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Sep 29, 2023

Gouda, cheese racks, and a supply chain problem : Planet Money : NPR

SYLVIE DOUGLIS, BYLINE: This is PLANET MONEY from NPR. (SOUNDBITE OF COIN

SYLVIE DOUGLIS, BYLINE: This is PLANET MONEY from NPR.

(SOUNDBITE OF COIN SPINNING)

AMANDA ARONCZYK, HOST:

Back in August, I first spoke with a man named Jelle Peterse. Jelle lives in the Netherlands. He's 35 years old. And he's got a job in a very Dutch industry.

JELLE PETERSE: I work for a company that buys and sells cheese, cheese and a lot more cheese.

ARONCZYK: Jelle's company distributes cheese to buyers international and domestic. The Netherlands is actually the second largest exporter of cheese in the world. It's after Germany. Think Gouda and Edam. There's also Old Amsterdam. I asked Jelle - how many cheeses are there in the Netherlands?

PETERSE: How many stars are in the universe? No, I - there's so many types of cheese.

ARONCZYK: And no, it is not 200 billion trillion kinds of cheese, but there are a lot. Last year, the country made more than 2 billion pounds of cheese, more than half of it Gouda, which Jelle says is not just a cheese but an actual very old and very famous city not far from where Jelle works. Of course, we say Gouda, but in the Netherlands - I've been working on my pronunciation, here goes nothing - the cheese and the town are called Gouda.

PETERSE: The cheese business in Gouda, it's big. And everyone's married to everyone. Everyone has each other's phone number. Everyone knows each other. And they all keep the same traditions alive.

ARONCZYK: Jelle explains that these family connections sometimes date back hundreds of years, and so the Dutch cheese business is steeped in tradition. Now we are speaking together over Zoom, and he says he wants to show me a photo that will make this very clear.

PETERSE: OK, share screen.

ARONCZYK: Yeah.

PETERSE: OK.

ARONCZYK: I'm starting to see it. Oh, my goodness.

PETERSE: Yeah.

ARONCZYK: So this is - it looks like some members of either royalty or religious leaders. What is this picture?

PETERSE: No, this is the guild, the cheese guild.

ARONCZYK: This is the cheese guild.

The photo shows a small group of people in the middle of what looks like a ceremony. Some of the people are in brightly colored robes, and there's one woman holding a bouquet of flowers.

PETERSE: So we're looking at someone who gets initiated into the cheese guild, and they carry around a staff with a cheese knife and a cheese drill.

ARONCZYK: The cheese knife and the cheese drill are crisscrossed, like how you might display two swords before a battle. I read later that the red of the robe represents the red cheese rind, and the blue represents the blue veins of a deliciously moldy cheese.

PETERSE: They love it. They love cheese. And it's a big honor to be initiated into the cheese guild.

ARONCZYK: Are you in the cheese guild?

PETERSE: No, I'm not. No.

ARONCZYK: Jelle has not been invited into the cheese guild. He's kind of a newcomer to all of this, and that's made it challenging to deal with a problem he was hired to fix. So Jelle, he is a supply chain expert. He's responsible for thinking about how to move his company's cheese around. One of his most valuable assets is the cheese rack - metal shelving with wood planks.

PETERSE: So it's very specifically made for transporting entire wheels of cheese.

ARONCZYK: Oh, I see. So, like, you - I can't go into IKEA and buy one of these?

PETERSE: No.

ARONCZYK: No. What was I thinking? Jelle says that these are custom built. Each one costs nearly $500. And Jelle, he has a problem with his cheese racks. Once the cheese is sold, the racks are supposed to be returned to him. But out of the 2,000 or so racks his company owns, he can only account for 26 of them. The people they sell cheese to are not returning the racks.

PETERSE: People get them. And they're like, great, I can use this to store my cheese. But it's our racks. Put it on your own racks.

ARONCZYK: In this friendly industry where everyone is married to everyone else, Jelle cannot get people to do this one thing - send back his cheese racks. So he emailed us for our help.

PETERSE: Because I was listening to the PLANET MONEY podcast a lot. And I was wondering - it's like, maybe they can help me with this economic issue I keep having. It's such a strange question. I was like, nah, they're not going to - nah. But it got stranger and stranger.

(SOUNDBITE OF MUSIC)

ARONCZYK: Look, when someone calls up PLANET MONEY with a strange and delicious problem, oh, we will show up. So I packed up my gear, told my family I loved them and got on a plane to Gouda. Hello and welcome to PLANET MONEY. I'm Amanda Aronczyk. When you think of a company, you might think of a big, cold, impersonal corporation that makes decisions solely to maximize profits, moving fast and breaking things. But by some measures, the majority of companies in the world are actually family businesses, with shared histories, lots of traditions and, well, some of the same complexities of families. Today on the show, we try to help a Dutchman with a problem, one rooted in centuries of tradition and cheese.

(SOUNDBITE OF MUSIC)

ARONCZYK: A couple months after my first conversation with Jelle, I wake up in the Netherlands. I grab a cab, and we drive past the famous Dutch canals, quaint, little brick houses, old cobblestone streets, only to arrive at an industrial park. I'm here to meet Jelle at one of his company's warehouses. We walk in, and it's this enormous open space. There are a few workers unloading and loading boxes with a forklift.

PETERSE: This is actually our smallest warehouse.

ARONCZYK: How many warehouses does the company have?

PETERSE: Six.

ARONCZYK: OK. And this is the mini one? And this one's huge.

PETERSE: Nah. The one filled with cheese is, like, six halls of them filled with cheese to the ceiling.

ARONCZYK: Six halls filled with cheese from floor to ceiling - that would be like cheese Nirvana. But Jelle, as we mentioned before, he's a supply chain manager. So his domain is logistics and the transportation of cheese. So unfortunately, in this warehouse, there is no cheese, just the empty vessels for moving it around.

PETERSE: Several types of crates - we've got the pallets, plastic pallets, wooden pallets, cheese boxes, cheese crates.

ARONCZYK: This is actually Jelle's happy place. He's got an almost fatherly energy as he talks about his beloved supply chain containers. Before long, though, he takes me over to see the problem child, the reason he summoned us to the Netherlands in the first place.

PETERSE: These are the actual - the boxes I've been talking about, so you can see the wooden planks on them.

ARONCZYK: We walk up to a short row of what Jelle calls cheese boxes. That's the word he uses for the racks - boxes. These stand 6 or 7 feet tall. And Jelle explains that the wooden shelving is perfect for cheese, this product that needs to be able to breathe. He's not transporting shoes or hairbrushes. Cheese is alive, and these racks are custom-made to nurture it. Now, in the supply chain world, there is a name for products like the cheese racks. They are returnable transport items. Think beer kegs or pallets.

But for Jelle, something has broken down. His company is sending the racks off into the world bearing cheese, and then people are not returning them. His company has tried all the obvious solutions, like, for example, requiring a deposit or just asking people to send them back. He said so far, nothing has worked. But later, Jelle says something surprising. I actually did just spot one of my missing cheese racks out in the wild. Do you want to see it? And I was like, of course, this is why I'm in the Netherlands - to track down these wayward cheese racks. So we go outside into that industrial park. All around us are other cheese companies and warehouses.

And as we walk around, there's, like, cheese trucks everywhere delivering cheese.

PETERSE: Yeah. There's one.

ARONCZYK: Big truck swooshes by.

PETERSE: See? Everything here is cheese. We're going to go follow that road.

ARONCZYK: Jelle takes me to a spot around the corner from his office in front of another company's loading dock. There, we see something a little tragic.

PETERSE: So we're just walking around, and when we turn to the left, you'll see cheese boxes.

ARONCZYK: Oh, no.

PETERSE: And some of them are mistreated, some of them missing boards. Some of them are ours. And it's not raining now, but it's going to rain.

ARONCZYK: Here lie some of Jelle's expensive, custom cheese racks, sitting outside, tossed away like yesterday's garbage.

PETERSE: And they just stand there looking at us. And I see that. That makes me wonder - how did they get here? Why are they here? And does this company even do business with us? Or maybe they've done business once, and they just kept the box like, oh, thank you for delivering in this handy box. And now they don't have a place to put it, and then it just evolved into putting them outside.

ARONCZYK: People leave them outside, clearly. But Jelle's also heard stories about the cheese racks being welded together and used as shelving or companies absorbing them into their fleet, delivering their own cheese on Jelle's racks.

What is keeping you from just going over there and grabbing it? And like, we'll run back, and we'll just put it in your warehouse.

PETERSE: Well, there's pallet pooler CHEP.

ARONCZYK: This is the first thing that comes to Jelle's mind when I suggest grabbing the rack - the pallet pooler CHEP. OK, so CHEP is a company that rents these pallets that you've probably seen. They're blue. And by pooling, he just means that the company deals with, like, a lot of pallets at once. And there are hundreds of millions of these pallets traveling around the world. They're a super common returnable transport item. CHEP loans them out to companies that transport goods. Usually they're returned, but there is a team that sometimes has to hunt down pallets that might have gotten away.

PETERSE: They go out, and they get their CHEP pallets back. And they have some terrifying stories.

ARONCZYK: Jelle's saying CHEP's recovery team sometimes has to confront people to try and reclaim the pallets. And he's heard that that can get tense. It can even lead to legal battles. Jelle, well, he is just one guy. He doesn't have a team. If he goes to a warehouse to negotiate for one of his racks back, he's worried he could end up facing down some angry owner - could be scary. Just then, as we're standing there by the loading dock looking at Jelle's cheese racks, this guy comes out of one of the offices. And he walks right towards us.

PETERSE: I think we're in the guy's now (ph).

ARONCZYK: Have we been spotted?

PETERSE: Yeah. Let's walk on to the warehouse where we do the actual ripening.

ARONCZYK: OK.

The man and Jelle just have this short conversation in Dutch.

UNIDENTIFIED PERSON: (Speaking Dutch).

PETERSE: (Speaking Dutch).

ARONCZYK: Seems more or less fine.

PETERSE: See, he was like, you taking pictures or something? I said no, no, no. We're just talking. Bye.

ARONCZYK: Is that what he was worried about?

PETERSE: Yeah, yeah.

ARONCZYK: It was - was that a friendly interaction? I couldn't tell.

PETERSE: He was just curious.

ARONCZYK: Do they think we were cheese spies?

PETERSE: (Laughter) No. I like your conspiracy vibe.

ARONCZYK: So then we just walk back to his office. Jelle didn't ask for the cheese rack back. He certainly didn't take the cheese rack back. He just left it languishing there by the side of the loading dock.

The thing that's really shocking is, like, that runaway cheese box is so close to where you guys have your offices. Like, clearly, they don't think it's a problem.

PETERSE: Yeah. Well, that's kind of harsh because I could just walk up there and say, oh, man, you're being a jerk. My office is right there. And the cheese box is right there. Come on, be cool. Give me back my cheese box. That's not the actual problem.

ARONCZYK: And hearing all of this, Jelle's problem finally clicked for me. From the beginning, he'd been talking about all the family ties in the cheese world - how everyone's married to everyone else, everyone knows each other. And this big extended cheese family seems to think that the cheese racks are to be shared among them. So the biggest reason that Jelle can't just go grab his rack and run is because that would be rude. That would break tradition. It was so simple. But being polite, following the social norms, this is profoundly important to Jelle's business. In fact, this is why we haven't even mentioned the name of the company where Jelle works. He doesn't want to ruin relationships.

PETERSE: The problem is complex. We have to...

ARONCZYK: Right, right.

PETERSE: And that's why I asked you guys. Like, OK, how am I going to solve this?

ARONCZYK: Aside from writing to PLANET MONEY, Jelle does have an idea in development - a new kind of tracker that he can put on the racks. But that is just going to let him find the cheese racks. He's still going to have the same problem of actually getting them back. And how do you do that without a big confrontation?

All right. Well, we'll talk to you tomorrow, or you'll message me and (inaudible).

PETERSE: Yeah.

ARONCZYK: OK.

What Jelle did not know was that I had spent weeks researching on his behalf before I even left for the Netherlands. I was consulting experts, gathering solutions, all of these things that I could present to him because I was determined to solve his cheese rack problem. I started all of this research close to home in Manhattan.

Are you guys NYC Kegs?

ANIKET SHAH: Yeah.

ARONCZYK: Hey.

SHAH: How are you, Amanda?

ARONCZYK: I'm Amanda.

This is Aniket Shah, owner of NYC Kegs. If you need a bunch of beer kegs for your party, Aniket's your guy. If you're interested in returnable transport items like kegs, Aniket is also your guy. On this day in November, he was doing a delivery to a party at a grad school.

Remind me, how many kegs are you delivering?

SHAH: So we're delivering seven kegs.

ARONCZYK: OK, of beer?

SHAH: Of beer.

ARONCZYK: The magic of beer kegs is that they get returned and reused. That is the thing with most returnable transport items - they reduce waste. Returnable transport items make environmental sense, and they should make economic sense, too. In the case of Aniket's kegs, the system works. People do give them back. His problem child is this big, plastic tub made by the company Yeti. These tubs are expensive. They're big enough to practically stand in. And they're great for holding a lot of ice and, in this case, a keg of beer. Customers love these tubs so much that sometimes they might be tempted to keep them.

SHAH: They'll say, oh, this looks nice. It's a Yeti tub. I can use it in my outdoor patio.

ARONCZYK: Yeah.

SHAH: And that's something that I'm just going to take home.

ARONCZYK: 'Cause I got to say, like, if I, you know, was going to throw a party, like, those would be pretty fun.

SHAH: Yeah. I mean, you can use these tubs for, like, softshell crabs. Or, you know, you can go fishing...

ARONCZYK: Oh, yeah.

SHAH: ...And put fish or, like, ice, cans of beer. You can also, like, put a lid on it.

ARONCZYK: A lid? Wow. These things can do anything. So along with the seven kegs, Aniket is dropping off some of those coveted Yeti tubs to the grad school party.

OK. So we're rolling in two kegs and three tubs. Here we go.

Then after we finish the drop off, I ask him, what is your secret? How do you get those tubs back? Aniket says, look, I don't drop these Yeti tubs with just anyone. If it's a frat party or something, I drop those tubs there, might not see them again. So he has, like, two tiers of returnable transport items - the nice ones and the not-as-nice ones. And he tells me, if your guy in the Netherlands is in a situation where no one's returning the super nice cheese racks, maybe he shouldn't have that super nice option at all.

SHAH: If it's too useful, then it's going stay. So my suggestion would be to not make them as useful.

ARONCZYK: Make the cheese racks less useful. Aniket suggests finding a way to make them either more niche or poorer quality or both. The problem with the cheese racks is that they are too good. First suggestion - make them worse. OK. So now onto gathering more problem-solving suggestions. Again, Jelle's talked about the family aspect of the cheese industry, how that impacts things. There's actually a whole realm of business management that looks at exactly this, at family businesses. Now, while the company Jelle works for is no longer technically a family business - it was bought by a large co-op a few years ago - he says that it is still run very much like one. So I reached out to Lorraine Uhlaner. She's a professor of management at EDHEC Business School in France.

LORRAINE UHLANER: I think when we look at family businesses, we are looking at how the family characteristics and behaviors and attitudes and interactions - how those interplay with the ongoing business.

ARONCZYK: So tell me, what are the main differences between a family business and, like, a business-business?

UHLANER: When we say family business, we're actually really looking at the ownership structure.

ARONCZYK: So basically, are the people who own the business together related to each other? Surprisingly often, the answer is yes.

UHLANER: Most people agree, regardless of how you define it, the majority of companies are family-owned.

ARONCZYK: Under the umbrella of family businesses, there is a ton of variation - could be a small dairy farm run by, like, just a couple of brothers, or could be Walmart or Ford. Technically, those two are publicly traded family businesses. And I was fascinated to hear that family businesses make up the majority of all businesses. I kind of thought of them as this relic of the past, but no. In most companies, in order to do business, people are dealing with their sisters or their in-laws and with all the complications that come from close relationships. Maybe your resentment about who got more love from mom and dad - maybe that gets played out in the boardroom. Lorraine says there is one thing that she sees clearly again and again in family businesses. If you want to change anything, if you want to innovate, you have to be very cautious. She understands why Jelle feels like he can't just march up to someone and say, come on, be cool. Give me back my cheese box. In the tightknit cheese world, saying that could do more harm than good. So with this in mind, Lorraine has two suggestions for the cheese rack problem.

UHLANER: We do see that these long-term relationships are really critical to the family firm, and they're often partners in the innovation. If they take a participative approach and present this as a problem to their customers and say, can we solve this together?

ARONCZYK: Oh, interesting. So we're together in this decision, this difficult decision that needs to happen. How do you want us to do this together?

UHLANER: You know, you want to try and get buy-in from both sides. And then it has to be workable.

ARONCZYK: There is a name for this. It's called participative decision-making. This kind of decision-making is happening inside companies at any given time all over the economy. There are a million Jelles trying to solve a million cheese rack dilemmas, all talking it out. Sometimes, this is the best way to get things done. So that is the next suggestion that I will take to Jelle - bring everyone to the table. Lorraine also had one more idea.

UHLANER: The thought that I have is maybe prices are going up. Energy prices are skyrocketing. And so I think there's a lot of pressure right now in the agricultural industry as well as other industries. One approach could just be up front and say, look, you know, we really - we'd love to continue to give you these, but this really means that we may have to charge more money or, you know, we may not be able to sustain our own business, and we would really appreciate the cooperation to help get these back.

ARONCZYK: This is what I'm calling the never-let-a-good-crisis-go-to-waste suggestion. It is a tough time. And maybe Jelle can use this moment as an excuse to reset the whole cheese rack return system.

(SOUNDBITE OF SIMON BATES, HARRY THE PIANO & DAVID KELLY'S "BARNEY'S BAGELS")

ARONCZYK: So even though I don't have an MBA or any training doing business, I'm going to try to convince Jelle to take these suggestions for fixing his cheese rack problem. That's after the break.

(SOUNDBITE OF SIMON BATES, HARRY THE PIANO & DAVID KELLY'S "BARNEY'S BAGELS")

ARONCZYK: The day after the walk around the industrial park with Jelle to see his sad, abandoned cheese rack, I get on my bike, 'cause, of course, I've been in the Netherlands four days. Now, I'm Dutch. And I head to meet up with him at his house. And I bring along my laptop.

OK, so I have prepared a PowerPoint presentation for you. Are you excited?

(LAUGHTER)

PETERSE: Yeah. Very.

ARONCZYK: OK, good. Good, good, good. OK.

I know that if you want to convince someone of your good ideas, you really need to sell those ideas. So with one year of graphic design experience, a template and some killer music - first slide.

(SOUNDBITE OF MUSIC)

PETERSE: I mean, I like it. All my PowerPoint presentations are going to start with this now.

ARONCZYK: OK. We are going to...

PETERSE: Like a...

ARONCZYK: ...Send you the sound.

PETERSE: Yeah.

ARONCZYK: This is how you, like, influence people. This is how you...

I start with Suggestion 1 from Aniket, the keg guy - make the cheese racks worse. Jelle considers it.

PETERSE: But then it would be like - it would be treated like a single-use transport item. So that would be a good idea for me, not for the planet.

ARONCZYK: I mean, you're not a paying client.

(LAUGHTER)

ARONCZYK: So, you know, you're not getting, like, my best work.

OK, rejected. Fine. Next slide - a suggestion from Professor Lorraine Uhlaner. She's an expert in family businesses.

PETERSE: OK.

ARONCZYK: OK. So she says family businesses tend to...

I explain to him Suggestion No. 2 - bring everyone to the table. Use participative decision-making to solve the problem together.

PETERSE: Also a good suggestion. I think it could maybe solve more problems.

ARONCZYK: But again, Jelle was unsure.

PETERSE: Or maybe make it more difficult. Like - oh, yeah, I want this on it. No, I don't want that, so...

ARONCZYK: Jelle worries, like, what if everyone gets together, and they want things that his company can't accommodate? Then they'll be forced to reject advice that they have explicitly asked for. That sounds awkward. So now, we're at my last suggestion, and I'm really hoping he'll take it. Otherwise, I'm flying back to the U.S. with, yeah, sure, a suitcase full of Gouda and stroopwafels but also a failed endeavor. Last suggestion, also from Lorraine - don't let a good crisis go to waste. Next slide.

One of her suggestions for you was to go to your customers and say this is an unusual moment, but, as you know, inflation is high. There's a war. You know, we - it's very expensive time right now. So could you use this crisis to reset some of your business practices?

PETERSE: That's actually an excellent suggestion.

ARONCZYK: Woo, woo (ph). Should I play the music again?

(LAUGHTER)

ARONCZYK: Yay, he likes it.

PETERSE: I think that's an excellent suggestion, especially 'cause the industry is so friendly, you know, towards each other, and they just want to produce, like, beautiful cheese and then sometimes lose sight of the importance of returnable transport items.

ARONCZYK: I mean, who among us has not? Anyway, I left the Netherlands, returned home, gave Jelle a few weeks to work on our suggestions. Then, a couple of days ago, I checked in with him again. So did you use the idea?

PETERSE: I did. We sent out an email telling everyone, like, OK, we need your help. We need our boxes back so we can send them back to you with cheese on it.

ARONCZYK: (Laughter).

PETERSE: And we sent it to everyone.

ARONCZYK: To all of his customers, anyone who might have one of the cheese racks stashed away somewhere. But his bosses were a little worried about focusing too much on the negative.

PETERSE: They thought the - like, naming. It's like, oh, the war in Ukraine, and they thought that was not the way to go.

ARONCZYK: Oh.

PETERSE: So they suggested something like, OK, we just ask them. Like, Christmas is also a busy time for us, also for you, so please be considerate and send the boxes back so we can send them back to you. So we found the middle way.

ARONCZYK: Basically, they decided that the crisis is Christmas. I like it - actionable and festive.

So do you think the email led to any being returned?

PETERSE: I think it did. I think it kept the market moving. It kept people aware of the fact that we're still looking into this, and we're still seeing how to get them back and the best way to work with them.

ARONCZYK: When I first spoke with Jelle, he could account for 26 of his cheese racks. Now, he says that in the warehouse, there are 30. OK, it's not the complete set of 2,000, but it's a start.

(SOUNDBITE OF HARRY ARNOLD'S "STROLLING IN THE SNOW")

ARONCZYK: Of course, we love hearing from you and sometimes even helping you with your strange problems. Our email is [email protected]. You can also find us on social media. We are @planetmoney. One more thing - you may have heard PLANET MONEY started a record label to put out one song. That song is "Inflation," sung by Earnest Jackson and Sugar Daddy and the Gumbo Roux. Stream it, download it wherever you listen to music. Our show today was produced by Emma Peaslee. It was mastered by Natasha Branch, fact-checked by Sierra Juarez and edited by Sally Helm. Jess Jiang is our acting executive producer. Special thanks to Katz Laszlo and to Marie Claire Pete (ph). I'm Amanda Aronczyk. This is NPR. Thanks for listening.

(SOUNDBITE OF HARRY ARNOLD'S "STROLLING IN THE SNOW")

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