Executive Spotlight: Dessi Zaneva, Director Strategic Sourcing, Panera Bread
SCS: Tell us about your background and roles that you've had and how you got to where you are now.
DZ: Like many people in our industry, I fell into it almost by accident. Going into college and even going into grad school after that, I never thought of supply chain or food service as the career I will end up in. But, looking back on it I'm very lucky that it is where I am
I've been in the foodservice industry since I started as a hostess when I was 16, then waiting tables, and bartending. I took a gap year after college and waited tables and bartended in Athens, Georgia (GO DAWGS), and got a little bit into inventory management of the restaurant that I was working at, Johnny Carino's.
After grad school in 2011, I was looking for a job and wasn't fully sure what I wanted to do. However, during my search, I saw a posting on LinkedIn for a Forecasting & Promotion Management Analyst at ARCOP and though I didn’t fully know what I was getting into, I was excited to be back in foodservice. During the interview process, I found out that my hiring manager at the time actually had known someone in my MBA program and she knew how intensive that program was. This gave us an immediate connection and though I did not have significant foodservice or analytics experience, I was hired into the ARCOP family. I was in that role for about eight months before I realized that as much as I love analytics, crunching the numbers and projections, I really missed talking to people. So lucky for me timing was on my side, someone on the procurement side at ARCOP was leaving. I took the chance to talk to the hiring manager and to my manager and moved over to procurement about eight months into my career at ARCOP.
From there it's been a very exciting journey for me in the sense that I’ve been fortunate to both have been in the right place at the right time and also having developed professional relationships. More than anything, our industry is based on relationships. It's based on relationships between counterparts, procurement/sourcing professionals, and our suppliers. Overall keeping good relationships and making sure that you're continuing to grow those and staying in touch is key.
My next step was based on taking a risk as well. One of my counterparts at ARCOP had actually gone to NDCP, the Dunkin’ Donuts Co-op, when they moved to Atlanta, and for about six months he was pushing me to go talk to them. Eventually, I said, "All right, well, I guess I will just talk to you. Why not?"
That resulted in me leaving ARCOP and going over to NDCP. It was a big leap of faith because it was a newly established co-op and I was joining something from the ground up. But I took the chance. One of the biggest takeaways from my four years at NDCP is to face risk, and be comfortable with ambiguity, and take on challenges. When I look at my progression at NDCP, I was given a lot of opportunities to touch multiple categories that were new to me and then manage and develop a team for the first time.
After four years at NDCP, Panera reached out to me for a new opportunity. Panera has always been one of those aspirational brands for me. I feel my first two brands, Arby's and Dunkin are both very iconic, very well known. But when I thought about where I really wanted to go next, Panera was one of the places for me.
There are moments in your life where you will always remember where you were. The career moment I will always remember is when Panera released their No-No list. I will never forget sitting in my office in Atlanta at NDCP and all of a sudden we got the alerts that Panera was coming out with a No-No list. It was groundbreaking at the time and we all knew it was going to lead to a significant shift in the way the food industry and our food offering worked, and that really stayed with me. So when Panera knocked on my door, I had to open it. There wasn't a moment of hesitation.
Panera's been on quite a journey over the last 30 years. We've gone from a founder-led company led by Ron Shaich--who is one of those people, at least in my mind, with a Midas touch; solid intuition, and an innovation forward mind. However, when Ron left and our new owners, JAB took over, Panera had grown to 2000+ units and the type of leadership structure could not be replicated.
Today we have an amazing CEO, Niren Chaudhary who joined us about two years ago from Krispy Kreme International, and he has done a tremendous job building an executive team of industry leaders and improving Panera’s culture, guest approach, and simplifying operations. The Supply Chain Team at Panera has grown exponentially and developed new capabilities over the last year under the leadership of our Chief Supply Chain & Manufacturing Officer, Gregg Waterman who joined us in January 2020 our Chief Procurement Officer Roland Ornelas, who joined us in March 2020—a few weeks after the pandemic started.
Our core values of clean food that is good for you will always be at the heart of what we do, but now it's time to also show our guests that we have crave-able, delicious, and affordable offerings. Our GMs are our number one leaders and everything that we at the support center do is to help them lead our cafes.
SCS: You mentioned moments in your career where you'll never forget where you were and I thought for sure you were going to talk about COVID, that other sizable career event. What did that event mean for you in your role at Panera?
DZ: I just circled the one-year mark on my last work trips. I remember I had just gotten back from AFFI-CON in Vegas and had a trip to Boston for culinary innovation and collaboration. The hotels were empty, the streets were emptier, and this is before any lockdown. All of a sudden hand sanitizer was sold out and there was an eerie feeling in the air. Lockdown was nearing.
When I got back in the office we shut down within a day—everyone take your equipment and don't come back to the office. We all thought at the time it was going to be a two or three-week thing. Now, we’re not projected to go back to the office until later this year (2021). I have to commend Panera on all of the precautions and how careful everyone is being both at the corporate level, but even more so at our cafe level and our front line associates.
We're very fortunate to have two offices (Boston and STL) and communication technology had already been heavily utilized. With that already in place, we were able to stay connected and see each other, though not in the same room. Thank you to our IT team, who made the adjustment easier and kept up the technology that helped everyone stay together and connected.
Looking at our operations at that time our sales were hit harder than a traditional QSR because of our business model, and fast-casual concept. At the start of COVID, about 30 percent of our cafes had an existing drive-through. So that immediately limited our ability to get food to the customer with minimal or no contact. We did have our rapid pickup, but that requires you to go inside, and with dining rooms closing we weren't able to do that. Within weeks, our organization pivoted and enabled innovation to solve for this both at the café level and support center. We established curbside pickup and geolocation for quick service, leaned in on delivery partnership, and adjusted our menu.
From a supply chain perspective, sales were down and our teams were all hands on deck—monitoring and mitigating inventory positions and ensuring quality, as well as tough conversations with our partners. We would not have successfully made it through without our partnerships and our supplier partners. We had everyone on the ball trying to juggle production needs, minimize obsolescence both on raw materials going into our supplier's plants, and minimize obsolescence on our finished goods in our DCs and our cafes.
One of the things that come along with "clean" is shorter shelf life. We don't use preservatives in our food so there's no luxury of a year plus shelf life on the majority of our items. This is where those relationships with our suppliers come in because that's the only way to be able to mitigate the risk. We weren't saying to our suppliers, hey, we want you to take care of all of this. We took the responsibility for what we could, but we also asked our partners to take responsibility where they could and mitigate risk as they were able to do through their channels. We are in this together.
Panera also did a lot of work with Feeding America. We donated a lot of goods onto that platform so that we weren't throwing food away. Our motto is “One Panera for a Healthier, Happier World” and that includes in café and outside operations. There were a lot of people without easy access to food, and that's where we were able to swiftly move our supply chain and pivot to support.
While part one of COVID was to stop production and mitigate risk, the harder part was yet to come. The few months following were in limbo without any idea what demand was going to look like. We were trying to figure out how to direct our suppliers on production, trying to exhaust inventory, working with our QA team to extend shelf life where we could. It was months of craziness and long days, but our priority was to make life easier for our GMs.
As mentioned earlier, our GMs are our number one leader—they are running our cafes, making sure the guests are coming through the door and leaving satisfied. And in order to do that, you have to have very clear communication of what is available.
Part of simplifying operations for our GMs and mitigating inventory risk came in the form of a limited menu. We used the opportunity with COVID to eliminate some slower selling items that in another situation may have taken us longer when it comes to testing. COVID has been tough, but we used that time to simplify our menu, streamline our operations and make sure that we were still focusing on our core—soup, salad, sandwiches (and flatbread!).
SCS: As a side note, one of the things that I remember very vividly is going to Panera for a gallon of milk when your cafes were selling groceries and our local stores were emptied out.
DZ: I cannot believe I almost forgot about that! That program is a great example of the flexibility and innovation that took place within Panera in order to answer our guests’ needs. Standing up the Panera Grocery program was a truly cross-functional effort --from cafe operations, IT, supply chain/QA (apologies on anyone I am forgetting—it truly was everyone!)—all hands on deck!. Along with milk, we sold some fruit/vegetables and some finished goods that were a need at the time, and yes, did help mitigate some obsolescence risk. But more than anything, store shelves were empty. People were struggling to get basics like milk and bread, and we had them and wanted to share!
SCS: For Panera Curbside, people needed the mobile app, which was forced adoption for mobile ordering. With the technology at the store level, what was happening on the procurement and the sourcing side?
DZ: Well, we're growing and we've been at the forefront of technology innovation for our guests and our cafes. Supply Chain Technology is one of the ongoing improvement opportunities that are a key part of our development journey and we're constantly working on improving it.
We have an inventory management and visibility platform that our supply management team uses, with our third-party logistics partner. This provides us a live feed of DC inventory, café purchases, and even in some cases supplier inventory. That gives us live feed visibility into our inventory on about an every twenty-minute delay within our distribution centers. However, when we talk about planning and forecasting work, a lot of that is still taking place in Excel. That meant a lot of firefighting—a lot of phone calls, a lot of hands-on work, a lot of communication on how can we get it done.
However, through the craziness and stress of COVID, our senior leadership team has invested to really grow our Supply Chain group—strategic sourcing, supply management, QA, and project management teams. A year ago, at the onset of the pandemic, we were shorthanded. The Sourcing function consisted of five resources managing our entire spend across food, beverage, packaging, and produce. We didn't have a lot of extra time to set aside to think, what systems do we need to improve but were rather thinking about what can we do better with the resources we have and manage day-to-day. Fast forward about eight months, and we have brought in a lot of talent and built out our strategic sourcing team to about fifteen people and we are at the point exactly where we're thinking long term and asking, now what are the tools that we need? Supply Chain technology is just one part of our ongoing improvement journey.
SCS: What about commodities?
DZ: We cannot talk about current headwinds without addressing commodities. About 60 percent of what we manage is driven by or directly affected by a commodity. Obviously, within that, there are things we can and can't control. COVID has created an additional challenge with shifting world demand, coupled with a few good recent years and now here we are facing an adverse situation for the rest of the year and beyond.
Our team has done a good job of planning proactively and taking coverage appropriately, we're not in the business of beating the market. We obviously want to be favorable to the market, we want to have our plan and spend secured, but more than anything, we strive for certainty. Some of the key commodes we are monitoring are wheat, grains, oil, protein. Flour makes up a huge part of our business—we are Panera Bread after all—and we have a very niche protein supply. Anything that affects those markets will affect our supply even more than other buyers.
Growing our strategic sourcing team enables us to develop category and commodity experts and dedicate more active time to commodity management along with planning and strategy. So we are monitoring current positions very closely and proactively planning for 2022. Price security and meeting our financial plan is key, however, supply availability will always be our number one priority.
There already are signs that as we go into the latter half of 2021, rising commodity prices could be coupled with tight supply. The industry feels there's pent-up demand for people to go back out in the world and do "normal things" and we believe the second half of this year is going to show an increase in foodservice demand, increased traffic, and transactions. We want to make sure that not only is Panera prepared for this uptick in demand but also our suppliers are prepared, and our suppliers’ suppliers are prepared as we face this together as well.
SCS: What challenges do you see for sourcing and procurement in the next three to five years from your point of view?
DZ: The industry and consumer preferences will continue to change and test all of us, technology will be our biggest help and challenge. For me, there are two key defense strategies as we approach this—adaptability and maintaining relationships. Adaptability to quickly shift focus as and when needed; and growing the internal, external, and industry relationships we all have. The last year has shown us that we collectively have to be able to shift priorities—production, distribution, promotions, off-premise. Panera has also been one of the most adaptable and quickly reacting companies I’ve had the privilege of working for—introducing our new Flatbread platform to respond to our customer's off-premise needs; answering the delivery need by joining forces with 3rd party aggregators and setting up our curbside pick-ups are just a few of the examples from the last 12 months.
I've had the privilege and the ability to develop relationships with a wide group of suppliers across all of our categories over the last few years, and have to thank all of our partners for the hard work over the last year. As sourcing professionals and account managers, we both have the common goal of growing our businesses and growing them together. That partnership in both good times and the tough times is a key part of why we were able to come out of the last 12 months successfully. So, I think what is so important going forward is really to grow that interpersonal communication and interpersonal skill.
I also have to give a huge shout-out to the way our industry organizations have shifted and adapted to this virtual world. For example, John Barone's MarketVision in the fall did a tremendous job embracing the virtual world and keeping us together. While we may not be in the same room, staying face to face as much as we can even though we physically distant has been a way to make us feel more connected.
SCS: What advice would you share with people who would like to get to where you are in supply chain?
DZ: You have to be able to be flexible, adaptable, and a calculated risk-taker. The things that may have worked last year are not the same as what works this year, but staying focused behind a common goal is key.
It's also very important to have a good network of support. If I look at my career where I am, I would not be here without the people that have guided, supported, and challenged me along the way. To paraphrase something I’ve often heard from an industry peer, Kristy Kingery, once you start climbing the ladder, always have a hand reached out behind you to help pull the next person up.
I'm very passionate about the next generation of supply chain professionals coming up behind us. My advice is to surround yourself with mentors, with people that will not hesitate to tell you the truth, both on the personal development side and on the professional development side. Find leaders or industry counterparts that will be there, and who will offer their experience and time to help you grow. Take and cherish feedback as it really is the most precious gift.