Small, Select Group Speeds the Process

A long-standing approach to buying P-O-P materials focuses on selecting a core group of vendors, perhaps three or four in different or overlapping functions, and bidding work among them. This limits the need to sort among a mountain of speculative projects, but also ensures competitive design and pricing. But how do companies select who makes up that core group, and how can someone new break in?"The type of display we're producing dictates who we'll bring in," explains Mike Arecchi, senior director of display purchasing at Revlon. Each project will have two or three vendors competing on creative and pricing objectives. "Having two suppliers working on the same project in two separate areas is not unheard of," he adds. "We're getting very good at combining the core competencies of different suppliers and letting them jointly develop a piece."This approach allows the supplier to spend time learning the company's culture and what its often-unspoken marketing goals are, clients say. It allows the P-O-P maker to see the bigger picture. "When dealing with a large company with many programs, new suppliers get up to speed over a long period of time," notes Penny Cleare, director of merchandising services, purchasing and production at Heublein Inc. "They have to learn to work in our system and learn the specifics of working with us, such as how we label and carton products."The speed of today's product movement dictates that product marketers can't start from zero every time, adds Arecchi. "Retail is a fast-moving business, and it's constantly changing the rules. We need to be able to adapt and not lose any time, and that calls for a vendor base that is keeping pace with us and the market."Such limits could conceivably reduce the potential savings available in an open-bid situation, but it can also pay off in lower costs in other ways, adds Revlon's John Lombardi, executive vice president of creative services. "With a relationship in place, you can really talk about pricing and where to save money so both companies win," he says. "It works better than forcing a vendor to cut corners or absorb costs. You can drive costs down if you have that trust."One way to do that can be through reusing tools, notes Laurie Houlihan, director of promotional purchasing at L'Oreal. This proves effective when returning to the vendors who supplied them in the first place, even if ultimately the client does own the tooling. "There are ways to work where you're not just saving money, but you're working better and more efficiently while still receiving the same design and quality as before."Bringing these limited partners into the process early can achieve that, too, notes Revlon's Arecchi. "We absolutely try to bring them in at the earliest stage of the project," he says. "That allows us to talk about feasibility of design, methodology of production, cost, shipping, prepacking needs and other criteria."Of course, that creates a major time commitment for the vendor, one that must be compensated in some form. "The suppliers have to be assured of enough business during the year that they can make this type of commitment," adds Heublein's Cleare. "If they're supporting our business, we have to support theirs." Notes Arecchi, "If the supplier is part of the team, he has to know he'll be doing significant business each quarter or half-year to feel as if he's an extension of our business. That makes him more confident and more selective in the projects he accepts from other sources."In some cases, suppliers and marketers work from formalized contracts, explains Doug Leeds, president of Thomson-Leeds Company Inc. These guarantee a certain amount of volume, along with required quality-control procedures, dedicated staff, electronic communication capabilities and the right to examine financial statements if desired. "These often are expressed as more informal understandings, but contracts do exist."What happens if this commitment has been made to a core vendor, but the vendor either begins or reaches a point where he continually comes in high with pricing or with a design idea that doesn't win out? "If we have a new supplier we'd like to have as part of our team but they aren't being as competitive as others, we'll give them feedback -- but not specifics -- as to where they're losing out and why," says Cleare. "That helps them and us as well."Pricing on many smaller displays isn't a big issue, notes Houlihan. "Pricing tends to be similar, because the suppliers know what everyone else is doing," she says. In many of these situations, adds Heublein's Cleare, pricing is a major but not necessarily determining factor. "We also examine delivery issues, production needs and the creative capabilities."Strong communication becomes the key to making this work, along with trust, notes Dennis Madigan, director of marketing and promotional materials at Miller Brewing Co. "If we've really developed a true partnership with our core suppliers, a mistake won't kill them," he says. "If a mistake is made or a delivery is blown, we correct the mistake, we don't throw them out."Notes L'Oreal's Houlihan, "I rely on my vendors' honesty to let me know if they have a problem. It's better to admit it right away than let it become a surprise, and if you have an ongoing relationship with your vendors, that's much easier for them to do. The way to tell a good supplier is how they react when something goes wrong."Breaking into a company's core group can be difficult, marketers agree, because those already in the fold understand the culture and have developed relationships. But without continual examination of other options, marketers run the risk of becoming stale by relying on three continual options that aren't breaking new ground.Houlihan says she continually considers new companies. "I like companies that have cosmetic work in their background" to ensure they understand the market and the specific design considerations that go into cosmetic displays, she says. She often hears capabilities presentations and sometimes works with salespeople on an on-going basis to explain her needs.Occasionally, this leads to small projects to see how they perform, she adds. "We'll give them something simple that's not a rush job. That way it's fair to them and us and gives us a chance to communicate." Other marketers agree on that approach. Some go so far as to create hypothetical projects, but many say they don't have the time or inclination to work that way and haven't been burned by failures so badly that they need to take that step."We want our vendors to develop a long-term relationship with us, because we have a culture and procedures that won't be understood on the first day," notes Richard Lysinger, merchandising innovation manager at The Coca-Cola Co. "Every large company has defense tactics to keep out suppliers who just want more business, and vendors have to be willing to make a commitment. Providing display programs should be a marathon, not a sprint."

Small, Select Group Speeds the Process

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