Bill Stankiewicz Copy Of Voice Of Vics July 2010v3

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
http://www.ups.com/bussol?loc=en_US&viewID=metaCategoryView&contentI
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

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

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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.
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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
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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
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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

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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.

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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

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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.

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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. ◊

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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

CSCMP Annual Global Conference 2010
Sept 26-29 San Diego, CA

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

The University of Tennessee
College of Business Administration
Nov 9-11 Knoxville, TN
Supply Chain Strategy and Management Forum
Details

www.cpgmatters.com/vics.html

http://www.bernardsands.com/rpm.asp.
www.vics.org
VICS Joe Andraski Tony Galli
President & CEO, VICS Managing Director
Princeton Pike Corporate Tel: 609-620-4590 Websites jandraski@vics.org tgalli@vics.org
Center Fax : 609-620-1201 www.vics.org
1009 Lenox Dr., Suite 202 Email: admin@lists.vics.org JoAnn Fiordland
jfiordland@vics.org
Lawrenceville, NJ 08648

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Bill Stankiewicz Copy Of Voice Of Vics July 2010v3

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