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Seattle Fish Co.

History

In 1902, Mose Iacino’s family came to Colorado from Grimaldi, Italy, in search of the American dream. In 1918 at the age of 16, Mose created the Seattle Fish Company. Mose developed a system for transporting fresh seafood to the state of Colorado from Washington. The system entailed packing fresh fish in sawdust and ice, and shipping the seafood by railcar from Seattle to Denver. Today, Seattle Fish Co. is still family owned and operated and is one of the largest seafood distributors in the western U.S.

Products/Services

Seattle Fish Co. supplies restaurants, hotels, caterers, and grocers throughout the Rocky Mountain region with fresh seafood and shellfish. Fresh and frozen seafood is flown into Denver International Airport seven days a week from American coasts and port cities from around the world. The product travels in special shipping containers in order to maintain freshness. Many of Seattle Fish Co.’s shellfish are grown in-house in their processing facility in Denver, Co.

Forecasting

The factors Seattle Fish Co. needs to consider in developing a forecast are their human capital, financial capital, sustainability of raw materials, and a competitive analysis of their marketplace. Human capital refers to supply and demand within the workforce. If it is the off-season, Seattle Fish Co. will have a lower demand for employees. If it is high-season, there might be a shortage of workers in relation to the amount needed. Financial capital alludes to the amount of money they are able to spend on certain types of seafood. Certain fish are more expensive, as they are harder to come by (e.g. halibut). The sustainability of raw materials is of huge concern to the company. Seattle Fish Co. is the only seafood wholesaler in Colorado with certification from the Marine Stewardship Council (MSC), an eco-labeling organization designed to ensure that seafood is traced back to a sustainable fishery. By using a competitive analysis of the marketplace, they are able to see what other fish wholesalers in the near area are providing and how they market themselves, as well as which markets they are targeting. Through this process, they are able to choose whether they want to compete or find a new market to enter.

The factors listed above form the basis for action. They dictate what the abilities to expand are; whether they should increase or decrease their Research and Development funding, concentrate on strengthening their balance sheet, open new markets, expand geographically, hire additional personnel, or invest in infrastructure.

The demand for fish in the general Colorado area is very seasonal. The winter season draws much tourism due to the skiing attraction. Some of the best places to ski in the world are located in Colorado, and is a popular tourist destination during the summer as well. As such, hotels and restaurants receive an abundance of customers which increases demand for the fish wholesalers. Volume reduces to half during the two off seasons.

Example forecasting equation: [(Week 1 usage) + (week 2 usage) + (week 3 usage)] / 3

Inventory

In order to maintain sufficient inventory, Seattle Fish Co. has to consider two main factors. Firstly, they must know when to order new product. Since their product is very perishable, the company orders and receives products seven days a week. Secondly, they must know how much to order. When Seattle Fish Co. places orders, they do not have firm commitments from their customers. As such, order quantities are based on historical data, a three point moving average, an estimated demand from previous owners, and input from representatives who aggregate portfolio demand. Based on these factors, Seattle Fish Co. has to consider any holding and shortage costs that are involved with ordering new product. Fortunately, holding costs are not high or fixed. Shortage costs are applicable, but there are substitute items available for out of stock items. The company does have significant costs in terms of spoilage, however. There are approximately $125,000 worth of spoilage costs a year. The absence of spoilage would indicate missed sales. Overall, the main goal is to find a balance between lost sales and spoilage. An additional factor that must be considered in terms of inventory is the cost of inventory management. Seattle Fish Co. has invested heavily in technology to minimize the cost of inventory management. An Integrated ERP system is utilized in order to allow for a high degree of customization, bill of material systems, and full transparency across the supply chain.

Sales and Operations Planning (SOP)

The main goal of SOP is to allow the operation to meet sales and inventory requirements and to do so at the lowest cost or the highest profit. As such, the company must know the balance of unused units that carry over from previous periods. Seattle Fish Co.’s balance of unused units varies from item to item and week to week. The goal is however, to have zero carryover from week to week. There are inventory and carrying costs associated, however. These costs include: cost of capital on inventory on hand, spoilage, yield loss, and cash conversion cycle. The company has additional costs based on seasonality as well. Their raw materials costs change based on season as seafood is a very seasonal product. Some seafood products are unavailable or very scarce when they are out of season. Mahi for example, when in season it is plentiful, good quality and inexpensive. Out of season the product becomes scarce, quality decreases, and price can increase 300%. Fixed costs do not change seasonally.

Additionally, the company must consider any issues regarding backorders in terms of SOP. Since the company offers a perishable product, their customer’s demands are immediate. As a result, their fresh process does not employ backorders. Rather, the company carries substitute products.

Supply Chain

The components of Seattle Fish Co.’s supply chain from the beginning to the end user are as follows: fishing vessel or aquaculture facility, primary processor or fishery, trucking or airline, SFC’s personal processing facility, SFC’s distribution vehicles, retail or restaurant, end user.

They select their suppliers based on due diligence, diversity of supplied fish, unique abilities, relationships, access to scarce goods, and price last. Through research, they are able to find the sustainability they require from their suppliers. They must ensure that their values align with those they will be working with. If a fishery or aquaculture facility does not offer a certain product SFC is looking for, they will have to go to a different supplier to find it. If a supplier can offer a shorter delivery period, they will be chosen over one who takes longer. If they have been working with a supplier for a long time and have developed a relationship with them, SFC will go to those with whom they have relationships because they have established trust, which is something new entrants cannot offer yet. Derek Figouera, COO, emphasized that price is the last thing they consider when selecting a supplier. He insists on their suppliers having just as high standards as them, and knows that that comes at a higher price.

One of Seattle Fish Co.’s main value adds is that they mandate traceability which is addressed by creating many SKUs to handle the various items. Difficulties include the sheer number of unique product codes, communication and education of each product specification, and poor initial communication of the expected specification.

To maintain customer satisfaction, Seattle Fish Co. operates as a true partner. They know their business, give exceptional support, are a resource, innovate and educate. They serve on boards and take leadership positions in the industry and create a niche that positions them as a specialty distributor. By creating a strategic philanthropic plan, which limits the charities they deal with and give materially to those few philanthropic organizations, they can make a dramatic difference, and exhibit a true passion for what they do. SFC inspects their products through continual visual inspection, daily statistical process control using contol sheets, and weekly laboratory testing. They use statistical process control as a sampling plan. SFC uses a push production system. Through technology, education, communication, their open culture, open system management, empowered and informed workers, use and review of metrics, they reduce a large amount of waste.

Challenges

Seattle Fish Co.’s main challenge in operations is keeping open and clear communication across all departments. They operate twenty-four hours a day, seven days a week, and that creates difficulty in ensuring that all team members are informed and aligned with and committed to a common purpose. While they operate mainly out of their 65,000-square-foot facility in Denver, Colorado, they have to be in contact with their fisheries/suppliers on both the East and West coasts of the United States, their delivery department, and all departments in between. As they are a company that highly values ethics, they constantly remind their employees of the environmental practices they promote and are part of, including the Marine Stewardship Council, the company’s “Green Team” which implements internal green initiatives, and hosting an annual sustainability conference to educate external stakeholders about sustainable fishing and products.

The key to success at Seattle Fish Co. is their relationship and partnership with their customers. As they supply to restaurants and established entities as opposed to individual fish-eaters, they are able to develop rapports with those to whom they supply and offer them a service unparalleled. It is a dynamic business, with scarcity and uncertainty of raw materials, and high perishability. The ability to understand the customers’ needs, fulfill those needs, and build essential trust with them helps both parties succeed.

Derek Figouera spoke of the future of the company as more diversified. He insists on still concentrating on core competency of seafood while having developed alternate sources or revenue based on this core competency. These alternative sources of revenue will be synergistic, low cost, and relatively low risk. In addition, they are considering E-commerce, value added, leverage for their distribution infrastructure.

Bibliography

Figouera, D. (2011, November 30). Telephone interview.

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