In his third column in this series, Aran Puri asks: What do R&D and marketing want from raw material suppliers?
One of the unique features of the cosmetics industry is the very close relationship that exists between its R&D and the raw material suppliers. Evolution of this special relationship based on mutual interest yields very positive benefits. However, despite this close relationship there is an undercurrent of dissatisfaction on several levels from both sides. I will deal with the viewpoints of both sides in my next two columns but here I will highlight the views of R&D and marketing.
One of the fundamental features of this special relationship is the mutual trust that exits between R&D and the raw material suppliers. This is absolutely vital for a variety of reasons in terms of expectations and challenges of R&D/marketing:
1. Quality of relationship
It is commonly accepted practice within the cosmetics industry to launch products on the market using speciality raw materials originating from a single source supplier. This requires great trust between the cosmetics company and the raw material supplier. This mutual trust is an enormous compliment to both parties and in many cases the arrangement works well for both sides.
However, when problems such as supply, quality, unsustainable price hikes etc are encountered, it then results in a huge and unacceptable strain on this special relationship, particularly if it occurs suddenly without any prior indication.
This puts a huge pressure on R&D internally within the company and with its clients. Pointed questions are raised about the choice of the raw material and partner. If the supply issues continue and are not resolved rapidly to the satisfaction of all parties involved then this trusted relationship breaks down. R&D shows its displeasure in the only way it knows how – as the saying goes, ‘once bitten twice shy’!
2. Supplier visits
R&D and marketing love and welcome regular visits from good suppliers. However, since time is money for all parties involved it is vital that suppliers come fully prepared having pre-sounded the client’s potential direction and interest with regards to raw materials, projects and challenges. Making an appearance and reading out set piece supplier presentations is hardly the best use of the supplier’s or the customer’s resource and time.
During my 35 years in the cosmetics industry I have seen enormous progress in the quality of service given by raw material suppliers, but it still amazes me how many raw material suppliers don’t do their homework. They arrive unprepared to make finely tuned presentations focused on customer needs but grace R&D with a visit, standard presentations and generally grant an audience with their presence.
The result is that I and many others like me resort to sending forward scouts to attend their presentations and later alert us and the rest of the team on points of interest.
With the enormous progress in IT, imaginative use of internet and webinars to offer information is a power which all companies need to harness comprehensively. Many companies have made a start but it is hard to understand their slow progress and reticence regarding this powerful tool to its full potential.
3. Samples
Requesting samples is the prerequisite of any R&D work once the information about the raw material supplied is assessed and there is interest. Since R&D is always under time pressure it is vital that samples along with supporting documentation are supplied rapidly. Many companies fall at the first hurdle by taking too long to do this, thus losing out. Sending samples that are too small or charging for them is a false economy.
4. Contact with raw material suppliers
R&D requires a very fast and seamless link with various experts at the raw material suppliers and a very quick and efficient response to its queries. Many raw material suppliers insist on all inquires going through the commercial person handling the account who in turn contacts the company experts for answers. This policy and filter leads to a ping pong effect causing unnecessary delay and frustration, especially if agents are involved. Very often the bigger the company the bigger the problem and their policies and response sometimes verge on arrogance. Why can’t raw material suppliers prepare a list of various technical and commercial direct contacts? The account handler can always be kept on copy and it will make everyone’s life easier
5. Patents
A very contentious subject. Everyone has strong viewpoints and reservations on this issue. Nothing aggravates R&D and marketing more than to realise that application of a raw material of interest has been patented by another supplier, especially if work has already started on the project. The question that springs to mind is: Why can’t raw material suppliers find imaginative ways to safeguard their customers interests? For example by taking out their own patents, making potential raw material applications public knowledge or agreeing to only supply information on new raw materials on the basis they will not patent the application in return for an agreed exclusivity time.
6. Claim support information
This continues to be a very important area. In the last decade we have seen enormous progress in terms of supporting information generated and offered by raw material suppliers, particularly efficacy data from suppliers of skin care actives. All information, direct or indirect, is useful. However, the high added value to R&D and especially marketing depends how close it is to real life in-use situations. Human studies data is the best, most favoured and useful option. In vitro data is a useful indicator of potential application but does not carry the same weight. Knowing this I wonder why so many raw material companies do not fulfil this requirement and offer even less.
7. Marketing
All efforts by raw material suppliers are focused towards selling the product to R&D of cosmetic companies. They need to take a 360° view of their selling strategy and realise that R&D has in turn to sell the concept to its marketing, keeping in mind a quote from a recent article on the subject: ‘Cosmetic raw material companies focus on solving the problems of the cosmetic chemists. They don’t focus on solving the problems of the consumers.’
Involvement of raw material suppliers with customers’ marketing at an early stage is a wise move. Raw material suppliers need to use their own marketing team to read the market trends and to create imaginative concepts based on their raw material and offer it as a team effort to the R&D and marketing teams of their clients.
I am delighted to note that some forward thinking companies have already made a start in this direction and we saw some examples at in-cosmetics 2009 and 2010.
The utopia of what cosmetics companies need is highly innovative products, a complete package from the raw material suppliers that helps them to satisfy their marketing departments; ie put a new product on the market as soon as possible with minimum time and effort; a full dossier with a stable formulation, comprehensive efficacy and safety information which enables R&D and marketing to go to market rapidly. Clearly this will add to costs but considering current input not a great deal of additional work is required, just a change in thinking. Companies who wish to make excuses will continue to take the usual cop out such as ‘claim substantiation is the customer’s responsibility as required by the European Cosmetics Directive’.
My comments are designed to provide food for thought and will certainly generate controversy. But I can only take the horse to water... the rest is up to you.
