Businessweek Archives

There's Even A Science To Selling Boxes


Cover Story: JEFFERSON SMURFIT

THERE'S EVEN A SCIENCE TO SELLING BOXES

When General Electric Co. expanded a no-frost refrigerator line produced at its plant in Decatur, Ala., in 1990, Jefferson Smurfit Corp. went the extra mile. Smurfit, a major packaging supplier, had a new plant scheduled to come on-line in 1991 to feed the Decatur facility, but GE needed more shipping boxes, pronto. So, Smurfit assigned a coordinator to juggle production from three plants--and sometimes even divert product intended for other customers--to keep Decatur humming. "You don't do that for just anybody," explains Ron L. Yates, Smurfit's vice-president for sales and marketing. "But we have a relationship with GE that promises long-term volume."

That kind of hustling helped win St. Louis-based Smurfit, the nation's second-largest maker of corrugated packaging, the GE appliance unit's "Distinguished Supplier Award." No wonder partnership selling has become a rallying cry at $4.5 billion Smurfit and scores of other business-to-business sellers. The days when the packaging company could just make boxes and hawk them are fading. Instead, customers such as GE are increasingly channeling hefty orders to fewer vendors. In return, suppliers must improve quality by sharing proprietary information, delivering products on a sometimes quirky schedule, and joining problem-solving teams.

That kind of selling can also shelter a supplier from the bruising struggle of competing only on price. "Today, it's not just getting the best price but getting the best value--and there are a lot of pieces to value," explains Joseph F. Bradley, vice-president for procurement at Emerson Electric Co., a big Smurfit customer that has cut its supplier count by 65%. "You want to earn profits jointly by reducing costs, but you can only work that intensely with a few suppliers who understand the changed role of sales."

That's why Smurfit is trying so hard to revamp the way it sells. Smurfit now serves big customers with teams of representatives from manufacturing, structural design, and even the executive suite. This fall, an outside consulting firm will train all 600 Smurfit salespeople in partnership-selling techniques.

NO RETREAT. Embracing partnering is not without risk, however. Smurfit has invested heavily in anticipation of continued business from its partners. For example, it bought a plant in LaPorte, Ind., solely to supply Kellogg Co. Because packaging plants usually must be near the customer they supply, Smurfit's investment pays off only if it can maintain that relationship for years.

Still, there's no turning back. "Industrial salespeople are going to have to face the fact that we're not going back to the old ways," cautions Yates, who expects partnership sales to account for 20% of Smurfit revenues by 1997. "If you don't follow your customers into partnering, then you'll be locked out--and your competitor will be the one doing the selling."James E. Ellis in St. Louis


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus