Risk and the Vitamin Industry’s Technology Deficit—The 23rd Fold.

Published July 5, 2017

Three years ago, my company, Healthnotes, began exploring the influence of exponential technology on the dietary supplement industry’s supply chain. What we uncovered was truly shocking. But, before I tell you what we learned, I’d like to walk you through a thought experiment.

Take a piece of paper. Fold it in half. Fold it in half again. Keep folding. 11 folds? 1 inch. 20 folds? A football field. 38 folds? Around the world. 50 folds? From the earth to the sun. This is the power of exponential growth. It is truly mind boggling.

In 1965, Gordon Moore, Intel’s co-founder, predicted that every 18 to 24 months, the number of transistors on a chip would double but cost half as much; this is now known as Moore’s Law. In 1971, an Intel chip had 2,300 transistors. By 2016, 45 years later, a Volta chip had 21.1 billion transistors—1.3 million times more transistors, as well as being thinner, faster, and 1/400 millionth of the price.

Now back to our piece of paper. If chips double in capacity and fall by 50% in price every two years, we have already doubled 22 times in the past 45 years. This means we are coming up on the 23rd fold sometime in the next 18 months and will soon see a chip with over 40 billion transistors. Moore’s Law is the single most important predictor of technological innovation. And, while computational power is growing exponentially, costs are plummeting.

So, how does this affect the supplement industry? We initially thought the supplement industry would be technology leaders. To find out if this was true, we talked to hundreds of people at over 100 raw material suppliers, manufacturers, and brands. We confirmed the industry is heavily regulated. The FDA is ramping up its efforts on Current Good Manufacturing Practices (CGMPs), New Dietary Ingredients (NDIs), and the Food Safety and Modernization Act (FSMA). Both the FDA and FTC are concerned about claims—not just health claims, but also claims around GMOs, allergens, organics, and more than 100 other types of claims brands routinely make. In addition, FSMA requires traceability from seed-to-shelf.

We did some math and calculated that a medium-sized manufacturer handles over 1,000 raw materials from 500 vendors. We estimated 1 to 4 million data points need tracking. We asked these companies how they were managing to keep on top of all this data—including expiration and requalification dates, missing documentation, and claims support. We were stunned at the response: over 95% of the companies we spoke to were relying on Excel.

While Excel is a great spreadsheet program, it is essentially unchanged since VisiCalc was invented in 1978 for the Apple II computer—almost 40 years ago. In 1978, we were on fold 6 of Moore’s Law. Today, coming up on fold 23, more dynamic tools are needed.

Here’s some of what we heard: “Material management causes a lot of angst and dissension among our staff.” “We have seven people managing material documentation and requests from our customers.” “Only 10% of our materials have all the documentation on file that we need.” “Every department has some of the material documentation, nothing is all in one place.” “We spend too many hours in emails and on the phone with suppliers to get the documentation we need.” “I hate the current way we do things.”

Here’s what we did: we listened carefully to the challenges of those we spoke to and asked them, “What does the ideal solution look like?” Using what they told us, we designed and built Vitature, a web-based software platform that lets suppliers and manufacturers work together to exchange information about raw materials. For suppliers, we created a web portal allowing them to respond to information requests from manufacturers. For manufacturers, we created a collaborative platform letting anyone in the company see what data and documents have been collected, when they do or don’t meet specs, what claims are supported, and what information is missing or outdated.

The reaction of those who have seen Vitature in action is overwhelmingly positive. They tell us it will reduce their risk, save them money, and make them more competitive. In short, it will make them better companies.

Let us help your company prepare for the 23rd fold. To learn more, please send a note to skye@healthnotes.com.