Eric Galkin Of Paris Baguette: How We Are Helping To Create A Resilient Food Supply Chain

An Interview With Martita Mestey

Transparent food holding regulations. This includes how it’s designed, how the temperature is displayed, the inclusion of things like sneeze guards, buffets, rules regarding whether or not customers touch certain items and a range of other regulations.

The cascading logistical problems caused by the pandemic and the war in Eastern Europe have made securing a reliable supply chain a national imperative. What must agriculture companies and policymakers do to ensure secure and resilient food supply chains? In this interview series, we are talking to business leaders who can share insights from their experiences about how we can address these challenges. As a part of this series, I had the pleasure of interviewing Eric Galkin.

Eric Galkin was recently promoted to Chief Supply Chain Officer for Paris Baguette North America bringing with him thirty years of proficiency in high-end procurement and supply chain operations. He spent the last three years as VP of Supply Chain Management successfully solidifying the strategy to help the organization reach its goal of 1000 cafés opened by 2030. In 2019, he was appointed Director of Corporate Procurement at OTG Management, overseeing 200 unique restaurant and bar concepts in 10 of the high-volume airports in the US and Canada. Prior to that, he spent 5 years as Senior Director of Purchasing at Delaware North’s Patina Restaurant Group focusing on award-winning culinary innovation at such iconic locations as Disneyworld & Disneyland, Rockefeller Center, LA Music Hall & Lincoln Center. Other key highlights of his career include being named Max Brenner Chocolate Bar’s first global supply chain & purchasing director for over 60 franchise & corporate locations in seven countries. He spent six years with pioneer ‘farm to table’ distributor D’Artagnan Inc. leading procurement and importing operations concentrating on sourcing and co-packing partnerships with local family farms. He earned a BS Sociology from Syracuse University in 1995.

Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you. Can you tell us a bit about how you grew up?

Born and raised in New York City, in Manhattan, on the Upper East Side, my experiences are quite unique. Most people I meet say, “Oh, wow. What was it like growing up in New York City?” It was always home, so it didn’t feel different or unique to me at the time. However, as I’ve gotten older, I can look back and see the influences of the city on my life and job. Certainly, from a fast-paced environment, my earliest days of supply chain involved trucks making deliveries, double parking, honking and the process of small stores in a super-dense area managing to get products and sell them to the consumer, which is very different from the suburbs where there is more space.

From a business case standpoint, it was certainly more unique than any other area or region. As I’ve gotten older and been based out of the New York City area, I’ve realized there is no other area within the country that operates like this tri-state area from a distribution standpoint. When we look at distribution models and logistics throughout the country, New York City has to be handled completely differently. It costs more money to do business here, and the expenses of drivers, trucks, time and space mean the cold chain really needs to be worked out ahead of time. You can’t apply any other model here.

Can you share the most interesting story that happened to you since you began your career?

Going back to my roots in New York City, I gained a passion for food. The different types of cuisines and cultures really kept me interested in how food is consumed, how it is cooked, how it’s showcased and how it’s marketed. This interest is really what gave me this background in food and into procurement.

As my career has progressed, I’ve tried to get involved and learn all different aspects of the supply chain, from procurement to manufacturing, co-packing to importing and operations to distribution. To me, it’s the continuation of learning and wanting to understand all aspects of the supply chain that makes me more knowledgeable and a better buyer. It also helps me have compassion for all the people in different positions within the supply chain, to understand their jobs and their challenges. If I can understand that, I can react a lot better in my job when problems do arise.

You are a successful leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

You have to start by being honest, and you have to do what you say you’re going to do. Examples of that are meeting suppliers and maintaining relationships every single day. You have to be honest and connect on a day-to-day basis. You have to follow through. If you can’t do that, you have to communicate that you are not able to do so.

Another important trait is being direct. I try not to waste much time. We are all super busy, and being direct in contact and about needs and wants is crucial so that the other party does not get the wrong idea and fully understands your goals as well as the endgame of the potential relationship.

Finally, I think having a good sense of humor is important. Not taking yourself too seriously at the end of the day breaks a lot of tension. It breaks the ice and helps you connect with people when you can step away from your own character and make fun of yourself or the situation.

Are you working on any exciting new projects now? How do you think that will help people?

Seventy percent of the goods that we sell at our cafés are proprietary materials that Paris Baguette sources, manufactures and distributes. We currently operate in a self-distribution mode for these goods. One of the most interesting things we’re working on now is being able to distribute a lot of our proprietary goods through our broadline distribution relationship. This will allow our cafés to receive our proprietary goods more often than they are currently, and at a reduced cost as their freight costs will be driven down.

At the top of the list, as an organization, we are looking at manufacturing domestically, which will drive down costs as well. This will insulate us from many geopolitical issues that cause freight to be very expensive and importing timelines to fluctuate. We will be able to manufacture more just-in-time, and our inventory values and levels will start to come down. Thus, our cost of goods will start to decrease, and we will be able to pass those savings along to our franchise operators.

Ok super. Thank you for all that. Let’s now shift to the main focus of our interview. To ensure that we are all on the same page let’s begin with some simple definitions. What does the term “supply chain” encompass?

In its simplest terms, the supply chain involves materials for manufacturing that are distributed to the end user on a day-to-day basis. It answers the question of: How do we move materials and goods on a day-to-day basis to be consumed by the end user?

Can you help articulate the weaknesses in our current food supply chain systems?

There are challenges certainly within North America with trucking and logistics. An aging population of drivers is driving costs up. Uncertainty with fuel and the conversion of trucks from gasoline to electric and what that looks like are also challenges. We can go as digital as we want, but at the end of the day, a truck and a driver have to deliver our products directly to the store, and we still have to solve those challenges.

Density within our big cities (like Manhattan), costs of doing business and congestion pricing are making last mile delivery more and more expensive. We still have to focus on last mile delivery because it’s never going to go away. How do we take that to the next level in terms of innovation on the last mile side? I see that as a challenge and something that we need to find a solution for.

Weather is always a huge supply chain impact. In the cold chain, weather is a huge issue, and upgrading the technology and the infrastructure of our third-party warehouses to ensure that the cold chain is maintained for food safety is crucial. Geopolitical issues with ships and container freight, along with fluctuations in costs within the supply and demand of container freight rates, continue to be an issue on a monthly basis for us.

Can you help define what a nationally secure and resilient food supply chain would look like?

Resiliency doesn’t mean mistakes don’t happen. To me, resiliency is about being able to bend, not break. Where we sit today, post-COVID in the supply chain, I think we understand that issues are going to happen. Problems are going to happen. We’re aware of them. How do we become aware of them earlier in the process, so that we can find a solution for them or have a backup scenario so that the supply chain doesn’t completely shut down? When we talk about resiliency, we want to control the controllables. We want to make sure that we are going to manage everything in our power to understand what could go wrong in any situation, from procuring materials to manufacturing delays to shipping delays to customs and port delays.

It’s about understanding each step in the supply chain and where delays could happen, understanding those scenarios ahead of time, and finding second and third options in case things do go wrong. What COVID taught us is that we can’t be in a just-in-time inventory situation anymore. We need to hold more safety stock to cover delays at all times. We need to have backup suppliers so that we are not relying on one supply chain all the time. We need to build in extra time within lead times. It costs us more money — a resilient supply chain will cost more money — but the investment is necessary. If you don’t make the investment, you’re putting your business at risk of not being able to generate sales and continue to grow.

A resilient supply chain includes investment from the company within the supply chain model — the investment in technology, the investment in forecasting tools, the investment in AI for demand planning and forecasting. It’s the investment in people, in resources within your warehouses, in warehouse management systems and in tracking inventory. The resilient supply chain includes investment, in short, to make sure that we are insulated from anything that could potentially go wrong.

Can you share with our readers a few of the things that your organization is doing to help create a more secure food supply chain?

We are currently looking at RFID [radio frequency identification] technology within our manufacturers so that all of our cases are labeled with RFID. This technology is going to help us from an inventory standpoint and from a traceability standpoint when goods get to North America, so that all cases can be traced from manufacturing to the café, for using that product and cooking that product. RFID is a big problem that we are currently in the middle of working on from a food safety standpoint as well.

Along with RFID technology, we are making sure that all of our suppliers have accurate case labels so that we can trace those cases from manufacturing to the café level. If there’s any issue with a food quality issue or food safety issue, we know where all those cases have been through the food chain. We also track all temperatures along the cold chain, from manufacturing to third-party storage to trucks to the café freezer, to make sure that those cases are at the proper temperature throughout the supply chain.

What are a few threats over the horizon that might disrupt our food supply chain that we should take action now to correct? Can you please explain?

I think weather and increased temperatures are a threat. The electricity power grid would be affected by hot temperatures, cold temperatures and wind. In order for our food to stay safe within our warehousing and our cold chain, we have to make sure that the power grid is strong and there are backups within those power grids. Using suppliers and third-party warehouses that have those features is going to be super important to keeping the supply chains safe for the consumer.

Another concern is labeling. Laws are changing all the time and, as an industry, we have to make sure that the regulations are very understandable and clear. Today, we have a lot of municipalities that have different laws. It could be within a state, but I think that hurts us when there are changes from county to county about how long food can sit out, how it is packaged and what is on the label. Building up to some sort of national system that has clear and consistent regulations that everybody can follow would make things a lot easier for the consumer to understand what is in their food from an ingredient and nutritional standpoint.

What are the “5 Things We Must Do To Create Nationally Secure And Resilient Food Supply Chains” and why?

1. Transparent label regulations. They need to be clear and traceable.

2. Transparent food holding regulations. This includes how it’s designed, how the temperature is displayed, the inclusion of things like sneeze guards, buffets, rules regarding whether or not customers touch certain items and a range of other regulations.

3. Robust infrastructure. The energy grid within the United States needs to be strong enough to support warehouses and cold chains. There needs to be backup systems in place and enough energy to support those systems.

4. Trucking regulations. There need to be clear records on the age of the trucks — how they’re working, especially in terms of their refrigeration with transparent temperature logs, as well as the driver logs of hours. Trucking companies and independents can’t simply shut off their refrigerators to save gas and money, because that can potentially hurt the product.

5. Improved importing processes. With borders and customs, the regulations need to be clear and robust before items can be allowed into the country. We’ve got to put more investment into increased border patrol so that more products and goods are thoroughly checked and tested to make sure the food we are bringing in is safe and the ingredients are accurate to the label.

Are there other ideas or considerations that should encourage us to reimagine our food supply chain?

When it comes to our infrastructure in the United States — our ports and our roads — I don’t think we’ve dedicated enough space, room and technology to the distribution of food items through North America. We have a rail system that is underutilized and technologically has not been invested in for many years. There are other countries like Canada that rely on their rail systems very effectively and at a lower cost.

I think if we had to reimagine our food supply chain, we would put more investment in technology into our rail system. Getting the food off the roads would address issues with transport time and temperatures. We’ve got an aging population and should switch to a supply chain that relies on rails, which would be cheaper, more efficient, less labor-intensive and safer.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

One thing we haven’t talked about is food waste. I think there’s so much that is grown and manufactured not to specification that could be put to use as seconds and thirds and “ugly” items. There’s nothing wrong with them; really, there’s a market there. What happens now is that it is not cost-efficient to be able to harvest those items, reuse those items, manufacture those items and distribute those items because the fixed costs are still the same. Whether it’s a number one specification or a number three specification, you have to sell it for less.

We need to find a way to market and reuse waste from manufacturing back into the supply chain for people that need it and can’t afford it. Or we could find a way to export to countries in areas where there are widespread hunger issues. I would love to be able to find a way to take those items and repurpose them. There are companies out there that are working on this, but I think they are marketing to the same group of people that buy the number one products. If there’s a discount to it, how do we take that and get it into the hands of people that need it?

At the end of the day, it’s got to be a win-win situation. The producers still have to be able to make a profit on it. They have to be able to pay to distribute it and get it into the hands of the people that need it, and somebody needs to pay for it. I think that’s where the challenge lies. At the end of the day, it’s about who is going to pay for that sort of subsidy. There is enough food being produced that is getting thrown away, and we need to find a way to get it into the hands of people that need it.

How can our readers further follow your work online?

They can follow Paris Baguette North America and follow us through all the cafés that are opening across North America. Our goal is to have 1,000 cafés by 2030, including Canada, and we will be moving into Mexico shortly. Customers can try our amazing products, which we produce daily and that make us unique in the marketplace. We bake on-site at our cafés every single day and do not use a commissary system.

Partners, we do not have our own commissary. Everything is done within the four walls of our cafés every single day, ensuring a super fresh experience. We’ve also just partnered nationally with Feeding America, so all of our products that are not purchased on a nightly basis are now being donated. Thousands of pounds of food per year at each café are being picked up and brought to people who need them, creating a win-win situation for everyone.

We’re super excited to be able to share these programs in each of our local communities and with our partners through Feeding America nationally.

This was very inspiring and informative. Thank you so much for the time you spent with this interview!