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Most developers of food and beverage products work with raw materials provided by an array of vendors, such as flavor and seasoning suppliers. The level of work varies widely, depending on factors ranging from the policy and culture in both organizations, the importance of the vendor’s products to the client’s products, and the willingness and ability of both parties to exchange information.
While a huge amount of exchange happens between vendors and customers, the process is rarely optimized. At the low end are generic requests for samples, usually met with a library sample and associated paperwork. The level of interaction can step up through focused project work to focused resources over time and, finally, to true partnering.
Most product developers start at the low end and advance in sophistication with time and experience. Consider how the levels of interaction and interdependence increase as the product developer gains experience:
“Send me a sample of strawberry flavor and data sheets.”
“I am making a strawberry line extension, what should I use?”
“I want you to show me some prototype strawberry products.”
“Please share some finished-product prototypes for new concepts.”
“We need to develop a product that is significantly better than Brand X.”
“How might we design a line of superior products?”
“Let’s get consumer data on product concepts and the competitive set.”
Finding the Best Vendor
How does an individual or a company move up to this level of interaction with a vendor company? First, find a company that merits high interaction. Marcus Buckingham and Curt Coffman in their book, First, Break All The Rules (Simon & Schuster, 1999), suggested a hierarchy of customer expectations. A great many surveys about factors influencing regard for vendors were correlated, and the authors categorized the drivers as accuracy, availability, partnering, and advice. These are a true hierarchy, and each must be in place for the next to be meaningful.
• Accuracy and Availability. In the relationship of food and beverage companies with their vendors, accuracy probably encompasses sending the requested samples, achieving the expected timing, having reproducibility in samples and scale-up, maintaining product integrity over time, and meeting price/ value expectations. Availability probably means sales coverage, turning samples, paperwork, and pricing around quickly, returning phone calls and e-mails, managing basic project communication, and getting on board for troubleshooting. Accuracy and availability can be described as zero-sum; i.e., no extra credit accrues from them, but deviations are strongly negative.
As a customer, my group experienced a number of situations that cost vendors heavily with regard to their credibility. We worked interactively with one vendor to identify a seasoned product with very good consumer scores. The product was introduced and did very well. A short time later, a small competitor marketed a virtually identical product. Industry scuttlebutt indicated that our vendor provided the seasoning for the competitive product. In another instance, a vendor asked us what submissions we would like to see. They were given three moderately unusual concepts to submit. A couple of months later, the vendor had an article in trade magazines touting the availability of all three flavors, down to the order in which we had asked for them. A third vendor consistently provided scale-up products that were not quite as good as the lab product which had won the brief and was selected, or products that degenerated over the first few orders. The net result in all three cases was very low credibility and virtually no opportunity for additional business for the vendor.
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• Partnering. This term has come into vogue in the past decade. It is used and misused by individuals on both sides of the business equation. True partnering between vendor and customer requires a lot of effort and consensus in both organizations. In most client companies, Product Development, Purchasing, and Quality Assurance must work together to have a coherent vendor strategy. Marketing, Operations, and Senior Management can also influence the strategy and culture to enable a successful partnership. Similarly, in vendor companies, Product Development, Marketing, Sales, and Quality Assurance must work together to have a coherent service strategy, and Operations, Finance, and Senior Management are enablers.
In both organizations, consensus must be achieved across functions and along management lines in both organizations for partnering to succeed. Overall communications must be complex and direct between corresponding functions for optimal performance. Resources from both parties must work together over time and develop deeper understanding of each other’s processes for product development and problem solving. Familiarity, team skills, and trust grow with exercise, and this improves the quality of information shared throughout projects. Partnering should ensure that the vendor company will do genuine homework on projects rather than merely respond to direction from the client. Enhanced communication, including reciprocal feedback, should result. In the end, the vendor that best meets the customer’s expectations for project support, creativity, quality, and value should be chosen as the partner.
Neil Rackham, Lawrence Friedman, and Richard Ruff, in their book, Getting Partnering Right (McGraw-Hill, 1996), suggest that three things should be in place for the relationship to work: vision, impact, and intimacy. The vision must be shared between the organizations, with a clear view of how development and interactions can work. Positive impact with regard to business development must be real for both companies. Intimacy must be two-sided, with open communication on plans, capabilities, project progress, and issues. This is in contrast to some organizations that use “partnering” interchangeably with margin reduction. The potential for partnering is highest with value-added raw materials that have high impact on the customer’s products. Commodity materials or value-added products with low impact are not great drivers of the partnering process.
• Advice. This is at the top of the hierarchy. It can take the form of information on trends in local or global consumer behavior, food trends, technology, or business changes that are in the public domain. Collated information or consumer data on competing products can be useful.
Training or skill building in the vendor’s particular discipline is valuable. In the realm of flavors and seasonings, that might include building an understanding of product design, flavor chemistry, applications methodology, quality systems, and usable vocabulary regarding flavor attributes. Avoid vendors that are willing to advise you with inside information on what your competition is doing; they cannot be trusted with your plans or technical data. Looking at ways to enhance the product development process can be considered advice, but that can flow both ways.
As a customer, I have been offered various forms of advice from vendors who had not established credibility for accuracy, availability, or partnering. I viewed this as a “freebie” without feeling any particular obligation. I have also received offers to partner from vendors with little or no credibility in accuracy or availability, the offers usually coming in at the level of top technical officer. These vendors can normally be characterized as unwilling to do the requisite level of project support to merit a true partnership. This was the genesis of one of my homilies: Mediocre vendors also claim excellence, but they try to sell to the senior staff.
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What Customers Want
Some things are easy for customers to get, with minimal mutual involvement. These would include an initial sample and, perhaps, a followup sample with minor modification. Simple technical service, pricing, and associated data sheets are normal. It is also very easy to ask for a matching project in an attempt to leverage price competition. From the vendor side, however, matching is an onerous task that seldom pays back for the effort invested.
Some services are a little tougher to obtain from a vendor. First would be their product prescreened in a good model for your product and process. Some sensory evaluation of their work vs project objectives is not the norm, but can be achieved.
Next might be work to improve the performance of their product in terms of shelf life, powder properties, quality, and the like. Focused project work from an individual or development team is in this category.
At the high end, vendors can provide dedicated resources or labs, consumer-tested proprietary products, consumer-driven product development, competitive product assessment, raw material programs specific to customer needs, true R&D, and quality and gold standard programs. Most of these are highly resource intensive and necessarily require a lot of business and potential to support.
The individuals with skills, knowledge, and talent in the vendor company can be a wonderful source of ideas, approaches, and shortcuts on a customer’s project.
Foremost on the list is vendor product development people who can be engaged to do proprietary creative or research work on your product development project. Flavor/seasoning companies generally have individuals who have worked with an array of model systems and food or beverage products. They are often capable of offering advice on ingredients beyond the flavor system. Many of the companies have pilot or model equipment that can be used to screen an array of flavors or fine-tune the flavor system of a product. The same equipment has the potential to help frame process parameters and determine how changes influence finished-product quality.
Working together in the vendor’s lab can produce results much more rapidly than long-distance development. Ingredient development is often done to meet specific requirements for finished products. Flavor companies generally have some terrific analytical tools, which allow them to identify or look at flavor constituents down to very low levels. This can be invaluable when unexpected product changes occur.
The vendor’s sensory group can provide other analytical tools to answer many questions: Is the product noticeably different, what attributes are different, how good is it, and will a selected change make the product better or worse?
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What Vendors Want
Vendors have a number of things they want in ideal projects:
They want a level playing field; i.e., they would like to believe they have as much access to information as their competition and that the product and project performance are the deciding factors in achieving business.
They need to understand the magnitude of business potential and the likeli-hood of implementation.
They need a fair return for work invested, and an honest assessment of business potential will help them gauge their resource commitment.
They prefer projects where they face a limited number of competitors.
They want to understand the project pathway: objectives, target users, timing, testing methodology, and action standards.
They do not want their technology and methodology shared with competitors any more than customers do. Propriety is a two-way street.
They want timely communication of project changes and feedback on work—a key consideration.
How to Work with Vendors
So, what should be in place to optimize work with vendors? Select a limited number of companies to work on a given project. If you screen similar flavors from 20 different companies and pick the best one, that is shopping for a flavor. If you work interactively with companies to identify or meet a target flavor profile, that is development. Done right, development yields better results than shopping. A development project encourages the vendor to examine flavor concepts, raw materials, product design, and price/value to a much greater extent.
In the end, comfort levels should be achieved that the finished-product consumer scores are high, the flavor is proprietary within the product category, cost-in-use is appropriate, physical properties are right for plant systems, shelf-life drivers are understood, and consistency in flavor and appearance are assured.
While everyone faces scale-up or raw material issues from time to time, consistent problems indicate either poor lab practices or a willingness to reformulate (e.g., reduce key components in their products) after winning business. In either case, consider whether that company should participate in future projects. Most of your work should be done with your best vendors. The easy projects help pay the way for the difficult ones, and big products help pay for smaller opportunities. A little work with some other companies on the basis of creativity or areas of specialization is appropriate. And a little competition is always healthy.
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Start the project with a brief for all the competitors. Build a clear understanding of the project scope and pathway. Define any constraints on the vendors, such as cost-in-use, ingredient restrictions, and regulatory needs. Describe appropriate model systems so flavors or seasonings can be screened effectively. Provide base product or mixes when appropriate. The food matrix and processing parameters profoundly influence flavor delivery, so unscreened submissions are often ineffectual.
Let the suppliers know the action standard for the project. This may be stated as specific scores in consumer testing with a defined demographic group, or it could be a good deal less scientific. In either event, project understanding and expectations should be managed. Again, feedback is key. Timely feedback on individual submissions, project performance, and overall capability should result in optimum support. Note that the optimum may be higher or lower, depending on the needs and capabilities of both organizations.
When a true partnership has been achieved, a formal brief may become unnecessary: The resource commitment is already in place. The vendor may have been involved in identification of product strategy and evaluation of concepts, so objectives are understood and embraced. Project constraints and technical challenges are already generally understood. Less energy is spent on negotiation and matching communication on individual projects than on the mutual drive for results.
As with any system, the challenge is to optimize resource alignment against opportunities. The customer partner should provide clear information on the opportunities and priorities of its organization. The vendor partner must balance the needs for short-term business growth against need to support exploratory product development. The risk is that the push for success on the big, immediate projects will crowd out support for more creative, lower-probability work. Optimal solutions can only come from candid exchange within and between the organizations.
A lot of work goes into building a strong working relationship over time, but a few things can undo all of the work:
1. Breach of trust: sharing plans or technical information with—or from—competitors; failing to live up to commitments; generally not meeting expectations for integrity.
2. Poor communication: late or incoherent information; poor listening; failure to build understanding.
3. Mixed messages: lack of functional alignment; cherry-picking projects.
4. Commoditization: disincentive to add value; works against loyalty.
5. Win-lose thinking: partnering must work for both sides in the long run.
All of these can bend or break a working relationship, and they must be managed from both organizations.
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Some Final Thoughts
• Organizational alignment is essential at the highest level of partnering—it is difficult to achieve and maintain, but certainly can pay back.
• Get the dishonest and the clueless out of your vendor pool—they will not change and will do more harm than good.
• Nurture the good guys—enhancement of the partnership raises their value.
• “Face time” works wonders—labto-lab communication maximizes the relationship in the development process.
• Feedback is necessary for any complex process to work optimally—learn to give, seek, and take feedback, on both product and performance.
By following these guidelines, both customers and vendors will enhance their new product development process through focused, interdependent work and achieve mutually beneficial growth.
by Don Williams
The author is Vice President of Flavor Design and Development, McCormick & Co., Inc., 204 Wight Avenue, Hunt Valley, MD 21031.