Marty Schoch, B&G Foods & Michael Atkin, Prosperous AI

Oh, feeling great. It came up as an opportunity where the incumbent of quality, insurance, consumer affairs, and R&D packaging got another opportunity somewhere else, and the CEO knocked on my door and said we want you to take this responsibility over. We think you're qualified, we think you can handle it, and bring optimization to that role. Based on your last two years of experience as a Senior Vice President and cleaning up that responsibility from the previous, we look forward to promoting you to Executive Vice President of Supply Chain and taking these 275 people under your wing. So that's the new group that I have, and I'm looking forward to reorg and optimizing and giving clear direction.

Sure. You have to go back to the year before that, in 2021. We had a new CEO join, his name is Casey Keller, it's public information. He's been leading B&G Foods since June of 2021. I had the unfortunate news to tell them that inflation was up double digits, hundreds of millions of dollars. Building that relationship and understanding where we are and navigating supply chain issues really challenged me and the organization to perform against some of our big peers like General Mills, Conagra, anyone that has a significant competitive edge against our small procurement group. There was a hostile work environment unfortunately with some of the individuals managing the operations on the supply chain, inclusive of manufacturing, warehouse, distribution, and capital. Over that year, from June 2021 to basically June 2022, I worked with the CEO, the ELT, and the board members because I was brought in as a special guest to talk about all the risk going on in the organization. They understood that I was straightforward, didn't sugarcoat anything, gave them the pros and cons of situations and what we were doing to fix these problems. We have a meager team of 12, so they're on other boards, they run other companies, they've been hearing this, and they thought I did a pretty good job during that time of crisis. So they wanted to go in a different direction and promote within. We were restructuring the org into BUs versus a centralized kind of operation, so Casey tapped me to become the head of supply chain in August of 2022. One of our biggest problems was in the S&OP process, where our bias and forecast accuracy were way below industry standards. Today, over the last two years, we have made incremental gains in those respective areas to be world class. Forecast accuracy of 80% or higher, we were in the 60s when I started. We weren't making the right stuff or putting it in the right place. We had a lot of O&D costs, our transportation costs are down because we're not shipping product from this distribution center to that distribution center to fulfill orders. The engineering process was functioning well and understanding what our capital needs per plant were. There was a lot of hostility in the presentations being put forth prior to that. We standardized the practice, got alignment with the ELT members, and now if we need something, it's quick, there's an approval process versus it would take three or four weeks to get an approval. We've done more work on the due diligence side. We've lowered inventory by over $150 million. Going back to the S&OP process, I can't procure enough materials or have the wrong ones, finished goods we have too much of and it ages out. Plants don't know what to run, contract manufacturers don't know what to run. We straightened all that out, and as a result, inventory is down, which is our working capital, huge important especially in this interest-bearing world. O&D costs are down in half, our customer fines are down in half. All these metrics you would want to be associated with to say a supply chain is functioning at a world class level. We've been trending in that direction over the last two years, and as a result, I think it was the basis of the conversation like I can do more. I stated it openly to the CEO: I can do more for this company, you just got to give it to me. This opportunity came up and now he's giving it to me.

International sourcing for both raw packaging and finished goods. We also have an external manufacturing network of 75 contract manufacturers that provide finished goods for us so that we don't have the capacity or the technical skills or the equipment to run those types of products, because we've done a lot of M&A over the years. About your point about asking, I wasn't an S&OP expert. I never done S&OP before. They gave me the responsibility, so it was my job to figure that out, associate with other peers that have done it and organizations to say, okay, what does best in class look like? What are we looking to do here? Then put the right people in place within our organization to help drive those results. That's really what's taking place. I've worked with quality over the years, I've done audits, I've done food safety audits, but have I schooled in that? Have I grown up in that for 20 years? No. But can I bring stabilization to that group? Yeah. Can I give them clear direction? Surely can. Can we then look to go to be world class? Yes. Food safety is always the most important thing, just along the lines of employee safety. We do take it very seriously here, and that's another one that we've driven to world class numbers. Over the last three to four years, we've not had some issues in our manufacturing facilities where employees were getting hurt. Can't have that. Going back to what you mentioned earlier, am I an expert in S&OP? Not necessarily. But it's a great leadership and growth example. I'm not great at it, but it doesn't matter because I have the skill set to take on something that I'm not comfortable with at the moment nor do I know the most about, but I have the skill set to go and figure it out and learn and then later utilize that application. It's old history at that point. I think it's important to outline those kinds of things when you're trying to grow and climb the career ladder. Do I know everything about what this new job is going to require of me? A lot of it, yeah, but not necessarily 100%. But it doesn't matter because everyone is under the understanding that I can go and take care of it and figure it out and still be impactful in a positive way and keep the direction and trajectory of having a world class supply chain going in the correct direction.

I've hired up. I have people that are better than me in procurement, I have people that are better than me in warehouse and transportation. I know that I'm a jack of all trades more than a specific person in a specific trade. Hiring people and then giving deliverables and objective goals, they know how to thrive in those environments and they're empowered to make those decisions. I just keep them on task, let them know what's going on with the company, and be the guy that helps fix problems for them that they can't fix themselves. That's a huge part of it. Knowing what your skill set is and then how do you make sure that you have the right team in place.

I would say probably in the last six to nine months. Once the team was put in place, the numbers were coming in the right way we expected them. The best part is when you know you're doing well when you know you're meeting with your boss maybe once every two weeks. I have access to the CEO whenever I want, he has access to me 24/7, we're not talking to each other, it's great. I was involved in the strategic vision of the company 100%, even as an SVP. But at that point, I knew my teams were doing well and I started diving into other areas, whether asked or not, because I saw weakness or things that weren't functioning well enough for my liking because they made conflicts for the other groups. I was talking to the customer service team, or I was talking to the food safety team having struggles, and I would ask how I can be a conduit to their success. That's where I started saying, listen, I can do more. I can do more, Casey. Just planting seeds where possible to make sure that when the chance arose, they'd say Marty's been beating my door down, we should definitely give him a shot. Also building a network of other partners that said, yeah, Marty, I think you could do that. I started networking with other executive leaders or officers of the company and saying, listen, I'm thinking about this. They'd say you have my support. It's not politicking, but just to say, you think I could go in this area? And they're like, absolutely. My role as an Executive Vice President now is supposed to be more strategic. Granted, this new responsibility of quality and insurance, I want to make sure it's on the right trajectory. We have roles and definitions set, and everyone knows what they're supposed to be doing. Unfortunately, there's a lot of feedback, unsolicited feedback, that I've received from other parts of the company saying this is not working, can you fix it? So we're going to do that. That's probably going to take 90 days, maybe six months, depending on if people don't like the trajectory or are too complacent. I don't want to be complacent here. If you don't want to change, then you don't belong here. Depending on how that goes, I would then potentially look to start saying, okay, what are we doing farther down the line? The company has very strategic goals they want to accomplish over the next four months that will also consume a lot of our time, but we do want to get back to growth, and that means M&A stuff down the road as well.

Thank you.

It's interesting you say that. I graduated Seton Hall in 2001, right before 9/11. The way I was brought up was to be either a lawyer or a finance guy on Wall Street. I chose the finance route initially. However, straight out of high school, I went to this company called BDI Laguna, which was a small consumer electronics company, distribution company, $50 million in sales, totally manual. They were taking orders and delivering them into New York City, and they were starting to eventually work with Amazon before Amazon got enormous, fulfilling their orders. I worked for that company for seven years, four years during when I went to Seton Hall University for my finance degree. I did such a good job of filling gaps in the summertime that they were like, just work during the school year. I started in the warehouse, started doing delivery, started doing inventory management, then all of a sudden I went to invoicing, bank reconciliations, and literally went through almost every aspect of that company in some capacity on the operations side, whether it's EDI, IT systems. I thought this was pretty cool. It seemed like I could talk to the different parties that were part of the organization. I could talk to finance, I could talk to IT, I could talk to purchasing, I could talk to the warehouse managers. They really taught me that there's no one siloed, you can do anything you want here. If you have time, you want to hang out with us and learn about this, be cool. If you guys need help in the warehouse getting orders out the door, the salespeople would come downstairs and help ship them. When I started, it was $50 million in sales, it was $350 million in that seven years in revenue, huge organic growth explosion. In my case, I wanted to learn more about the supply chain because I was involved but I didn't know much about purchasing. There wasn't really an opportunity there, so I decided to go over to Manischewitz, which is another consumer food company but was a self-manufacturer. They had three manufacturing sites, also 100 contract manufacturers, and totally antiquated, nothing automated, no EDI, nothing. I worked my way up there through attrition. Going back to, well, this guy was let go or he left, I'll do that job. I put my hand up, and the next thing you know, you're learning a lot about purchasing and how the materials flow in and out. I just said, you know what, I think I'm going to be a supply chain guy. I started doing other things. Then I had a big consulting firm come in at Manischewitz, AlixPartners, out of Chicago. They thought I was great at managing all these different responsibilities, so they promoted me to Director of Supply Chain. I managed that for a year and a half while I was there for five years. I got my MBA in management because I like managing people and developing them. Just like the CEO took a chance on me three years ago to be the SVP of supply chain, in 2008 I decided to go to interview here at B&G Foods. My spend there was $60 million and I was going to $250 million in spend. They took a huge chance. I only managed at that plant like one self-manufacturing plant and like 100 co-packers. This was five plants, 38 co-packers, much more diverse. No staff, like one full-time person, one part-time person. They said, we need you to fix this for us. I was like, this is a four-time scale job. I said sure. What they saw in me and what I saw in the company is that if you have the right mentality and drive, you'll be successful. That's what I did. In scale, it didn't look the same like, oh, he doesn't have that much responsibility, but I beat out people that had 30 years experience, 20 years experience for this role just because I knew so much about the business that I was managing. They were dumbfounded by that. They wanted me to come in here and have that same drive. That's what we did. I started in procurement as Director of Procurement. The first year alone, I changed 70% of the vendors that were up for contract and reduced cost. It was a steady like that for probably the first three years, and then again it started being asked, hey, can you look at this? Sure. Can you do that? Sure. Never said no.

Yeah, so that's how it kind of started, and I just ended up staying here.

Correct. One thing, I had four CEOs in five years at Manischewitz. Doesn't help. For you now, you got to build a relationship with every CEO that comes in there. I started building them, and they kept moving me up. It's just about delivering against objectives. It's not argumentative at that point. You want us to do this, fine, we're gonna go do it. You want us to do that, we'll go do it. That company told me a lot of what not to do in business because they were not successful over those four or five years, obviously changing CEOs out. That allowed me to say, okay, the consumer electronics company did this really well, Manischewitz did this really well. I got both visions and I learned from both of those to apply my trade to B&G Foods and say how can I drive against that? I've had since I've been here, now I'm on my fourth CEO, and I've managed to continuously move up with all of them.

They had suppliers that were overcharging us for products and services. In my thought process, you never know who you're going to cross down the road. We were buying companies over the next 15 years that I didn't want to damage relationships. Even though I knew you may be ripping us off with a contract, I would wait until that came to expiration to let you know, because one, I need you to deliver on the current products, two, I don't want to damage the relationship, and three, I'll give you the benefit of doubt that this was negotiated in good faith with the previous guy. I honor contracts, I don't break them for anyone unless you're screwing me over. When those contracts were up, yeah, we changed 70% of the vendors. Those contracts were up, but we saved like 10% of our costs in the first year.

This is public knowledge, I'm not sharing anything that's not. The guy before me was price fixing. It's public knowledge if you ever look up the SK Food Scandal, we were part of that, B&G Foods. I was brought in to fix that because they didn't really know how deep it went. Not to say that these other vendors were bribing him or not, I don't know any of that. All I know is he didn't do the due diligence. In some cases, there were times where a vendor would offer me 25% reduction in the office, and you're like, well, it's definitely going out for an RFP, and then you find out it's 30 or 40% lower in cost. It was a very interesting three years where it was just pure chaos in the procurement world, especially during the financial recession too at the same time.

In 2009, we had a record year. The work was coming in and in fruition. I was just lining vendors up every hour, just like literally almost like speed dating. Okay, what's this thing occur in the business? Fine. Your contract is going out to bid. All right, I want to lower your price. Well, that's nice. Tell me what you're going to lower it, and then still going have to go out to bid.

70% in the first year, then 50%, then maybe now, where we are today, maybe we change vendors 25% of the time because we've built relationships over periods of time that are great, and we're still not afraid. Like the big boys, when we bought Green Giant, General Mills didn't want to switch can suppliers, it was too much work for them. For us, not a problem. In our industry and in certain circles, it's a very small group of folks. They know that B&G is willing to make a vendor change and go through the qualification process. That's how we try to compete with the big boys. We put resources behind it. We have that attitude of we can get it done, and we just keep pushing on everyone.

Yeah, we're like a thousand plus. We have 50 plus brands, probably four or five thousand SKUs alone right off the bat. When you think about the materials that go into that, it's a significant amount of vendors, plus your indirect spend too. It does start adding up dramatically across the network.

Food companies are antiquated, so to a certain extent we're always kind of like the second or third tier movers. Specifically like AI for example. When I started procurement, it was paper and pencil and green bars in some cases at Manischewitz. We've moved way beyond that, but we do have better controls, contract adherence in our systems. It depends on what kind of ERP system you may have or any other procurement tools. We have stuff that flags, hey, somebody missed a decimal point and it's a $5 million PO, so there's checks and balances on those types of things. Bid software packages, we're currently evaluating different parts of that. We only put JD Edwards in over the last six years or so, so we're still evolving that functionality. Even AP invoice matching automation versus matching invoices, part of the payables and procurement responsibility, EDI having it done electronically, we do have all that. But there's still more work to be done. We are exploring AI in the S&OP process which will help drive the procurement process, RFP software. We just don't have a lot of OpEx budget for some of that stuff, but we are carving that out. We are adding other modules to our JD Edwards system for planned equipment maintenance to be scheduled for more proactive versus reactive maintenance so when machines break down, and warehouse management tools that will also help drive yield accuracy, inventory accuracy, so that again it drives the procurement function to procure what is absolutely necessary. More work to be done, but it is evolving, probably a little bit slower. The AI function is definitely intriguing, but what I've learned recently in the last six months about the AI part of procurement is that it hasn't really returned the value people are looking for. It's probably still new and has a lot of bugs to work out, and people have to actually manage it. We're definitely not going to be the first movers in that group. We're probably going to be waiting for the second or third tiers to make sure that this person rolled it out and we want to hear success stories from those bigger larger companies before we put it in there, because we have a small capital budget. We want to make sure that the projects have a great ROI on it. If I brought that software in and it's supposed to take three headcount out and it only takes out one, it's not going to look bad for me and I don't need the squeeze.

I'm part of the Gartner Association, so I network with other peers in consumer groups, and they tell me, yeah, we put this in, it didn't really work, or hey, if you're going to do this, go the top package because you're not going to get everything you want. That's where we're evaluating different options right now.

We've kind of put it in a semi-AI program for our S&OP project, the demand stat engine. Brands that don't have a lot of volatility, that stat engine runs it easily. A demand planner, we only have a few, which is people are like, well, you should have like 10, we have five. Same thing with the procurement group, we have 12 and we should have 25 people to manage that same kind of spend. This tool allows them on those brands to say, okay, stat engine, you take these, I'm going to work on these high volatile items so that we can have deeper conversations with the sales team, the brand team, the business team about where we really think they're going to go, and that will then drive the procurement function about contracting and securing. That's working and it's been getting better as it gets more data over time. We're moving one brand after another to that, which has been fantastic. Everyone is scared of change, I'm not. I think this is the most important characteristic of any operations person. Change is good as long as it's thoroughly thought through and tested. We will hopefully progress where we're only looking at six brands and it'll have maybe only two to three demand planners that are managing those kind of volatile ones, and then the stat engine managing the rest.

My goal, you talk about supply chain or procurement, there's a couple programs out there that I want like a war room. I want TVs that show me where our OEEs are in our lines. I want to be able to basically sit here and know exactly where we are real time. Casey kind of laughs at me because he's like, dude, this isn't Star Wars. You're not going to be there in five years. I said, no, I'm planning to be here for 10 to 15. My goal is to systematically put some of that stuff in over that period of time to help drive that, so we can have real-time discussions and know exactly where our business is and how it's performing, versus oh, we got to close the books, the sales report's different, you're trying to cobble all the data together and that just doesn't work. That would be my end goal. As an EVP, that's my strategic vision beyond the two-year program. Three years to 15 years, this is what I want it to look like. That's pretty adventurous in this organization because again, food kind of moves at a snail's pace sometimes, but I'm not here to sit and be complacent.

That's not helpful for anyone. We don't have data scientists. The people in the roles become that role. That's how lean we are in this organization. We don't even have data scientists. We have an MDM team and master data team, but they basically do the maintenance of it, they're not necessarily helping drive efficiencies. How is that value added? It's not.

If you show an interest in something, sometimes managers pick up on it or not, other managers in other departments. You should pursue that and ask the questions. Don't be afraid to ask questions. I would ask questions about production and manufacturing and what the hell they're talking about. People are like, wow, this guy has a lot of interest, he wants to know what's going on with the business. People gravitate to that. They want to take you under their wing. If you have good people, they want you to grow. I've been lucky enough in every place that I worked that you could free up time and say, listen, I could do that. I never driven into New York City and deliver laptops, but I'm like, hey, I can go in with this guy, we can go collect $3,000 in cash. Sure, I'll do it, let's go do it. Same thing here. I didn't do a safety or food safety audit, but the guys that were doing it are like, hey, Marty, we're gonna go see your vendor that you want to approve, you want to come on the audit? Sure. All of a sudden now you're coming on the audit and you're learning something that you didn't learn. Hopefully you're not messing up your current day job, but if you can balance that, people are going to be like, this guy's a star in the making or she's a star in the making. Finding people and asking the question too of what am I doing wrong? A peer, not necessarily your manager, because your manager might say you're doing everything right. I used to hear that all the time even working here at B&G Foods. I had to go to other ELT members or other leadership people on the team outside of operations to say, hey, Vanessa, she was head of sales at the time, what could I be doing better in your viewpoint? She gave me a laundry list of stuff. I'm like, oh right, I didn't think I needed to work on this stuff. It's like, yeah, you do. That's helpful. I even had one guy telling me, man, you're the smartest guy in this company, but you're the biggest asshole. I'm like, oh, is that how I'm perceived? Okay, well that's good. He's like, everything you say is right, but you're ramming it down people's throats. How do you change that perception of you? How do you persuade somebody, use your procurement skill set to help drive your decision-making or help lead them down the path that you want them to achieve? That was one of the biggest things for me. I had to really go from, and I was told this by one of the CEOs of this company, you'll never be an EVP. I was told by a CFO in this company at one point, you'll never be an EVP. Well, guess what, I'm here. But I had to really change and be objective about what I did and how I did it by going outside of operations and saying, hey, head of marketing, love to hear your feedback on how I perform. Here's the unfiltered version. Hey, head of CFO, can you tell me what I'm doing wrong? You're telling me that I'll never be this, but you gotta tell me why. They would tell me, and I'm like, okay, that's helpful. Because sometimes managers aren't good managers, they won't tell you what you really want to hear because they're afraid to, and that's not developing people or your career. That was frustrating for me where I actually looked multiple times to leave here because I'm like, well, that's not helpful. But then I had to take it upon myself. The best piece of advice is don't wait for anyone to bring you along or help cultivate that image of yourself that you want to be brought along. Seek help from others.

I'd love to discuss anything with you guys.