"One on One: An Interview with Lori Vegso" By Jill Schildhouse, Summer 2006, Vol. 42, No. 3, p. 2
Journal of Supply Chain Management Copyright © August 2006, by the Institute for Supply Management, Inc.
Interview by Jill Schildhouse, writer for Inside Supply Management®
Lori Vegso is the director of sourcing and supply management for Kimberly-Clark Corporation in Neenah, Wisconsin. In this role, she leads a 13-person team with responsibility for procuring many of the raw materials used in her company’s consumer products. With a focus to drive business results by working with internal technical and manufacturing customers to select, manage and optimize a supply base that meets Kimberly-Clark’s business priorities, Vegso’s three key priorities are cost in use, speed to market and innovation. She also has responsibility for a team that is Six Sigma trained and focused on optimizing Kimberly-Clark’s supply chains. A 21-year veteran of Kimberly-Clark, Vegso has held various roles in transportation, cost analysis, production planning and distribution operations. Vegso received a bachelor of science in accounting from Marquette University.
The Journal of Supply Chain Management: Why is innovation a key priority for Kimberly-Clark?
Lori Vegso: Innovation drives our product differentiation and overall competitive advantage in the market. Bottom line, it helps us achieve our growth and profit goals. As we develop innovative solutions, we not only look to the talent of our internal technical experts, but we also look to our supply base as a way of optimizing our resources and leveraging our combined talent and expertise. Supplier innovation is a valued resource that helps Kimberly-Clark meet its growth objectives from an innovation and speed and cost perspective.
The Journal: Because your suppliers are an important part of your strategy to obtain innovation, what challenges do you face?
Vegso: Kimberly-Clark’s process for managing innovation with our supply base has developed significantly over the past 10 years. As the global market becomes more competitive, the challenge of competing for the top talent of our suppliers also exists due to the fact that Kimberly-Clark and its competitors often have similar objectives around innovation. Therefore, it is a business necessity to have the structure and process in place to attract, develop and retain the best suppliers to meet our internal growth objectives.
The Journal: How do you position yourself as the company in which suppliers should bring their innovation?
Vegso: Much like Kimberly-Clark, our suppliers make choices as to who they prefer to work with as business partners and how they allocate resources to these relationships. We are focused on streamlining the innovation process. We’ve had significant focus in cutting down the amount of time it takes to develop new products and bring them to market — from 2004 to 2005, the cycle time was cut 30 percent. Our approach to innovation, along with our global presence and scale, makes us attractive to suppliers that are looking for business partners.
The Journal: Now that your suppliers have seen you are worthy of bringing their innovation to, isn’t it equally as important for you to determine that they are the right fit for your organization?
Vegso: It is important to ensure that the two companies are well aligned in terms of their goals and commitments to the relationship. We must not only understand the suppliers’ current technical capabilities, but also their goals and strategies to bring new technologies and innovation to market.
The Journal: Do you feel it is your suppliers’ duty to come to you with innovation?
Vegso: Managing innovation with our supply base is a very collaborative effort and expectations vary according to the strategic level of the relationship or material. When we are looking for proprietary or new to the market capabilities, we give our suppliers more insight and direction so that they have focused developmental efforts. The more strategic the opportunity is, the more we will share — resulting in higher expectations for them bringing innovation to us. Therefore, a critical first step is to thoroughly understand our business priorities and how they contribute to our growth objectives.
The Journal: Once you have come to an understanding of your objectives, what is the next step?
Vegso: To establish specific, measurable performance goals around innovation with our suppliers that include jointly developed success criteria. As previously mentioned, the level of integration and resulting goals are based upon the strategic value of the supplier and materials/services they provide. The highest level of integration is executed with a small percentage of the total supply base. At this level, the stakes are much higher in terms of the commitment the suppliers make to Kimberly-Clark in terms of bringing their best innovation to us first. In return, the reward is also much greater in terms of the business opportunity for the supplier.
The Journal: After you have established your goals, who is responsible for assessing that these projects are going as planned?
Vegso: Both parties (Kimberly-Clark and the supplier) regularly evaluate progress against the joint objectives. A critical step in this evaluation is to ensure that projects are prioritized and that the appropriate levels of resources are applied to these projects. Equally as important is to stop activity on projects that are not prioritized as having strategic value to achieving the performance goals.
The Journal: Upon completion of a project, how do you know if there was success?
Vegso: Once a project is closed, both parties evaluate the final results against the goals and success criteria. Key learnings should be documented and success should be celebrated. This is a key step in gaining supplier commitment for future projects while assessing the overall structure of the relationship.
The Journal: How does the nature of an existing supplier relationship change when you’ve become partners in sharing new innovation?
Vegso: These relationships are based on a high level of mutual trust, which benefit from more face time, and the sharing of strategies and insights. There are many ways to solidify the relationship, such as joint development agreements, licensing agreements or joint ventures.
The Journal: Can you share an example of how a supplier’s innovation impacted a product?
Vegso: A good example is in a category we invented, Huggies Little Swimmers®. We recently came out with Little Swimmers® with Sun Signals that change color, signaling that it’s time to either put on more sunscreen or come inside. This is a good example of some of our internal technology scouts identifying a technology new to the market that helps us stay ahead of our competition. Innovation does not always come from our existing supply base, and that’s where the technology scouts play a significant role. Another example is a service-related innovation to improve how we take our product to market. A supplier brought innovation to Kimberly-Clark in the form of new avenues for getting our product on multiple manufacturers’ product displays in a very efficient manner. And one final example is the innovative packaging we’ve marketed for our Kleenex® facial tissue cartons. We continue to market some very eye-catching designs and graphics that have been very successful in enhancing our brand image.
The Journal: What advice do you have for other companies looking to compete for their suppliers’ innovation?
Vegso: First, ensure that you have a clearly defined process on how suppliers should present their innovation to your company, including how to maintain the appropriate level of confidentiality. Second, understand the business model. Third, be realistic about the opportunity from a speed- and market-potential perspective. Fourth, be respectful of your suppliers’ resources (e.g., people, time and investment), because we all have limited resources. And finally, celebrate success.