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Bill Stankiewicz Copy Of July 31, 2010 Of Voice Of Vics July 2010v3


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VICS NEWSLETTER COPY for Bill Stankieiwcz


Bill Stankiewicz
Vice President & General Manger
Shippers Warehouse
Office: 678.364.3475

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Bill Stankiewicz Copy Of July 31, 2010 Of Voice Of Vics July 2010v3

  1. 1. July, 2010 A Tale of Two Companies: BP and Shell Oil The bedrock of any successful enduring strategy requires a leader‘s vision that is embraced by the entire organization. Operating plans are developed that provide guidance on daily activities and standards by which the company operates. The organization operates through the delivery of its value proposition (i.e., the unique value it intends to deliver to its customers), and in how it operates internally in order to deliver that value proposition. Operating Psychology Peter Senge tell us that the vision of how a company will operate internally is communicated in the form of its operating philosophy, which consists of the organizational structures, methods, standards, processes, technologies, etc., that the organization will use to accomplish its work. The operating psychology needs to ensure that the leaders' values will be maintained through their employees' daily decisions and actions, and that such actions will produce the long-term vision the leaders have for the company. If a company's business activities are inherently risky, drilling for oil a mile deep in the Gulf, then the business needs to incorporate that degree of risk into its operating psychology. They would need to make sure that risk mitigation (aka safety) is tightly woven into the core of the company. Safety, therefore, would always take top priority over everything else. To make safety the highest priority, the company D=ct1_solg_met_industry&WT.svl=PNRO_L1 would need to rigorously train its employees on good safety practices, and it would need to reward examples of putting safety first, even when doing so results in short-term costs or missing production objectives. TM The Voice of VICS – 1 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  2. 2. Joe’s Corner (Continued) The events leading to the BP disaster would indicate Scenarios Developed there were both managerial failings on the rig and The first scenario – Stable oil prices - In this view, through every level in the company. It‘s no Shell predicted oil prices would stay somehow stable. coincidence that BP had the worst safety record in But in order for that to happen, a miracle would have the industry even before the disaster in the Gulf to occur. New oil fields, for example, might have to Clearly, a linkage between safety and the long-term appear in non-Arab countries. sustainability of the corporation has not been firmly ingrained in BP's operating psychology. The second scenario looked at the more plausible future – an oil price crisis sparked by OPEC. But after We Get What We Reward they have presented these scenarios to Shell‘s The BP manager on the rig was worried about management, there was no change in behavior staying on schedule, as a slippage would have cost in happening. The managers understood the the company a few million dollars. Instead, by implications, but no change in behavior came. So ignoring the possible consequences, he (and BP, Pierre Wack went one step further and described for through its management) created a disaster that the scenarios the full ramifications of possible oil may well bring down the entire company. More price shocks and he tried to make people feel those importantly was the loss of life, injuries and the shocks through the scenario. He warned financial and emotional pain suffered by those who management, that the oil industry might become a are dependent on an environmentally friendly Gulf. low growth industry, that OPEC countries would take These same types of failings have brought down over Shell‘s oil fields. They described the forces in many corporations over the years, including many of the world, and what sorts of influences those forces the financial houses in the past couple of years. had to have. This was when scenario planning for businesses was born. It helped Shell‘s managers to imagine the decisions they might have to make as a Contrast the story above with that of Shell Oil. (Peter result. Their plan was conceived just in time. In Senge, the Fifth Discipline) October 1973, there was an oil price shock and of In the early 1970s, Pierre Wack, was a planner in the the major oil companies, only Shell was prepared for London offices of Royal Dutch/Shell in a newly the change. The company‘s management responded formed department called Group Planning. Pierre quickly and in the following years, Shell moved from Wack and other planners were looking for events one of the weaker of the seven large oil companies that might affect the price of oil. They found several that existed at that time to the second in size and significant events that have been in the air. One was, the number one in profitability. that the United States was beginning to exhaust its oil reserves. At the same time American demand for So to operate in an uncertain world, managers need oil was steadily rising. The emerging Organization of to be able to question their assumptions about the Petroleum Exporting Countries (OPEC) was showing way the world works, so that they can see the world signs of flexing its political muscle. Most of these more clearly. The purpose of scenario planning countries were Islamic, and they bitterly resented therefore is, to help managers to better understand Western support of Israel after the 1967 six-day the ramifications of their strategies and understand Arab-Israeli war. Looking at this situation, the that ―today‘s solutions are tomorrow‘s problems planning team realized that Arabs could demand (Senge). The ramifications of decisions made are not much higher prices for their oil and there was every felt until years or decades thereafter. Peter Senge reason that they would. The only uncertainty was stresses the importance of team learning and of when. It seemed likely to happen before 1975 when scenario planning as key to sustainable strategies old oil price agreements were due to be that lead companies to the accomplishment of their renegotiated. So Pierre Wack and his team wrote up goals. I highly recommend Peter Senge‘s Fifth two scenarios – each a complete set of stories about Discipline.◊ the future, with tables of projected price figures. All the very best, Joe TM The Voice of VICS – 2 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  3. 3. Notes from the Birth Fred: ―Pillsbury, at the time, was attracted to the notion of CPFR on a couple of fronts. First, we thought, ‗how do we look outside of our own of CPFR® company to drive value in the supply chain?‘ There seemed to be a broad consortium of both retailers Fred Baumann’s Perspective and manufacturers that wanted to build practices on how to work together, but at the time this was fairly unique. There was not much focus in the industry on In our continuing series of articles about sharing information regarding forecasts. Secondly, Collaborative Planning we were interested in the idea of coming up with a Forecasting and framework for adding customer-driven value.‖ Replenishment (CPFR®) and where it all began, we highlight the roots, growth VoV: Were you influenced by any of the and people that are beginning studies regarding CPFR? responsible for its success. The impact of those Fred: ―The original work of CPFR that truly proved to involved from the beginning be influential was the original pilot with Wal-Mart and continues to shape the Warner Lambert. The CPFR case study showed the CPFR guidelines today. It is success of collaboration between a retailer and a because of the hard work supplier as it was executed with Manugistics (now and contributions of these JDA Software) technology. The pilot was very individuals that CPFR has instrumental at a high level; for example the in- changed the way businesses operate for the better. stocks were moved from 87 percent to 98 percent. There was also a big impact on lead time reduction In this article, we interviewed Fred Baumann, vice because both companies were working more president, industry strategy for JDA Software Group, collaboratively. Most importantly, there was a huge Inc. Fred leads product and industry strategy for the impact on —sales – in fact, Listerine sales went up manufacturing and wholesale verticals at JDA $8.5 million. Software and has been instrumental in driving JDA‘s collaborative trading community As for the pilot project that I strategies and launching the company‘s worked on at Pillsbury, it also CPFR and sales and operations planning influenced and shaped what (S&OP) offerings. CPFR means to me today. In the early stages, I was Fred‘s previous career experience responsible for all of the includes an application-training role at collaborative initiatives IBM and eight years of experience with Wal-Mart. Therefore, I with The Pillsbury Company, where was very interested in he served as a value chain manager. applying the insights of the Fred was responsible for starting CPFR initiatives and Pillsbury‘s collaborative inventory integrating them into my program with Wal-Mart and executed work on the Pillsbury team other value chain strategies. to drive value at Wal-Mart. On the food side, we were one of the first companies to Fred received his undergraduate degree at have a cross-functional team Georgia State University and an MBA with with Wal-Mart in Bentonville, distinction from the University of Arkansas, Sam M. Arkansas, where I worked for three years.‖ Walton School of Business where he had a core focus in supply chain management. Fred is an advisory board member of the Collaborative Planning, VoV: What obstacles did you come across Forecasting and Replenishment CPFR® VICS industry during the pilot? subcommittee and was a named contributor to the 1998, 2004 and 2007 published CPFR guidelines. Fred: ―The principles of CPFR are about leveraging consumer sales as the primary demand signal and The Birth of CPFR translating a sales forecast into an order plan that can be integrated into the corporate planning of the company. As such, the challenge is to work through Fred first took part in the CPFR initiative while at differences and move to a customer-driven practice. Pillsbury during the ―blue-print phase‖ of the There are always cultural and behavioral barriers business practice. As value chain manager, it was that can come between internal functions and his responsibility to cultivate a shared vision in all external customer relationships, which I believe participants. The shared vision provided common proves to be bigger than the technology challenges. direction and focus, motivated personal, team and Also, 12 or 13 years ago when the first CPFR organizational learning, and thus enabled all guidelines were introduced, it wasn‘t all that participants in the value chain to work toward common for customers to open up and share point- common goals. of-sale information, future forecasts and promotional plans beyond a short horizon. There has always been Voice of VICS (VoV): While working at The a trust issue. Therefore, every manufacturer had to Pillsbury Company, what led your company to earn that trust and assure their customer that they adopt CPFR? weren‘t going to share that internal information with others. TM The Voice of VICS – 3 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  4. 4. The Birth of CPFR (Continued) to bring CPFR to scale. You have to consider lead times, package sizes, receiving and shipping windows and transportation constraints; all of these VoV: At the very beginning, VICS CPFR variables impact how the product flows through the meetings what area did you focus on most? supply chain. Technology provides a means to What was your claim to fame? collaboratively plan together and allows the companies to scale. As a planner I have a finite Fred: ―I covered a lot of different spaces for the amount of bandwidth. I want to make sure that I am guidelines. I worked on the distribution center level prioritizing activities to provide the greatest value of collaboration quite a bit. I was also one of the lead and am working on items that are most likely to editors on the original guidelines focusing around the deliver value while creating an alignment with my sales and order forecasting process—and more trading partner. Software plays a key role in being broadly, I was instrumental in the overall process able to present priorities through exception-based model development.‖ processing.‖ VoV: Do you have any advice for those VoV: On a personal level, how did your work on considering CPFR? VICS help your life and career? Fred: ―The thing that I would highlight is that a lot Fred: ―It contributed quite a bit to my career—when of people get wrapped up in trying to execute every I left Pillsbury I was brought on to a software single step in order to get value—this is a myth that company named E3 Corporation. It was here that I should be broken. There is considerable value in took the knowledge and exposure gained from VICS different areas of the model; the value of CPFR does to create a business unit at E3 that was ultimately not have to be ―linear‖ and the model allows for acquired by JDA. The collaborative business unit is multiple start and end points. still very active and contributing to the company Also, don‘t underestimate change management steps today. The relationships that were built through my in the process. It is a lot easier to share information experiences at VICS greatly contributed to the openly today than it was 15 years ago, but there is design and rollout of how the process should be still a level of trust that needs to be built. Without deployed. ― that trust nothing else will work, so spend the appropriate amount of time building relationships VoV: Over the last couple of years has there that will ultimately drive better performance. The been anything that has tied CPFR with the importance of senior-level sponsorship from both faltering economy? For example transportation sides is key. Companies that have succeeded with and fuel prices. CPFR have had excellent executive sponsors.‖ Fred: ―As we talk to our customers what we have VoV: What organization alignment do you feel gathered is that the recession has had a big impact works best for a company? across all business aspects, including CPFR. For example, due to the cash constraints from the Fred: ―In the early days we talked about the consumer point of view, there have been a lot of evolution of relationships and how they change. shifts from branded-based products to value- There really was only one point of contact back then oriented products. Also, in the past a consumer that with the key account historically managed might have bought a 50-count product might now exclusively by sales. One of the things we talked only purchase a 24-count product. These changes in about with achieving a successful CPFR program was consumer behavior from the faltering economy ‗the bowtie and the butterfly.‘ You want to expand greatly affect how we operate and plan today. the bowtie by reversing the model to form a kind of diamond with multiple points of contact. By The recession moved many consumers to value expanding from just sales to supply chain, the channels. So, we see the club environments and financial organization, senior-level marketing/sales, other value-focused retailers such as Wal-Mart category management groups and even logistics to benefiting in these times. There are huge represent all key points on the bowtie, the opportunities for companies to collaborate to organization alignment will prove to be beneficial. understand the shifts that are happening in stores CPFR played a huge role in getting away from the with consumers and how they‘re changing their mindset of the narrow bowtie and into the industry buying habits. chain.‖ Hopefully, as the economy recovers companies will VoV: From a technology perspective, do you not get left out by not having enough product for feel you need technology for CPFR? sale. Fred: ―To scale, the answer is yes. Do you have to As for transportation, we are seeing more impact to have a CPFR purpose-built solution to do CPFR? due to not only saving a dollar, but sustainability as No. There have been a lot of great results in a well. In Europe, for example, the concept of manual framework, but how do you move from a horizontal collaboration has greatly affected logistics single customer to multiple customers? You think – competitors have been working together to about what a software program does that humans improve logistics by sharing the same truck and co- can‘t do – for example, provide statistical locating in common warehouses. Also, recent information, manage enormous amounts of regulation in the United Kingdom has constrained information and prioritize information that needs transportation where only certain trucks are allowed further analysis to garner insights. The complexity of in the city at certain hours.‖ supply chain information requires technology in order TM The Voice of VICS – 4 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  5. 5. The Birth of CPFR (Continued) the inventory reductions, revenue lift, and cost reductions that are the ultimate goals of collaborative initiatives. Fred Baumann and JDA have VoV: What is the future of CPFR? helped to provide this solution that matches limited materials and production planning against Fred: ―There are a couple of things on the horizon constrained and unconstrained demand plans to that we are involved with – one is the concept of meet the general objectives of profitability, scenario planning: when I have a long-term view of productivity, competitive customer lead times, and my plan, I have better visibility of where I am versus backlog levels. JDA is the world‘s most my annual operating plan. This presents the comprehensive provider of innovative supply chain opportunity to run scenarios to close gaps between management and pricing excellence solutions. For the sales forecast and the operating plan, as well as between the sales forecast and the financial plan. Another new concept is shelf-centered collaboration. nearly 30 years, JDA has empowered its customers This is focused around tying the activities at the shelf to make optimal decisions that improve profitability into a combined effort and identifying how they and achieve real results. The company‘s unparalleled impact the supply chain. We see companies getting heritage, customer base, solutions, financial strength closer to having store-level assortments and store- and intellectual capital all combine to create one of level planograms. In the past, they may have had the world‘s leaders in supply chain solutions and regional planograms, but the future shows that services. Empowering more than 6,000 companies companies will be getting much more granular as of all sizes JDA makes optimal decisions that improve they look at allocating space and items in specific profitability and achieve real results in the discrete stores. This is just another level of collaboration that and process manufacturing, wholesale distribution, is happening and representing the future of CPFR.‖ transportation, retail and services industries. So thank you Fred for your unparalleled commitment to Overall, Collaborative Planning, Forecasting, and Replenishment (CPFR) provides customer-level excellence and industry-changing ideas. ◊ visibility throughout the supply chain to help achieve States Logistics: Consolidation Success With sustainability and the of their companies due in part to the continued trend in faltering economy on the forefront the industry and due to their ability to shorten cycle of today‘s concerns it is no wonder times for their customers. that businesses are keener to collaborate. Today‘s fast paced In last year‘s article, Donovan told us that many of their business world requires suppliers had an average lead time on orders of 7-10 organizations to depend on the days, but by consolidating through States Logistics, that performance of their supply chain time was cut to 3 to 5 days. ―In spite of the continued more so than any other time in trend towards smaller orders,‖ Donovan exclaimed, ―we history. In July of 2009 we spoke are still seeing an average of 3 to 5 days. Customers in with Ryan Donovan, VP of the program stay at this desired level.—Instead, part of Operations and Business our big growth are the new customers we were able to Development for States add to our business—the upside about tough times and Logistics, concerning the depression is that everyone has to find savings, so Ryan Donovan advantageous route of VP Operations & Bus. Dev., when we are knocking on doors and talking about using a 3PL company. consolidation and what we can do for them, they now Statess Logistics Since 1958, States listen. Their requirements are to cut costs by x percent; Logistics Services has they‘re looking for a solution and we come with proof provided organizations with cost effective and value that it works. We‘ve got 50 references that are all driven 3PL and supply chain management solutions. singing the praises of what the program is doing and it Their services include warehousing, transportation, and ends up being a pretty easy sell. We don‘t have to be value added services all of which enable them to deliver geniuses--you catch the right groups at the right time the necessary capabilities that have taken their clients‘ and it‘s an easy choice to switch over and become part supply chains to the next level of performance. With of the program.‖ operations in Southern California and Phoenix, Arizona, States Logistics has become the premier 3PL provider The program itself is a very easy one to participate in. on the west coast. That is why we recently spoke to Donovan explained that what it really entails is ―using Ryan Donovan again to see where his business is at us as the company‘s warehouse and transportation today. provider and from there it just kind of fits. The retailers are notified of the new ship points and that they are Last year when we spoke to Ryan, he told us that now being serviced through States Logistics. From there States Logistics was working with about 50 to 70 they go back and look at what their lead time was and consumer goods suppliers, and they have now grown start shrinking it. Really a company can start up and get that number to close to 100 companies. Ryan shared running in less than a month.‖ that they continue to see some smaller order sizes due to shorter lead times and decreased volumes for most TM The Voice of VICS – 5 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  6. 6. States Logistics: Consolidation Success much margin as you possibly can. In difficult economic times, our business has thrived. We (Continued) have grown our customer base significantly over the last two years purely because people need to make We asked Donovan what alternatives exist for the small changes. manufacturer that‘s not part of the program. Is he in the situation where he will eventually have to find a Not only is consolidation bettering the way these service like this or be purchased by a larger businesses are run, it has a MAJOR impact on manufacturer? Donovan answered this question by sustainability. A driving benefit of States Logistics is the stating, ―For the small manufacturer shipping on x environmental aspect of lessening the carbon footprint carrier it is extremely inefficient to have to make deliveries of one or two pallets at a time. This results in a truck driver and trailer tied up for several hours with a mere two pallets. Their transportation costs at some point are going to increase until the cost of of many companies. Donovan states, ―One of our transportation is too overwhelming. What also happens biggest sells is the sustainability aspect of our business. is there are logistic companies out there who quote you We started using this point about 4 years ago and since low rates for transportation; you tender them with then we‘ve expanded our business, particularly among freight, they handle it and go into a delivery. Then they suppliers of natural and organic foods. Obviously those start hitting you with charges for delay times at the companies are on the leading edge of sustainability. dock. You will start fighting those, but at the end of the States has been doing its part for the environment for day somehow with those rates you can‘t pay somebody some time. In early 2006 we started running biodiesel to just drop off two pallets and sit for four hours. It just in our trucks. In doing so we are not only saving wear doesn‘t work. Once again this goes back to the last 2 or and tear on the highway system and cutting down on 3 years where you had a number of transportation highway congestion, but we are also using clean energy companies forced out of the business because they and saving the environment.‖ would quote low rates that would eventually force them Lastly we wanted to touch base on where is there out of business. The difference with us is we send a growth for States Logistics. Where is the future going driver in with 50 pallets for 25 different manufacturers. for consolidation? Donovan once again enlightened us in stating, ―Relatively speaking we are limited because we He may be there a little bit longer, but he gets all that are a regional based company that operates in the west product delivered at one time; he doesn‘t do 15 stops in and so we are kind of stuck with our niche in a day. And if it‘s a drop trailer he‘s finishing with one geography. Our standpoint as of now is that we are stop, coming back, and doing 5 more stops in a day-- trying to expand and do more and more with those potentially delivering 75 POs in a day on one driver.‖ customers that have a one DC or two DC network—we are also trying to get straight consolidated trucks out of Southern California going to the northeast. With the benefits these manufacturers Further building our routes going from are realizing from the program, they have Southern California to the northeast is the ability to pass some of the savings on important to us but we still have a long way to the retailer making it a WIN-WIN-WIN to go. We could hit 500 manufacturers and situation. A program like States Logistics still have plenty of growth opportunity. Our can be a major advantage to a smaller target customers are consumer package manufacturer—keeping them afloat. goods companies. In the past we have focused on the channels with food service, After hearing all of the winning aspects of grocery, club, and mass, and have no the program, it seemed appropriate to problem expanding to other products, yet wonder, why everyone else is not doing there is still quite an untapped market this? Is it because States Logistics is located in a highly potential in CPG-- why go away from it and lose focus populated market area that is very congested? Donovan on that? We have only focused on CPG for the last 10 to explained, ―In California there is rival proximity from 15 years. one major retailer facility to another so they‘re all going to be fairly close. I think you‘re seeing more and more Overall, Ryan Donovan and States Logistics have people migrating towards a 3PL company. It is proven the success of collaboration. By consolidating becoming more and more important—to me it all falls many small manufacturers are about to stay afloat and back on the point that when times were good, people in hard economic times, many companies are looking to didn‘t look as hard to find better ways to run their save that extra dollar. States Logistics has provided a business--people sat back and were happy with the status quo. As times get difficult, however, you have to way to do that.◊ save every penny and figure out a way to squeeze as TM The Voice of VICS – 6 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  7. 7. Counterfeit Goods: It’s Not Just Your Handbags You may feel great strutting your stuff with Corporations may see many effects due to that knockoff Louis counterfeit goods: Vuitton bag that looks real, but you only paid Lost sales to the fake product $50 bucks for on Canal Harmed brand reputation Street in NYC; you feel as Loss of consumers due to dissatisfaction if you are tricking society. Loss of trust in the Corporation name But imagine how you would feel if you were the The New York Times also reported that in general one being tricked. multinational manufacturers lose about 10 percent of Counterfeit goods are no sales to counterfeiting and that the true effects of longer just limited to high-end merchandise such as counterfeit handbags; the trend is falling towards consumer goods is very hard to quantify. Some examples of products. Asian counterfeiters are now tricking society phony items confiscated in the past include Gillette into buying counterfeit soaps, toothbrushes, and even Mach 3 razors and Head & Shoulders shampoo, both food and beverages. This is not a matter to be taken P&G brands, and Colgate toothpaste. lightly. Not only is the counterfeiting hurting the company brand image and taking away sales, but can The boom in counterfeit goods is being driven by: also be extremely dangerous to the fooled consumer. The Internet: makes it easier to find In the past years the amount of consumer goods being customer counterfeited has risen immensely. The key to stopping The development of cheap, high-quality the problem begins in Europe. Many of these items are printing equipment that allows criminals to discovered and confiscated at the border including the mass-produce packaging interception of 20,000 kilograms of fake Lipton tea from Rising trade with Asia, where trademark China and 800,000 knockoff Oral-B toothbrushes in the rules are less rigorously enforced past. In Belgium they have had a counterfeit-hunting squad in place who believes counterfeiting has gone The lack of consumer awareness makes from a local problem to a multinational problem. counterfeiting household goods less risky than Fraudulent products hurt sales of companies such as targeting luxury handbags and watches, but the Nestlé, Procter & Gamble and Unilever, the owner of potential danger is much greater for the consumer. Lipton tea, and may pose health risks. Fake baby formula has caused the deaths of infants, and phony tea has caused sicknesses in many unaware consumers and is known to contain sawdust The New York Times reported that in 2006, European or dyed wood chips. Union customs officers seized 253 million fake products at the external borders of the bloc, up from 85 million in Many companies are upping their staff to channel 2002. Seizures of personal-care products and perfume their energy and time into fighting the counterfeit rose to 1.6 million items from 112,132 in 2002. Officers problem. With the rising trend in phony consumer caught 1.2 million food and beverage products, up from products, these companies are focusing on stopping 841,000. The counterfeit-hunting squad is on the the counterfeiting all together. The only problem is frontline of a new battle in the war that with the sophisticated technology against knockoffs: fake brand- it has become harder and harder to name items including tea, distinguish the phony from the real. shampoo and soap. In 2007, Counterfeiters have become skilled in Colgate-Palmolive warned packaging and then disregard the American consumers that product inside. Overall, consumers and counterfeit toothpaste that may corporations should all be on the contain a chemical used in lookout for counterfeit goods and antifreeze was found at stores in remember—it is no longer just those four U.S. states. The problem handbags on Canal Street that are with counterfeit consumer knockoffs. ◊ products was present in the past, and the fact that it is still posing as a problem today, makes it something to really concentrate on. TM The Voice of VICS – 7 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  8. 8. Brand Revival – What’s Old is New Paul Earle, a noted ―Brand Revivalist‖ and president worked once, it can work again. Unfortunately, this of River West Brands, LLC writes, ―Everywhere simplistic strategy is not enough. Brands that rely consumers turn, it seems, a marketer is waxing purely on their glory days risk finding themselves nostalgic about yesteryear. From beverages, to overlooked by a new generation that must be sneakers, to detergent, to cars, to television sets, to brought into the fold. Admittedly Boomers and baseball uniforms, much of today‘s brandscape is Xers tend to feel an affinity for brands they once being retrofitted — figuratively and sometimes used. But what is the attraction for a new literally.‖ generation of consumers who have no history with these brands? What makes a new generation want ―Old‖ has become ―classic,‖ and classic has become to adopt old things? For Millennials, the draw is cool. Unless hundreds of different marketers are all inspiration. The past offers a cupboard of mix-and- wrong, the conclusion must be that brand revival match elements to form new experiences. works. In other words, consumers don‘t have to be old to A brand is value, personality, and recognition. We connect with old-school. Recognizing the duality of know them, we love them, we hate them, we trust audiences is crucial for a retro brand to sustain a them; a brand defines the product, the quality, and comeback. The question remains: What does it take the experience. It takes years to create a brand that for a forgotten brand to resurge within popular resonates strongly and favorably in the eyes of culture and achieve fresh meaning and lasting appeal consumers, but opinions are always subject to with consumers? change. Allison Cenna, a Senior Strategist at DDB Chicago, A team of scholars at Northwestern University notes there are four key elements that make for a recently argued recently that practitioners of the successful retro brand revival. discipline called ―new product development‖ should also consider ―old product redevelopment.‖ The 1: Allow for Rediscovery researchers challenged the long-held belief that A successful retro brand revival allows for a true brands have a ―life cycle‖ with a clear beginning and sense of discovery and rediscovery across age an end, suggesting that certain kinds of brands may groups. It has multigenerational appeal – and each follow a ―life circle‖ instead. Perhaps a good brand generation has its own connection to the brand. may hibernate, but it never really dies. What‘s become pure nostalgia for one generation can be new, different, and genuine for another. As an older generation fondly holds onto past brand associations and a new generation seeks to adopt old Winner: Pabst Blue Ribbon Beer:- PBR appeals things as new, more brands attempt reinvention and to Boomers who enjoyed the beer everything old becomes new again. in its heyday and now drink it to reconnect with their youthful past. Our culture is composed of sequels, reruns, But it also appeals to a whole new remakes, revivals, reissues, re-releases, recreations, generation of Millennials and Xers re-enactments, adaptations…and nostalgia record who like PBR for its retro appeal. collections. Loser: Hai-Karate Aftershave: Despite its status So how can a forgotten brand stage a as a ‘70s icon, Hai-Karate failed to successful revival? connect with a new teen audience who, Successful revivals involve more effort and planning finding it neither cool nor inspiring, than marketers realize. Today‘s world is complex and dismissed it as old-fashioned with an uncertain. In the midst of what economists are unbearable scent. It didn‘t align with their calling the ―Great Recession,‖ the country is values or their tastes.. struggling with financial troubles – housing foreclosures, rising food prices, high unemployment 2: Connect with Timeless Consumer Values – consumer confidence is low and there doesn‘t For a retro brand to successfully connect with seem to be an end in sight. Because of these factors consumers, it needs to align with timeless values many marketers are bringing back the brands of relevant to all generations. yesterday with the hope that they will tap into Such values include: authenticity – the quest for peoples‘ desire for simpler, happier, less stressful what‘s real and true and simplicity – the desire for a times. They believe their brands can provide safety, less complicated time and lifestyle. comfort, pleasure, or joy – a tonic in today‘s uncertain world. Whether dusting off an old slogan or bringing a brand name out of dormancy, the hope is that if it TM The Voice of VICS – 8 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  9. 9. Brand Revival What’s Old is New Winner: Rubik’s Cube : The Cube, launched in 1980, was an instant success. At the height of its (Continued) popularity, the world was crazy for the Cube. One Winner: Converse Chuck Taylor All Stars: The hundred million Cubes sold between 1980 and 1982 1920s through 1970s were Chucks‘ glory days. But the 1970s brought new In the early 2000s Winning Moves competition from Nike, Reebok, and Games brought the infuriating little Adidas, and Converse ceded territory as a puzzle back, re-launching the original performance shoe. The company, under product, creating new technologically new leadership, concentrated on enhanced versions, revamping its rebuilding its brand name and focusing on site, and allowing people to easily what made Chucks so successful: simplicity and get involved in game play. The re-emergence of the authenticity. Converse re-established timeless cube, coupled with word of mouth, spurred a new bestsellers with updates. They have since designed generation to discover and adopt it. new streetwise models that retained the original style and sales continue to grow. Loser: Napster: Napster created a 20-million- person community by making music Loser: Centipede Video Game: sharing accessible to the masses.21 After Despite its success in the early 80;s, being sued by copyright owners in the Centipede 3D failed to connect with music industry, Napster met its demise. consumers young and old because it Its name and rights have since been wasn‘t authentic, it wasn‘t simple, bought and reinvented. But in trying to and quite frankly, it wasn‘t fun. resurrect a community of advocates, the brand is offering nothing to rally around − the newest incarnation is a pay service meant to compete with 3: Stay True but Contemporize iTunes. A brand that stages a comeback without making any changes to the product is simply an old brand with old tricks. The retro brand that succeeds comes Histories of Brands you know…Brands you love back updated – improved – to today‘s standards. Classic appeal, contemporary features means an old Like River West Brands, Pinnacle Foods is another brand can be taught new tricks. example of a company that has acquired well known brands that were cast off by their original owners. Winner: VW Beetle : The old VW Beetle was the stuff of legend. In 1968, The vast majority of their brands have been in its peak year, VW sold existence for at least 50 years each, and penetrate 423,008 Beetles in the 81% of US households. Let‘s take you on a trip U.S. − 5% of the US car down memory lane; where are those brands you market. The Beetle was remember as a child today?—the answer is Pinnacle cheap to own and fun to Foods. How some Pinnacle brands came to be: drive. The linchpin of the New Beetle‘s success was staying true to the heart of the Beetle brand while contemporizing for today‘s buyer. The New Beetle‘s design evoked feelings of nostalgia, Armour meats freedom, and fun. Its spirit was friendly, honest, and Begun in 1867 as a meatpacker, Armour optimistic. eventually was better known for soap, a meatpacking byproduct. It became Armour- Loser: Re-Introduced Ford Thunderbird: The Dial, then just Dial. Pinnacle licensed the 2002 Retro Bird was meant Armour trademark for canned, jarred and to be a reinvention of the pouched meats from Dial. 1955 classic. However, in the updating process, designers made the car overly posh (the interior and engine were similar to a Lincoln‘s), and the brand faced complaints that it drove more like a ―luxury land yacht‖ than the sports Aunt Jemima frozen breakfasts coupe it evolved from First a pancake mix in 1889, Aunt Jemima mix and syrup now are owned by PepsiCo's Quaker Oats unit. Pinnacle licensed the name for frozen 4: Build a Community products, such as pancakes and waffles. Powerful retro brands have provided their fans something of value to rally around. Their communities are swarms that advocate the brand and help propel its success. Successful companies have reached out to the brand‘s most passionate advocates who spread the word from peer to peer and multiplied their efforts exponentially. TM The Voice of VICS – 9 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  10. 10. Brand Revival What’s Old is New (Continued) Mrs. Butterworth's syrup, pancake mixes The talking, granny-shaped Mrs. Butterworth bottle first appeared in ads in the 1960s. Pinnacle revived the icon for TV ads in 2007. Actress Edie McClurg, the school secretary in 1986's Ferris Bueller's Day Off, is the new Duncan Hines baking products voice. Duncan Hines, a traveling salesman turned author/food critic, lent his name to a cake mix in 1948. The brand now has more than 80 products. Swanson frozen dinners Its "TV dinner" was born in 1954 in response Log Cabin syrup to two home innovations: freezers and TVs. Minnesota grocer Patrick Towle in 1887 named An original aluminum tray is on display at the his syrup for Abraham Lincoln's early home. Smithsonian Institution.. ◊ Business by the Book Knowledge is gained through many This month highlights a book for the aspiring facets in life: experiences, lessons entrepreneur titled from others, mistakes, lectures, schooling, and books. Growing up in an age where technology was just a The 51 Fatal Business Errors and How to Avoid sapling, books were the trees of Them by Jim Muehlhausen. knowledge we climbed. Our school age days consisted of Description innumerable books shaping our minds into what they Starting a business is easy! Successfully are today. In an age of running a business can be a challenge. Jim technology, books should Muehlhausen has traveled the country not be discarded—there is always learning collecting best and worst practices from to be done. business owners. The 51 Fatal Business Errors provides a quick and easy format to That is why VICS is starting a new section learn from other business owner's successes Business by the Book highlighting the and failures. Each error contains a real-life recommended reading of the month. example and definitive action-steps needed to improve your business. The book is not full of fancy theories or fluff. It is chock-full of real-world experience learned at the world's most expensive business school: The School of Hard Knocks. ◊ TM The Voice of VICS – 10 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter
  11. 11. VICS Meetings & Events Date 2010 Meetings/Events Location The Value of Linking S&OP to CPFR: A Cross-Functional Industry Panel Webinar Aug 12 Webcast 11:00 am - 12:00 pm EDT Details & Registrations PSU: Supply Chain Collaboration Program Aug 23-25 State College, PA Details & Registrations CSCMP Annual Global Conference 2010 Sept 26-29 San Diego, CA Details & Registrations RFID Forum Oct 12-13 Information Fayetteville, AR Registrations & Details VICS CPFR® Knowledge Networking & Committee Meeting Oct 19-20 Details & Registrations Chicago, IL Hosted by Accenture VICS Board of Directors’ Meeting Oct 20-21 Chicago, IL Hosted by Accenture AIM Expo Nov 1-3 Details & Registration Chicago, IL Event Flyer VICS CPFR® Certification Program Nov 9-11 Program Description Lawrenceville,NJ Details & Registrations The University of Tennessee College of Business Administration Nov 9-11 Knoxville, TN Supply Chain Strategy and Management Forum Details VICS Joe Andraski Tony Galli President & CEO, VICS Managing Director Princeton Pike Corporate Tel: 609-620-4590 Websites Center Fax : 609-620-1201 1009 Lenox Dr., Suite 202 Email: JoAnn Fiordland Lawrenceville, NJ 08648 TM The Voice of VICS – 11 of 11 Don’t wait to be great… Collaborate! - The VICS Monthly Newsletter