2023 GLOBAL SRM RESEARCH REPORT
INTERVIEW: ERIC WILHELM
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‘Organisations are realising that they have to become a customer of choice. They have to be open to gain- sharing and partnering.’
“It would almost be like a separate division of their company or a Special Forces taskforce should they need to ramp something up. But very few customers get into that mindset as opposed to the ones that still carry the procurement baseball bat and want to beat you over the head and drive prices down. There’s a lot of rhetoric, and not a lot of walking the talk yet.” Any cultural change has to come from the top of the organisation, he adds; and there are signs that the current conditions are now starting to have an impact on customer willingness to engage more with important suppliers. “Twenty years ago you never saw chief supply chain officers, and you do now, and they are usually the ones that are driving the company,” he says. His own organisation’s response to this has been to become an employer of choice, ensuring it has the staff required to deliver customer needs. “That gives us the foundation to be a provider of choice, because now we can offer unlimited supply to our customers, when our competitors are turning away business,” he says. Wilhelm believes the current climate is making procurement teams realise they need to change their way of thinking. “Organisations are realising that they have to become a customer of choice, and to be open to gain-sharing and partnering,” he adds. “They have to get away from that strict procurement mentality. The true quality suppliers want to provide the best value for customers, and that goes way beyond the contracted price.”
‘It would almost be like a Special Forces taskforce’
In both these roles, Wilhelm worked closely with procurement teams at customers, which would often be major FMCG brands. He noticed two big changes in the period during which he was out of the sector, which coincided with the start of the Great Recession. “The first was that the consumer packaged goods companies had put pressure on suppliers to take over the procurement of materials in primary and secondary packaging,” he says. “Unfortunately, they did that at the demise of many of the contract packagers because those companies didn’t have the systems or the expertise to manage that. Secondly, procurement teams rather than operations divisions were now in control of supplier relationships.” The shift in the balance of power towards procurement at this time meant greater – and excessive – use of tools such as online and reverse auctions in a bid to cut costs. “They got too carried away with it,” says Wilhelm. “Now that’s starting to swing back again because they realised they went too far, and as a result they lost top-line sales. Some of the suppliers that they picked weren’t the most robust or competent, and weren’t able to produce their on-time, in-full product to anything greater than maybe 85 per cent.” Operations teams are now starting to have more of an input, he adds, with a greater focus on building up stronger relationships with suppliers.
Wilhelm believes one of the issues with procurement is a deliberate attempt to remove any personal relationship when dealing with suppliers, and focus solely on commercials; something that is made harder in any case by the fact that the average tenure his organisation saw with a dedicated procurement contact was just nine months. “You can’t build a relationship every nine months because it’s a whole retraining process and a new culture, learning how we work, communicate and attack crises,” he says. He believes the basis of a better relationship lies in the use of reciprocal scorecards. “There needs to be a very transparent and open discussion on behaviours,” he says. “Suppliers are afraid to tell a customer when they’re wrong. But a customer has to be open to that, and often there are silos within those companies which don’t communicate and sometimes experiences, it’s no surprise that Wilhelm is sceptical about the willingness of procurement to genuinely embrace the concept of the extended enterprise. “Some customers will do this but it’s very few,” he says. “I was selling that back in the 1990s and the pitch would be that companies could treat us as a true, invisible extension of their organisation. That would give them a secret weapon of millions of square feet of space, an unlimited number of production lines and hundreds of employees at a moment’s notice. compete with each other.” Having been through these
Eric Wilhelm first started talking about the concept of the extended enterprise back in the 1990s, but companies were reluctant to engage. That’s still the case, he says, but the current business landscape means organisations are having to change their attitude.
Today, Eric Wilhelm is an entrepreneur and investor, and most days can be found working on the farm he owns with his wife in Marietta, in the US state of Georgia. His is a tale of triumph over adversity, of rags to riches, with a healthy dose of altruism in between. Wilhelm set up contract packaging and supply chain services firm Wilpak in 1994, just a few years after a stint of homelessness. He would go on to build it up into a mid-market business before selling it at the peak of the market in 2006, and giving away $4 million from the proceeds to its employees. His own plan was to stop work altogether. Five years later, having grown tired of early retirement, he started another, similar, business in the form of Coregistics, which
today operates over 100 production lines as a third-party logistics packaging company. He sold this in 2022 to private equity firm Red Arts Capital, although retains a 10 per cent equity stake, and this time gave away $10 million to employees. “They were the people who had grown the companies, and I felt they deserved to have life- changing cheques, along with me,” he says. Today, Coregistics is largely run by his son and son-in-law. “We operate 1,000 truckloads a day, converting retail products from one form to another,” he says. “That could be putting labels on bottles, putting products together in displays, or filling pouches.” The company played an important role during the pandemic, helping to provide some of the logistics infrastructure around the vaccine rollout.
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