Let's not kid ourselves. Tough economic times have taken a toll on business. Regardless of the industry, when a supplier can't perform for financial reasons, it impacts its customers and its suppliers. That is especially true for lean operations that rely on the timely delivery of products to keep their businesses running and their customers satisfied.
Financial stability is a key component of Millwood's strategy to service its customers, including a growing number of national accounts. "To get in the door and develop a relationship with a Fortune 1000 customer, you have to demonstrate financial stability, controlled growth and have the working capital to work with a large customer," says Tom Paskert, Millwood's chief financial officer.
How does Millwood measure up? "We have demonstrated time and again that we have full control of our company," Paskert says.
Financial stability in unstable times is just one of the reasons Millwood has continued to grow its market share in recent years. There are four key components to Millwood's approach to the market from the CFO's point of view.
Work with customers: Millwood gets to know the financial requirements of any new customer, and not just its product requirements. "We want to offer a package that includes our products and services, as well as financial terms that will reduce their total cost," Paskert says.
Work with suppliers: Many of the suppliers in the industrial packaging business are small enterprises. For them, immediate payment after delivery is key to their financial health. "With our financial strength, we are able to work with our customers on extended payment terms while paying our suppliers quickly so they can provide us with the quantities and quality of product we require," Paskert says.
Invest for the future: Millwood has taken advantage of the current economy to make strategic investments in research and development, new equipment to improve productivity and increased capacity. In October, for instance, Millwood acquired Graham Pallet, a leading pallet manufacturer serving the Southeastern US. "That's an example of increasing our capacity to better serve key markets," Paskert says. "We are also making a significant investment in new equipment to modernize Graham." Millwood is currently in the process of acquiring a national distributor of engineered stretch films to complement its unit load offerings.
Establish long-term banking relationships: "Our business isn't glamorous," Paskert says. "So, we spend time educating our lenders and their credit teams so they understand our business." Millwood has also invested in computer systems and business software so that the company can monitor cash flows and operations daily as well as exchange electronic data with financial institutions and customers. "We continually provide our banks and investors with timely information, so there are no surprises," Paskert says.
These are uncertain times. "But, Millwood is following a strategic plan," Paskert says. "We're putting our profits back into our business. That's allowing us to expand our markets and penetrate Fortune 1000 companies."
Tom Paskert, Millwood's Executive Vice President and CFO since 1997, was formerly a Special Advisor for International Trade to the Reagan Administration and is a former executive with TRW.