Shareholders expect high CAGR: Engineering approach to Turnaround Underperforming Consumer Goods Giants: Fragrance Category

CAGR Turnaround Underperforming CPGs, Innosolinc.com

The compounded annual growth rate (CAGR) is one of the most accurate ways to calculate and determine returns. In engineering we work off drawings and specs. Any deviation, defined as an unplanned, temporary change to a procedure, design, or raw material requires approval from the CCB, change control board. These approvals are a temporary fix until a permanent change can be accommodated.

For new fragrance briefs, our customers are applying this same logic to their fragrance category.

  1. We provide a standardized list of F&F Ingredients and our customers select the best and most sustainable /food grade ingredients who in turn provide to their F&F House through new fragrance briefs.
  2. This list details the ranking of each ingredient by how many formulas require  it based off our 7,000 best sellers list.  (ranking, mean, median, mode, std. deviation.) More importantly, this list provides an estimated cost for each ingredient to scale.
  3. A list of 1,7000 ingredients can make over 1MM fragrances, so this is not in dispute.

Any deviation from this standardized ingredient list requires a deviation request listing the ingredient or ingredients added and why. This in no way compromises the trade secret agreement but will identify cost-driving captives, and previously unknown ingredients.

This small step also improves behavior and benchmarks which F&F House is using less sustainable ingredients.

Just imagine if your company applied this same methodology…

How to Grow CAGR & Reduce Costs with a standardized ingredient list

It’s easy to think of Aroma-Tune as just another chemical ingredient software that takes a bite out of your R&D or EHS budget. But by changing the way your R&D team deals with fragrance ingredients being added to new products, as well as enabling you to stay on top of sustainability and regulatory requirements, a standardized ingredient list can make a positive impact on cost management. When utilized properly and managed well, a standardized ingredient list could greatly improve your CAGR. Imagine the ways that you could increase revenue, increase sustainable ingredients and reduce costs by removing overpriced captives in your new product launches.

Reduce the Volume of Ingredients Purchased by your F&F house on your behalf

Many F&F Houses are already bursting at the seams with people, ingredients, and consumables – it would help if you didn’t have to worry about extra chemicals (captives), adding unnecessary costs to your price of oil. If you keep an accurate and up-to-date standardized ingredient list, you could reduce their inventory burden which both of you could share in cost savings. As fellow researchers, isn’t it time to take a closer look behind the scenes and discuss the impact of adding extra chemicals to products.

Share Chemicals

Many F&F houses maintain their own stock of chemicals that they order and keep track of on their own. They believe they know exactly what they need and what is in their stock, and they rarely discuss the costs involved with such a setup, as they are added to the oil price. In a perfect world, CPG’s and F&F Houses  could limit chemical inventory redundancies and over-ordering, thus reducing cost.

Lower Regulatory and Safety Risk (Which Saves $$$)

As ALL ingredients in a product are subject to rules and regulation from many government institutions and from all levels of enforcement. A lot of regulations point toward and are informed by an organization’s standardized ingredient list, so the wrong ingredients added to your products can leave you open to violations and fines. Proper and standardized ingredient lists won’t get you out of all regulatory scrutiny, but it is useful in making the right impression on regulators. If they visit your site and are asking to see a list of all chemicals in your products, and you don’t know, they’re likely to keep digging for discrepancies and violations. You’ll set yourself up for success if you can show them an up-to-date standardized ingredient list that is searchable and can run all the necessary reports.

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