Rethinking Food Distribution: AI, Partnerships, and the Road Ahead

Written by Charlotte Johnson

Have you ever stopped to think about the journey your food takes to reach your plate? It's more than just your grocery run—it takes an entire global supply chain working in sync to get it there. But the process isn’t always as smooth as you’d think.

Today, we're joined by Shangyan Li, Director of AI Product Development at GrubMarket and cofounder of Butter, to explore how AI is transforming the food distribution industry. From integrating with legacy ERP systems to helping businesses meet evolving regulations, Shangyan's approach emphasizes partnership over disruption. We'll discuss the evolution of supply chain technology, the challenges of AI integration, and why collaboration is the key to modernizing traditional industries.

Shangyan, thanks for joining us today. With the U.S. food industry valued at over $1 trillion, it's no surprise that AI and automation are everywhere now, from taking orders to managing logistics. How did your own journey with AI begin?

It really started with Butter. Our initial goal was to develop a SaaS solution for food distributors. It seemed like the right product at the right time, coming out of the pandemic. But we quickly learned there was a deep attachment to the old ways of doing things. Chefs and suppliers were still calling in orders by phone or jotting them down on paper. We knew our tools were effective, but they weren't being adopted as quickly as we had hoped.

After spending time in their world—early mornings in the warehouses, talking to the back-of-house, meeting chefs—we realized the solution wasn't about getting them to change their habits. With SaaS, there's usually an expectation that the client will adapt to the tool—they’re coming to you for your solution, after all. But digital transformation in traditional sectors doesn't work if you try to replace everything. So, we started developing tools that could seamlessly integrate into their existing workflows.

That's a smart pivot, and it seems to have paid off—especially with Bain Capital naming Butter one of 2023’s top 50 emerging SaaS companies. How did AI fit into that solution, and how is it addressing the challenges facing food distribution today?

AI became an extension of manual work. It didn't replace the human element but made it faster and easier. It interfaces well with some of those old habits and tools our clients were already using. Butter's AI Order Assistant processes natural-language orders via text or voice, so chefs can still place orders in the way they're used to, while AI handles the back-end work. It keeps people in the loop but automates the tedious tasks.

They’ve told us as much—these were hours spent after work poring over notepads and entering data or confirming yesterday's orders. We gave the suppliers back their time. Once supplierssaw the dramatic drop in manual data entry hours (>80%) and how easily the AI fit into their operations, things took off. We had dozens of suppliers and ERP (enterprise resource planning) partners expressing interest because the AI was filling gaps they hadn't been able to address with other solutions.

Legacy systems are often seen as a major obstacle for tech companies. How did you manage to integrate your AI with those older ERPs?

Legacy systems can definitely be tricky. Many of these outdated, unsupported systems have been around for decades, but businesses rely on them to function. So, any changes can feel risky. We developed tools that could connect with older systems without requiring a significant overhaul.

The real breakthrough came when we developed a narrative positioning our AI as an add-on. It enhanced their existing systems rather than making them obsolete. ERP providers—many of which are looking for ways to modernize—became more open to collaboration when they realized we weren't trying to replace their offerings. We became a value add, and it was a win-win. That's where the real partnerships formed, because we could help their customers stay within their existing ecosystems while benefiting from AI.

It sounds like the key was in collaboration, not competition. According to McKinsey, only a quarter of companies working with AI system integrators felt their goals were aligned. How did you overcome that challenge?

AI often raises red flags because there's this misconception that it's about replacing people or rendering old systems irrelevant. But that's not what we're doing. We're focused on helping businesses build on what they already have, tackling the real challenges they face today—not theoretical ones. In the supply chain, from distributors to ERP providers—every player is a partner in that effort.

After GrubMarket acquired Butter, we scaled our AI model into its GrubAssist AI offerings. This allows us to deliver the business intelligence and automation we had always envisioned, without disrupting core operations. It integrates smoothly with existing ERPs, and our combined experience proves that. The timing also works well, given the FDA's new traceability rule set for 2026. Our suite can help businesses manage compliance smoothly moving forward. It's strong partnerships all around.

As we wrap up, what are the biggest challenges for AI integration, and what advice would you give to business leaders who are hesitant about adopting AI?

The skills gap is still a big challenge. AI systems require a certain level of technical expertise to manage, so companies need to invest in upskilling their workforce. But it's important to approach this carefully—people need to understand they're not being replaced by AI, just supported. It warrants the same amount of training and due diligence as any other tech.

For those hesitant to adopt AI, my advice would be to start small and be intentional about your initial wedge workflow. Focus on product experiences that fit into your existing workflows, especially in areas that feel like a chore and the effort-to-payoff is high. This can be manual data entry/mapping where you can see immediate gains. Once you start seeing the benefits, it becomes easier to scale and expand. Look for partners who are willing to work with you rather than expecting you to change everything at once.

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