The Foundation for Supply Chain Solutions (F4SS) is an industry organization focused on improving external supply chain and the relationships and capabilities between CPG brands and their contract manufacturing partners. Julie Christiansen is the CEO of Gordon Laboratories, a premier personal care contract manufacturer in the Los Angeles area. She has been part of F4SS since 2012, and is currently on its Board of Directors. Russ Stewart is the Senior Vice President Procurement for Tyson Foods, and he was one of the founders of F4SS during the time when he worked for Procter & Gamble. Julie recently had the pleasure of speaking to Russ about the value of the F4SS organization.
Q: Christiansen –
When F4SS was first created, what was the vision for the organization and its purpose as related to supply chain?
A: Stewart –
I was in Supply Chain for Procter & Gamble and collaborated with others from J&J, Campbells, Unilever, and KIK Products who were all separately discussing the need for the co-man industry to improve capabilities to expand the industry’s potential and unlock CPG company opportunities. Customers (P&G, J&J, etc.) were treating the co-man industry very tactically, when there was a strategic business need. We collectively determined that this was the ‘big rock’ that needed to be addressed and that there were not any unique competitive advantages for any company. Therefore, we came together in 2005 to form what is now F4SS with the vision to bring buyers (CPG companies) and sellers (co-mans) together to discuss industry best practices with the vision of improving capabilities to unlock possibilities.
The initial example we used was planning. Customers of the industry were frustrated at the lack of co-man integrated planning capability. It seemed that our co-mans were always behind, not proactive, and costing them and their customers A LOT of money. In discussions with co-mans, we asked for them to improve planning capability. The response was ‘are you willing to pay for this’? Our response was ‘no’, however, what if we standardized quality systems and shared this information among customers to unlock the co-man’s costs and resources to redeploy towards planning. The answer was ‘yes’. So, we focused on S&OP which we created as S&OCP. The sharing of quality system reports among customers enabled this type of resource reallocation to benefit buyers & sellers.
This approach at the time seemed revolutionary. In fact, we understood that getting our companies to sign off on this was going to be a challenge, so we just did it. Then, sought approvals later.
Q: Christiansen –
As you look back, what are the biggest surprises or changes that have happened in external manufacturing since the organization was formed?
A: Stewart –
The most pleasing aspect of F4SS’ impact on the industry is the shift from very transactional to strategic. This growth appears to have enabled companies to have different discussions and to unlock the potential of the co-man industry. Continuing to build this trust to unlock further opportunities is still there, however, there is a forum to have these discussions whereas in the past that was not the case. One story we shared in the original 2005 meeting at San Diego State University was the story of a Malaysian company…the company only had a core leadership team, everything else was done via 3rd party…that was a provocation of what’s possible.
Q: Christiansen –
Can you give us some insight into the value that F4SS has been able to bring to the industry, your company or you personally throughout the years?
A: Stewart –
The value has been in the connections, peer relationship building, peer benchmarking (non-competitive info), and ability to provide rationale for leveraging co-mans in a more strategic way within the business. At P&G, co-mans are now thought of much more strategically. In fact, in the mid-2000’s…part of P&G’s innovation strategy was to leverage co-man’s given unique capabilities. While this sounds obvious, it was not as obvious at the time. I recall one co-man providing feedback about providing P&G ideas for new products. The co-man’s response was, “Fortress Procter”. Ideas would be shared never to be heard of again! That is changing and needed to change. Companies must focus on ‘what are they going to be great at and what are they going to be bad at’.
From my standpoint, the growth of F4SS has been a pleasant surprise. When we formed the group in 2005, I doubt any of the original founding members would have envisioned how impactful and where the group has gone. That is very refreshing to see how a forum, enabling open idea exchange, can grow to meet the needs of its’ members.
Q: Christiansen –
Our Fall Conference theme is “Pioneering the Future of External Supply Chain”. What do you see as some of the challenges ahead?
A: Stewart –
This is a very intriguing topic. From my vantage point, there are two key challenges/opportunities ahead.
First, the future is about the continuing de-globalization underway around the world and the need to invest into supply networks of the future. Therefore, the role F4SS can have is to help facilitate these strategic decisions among companies to create a set of thoughtful requirements and design a supply network that is fit for purpose for the future vs. individual companies. Let me share an example. If companies are going to invest into chip technology given the de-globalization effort, the buyers/customers should leverage F4SS to identify the requirements for the industry to ensure an optimal supply network design is created vs. the traditional approach of each customer trying to intervene and influence the design to their benefit. This could be as simple as customers sharing their demand plans over the next 3-5 years or as complicated as trying to create just in time deliveries to various customers leveraging 4PL capabilities. This approach should leverage scale and enable all companies to get advantages and compete ultimately on their products in the marketplace.
Second, the future is going to become even more challenging from a geo-political standpoint due to de-globalization. Therefore, companies that are trying to compete need to be laser focused on their products/services and customers. To help these companies be successful in areas that are non-competitive, F4SS could venture into areas such as group buying to help leverage buying scale and lower costs among members. This is especially true in areas of indirect spend up to and including marketing spend. While the components/ingredients going into products may be more confidential, the area of indirect spend is not, regardless of the arguments.
Q: Christiansen –
Thanks for all your insights, Russ. Any other comments?
A: Stewart –
The growth of F4SS proves that there are truly valuable forums that can be created that do not share confidential or proprietary information and that can add significant value for buyers-sellers. F4SS is one of those forums and I look forward to seeing the continued growth and impact of F4SS into the future!