Analytics: How to avoid the top hindrance to (re)building your business

2020-03-24 by Bob Sperber

Manufacturers and others working through the COVID-19 crisis and planning to regain their competitiveness will rely on data analytics more than ever. But they’ll need a smarter, more strategic approach to prevent the most common cause of failure. Fortunately, the problem is more human than technical in nature, and it’s fixable.

The Fourth Industrial Revolution or Industry 4.0 brings among other things IoT data visibility, fueling more and better data modeling, machine learning, deep learning and Big Data. For purposes of this discussion, I’m committing a transgression here, lumping these together as “analytics” despite the technical distinctions. In reality, things just keep converging so that instead of plain-old IoT, more attention is going to the newly-coined AIoT, or artificial intelligence of things.

When deployed in tandem, artificial intelligence (AI) and the internet of things (IoT) can bring powerful new capabilities and competitive advantages—a net effect that’s greater than the sum of its constituent parts. How much more powerful AIoT is than vanilla IoT at tackling organizational improvements? Take a look at the percentages inside the little orange circles:

AIoT is 39% to 45% more effective than IoT, per a survey of 450 business leaders. (SOURCE: SAS, Deloitte, Intel and IDC)

Those surveyed said that among the benefits sought for their IoT efforts, increased revenue topped the list, regardless of geography, industry or company size. AI turbocharges that effort. (More details in the full article.)

AI, analytics: old news

Since my early-1990s coverage of early analytics and AI in such applications as statistical process control and machine vision, solutions have evolved with compute power and cloud services. The practice can now reach data anywhere, including networks bridging sites within single sites, across multiple sites or throughout enterprises and supply chains.

Ceci n'est pas une cobra — *“Ceci n’est pas une cobra” … This elephant is* not a snake.

In seeking improvements, top officers of the company need to instill a pervasive culture of improvement. True, improvements can be made in the silos of R&D, engineering, production, sales, finance or other functions, but still should be guided by market signals and customer demand, not just the blind pursuit of efficiency or cost-cutting. Without that holistic approach, line managers down can fall victim to the parable of the vision-impaired persons and the elephant. In short, things aren’t always as they seem.

If such talk seems a generality, it’s also very real. Plant managers, for instance, can achieve operational excellence, but so can their counterparts in competing organizations — the technology is a known commodity available to all. This diagram from ARC Advisory Group analytics specialist and VP Mike Guilfoyle helps illustrate the scenario — which gets more play in a Smart Industry story (hitting print and online channels at month’s end):

Transformational improvement with analytics can come when market signals lead internal improvements. (Source: ARC VP Mike Guilfoyle)

Where are the gaps in your apps?

The market’s flooded with analytic sellers and solutions. Here are for deceptively simple considerations that might help uncover how to find growth opportunities; where to find the greatest needs; how to approach solutions and who will support a cycle and culture of improvement:

Imagining I were in your shoes, I came up with a thought exercise with four very basic questions that might be a good first step closing the opportunity gap in your application of analytics:

1. In every sector and at every level, organizations generate massive amounts of presumably (or potentially) visible IoT data — so where are most data generated throughout your entire digital universe that you can, or should be measuring?

2. For every area that can be measured, analytics solutions (or platforms) can be bought, adapted or created to yield greater insight — so where are there gaps in your management and automation systems across your value chain(s) that if filled, will yield the greatest visibility for tracking and potential improvement/innovation?

3. Every business and operational system in the IT/automation marketplace must include some provision for the use of analytics — so how capable are your systems to perform analytics via native functions, third-party partnerships or via a suitable level of standard integration capability?)

4. Every application of analytics requires a sustainable ecosystem of training and support for better decision-making and ongoing innovation — so do you have a sustainable culture of improvement, with suitable lifecycle support structures in place via in-house and/or reliable external resources?

How are you approaching analytics?

Can you help me support the cause of progress? Share your thoughts and anything allowable…I’ll work with you and your organization to see how we can get the word out.

Contact me

A DYI ‘shroom farm? A fish-tank herb garden?

2015-02-12 by Bob Sperber

“That’s the most disgusting thing I’ve ever seen,” the Whole Foods buyer told Nikhil Arora, who opened a big & stanky bag-o-fungus in the buyer’s office. To the young innovator, that bagful was the crown jewel of a new product he’d liken to a “next iPhone” for natural products fans.

He was kinda right, as you’ll find out if you read the story — “Home mushroom farming, fish-gardening and other supply chain collaboration challenges,” — that I wrote when I saw Nikhil in my travels on the packaging beat. Over the next few years he found the right suphttps://www.packworld.com/article/contract-packaging/contract-packaging-news-trends/home-mushroom-farming-fish-gardening-andliers for his DIY mushroom kits and then a cool aquaponic fishtank-meets-herb-garden kit.

New product to bow end-February 2015.

Now he Alejandro Velez, co-founders of Back to the Roots, are at it again; they’ll unveil a new product on February 26th.

What’s it gonna be? I don’t know, but I couldn’t be happier to see these folks start so small and gain national distribution so quickly with such simple, honest ideas.

Rock on, guys.

How ‘Social’ marketing is like Soylent Green

2014-04-11 by admin

Goin’ social with the Contract Packaging Association at the Tucson Omni/National

Okay, we get that Spam — the canned pink, meaty stuff — has a protected trademark, unless it has a lowercase “s,” in which it’s less edible still. And Kleenex ain’t just any paper product. Unlike brand names, however, in the struggle to make “social” interactions relevant, there aren’t many actual rules to governing relationships.

What’s social networking in a B2B sector where smallish businesses do outsourced manufacturing and packaging services for large brand-owners? The key — just as in the movie Soylent Green — isn’t about industrial machinery, it’s…people.

Presentations, discussions with attendees and deep thoughts at a winter confab of the Contract Packaging Association led me to wonder how this group of (mostly) small business execs is un/like their counterparts in other sectors. One of the presenters, following a group participation event, noted that he’d never seen a group with so many self-identified “socializers” vs. other kinds of personality types. Then came dinner, drinks and a day of golfing around. So yeah.

It was a fun trip that led me to write a short column on those personalities, and the “people thing,” in my column for Contract Packaging magazine: “Where’s this Relationship Going?“

When Big Pharma brands shed their sales reps, you know outsourcing’s here to stay.

2013-11-26 by Bob Sperber

Major brands in various industries have shed all but their deepest core competencies. For the largest U.S. and global brands, this has typically led to a major offloading of manufacturing, packaging and distribution- and logistics-related functions. The reason is simple; for many if not most brands, much of those functions are commodities, whereas the real and profit-adding value to the brand is the brand itself. When the product can be manufactured and otherwise acted upon using standard equipment, processes and services that meet the brand’s specifications, even the sales function can be outsourced.

Sales is so closely linked to marketing in the Big Brand wheelhouse, it may surprise you to learn that sales, even in the highly specialized life sciences business, is often outsourced. How much of the Big Pharma sales force is outsourced depends on lots of product variables, but the use CSOs, or contract sales organizations, has been mainstream for many years.

How do pharma firms and their CSOs manage the ebbs and flows of the market and tenor workforces? In part, CSOs have been busy scooping-up experienced sales reps as brands reduce their headcount. CSOs area also laying the ground work for global growth through enhanced IT competency, broader service offerings and international partnerships and acquisitions. Online and mobile app use and the resulting collaborative capabilities of sales force software has only hastened the integration of in-house and outside contractors in communicating to customers, in this case healthcare providers. (See article linked below for an explanation of the graphic.)

I recently investigated the phenomenon and wrote what I found in a feature for Pharmaceutical Commerce magazine. Learn more by reading the story, “CSOs broaden their palette of service offerings.”

Redefining the outsourced supply chain

2013-07-18 by Bob Sperber

To state the obvious, contract packaging is rapidly evolving. The core outsourced-packaging function is easily understood, but the form and function of the contract packaging organization is a moving target. Decades ago, a co-packer was defined by the machines the company had on the floor.

By Bob Sperber; original post here.

Packaging-specific services remain a much needed, much in-demand core competency. Consumers want the benefits of the latest primary containers, pouches, blisters, pillows, stick packs, and/or the latest secondary innovations in POP, club packs, multi-packs and the like.

It’s why, to cite one of innumerable examples, Salt Lake City-based Northstar Labs has steadily upgraded its injection molding, liquid filling and four-color digital label printing capabilities. And it’s why Fairport, NY-based LiDestri Food & Beverage, for instance, leveraged its contract manufacturing and packaging smarts to develop a new multi-compartment flexible pouch format and expand into pharmaceuticals.

Brands, too, find themselves in the co-packing game. Toad-Ally Snax, Bristol-PA, which markets its own brand of chocolate-covered goodies, nets new business through additional contract and private label work—something even the largest brand marketer-manufacturers do whenever company-owned production assets sit idle for so much as a shift a week—just to keep capacity at 100% and feed the bottom line.

Those for whom co-packing is the core focus are doing much more these days to give a brand anything it can, from upstream package development and manufacturing to downstream warehousing, fulfillment and logistics.

Fave Juice, for example, outsourced just about everything but product development and marketing to The Scoular Company, which manages everything from ingredient and material procurement to manufacturing, logistics and contract packaging—even finding and managing day-to-day operations and growing a nationwide network of co-packers.

One day, it’ll be hard to define the very term “contract packager,” because the overarching industry trend isn’t on four-walls production, but on the supply chain. Whereas co-packers were once seen as a “stop-gap” solution, tomorrow’s contract packagers are “sophisticated logistical specialists,” says Chris Nutley, president of MSW Packaging Services and Contract Packaging Association president.

This reality is reinforced by Industry consolidation, notes Lisa Shambro, executive director of the Foundation for Strategic Sourcing, in her latest column. She points to private equity firm Wind Point Partners’ merger of Hearthside Food Solutions and co-packer Ryt-way Industries, which has created a $1-billion contract food and consumer goods manufacturer-packager with 19 facilities across seven states.

Likewise, Coregistics, itself a merger of co-pack and supply chain firms, just acquired Chicago’s Cano Packaging to offer food brands “increasing operational efficiency while significantly reducing their total supply chain costs,” according to CEO Eric Wilhelm.

As contract manufacturers and packagers broaden their horizons, large logistics firms are also deepening their packaging capabilities. GENCO, for instance, has formalized its contract packaging operations into a new, dedicated business unit. Dave Mabon, president of the business, says that brands are seeing savings into the millions of dollars due to tight partnerships aided by data visibility, or integration, across the “functional silos” present in large organizations.

The savings in purchasing, packaging, logistics and other “silos” need to be seen in cumulative form. Managers who ask, “What’s in it for my department?” need to recalibrate their attitudes and put on their cross-functional thinking caps.

Contractors need to maintain tight communication but also remember that big brands will continue to outsource as well as take work back in-house as the spreadsheet dictates. What should they do? “Enjoy the ride while you have it—and build other business for when you don’t,” advises Tom Bacon of Aaron Thomas Co., in the latest Personal Best profile.

Perhaps the hardest job in any co-pack relationship is finding the right fit in the first place. Online tools can help, from “Find a Contract Packager” link on the CPA’s homepage (www.contractpackaging.org) to Sealed Air’s Co-Packer Connection (www.copackerconnection.com), a matchmaking database service that now boasts more than 1,000 facilities indexed down to their machinery, financials, certifications, and more—as we’ve covered in the news.

Come to think of it, everyone and everything I’ve mentioned here, and more, is detailed in this July/August Contract Packaging, in print and online. Read on!

Store brands: Threat or opportunity?

2013-04-04 by Bob Sperber

By Bob Sperber; original post here.

Happy consumer Antonia with easy-to-use (and tasty-looking) Tide Pods.

In January, a Wall Street Journal story, “P&G Needs to Convince Thrifty to Splurge” said that the “real challenge” for Procter & Gamble in combatting poor sales and disappointing new-product launches was to get consumers “to spend more again on the company’s premium-priced products.” But the reporter “missed the point,” Robert Hogan of Zip-Pak told attendees at the CPA 2013 Annual Meeting in late February because there’s no difference in product quality between private-labeled store brands and traditional, national brands. The real challenge, then, is coming-up with innovations that will resonate, like the next iPod… or Tide Pod, in the case of P&G.

Nielsen research cited 21% dollar growth in private label from the onset of recession until 2011, while in the same period, national brands logged only 3% growth. Brand loyalty and consumer satisfaction varies across categories, and NPD Group research partly refutes Nielsen’s findings, but everyone agrees that innovation is key. Will consumers care if the R&D behind that innovation comes from a manufacturer-owned brand or is the result of a retailer who decided to partner with an enterprising contract manufacturer/packer?

Today, I’m hearing that traditional co-pack growth is in the middling single-digit range at best. In contrast, Hogan presented research indicating that store brands account for 22% of all U.S. retailer goods, a number greater than 50% in the UK and Switzerland. As with other market trends, North America is likely to follow Europe’s lead.

If so, traditional brands’ power may well erode in the supply chain and at the outsourcing contract negotiating table. If you believe the co-pack industry will mature and consolidate (as I do), tomorrow’s larger outsource service providers will have more leverage to invest in their own capital equipment and innovate with their own R&D efforts. This in turn could mean that traditional brands have less power to negotiate non-compete terms, and co-packers have more power to work directly for retailers.

Thoughts? My inbox is open.

Words that work

— by Bob Sperber

Category Archives: Outsourcing