Waiākea Hawaiian Volcanic Water was created in 2012 not only to be an ethically sourced premium water brand, but according to its founder, to change the consumer packaged goods industry from the inside out.
The water itself comes from a spring at the foot of the Mauna Loa volcano, which is fed by snowmelt and rainwater that naturally flows through thousands of feet of porous volcanic rock before emerging near the town of Hilo. Waiākea collects a tiny fraction of the water and bottles it in a nearby plant staffed by local workers. The bottles are made from 100% recycled polyethylene terephtalate (RPET), a sustainable material that Waiākea introduced to the premium water industry, with much of it sourced from plastic recovered from the oceans.
The company cites mālama i ka ‘āina, which means ‘to respect and care for the land,’ as an important pillar of Hawaiian culture and one of Waiākea’s core values.
Waiākea supports a number of sustainability initiatives, from reforestation in Hawaii to fleet electrification across the U.S. In fact, Waiākea was the first bottled water to be certified CarbonNeutral. But the company’s supply chain strategy has evolved over the years. Waiākea has leveraged its growing volumes to drive more efficiency in its network, reducing costs, transit times and carbon emissions, all while fulfilling just-in-time orders to local distributors who carry very little inventory.
When Alexandra Alegria joined Waiākea as director of supply chain and logistics three years ago, she already had a lot on her plate. Waiākea was doubling its revenue every year, which meant bringing multiple new distributors online each year – in 2019, Waiākea added 10 distributors. The growth also meant that a network of warehouses had to be designed and built to serve the entire country. Finally, Waiākea wanted to convert its purchased transportation from less-than-truckload (LTL) to full truckload to save money and source capacity faster. And it wanted to do all of those things while maintaining its CarbonNeutral certification for both its product and business.
“We have a constantly evolving supply chain,” Alegria said. “When I started three years ago, sustainable supply chain wasn’t a widely known concept. We had three warehouses, two in California and one in New Jersey, but we were shipping across the United States.”
Now Waiākea has nine warehouses on the mainland, which helps keep its transit times under two days. A partnership with a parcel integrator’s carbon neutral program handles Waiākea’s direct-to-consumer shipments. LTL lanes were optimized to put multiple shipments on the same truck, and some over-the-road truckload shipments from the West Coast to the East Coast are now intermodal.
Converting Waiākea’s linehaul network – which moves water from Waiākea warehouses to local distributors – from LTL to full truckload was tricky, Alegria said.
“When I started, we only had a partnership with an LTL brokerage,” Alegria recalled. “We were sourcing full truckloads through them, which drove up the rates exponentially. Water is a very heavy product and can be very expensive to ship.”
At that time, just 30% of Waiākea’s linehaul transportation was full truckload; the remaining 70% was LTL. The LTL carriers were inherently less flexible because Waiākea’s freight had to fit into their trucks’ specific schedules; it took longer to book a truck, and LTL rates penalized water for its weight.
Waiākea wanted its warehouses to be within a two-day transit of each other, and they needed to be able to ship quickly to local distributors that were stocking shelves at retail locations, typically within five miles of their own locations.
“Any supply chain director gets 10 to 20 cold calls per day from different logistics companies,” Alegria said. “You’re constantly bombarded with the same promises over and over again. But two years ago, Convoy was the first to reach out to us with a digital platform, and it offered transparency I didn’t have with other logistics companies. Convoy was looking at it from a much more analytic perspective; being so data-driven drew me to them.”
Convoy’s commitment to sustainability and the reduction of empty miles and carbon emissions in its carrier network also helped Waiākea pull the trigger. Programs like Automated Reloads in particular automatically fills backhauls for carriers and keeps their trucks running in efficient loops, maximizing capacity utilization and cutting empty miles by 45%.
Alegria watched as Convoy built density in more lanes over time. Waiākea gradually gave Convoy more and more freight as its business grew and it converted LTL shipments to full truckload. Waiākea started by giving Convoy 10 loads per month; now it’s 95 to 100 loads per month, said Alegria, representing about 80% of Waiākea’s wholesale business.
Waiākea still has a goal of moving to 100% full truckload transportation in its linehaul network. Converting the remaining LTL freight to full truckload requires a complex orchestration of Waiākea’s supply chain, including its production plants in Hilo and its warehouse network, with its customers’ behavior.
“We try to partner with our customers to let them know if they order in the full truckload range they can get their loads a lot faster,” Alegria said. “Sometimes they’ll place five smaller purchase orders, and we have to wait until we get the fifth one to make a full truck. Convoy is helping us understand how to combine those loads and giving us automated triggers so we can go to our customers with the data and say ‘if you give us these orders in this time frame, we can do xyz.’”
Like most beverage companies, Waiākea’s business experiences seasonal volatility, with a pronounced demand surge in the summer months. Alegria said that Waiākea tries to ease into the push by using promotions to get stores stocked in the spring. Convoy also helps Waiākea understand when and where trucking capacity is tightening as the summer progresses.
“Convoy lets us know that if we have to ship something to Florida and it’s juice season, maybe we should ship from Texas instead of Pennsylvania,” Alegria said. “They give us that kind of advice because they know our supply chain and know where our warehouses are. We’re constantly having conversations about how to optimize things depending on the season and what the business looks like.”
This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.