A few years ago, a potential new customer for Kansas City, Mo.-based Vanguard Packaging called its president, Mark Mathes, and expressed a desire to upgrade its furniture packaging. Mathes was quick to hop in his car and learn more.
Mark Mathes (left), president, Vanguard Packaging, and Paul Pechacek, director of corporate quality, discuss one of the many displays the company produces daily.
Upon arrival, he closely examined six of its current packages. He then proceeded to the conference room to discuss options with key executives in the production and marketing departments.
"I told them that they're buying poor packaging and until they upgrade their standards, I'm not interested in doing business with them," he says. Then he walked out. He had been in the room for only a few minutes. The executives were stunned. But they had some in-depth discussions about what Mathes had to say. A few months later, he received a phone call from one of them.
Vanguard finds itself making displays like this more often because its salespeople have been educated about the ins and outs of process printing and label laminating.
"He said, 'We're ready to upgrade,'" says Mathes. "'Come on back in.' Today that company provides us with a nice piece of business."
And what about this client's other box suppliers? One has upgraded its quality standards to stay competitive with Vanguard. Two didn't change at all and risk losing the business altogether.
Dare to Be Bold
Five years ago, Mathes would never have dared to be so bold. But five years ago, he was just starting to focus the sheet plant's business on producing more high-end graphics packaging. In those five years, he has made a concerted effort to climb inside the head of his customers and think like they would.
The sheet plant takes pride in taking a customer's current package and turning it into a more graphically-appealing container.
"We want to promote creativity and what it can do," he stresses. "We have to prove we're capable of assisting them. We were selling displays early on; Now we're complete marketing assistants."
Being able to do this doesn't happen overnight, of course. It takes a significant dollar investment in both equipment and personnel training. Vanguard has stepped up to the plate in both areas. In addition to purchasing a Hycorr five-color rotary diecutter (with infrared dryers) in July 1998, it has spent thousands of dollars in upgrading its conference room so that it can both train and educate its salespeople (and customers).
The room has been set up for Internet seminar training and outside speakers from such organizations as the Point of Purchase Advertising Institute (POPAI). In addition, Vanguard has committed to sending its sales people to different parts of the country to acquire firsthand knowledge of the display business. For example, last year the company sent some of its sales staff to Modesto, Calif., for a seminar on wine displays. In addition, last September, he invited his customers to a series of lectures given by Dick Blatt, president of POPAI. Blatt discussed how to measure what works and doesn't work with P-O-P displays.
Laminating sheets to make P-O-P displays is just one of the options Vanguard Packaging provides its clients.
"I want our people to be exposed to different ways of thinking and then have them report back (to the rest of the sales staff) on what they've learned," says Mathes.
Couldn't Back It Up
One person who has benefited from such exposure is Maureen Abrams, account manager. She has been working at Vanguard for the past 13 years. Her previous employer would often make verbal commitments to high-end graphics work but couldn't back them up with the right employee training and an investment in the necessary equipment. Shoddy jobs resulted.
Vanguard's acquisition of Missouri Container in 1990 exposed her to the world of label laminating, which at the time wasn't being done by a lot of sheet or box plants in Kansas City. When Vanguard bought its five-color Hycorr, she started dealing daily with ink sales people and learned the ins and outs of line screens and process printing. She also quickly learned how process printing differs from label laminating.
Sink or Swim
"This industry is so competitive and we have a lot to offer our customers, which makes it easier to do my job," she says. "We're known in town for quality printing. Now I have backup and can follow through. Before (joining Vanguard), that wasn't so."
"For years, our salespeople knew a lot about packaging and not much about high-end graphics and displays," says Mathes. "So I first had to create excitement about learning these processes. I hired those with knowledge and educated those who knew nothing about high-end graphics, sending them to seminars. You can't make a salesman think, so it's neat to watch the light come on at different times (as salespeople learn how to market high-end graphics.)"
Over the next few years, the company will be significantly expanding its design lab.
In a compliment to the environment the company has created, Vanguard hasn't had a single former salesman selling against it for years.
Fighting The Perception
Mathes readily admits that there has been some sales resistance to the plant's push to high-end graphics. He has had to fight the perception that brown box sales are better than high-end graphics sales. But he also recognizes that (because of the cyclical nature of the business) to abandon making brown boxes entirely would be foolhardy. Speed comes with producing brown boxes while the high-end graphics business allows Vanguard to run the long races, he says.
"If we're going to be a continuing success, we have to thrive, not just survive," he adds.
And you don't thrive just by buying new equipment. In fact, at Vanguard, the cost of equipment has only been one-third of the financial commitment to high-end graphics.
"You also have to commit to an aggressive, ongoing campaign of maintenance," Mathes notes. "In the past five years, we've tripled our maintenance staff. It has to be at maximum operation. Also, you have to be committed to ongoing employee training or don't buy the equipment."
Planning a Move
Since 1998, Vanguard has done more equipment upgrades than new equipment purchases. One of its latest acquisitions is an Automat laminator. The Hycorr flexo rotary diecutter was added to complement what was already being done, not establish a new printing avenue. Today, the plant has two of everything, whether printing press, diecutter or laminator.
But even all this isn't enough. Committing to where the customers are located has meant that Vanguard has grown faster outside of Kansas City than in it. That's why the plant's videoconference room (and e-presentations) has become such a crucial component to its success.
Identifying The Base
"Our job is to make high-end graphics relevant to our customer base and get it in their hands," Mathes says.
How to identify that base? At Vanguard, it's all about knowing and identifying packaging cycles and counter-cycles. Mathes and his salespeople create potential customer lists that balance each other out by season. Then they go after specific companies within those industries. For example, if a plant traditionally has a slow first quarter, it should determine what industries require display production between January and March of each year.
"My goal is to eliminate the highs and lows by eliminating the lows and having all highs," states Mathes with a smile. "I knew a display company that made all its (yearly) profit in a 10-week period by making displays. The rest of the time it broke even or lost money. That company never identified the reasons why it was busy. That's why it's struggling today."
But Mathes admits that even doing all this isn't going to prevent customers from changing the way they do business with you. Today he finds that some of his largest customers are playing the cash flow game, waiting until the last minute to order their packaging and P-O-P displays. So the entire time frame from concept of an idea to hitting the store floor is crushed into days, not weeks. Customers are shifting August business into September and October.
That's why Vanguard knows it must constantly maintain high quality printing levels. Its flexibility in label laminating and direct printing lets it provide customers with options. For example, it recently replaced a litho label job with direct printing, saving a customer $100,000 in label costs.
"Customers are slowly learning the advantages of labels versus flexo printing," says Mathes. "Flexo won't replace litho labels. The choices will change from market to market and customer to customer."
Still, Vanguard isn't forsaking its brown box packaging business. Five years ago, the brown box versus high-end graphics percentage breakdown was 75/25; Today, strong display business months change that percentage ratio to 60/40.
"Our (brown box) packaging growth has been spurred by the jump in our display growth," Mathes points out. "Once we get in the door (with display business), our packaging business receives a boost. Displays will pull up packaging but not vice-versa."