Defining Core Competencies —Sherburne
This was a bold and unusual move and prompted me to contact Fetter President and COO Terry Gill to find out more. Gill told me that he and his team came to the realization that with finite resources, they couldn’t create a powerful enough value proposition that would allow them to dominate a category. They decided that they had to simplify their business and focus all of their resources on a limited set of vertical markets.
Fetter was already the number two supplier of labels to the paint and coatings segment. Gill says, “This industry traditionally has a heavy reliance on inventory and acceptance of high costs of obsolescence. We believed that if we could devote 100 percent of our resources to the label business, we could help them reduce their dependence on inventory, as well as reduce cycle times. We didn’t see that opportunity in direct marketing and commercial print, and that was what drove us down that path—the huge savings we believed we could help this segment achieve.”
Fetter then examined other customers to see what synergies there might be with other industries and settled on healthcare fulfillment. This seems like a pretty different kettle of fish, but Gill assured me that there were significant synergies, saying, “Actually, they are related in the sense that they are both data-intensive and highly regulated. We came from a direct marketing background, and we understand data. Print quality is expected—there is no premium that the market will pay for quality. We wanted to look at how we can help these two segments manage their information and assets better.”
Synergies with Industries
And that’s exactly what they did. What was bold about the move was that the company walked away from 40 percent of its top line revenue in focusing on these two industries. When asked how much of that top line revenue had been recouped since the company made the change, Gill states, “We haven’t recouped it in terms of top line sales, but we have made significant progress in recouping the value-added portion. Because our margins are so much better today, we don’t necessarily miss the top line revenue. We are doing much better with a smaller number at the top. Bigger isn’t always better, and we learned that lesson, as well.”