Managing the marketing-related print collateral needs of Unilever, a consumer goods company with 400 brands in more than 100 countries, is an enormous task, to say the least. The complexity of the endeavor increased in 2004 when Unilever announced a North American initiative to consolidate its brand portfolio and maintain global brand consistently across all media, including print. Achieving that objective would require a unified, repeatable, end-to-end process with consistent delivery and quality.
At that time, the company had a decentralized print process with some internal staff and brokers to manage projects and some external creative agencies that also procured print. "Everybody within the business was working with different print providers and had different approaches," states Katherine Westfall, Director of NPI Americas, Unilever. She says the company was also not taking advantage of any aggregation of spend and lacked consistency in pricing, quality, and standards.
The solution was to go to market with a Request for Proposal (RFP) in 2005 and look for one print services provider that could manage Unilever's North American marketing-related print needs from the initial concept of a print project through shipment and billing.
Unilever awarded the contract to print managed-services provider NewlineNoosh (NLN). Peter Faucetta Sr., Chairman and CEO, NLN, recalls the RFP requirements quickly weeded out most of the 100 service providers and print suppliers that received the RFP.
"They needed to leverage a provider's expertise around print manufacturing. Those are actually skills that are fairly scarce, and we have deep expertise in this area. They were also clearly looking for a total solution, a managed-services relationship. Onsite representation was also a big part of what they were looking for, as was transparency," recalls Faucetta.
A key Unilever criteria that greatly reduced the number of qualified providers was a Web-based tool that could not only track orders but also provide reporting on spend management, demand aggregation/demand management, and sourcing strategy. It needed to manage the day-to-day transactions and provide visibility from the beginning of the sourcing process all the way through to accounts payable.
"Having one provider with Web-based management tools to provide visibility was very important to us in order to deliver simplification to the business," states Westfall.
"If a provider does all these things well, cost savings fall into place naturally," says Faucetta.
Unilever has, indeed, realized significant cost savings of millions of dollars in print services and expects the savings to increase over time as NLN continually looks for opportunities to provide more value. While cost savings are a key objective of the outsourcing arrangement, the hallmark of the relationship's success is its collaborative nature.
It's All about Marketing
The effort to reduce the number of suppliers a procurement organization uses and introduce policies for using particular suppliers is a known challenge. It's an even bigger issue in a marketing area, Westfall says. "We're a consumer packaged goods company, and it's all about the marketing," she explains.
"Announcing that they would be doing something different regarding use of print suppliers met some resistance. Integrating NLN into the marketing organization and getting buy-in from people in the different marketing areas and creative agencies was a challenge," says Westfall.
Despite explaining that NLN was now responsible for bottom-line results at Unilever, people still had to be convinced that they could trust the provider and turn over a segment of business for which they had been responsible and which could impact their creative capabilities. Their buy-in could only be accomplished by proving the value of NLN's services.
So NLN markets its services to the Unilever marketing organization. It travels all over North America for road shows at Unilever facilities and its creative agencies so the marketing organization can learn first-hand about NLN and its services.
As Joeseph D'Andria, NLN's Senior Vice President, Operations, points out, the need for the road shows is ongoing, even though the initial transition effort to gain buy-in was successful. "We do the road shows monthly to ensure a face-to-face environment with the creative agencies, report new industry innovations, and review processes. With Unilever and its agency partners, there is a continuous education that has to happen to make sure that everyone follows the process and stays intact when their people either move from brand to brand in Unilever or to a new role in the agency."
"Through these road shows, NLN makes the investment in time and effort to meet the right people and prove or re-prove the value in its services. They are invested in this business for a long-term relationship," says Westfall.
Key evidence of NLN's collaborative approach to the relationship is that John Bittner, who manages the day-to-day relationship with NLN on behalf of Unilever, also participates in the road shows.
Under a separate outsourcing arrangement, some of Unilever's procurement process is outsourced to IBM. Bittner is an IBM employee onsite with Unilever's NPI organization. NLN handles the day-to-day interactions among Unilever's marketing folks, the creative agencies, and the print suppliers. IBM is there to help enforce the protocol to follow, if necessary.
Bittner says he is "impressed with the actual volumes of maverick spend in the commercial print space that NLN has uncovered and continues to uncover. You've always got the maverick spend--people who go out and do things on their own instead of using the list of preferred suppliers. On a weekly basis, they continue to beat the bushes to identify where the maverick spend is coming from and then corral it by addressing the folks who--sometimes unknowingly--go around the process."
Unilever has four business groups in North America. The outsourced print services with NLN began with a pilot at the Home and Personal Care Division. Because of the successful efforts at achieving buy-in, Westfall says they now have almost all business groups engaged. "NLN is doing a great job, and people see that. They have gained that reputation in our business," says Westfall.
Westfall cites another example of NLN's collaborative approach to resolving challenges. When Unilever recently rolled out a new Ariba Buyer procurement tool as a link between Unilever and NLN, it was necessary to enforce that end users use the tool instead of contacting NLN directly. This was a real balancing challenge for NLN. "They wanted to make our end users happy and be responsive to them," says Westfall. But NLN could not take the end users' orders unless the end user used the new Ariba tool for the order.
NLN took a very collaborative approach at working through this issue, Westfall reports. "They took it upon themselves to invest and expand in some technology that would be more user friendly, allowing NLN to be responsive, and yet support our long-term vision of using technology tools."
Print Management Advisory Services
An NLN employee is onsite at several Unilever locations. Like Bittner from IBM, they are a seamless presence, blending in with Unilever's marketing organization. Print manufacturing is highly customized, and NLN's onsite representatives are experts in print manufacturing and the most efficient ways to get print products to market.
Mark Tiedens, Vice President of Marketing at NLN, says they collaborate with their onsite people, the Unilever brand managers, and creative agencies to determine the specifications for a particular print project. "It's important for us to be involved in the initial creative stage," explains Tiedens. "In print manufacturing, if you create a specification that's too complex to build, it will drive costs up."
The print experts at NLN simplify specifications to keep costs in line. As an example, Unilever had an initial creative concept of a direct-mail postcard that looked like a jeans pocket with coupons in the pocket. The card corners were rounded, which meant they could not be processed with machines at the US Post Office (thus increasing costs for a manual process and increasing postage costs). Inserting the coupons into the pocket would require two press runs, which would necessitate a heavier card stock.
Because of NLN's up-front advisory services on print manufacturing efficiencies, Unilever and NLN changed the concept to an in-line press product (eliminating the second press run and heavy card stock) with non-rounded edges (reducing mailing costs). With the changes, the original manufacturing quote and the cost of postage were reduced significantly.
In the managed services model, there is a review process where Unilever reviews the provider's sourcing strategy, but NLN actually selects the print suppliers for Unilever's projects.
In selecting a print supplier, NLN considers such factors as:
- Sourcing objectives (is the timing critical such that it many mean selecting one that is not the lowest-cost supplier?)
- Project specifications (finishes, folds, binding, etc.; is the look and feel of the piece more costly but crucial for a high-end consumer?)
- Geography where the print will be consumed by the marketplace (is there an advantage, for instance, to printing closer to the marketplace in order to minimize freight costs?)
- The supplier's constraints (does it need to buy from a sister unit or have minority- or woman-owned business sourcing goals?)
- The supplier's track record in quality and delivery
- Recycled paper sources
NLN then presents a proposal to the Unilever brand manager as to the suppliers that can meet the qualifications for manufacturing capability, timing, and pricing. The proposal includes the provider's selection as to which supplier to use, based on all the project issues. Unilever has the opportunity to choose a different supplier, but Tiedens says 95 percent of all jobs go to suppliers NLN recommends.
NLN is supplier neutral. Tiedens says, "Because of the process visibility, when we show the pricing to Unilever, it is the price; there are no rebates involved in our business. Anything that we do is truly visible to the buying organization." That was a market differentiator that Unilever liked.
As another example of partnering collaboratively, NLN customized its technology to record, report, and validate why a supplier is selected for a particular project. This data supports Unilever's goals for financial visibility required for compliance with Sarbanes-Oxley and other government regulations.
Finally, the NLN managed services model also manages the accounts receivable. The various print suppliers invoice NLN, who then sends only one invoice to Unilever. Unilever cuts one check, and NLN then pays the print suppliers. "This is another added cost savings for Unilever," says Tiedens. "This is a significant savings, even though we don't monitor or report it."
Technology-Enabled Managed Services
All of the NLN activities for Unilever run through the provider's proprietary collaborative platform. About 70 creative agencies for Unilever also have logins on the system to feed the front end of the procurement process. In addition, the system tracks the metrics for the service-level agreement.
The software has three toolsets. One manages reporting functions. There is also a set of collaborative project management tools for specification development, task management, supplier sourcing, supplier rating, and similar activities.
A third toolset manages the procurement functionality and is tailored specifically for print. It differs from Ariba, Oracle, and other procurement tools in that it has the ability to do multiple bids, contract or rate card pricing, not-to-exceed pricing, change orders, and overs and unders (allowing certain printers to ship overs or unders and charge accordingly)--all the intricacies specific to print manufacturing, with a complete accountability trail.
The Web-based tools are essential in achieving Unilever's goals to standardize and enforce an end-to-end print process across all business units and external agencies.
It's still early in this highly successful relationship, but Westfall says NLN has exceeded Unilever's expectations. In fact, the parties nominated this relationship for a 2007 Outsourcing Excellence Award.
The provider continues to proactively push boundaries, does not settle for status quo, takes a collaborative approach, and makes investment decisions for a partnering relationship. It's definitely a formula for competitive advantage.
Lessons from Outsourcing Journal:
- Outsourcing a company's print manufacturing and marketing collateral needs will involve spend management, demand management, and visibility into the process from sourcing to accounts payable. Web-based tools are essential in achieving standardization, visibility, and an accountability trail. However, the usual procurement Web-based tools are not adequate for print manufacturing. Print manufacturing tools need the ability to conduct multiple bids, contract or rate card pricing, not-to-exceed pricing, change orders, and overs and unders.
- Because a company's internal marketing team is likely to believe that outsourcing print collateral functions will impact their ability to be creative, it may be challenging to obtain their buy-in. The outsourcing service provider will need to continually prove the value of its services in order to obtain and sustain their buy-in.
- When new automated tools and procedures are rolled out due to outsourcing a function, it is necessary to enforce end users' use of the tools and adherence to the process. The service provider and client will be in a tough balancing act, trying to be responsive to end users yet enforce the new tools and procedures. Buyers should select an outsourcing provider that will take a collaborative approach to working through such issues.
- If the service provider in a managed-services model for outsourced print manufacturing has the responsibility of making the final selection of vendors for particular projects, the provider needs an automated tool that collects data on the vendor-selection process so that the buyer will have supportive data necessary for compliance with Sarbanes-Oxley and other government regulations.
- In a managed-service model for outsourced print manufacturing, the provider manages the accounts payable and receivable process for the various print vendors and sends one invoice to the client, which then needs to cut only one check instead of multiple vendor checks. This is a significant cost benefit for the buyer of outsourced services.
- Creating a print specification that is too complex will add to the manufacturing costs. Buyers should get their outsourcing service providers for print manufacturing functions involved in the initial creative stage to realize the full benefits of the provider's expertise in the most efficient and cost-effective ways to get print products to market.