A FRESH EYE: R. C. Strickland has succeeded because its strategy drives down costs for both vendors and retailers--a feat that's critical in today's competitive economy. It does so by being consumer driven, not retailer driven . "In our business the old paradigm is that the manufacturer would come out with a product, and the brokers were driven to show it to every retailer," says Hamer. Strickland turns that notion around by selectively targeting products to the retailer to meet specific consumer wants.
Jerry Weil of Swiss-American says of Robert Strickland: "He sells a product as well as anybody. What he's really selling is knowledge about it." Weil adds that what deepens that knowledge is Strickland's experience from the seller's side of the counter. (He spent 14 years in deli operations, 5 of them at Piggly Wiggly, a chain of supermarkets primarily in the Southeast.) The partnership between Swiss-American and R.C. Strickland is yet another case of Strickland's casting a fresh and discerning eye on a client's business and finding an underused asset to be newly leveraged.
Swiss-American markets its domestic cheeses under the Dutch Garden label. When Strickland started working with the company, he believed the management was too focused on its core business. "They were trying to exploit a brand name," he says. "They wanted to be a Budweiser." Strickland, meanwhile, was more intrigued with the company's distribution facility in Charleston, S.C., through which it imports specialty cheeses. He knew through his alliances with Harris Teeter and Food Lion, the two largest supermarket chains in North Carolina, that there was a burgeoning market for specialty cheeses in the state. Why not use that distribution facility to better serve that market, to which Strickland had terrific access through those two blue-chip retailers? Since Swiss-American began working with Strickland, six years ago, its share of the specialty-imported-cheese market in North Carolina has risen from zero to 80%.
What made that possible was that Strickland saw that the Charleston facility had the ability to cut, hand-wrap, price, label, and deliver cheese. (He knew through experience that consumers would pay a premium for hand-wrapped, as opposed to machine-wrapped, cheese.) In effect, it could offer retailers a highly customized product that would meet a range of consumer tastes--and deliver it as often as four times a week throughout the state. That capability, meanwhile, stripped labor out of the retailers' deli-bakery operations, a major cost component.
Recalls Weil: "Robert saved the stores labor; the cheese looks better and lasts longer; and we deliver three or four times a week." There was a subtler dividend, too, adds Weil. Workers in the stores, busy preparing the cheese, often had their backs to customers at the counter. With the cheese delivered prepacked, deli workers could face the customers and provide better service.
Strickland, not one to sit still, now wants to further leverage the Charleston distribution facility. He will distribute other specialty foods such as olives, hummus, and herring into the North Carolina market. Weil, who says he is in the cheese business, initially balked. "It was a bone of contention between us," he says. But Strickland kept after him and forged a deal whereby he and Weil would spin off the Charleston operation as a separate business, of which R.C. Strickland would own 80%.
WORLD WIDE WEB: Frank Casale of the Outsourcing Institute says that a bird's-eye view of the economy today would reveal a complex web of companies ("resources," he likes to call them) connected through myriad alliances not unlike R.C. Strickland's interwoven relationships with both vendors and retailers. This sharing of resources represents what he labels "a modular approach" to business that eschews building infrastructure inside a company. He says that the "resource web" will grow only denser as business alliances proliferate and strengthen. Vice-presidents who once ran divisions inside companies will now be "point people" to outside organizations, producing what he calls "the real worldwide web," which will be strengthened by the far better known electronic version. Says Casale, "Many of these people will have more interaction with people around the world than with some of the people in their own building."
Just as outsourcing has challenged the conventional wisdom about organizational structure, it has also challenged how one might think of traditional measures of business success and value. Casale says that what matters today is not so much indicators of brute proficiency such as how many employees a company employs or even how fast they have grown sales. One should pay attention to certain ratios, which at their base are indicators of leverage. Revenues per employee, return on assets, and economic value added (a measurement of net operating profit to cost of capital) are some of the indicators that merit closer scrutiny.
Says Casale: "I don't care how many employees they add, the nature of these companies is changing, the measures are changing. In fact, a company with too many employees and too much infrastructure could be going the wrong way.
"That could be a sign of lethargy."
Edward O. Welles is a senior writer at Inc .
Resources
The best single source of information on outsourcing is the Outsourcing Institute, in New York City, which disseminates independent information on the strategic use of outside resources. The institute publishes a quarterly management newsletter, The Source. To subscribe or get other information, call the institute at 800-421-6767.
Also, International Data Corp., in Framingham, Mass., a leading provider of information-technology data, analysis, and consulting, has recently produced 1996 Worldwide Outsourcing Markets and Trends. For a copy, call 800-343-4952.
One consulting firm that specializes in outsourcing is Michael F. Corbett & Associates. It puts on intensive three-day seminars called "The Disciplines of Outsourcing" and distributes Outsourcing: The U.S. Business Revolution, a 400-page review of the history and future direction of outsourcing. Corbett can be reached by E-mail at mfcorbett@corbettassociates.com or by phone at 914-463-1110.
OUTSOURCING INSTITUTE, Frank Casale, 45 Rockefeller Plaza, Suite 2000, New York, NY 10111; 800-421-6767; fcasale@outsourcing.com 54
R.C. STRICKLAND, Robert Strickland, 2900 Westinghouse Blvd., Suite 100, Charlotte, NC 28273; 704-588-1908 54
SWISS-AMERICAN, Jerry Weil, 4245 Papin St., St. Louis, MO 63110; 800-325-8150 54
