at different demand scenarios and making sure that we take every single one of them into account. So, it is really understanding how long it is going to take us to achieve, let’s say, the maximum production that we foresee and taking steps today to essentially compress that time in order to be able to react quickly if demand is higher than we anticipated. Then we know exactly what the constraints are, and we know what the triggers are that [tell us] that we need to go in and remove those constraints so we can deliver product.
Q: So that is primarily on the production side. Are you also looking to see how such changes affect the distribution end?
A: Absolutely. It goes back to when we are selecting those partners and thinking about the distribution infrastructure that we need. We’re always thinking about it from a scale perspective. We’re asking [potential partners], ‘OK, what do we do if our demand doubles, triples, or quadruples? What are the steps that we would take in making sure that the infrastructure is in place and capacity is available to us?’
Q: So, it is not just the ability to ramp up but maybe having partners with facilities in markets and locations where you may be ramping up your operations?
A: That is correct. You know, it is setting up agreements with distribution companies and with carriers. It is understanding pickup times. It is understanding delivery times, making sure that we are setting up the optimal network. It is understanding where those end-points are and planning and distributing according to that.
Q: Now with the Impossible Pork product, are there other changes you made to your supply chain approach?
A: I think one of the great things about the way we designed Impossible Pork is that from a production perspective, we were able to reuse a lot of the existing infrastructure. That makes it a lot easier. Of course, we had to go source the ingredients. We had to think about that a little bit differently, but from an infrastructure perspective, from an equipment perspective, we were able to re-use a lot of the existing infrastructure.
I hope one of the things I’ve made clear is that we think about scale all the time. Even our R&D folks are thinking about scale when they go to design our products in the kitchen or the lab. They are designing them with the intent of making sure that we are choosing ingredients as well as processes and culinary techniques that allow us to scale. That is one of the things that allowed us to re-utilize a lot of the infrastructure we had in place.
Q: And you weren’t inventing your supply chain from scratch.
A: Right. From a supply chain perspective, we were able to scale with the partners we had. Obviously, once we go to market, Impossible Pork will be used in a lot of different types of applications, and restaurants and partners will make it available to consumers in various ways.
Q: Has the Covid-19 crisis affected what you do and how you operate from a supply chain perspective?
A: Yes. One of the first things we did is make sure that we touched base with all of our ingredient suppliers. We are taking some positions on inventory to make sure we can accommodate any potential disruption.
So far, from a supply chain perspective, we haven’t seen any disruption, but I think this is something that we will continue to monitor to see how it plays out. But today [in March], we are continuing to get product from our external providers and suppliers, and we are able to continue to produce product.
Q: Are you looking at any other e-commerce options or is that mostly done through the retailers that carry your brands?
A: Today, our primary distribution is through grocery stores as well as the 17,000 restaurants that offer it. I think all these things are something that we are going to be looking at. Home delivery-type services are very popular right now. These are things that we will be looking at and making available over time.
Q: You’ve got a lot coming up. I believe that Burger King is launching a croissant with your Impossible Sausage on it. You have the pork, and you’ve got some other things. What is the future for you?
A: Let me just touch on the Impossible Croissan’wich. Burger King tested it in, I think, over 130 of its restaurants. It did very well. We will be partnering with them at the appropriate time to launch that nationally. That is made with our Impossible Sausage product that we are pretty excited about.
Today, we ship our product to Singapore and Hong Kong. You will see it expand both geographically and from a product perspective over time. I really think it is governed by that mission we have. The only way we are going to achieve that mission is to continue to expand geographically. I think 88% of the world’s meat is actually consumed outside the U.S., so obviously, we need to make our product available to those people and we need new product. So, this year, it’s Impossible Pork and Impossible Sausage, and you will see more new products in the future.