Editorial: Musings from Las Vegas - Holding up the Supply Chain

By Len Monheit
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I’ve had a few days to reflect on my week in Las Vegas (SupplySide West and WorldNutra) . although there will be short event reviews appearing in the near future as standalone articles, there are some thoughts that came to me in my discussions on the show floor that I’d like to share.

I find myself (like many attendees) alternating between pride at being involved in an industry that has so much potential benefit and opportunity and at the same time frustration and exasperation that some of the key players just don’t get it. Both events served to point out important issues and developments industry must consider as it wrestles with legislators, regulators, media, consumers and itself.

At SupplySide, the show floor had a happy buzz to it, especially the first day, and besides, most of the industry suppliers have learned not to measure trade show success by quantity of booth visitors. The educational sessions were topical and well attended and are an important part of an overall program to tie both industry and research and industry and government, two necessary pieces of the strategic process industry must follow in the next three to five years if it is to secure a more credible position in Washington and with mainstream consumers. Some presentations were better than others, but it is imperative that the mission and objectives of this ‘educational program’ be supported by tradeshow attendees. The installment of a scientific advisory board to review educational presentations is an important step in ensuring that education rather than marketing predominates. The challenge remains that many of the attendees are marketers seeking a marketing rather than an educationally based message to develop their businesses.

The building of the link between science and marketing is still a challenge, and the pure science discussed at many of the Worldnutra sessions were of little interest to any trade audience present, yet fascinating for the scientists in the crowd. Sandwiched between extremely technical presentations were nuggets that were of significant industry benefit including market segmentation, strategic product development and a few others. Subjects like ‘partnering with academia’ and ‘building a research-based organization from the science up’ may be ideas that will link research and marketing at future events.

Swinging back to SupplySide, one of the most significant messages being delivered by the trade associations and Virgo was the need to prevent the dismantling of DSHEA by participating in industry’s Lobby Day in Washington, October 21st. Information is available from the various associations participating (NNFA, AHPA, UNPA, Citizen’s for Health).

Behind the scenes, ingredient strategy is being altered as suppliers assume more and more value chain responsibility in an attempt to develop categories, recognizing that in many cases, brand manufacturers do not have the resources, the vision, the capabilities or the inclination. Sure, categories have in the past been developed using marketing machines and smooth distribution systems, but what we’re talking about here is sustainable, methodical category development that is underpinned by solid science, and education to both trade and consumer audiences. We’ve seen pieces of this approach before, but it now appears to be coalescing into a broad industry strategy – at least in the hands of industry leaders.

I’m not suggesting that all manufacturers are relying solely on their suppliers for these critical functions, in many cases it is truly a participative program supported by manufacturers, but in some cases, we see a total abdication by manufacturers without recognizing or realizing the value of the supplier’s input and channel development efforts.

Programs like Veris Research, the Lutein Information Bureau, PUFA News and LycoNews all deliver science based information. The companies supporting and sponsoring these programs have gathered and packaged the information, and presented it primarily to an educated audience including those downstream in the value chain. The companies behind these efforts, and other thought leaders, have begun expanding their roles by supplying total solutions including formulation, delivery and bioavailability and total product development assistance. We’re going to see much more of this and suppliers unprepared to participate in this way will be challenged.

In the emerging regulatory environment with testing, registration, support and documentation all expected to impact supplier relationships, we will see the emergence of tighter relationships with an increased contribution from suppliers. In order for the economics to work, manufacturers must also acknowledge this more significant role and attribute relationship value to it.

The supplier of the future is being born now. This organization is performing solid, sound research, is developing and expanding its IP position, is not attempting to over-saturate any particular channel but is strategically seeking channel leaders to support on a product by product or line by line basis. This organization is committed to building each category it enters by supplying high level information to manufacturers to assist formulation, product development and market positioning and as well, is committed to supporting two levels of education – channel and consumer, in an attempt to build the category and brand. Strong contract manufacturers too are aligning with this top tier of suppliers to access the support and solutions available as they seek to provide a ‘Best of Class’ offering to their clients. Those that are treating suppliers like interchangeable parts may find themselves on the outside of this evolving industry.

One of my final discussions at SupplySide took place at the booth of educational sponsor, Cognis Nutrition & Health. In a discussion about educational program objectives (which were certainly met this year) and the importance and commitment that is necessary, we talked about the concept of innovation. Paul Allen and Kathleen Moran of Cognis pointed out that innovation is more than just new products, it’s about a way of thinking. While the typical answer to the question ‘What’s New’ is a new product introduction, (and this is certainly what has typically driven the industry), advances in research about existing products, new formulation support and expertise, and new capabilities are the types of innovation that can drive industry growth in years to come.

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