A FirstPak Primer: A Special 5-Part Series

Part 1 - Four Years Later: What's Going on with FirstPak?

In 1998, the Association of Independent Corrugated Converters (AICC) approached the U. S. Department of Justice seeking a way for independent corrugated converters to work within the provisions of the antitrust laws to serve multiple-location customers. The result was the issuance of a Business Review Letter and the creation of FirstPak the North American "brand name" which is used to identify independent corrugated converters working together to serve a customer with multiple locations.

FirstPak was created in response to members' concerns about protecting and expanding their corrugated market share. In a time which is seeing an increase in consolidation in the corrugated customer base, with centralized purchasing and "sole-source" purchasing practices, independents have found themselves frozen out of the running by larger competitors with multiple locations. The goal of FirstPak, therefore, is to give independents a chance to stay in the game by providing a way they can legally work together to serve a single customer. AICC members, by aligning themselves with other AICC members, can better serve multi-location customers and can even target multi-location accounts and compete for business now largely controlled by some of the largest corrugated products companies.

So how's it going? Well, two years ago AICC published "What We've Learned" an overview of the program and its use by members. The process involved in using FirstPak is not an easy one, members told us. There is much dedicated effort involved in identifying potential partners and in ensuring the smooth flow of information so important to good customer service. But the reward for participation in FirstPak arrangements can also be great. While exact dollar volumes aren't known, some members have reported additional sales in the millions of dollars due to their participation in FirstPak arrangements.

Part 2 - How to get started in a FirstPak Selling Group

Many of the questions we receive here at AICC headquarters about FirstPak have to do with elegibility for participation and the how-to's of getting started. So how do members get started in FirstPak? How do members deal with current customers who are considering sole-sourcing? In short, how do members begin the process and work with it successfully? Let's address elegibility first.

When AICC established the FirstPak program back in 1999, the association was very careful to state that all AICC members, indeed anyone in the corrugated industry, was eligible to participate in a FirstPak arrangement. Even an integrated company plant in a given market area could participate within the group within certain limits. For example, the Department of Justice review letter specifically states that, "No member of the group may be a company that has the capacity (e.g. personnel, capability, equipment and specialty products) to meet the national (or regional, as the case may be) requirements of the proposed customer in a satisfactory manner." So if an integrated company had plants in one or two, but not all the required locations, then they would be elegible for participation.

In reality, though, this is a technicality, for it is independents that are making up FirstPak groups. Any independent can participate in this program, but it is the resources of the Association of Independent Corrugated Converters (AICC) that makes the process easier and provides the information which the participants need. Hence, Association membership is the key to forming a successful group.

Many of the questions we get ask how to get started, and the answer to that is to identify a customer need that can be fulfilled with a FirstPak alliance. Many times these situations present themselves as a circumstance of the customer: a reorganization of purchasing functions; an acquisition by an outside organization; a movement of a manufacturing plant from one part of the country to another (or to another country altogether). The customer then comes to you the converter and says, "I need you to serve my locations in these areas," or, "We're looking for someone who can be a single-source supplier, a one-stop shop." In essence, identifying the customer need is the important first step in getting started.

Then comes the hard part: identifying potential partners in a FirstPak arrangement. While a later article will go into this aspect more deeply, here are some fundamentals.

Learn the geography and the needs. Look at the locations where the customer's locations are located. Gather all the specs for each item at each location. What's involved in each. Are they all die-cuts? Simple RSCs? Printed or not? Labeled or specialty glued? Define the processes and requirements at each location.

Start with friends. The beauty of an organization like AICC is that long-standing friendships can become profitable business arrangements for both parties. Those who have been most successful in FirstPak arrangements have known each other and their companies for a long time. AICC meetings, regional and national, provide the meeting ground for these relationships.

Locate and investigate. OK, so you don't know a lot of people around the industry, now what? Well, AICC's website is a wonderful electronic tool that can provide the basics of what you'll need to know about potential partners. It can serve to identify the most likely "best fit" for a potential partner in any given area. Knowing the location, you can search the site by state, market area, type of plant and even by the kind of equipment they have. True, we don't have makes, models and sizes of the equipment we list, but what we do provide is at least a starting point for you.

Negotiate with your partners. Here's a sticky question we often get: How do I deal with pricing issues with my partners. Can I tell them the price? According to the terms of the business review letter, only the lead member (the member putting together the FirstPak group) can deal with the customer on pricing. Once the price is determined, then the lead member negotiates with each partner individually. Once a price is agreed-on, then the individual box plant partners invoice the lead member directly.

Running the business. Now that all that's done, it's time to run the business, and here the day-to-day dealing with tooling, specs, design, delivery and countless other details can present some challenges. Here's where internal education about the FirstPak process is critical. Successful companies in FirstPak arrangements have customer service and sales representatives knowledgable about the process and how it works. It's important to have designated points of contact as you would with any other customer, but these must be able to handle the multiple locations in the FirstPak alliance.

Part 3 - Steps to Successful Implementation in Your Company

Now we look at some of the aspects of marketing the program to your prospective customer base. The goal of any marketing program is to identify your potential customers, their needs and fill them with your product or service. FirstPak, then, becomes a tool for your own marketing program that helps position your company as a credible, quality supplier for your current and prospective customers. In order to help members position themselves as a FirstPak company, we have reprinted here some of the guidelines we published in October, 1999, during the program's first year of implementation. Thanks to Eli Kwartler of Kwartler Associates, Pelham, Mass., for contributing these guidelines.

Internal education and execution is the key to success. Those involved in sales and sales management, customer service, design and accounting, among others, have to be educated and trained in the philosophy and implementation of the program if it is to work successfully for you. Here, then, are a few simple bullets which you can use to help you in your company's use of the FirstPak philosophy:

1. Identify your internal FirstPak contacts and authorize them to be the contact points for other AICC members (FirstPak partners). Be prepared to answer internally who and how pricing issues will be administrated. Design and publish a flow chart for the contact and information path within your company.

2. Educate your own company personnel, from the receptionist, through to sales, customer service, design, production and shipping about the FirstPak system you've implemented and FirstPak's value to your company.

3. Train your sales representatives about the FirstPak program and what it can do for your company. You might consider holding a sales meeting around the FirstPak system and how it works. Use the book as your guide for discussion points. (order extra copies for your sales representatives and customer service reps). Be sure to:

• Discuss FirstPak customer and prospect qualifying criteria.

• Discuss and tell how you will qualify FirstPak partners. This is vital since, in some instances, existing account might be put in danger.

4. Educate and motivate your sales representatives. Inform them of the value FirstPak has to them, that by using this network they are able to sell for hundreds of plants. Show them how FirstPak can help them:

• Retain and solidify your position at existing accounts that have multiple locations.

• Grow with and expand sales with existing accounts as the open new facilities outside your marketing/shipping area.

• Expand sales opportunities to solicit accounts where multi location service capabilities are a prerequisite.

5. Print the FirstPak logo on stationary, calling cards, and collateral materials. Present yourself as FirstPak, or as "ABC Box, a FirstPak Company." Since you may be competing against larger multi-location vendors, use the FirstPak size and name to your advantage. Remember: as part of FirstPak, you represent more than 625 corrugator and sheet plants in the U. S. and Canada. Show the world that your company is part of the FirstPak network! (If you want a color version of the logo, we have them in electronic format. Simply call AICC headquarters at 1-877-836-2422, or email firstpak@aiccbox.org.)

6. Use the tools which are available from AICC headquarters. Introductory literature about FirstPak is available to you in quantities enough to distribute to your sales representatives and your customers. These will help promote your company as an independent, and FirstPak as a continental packaging network.

Most important, manage the process. FirstPak is not a passive endeavor, but an active and dynamic network of independents sharing business opportunities. Your active involvement in essential to its success.

Part 4 - Sales Reps are Key to Identifying and Selling FirstPakâ Opportunities

In this part we look at the role of the converter's sales representatives in helping identify and sell the FirstPak concept to your customers. In the previous part, "Steps to Successful Implementation of the FirstPak Program", we looked at seven different steps your company can take to help ensure that FirstPak can work for you. It's no coincidence that three of these seven steps involve your sales force and their training in the FirstPak process. So let's take a look at some of the ways you can make this happen.

First, it's safe to say that there's really nothing new here for your sales representatives to learn. All good corrugated sales people recognize opportunities when they see them in their existing territories. But do they actively and regularly pursue those same opportunities in their existing book of business? FirstPak fits into this scenario perfectly because if your customer base has multiple manufacturing locations across the country or even in your general region, there are potential opportunities for you using a FirstPak network with other AICC members. So it becomes a matter of looking at the customer's potential not just in one location, but in multiple locations.

In our previous parts we noted that the benefits of FirstPak arrangements allow you to retain and solidify your position at existing accounts, allow you to grow and expand your sales in these accounts by giving you the ability to serve these facilities outside your normal shipping area and to help you pursue larger accounts than you normally would.

AICC has produced a Powerpointâ presentation that helps you "sell" the FirstPak program to your existing or prospective customers. This FirstPak Powerpoint resentation consists of 11 slides and is divided into three main sections: "About Your Company;" "Benefits of FirstPak;" and "Conclusions and Frequently Asked Questions."

"About Your Company". This first set of slides offers a typical overview of your company. All you need to do is fill in the details. There are some important differences, however, from a typical presentation which you would make about your company alone. The AICC FirstPak presentation gives an overview of the entire independent sector of the corrugated industry - your potential FirstPak partner network - and talks about the number of plants throughout North America. It offers you the opportunity to discuss how your company fits into this network and to talk about how your company's products, services and specialty mix are also available nationwide through it.

"Benefits of FirstPak" The next set of slides talks about the FirstPak program and the benefits it offers. It talks about single source convenience; stability of supply; equipment capabilities; and the benefits of dealing with stable, independent businesses, many of which are family owned and operated.

"Conclusions and Questions" Finally, the short presentation wraps up with Conclusions and Questions, and here your sales representative sums up and answers many of the frequently asked questions about the FirstPak program. Questions involving the legality of the system (it's approved by the U. S. Department of Justice); logistics in handling order specs, etc.; and typical questions about shipping, delivery and service.

It's important to note that the FirstPak Powerpoint presentation is a template to adapt to your company's use. Using the FirstPak program, and the tools AICC provides, can open new doors and broaden the boundaries of your business at a time when you need it most.

Part 5 - Success Using AICC's FirstPak: The rest is up to you

In parts one through four we have defined the AICC FirstPak program and have explained its origins and purpose. We have also, attempted to illustrate how independent corrugated converters can use the program to their advantage in serving their customers. Finally, we have described various tools which AICC has made available to you, the membership, to help train and educate those within your company. The rest, now, is up to you.

The "you" I'm addressing here is the owner. You have the strategic vision for your company; you understand your market and your customer base more than anyone; you also understand that you cannot continue to do business the same way in our increasingly competitive world. Twenty-five or 30 years ago it was a safe bet to say that the typical box company's market radius never exceeded 100-150 miles. For independents, anyway, yours was a local business, serving local customers in a relatively defined area. Now look at the corrugated industry. You all know of AICC members who are shipping across the country to customer locations elsewhere. You all have customers of long-standing, those who you "grew up with" and who still understand loyalty and relationships. These customers, when they have grown and have opened satellite facilities, have brought you along with them. You probably also have customers who have downsized their purchasing operations, and have suddenly found "single-sourcing" to be a desirable philosophy. In this kind of climate, you need ammunition to help defend your share of the market.

Here is where we believe that the FirstPak program gives you a unique opportunity to transform your business. As you read the previous sections, you saw that we have emphasized that no longer do you have to consider your company as just a single entity. We discussed that you can and should begin looking at your customer base with a more strategic view to understand how you can be a player in your customers' growth. This will, of course, require some added insight and legwork on the part of your salesforce, encouraging them to look for opportunities whereby you can become a "single-source" supplier. As an owner, you will have to ensure that the rest of your company shares this vision, and we have provided some useful educational tools to do this. From our FirstPak publications to our sample PowerPointâ presentation for your sales force, AICC has assembled the materials you need to help others understand this new direction.

With the competitive challenges facing independent converters today - a shrinking manufacturing base, chronic overcapacity in the box market, and ongoing price pressures - you have to begin thinking of your company in a whole new light. AICC's FirstPak program gives you the opportunity to begin this transformation. Now, it's up to you to use it.

For more information, call AICC headquarters at 1-877-836-2422, or email at syoung@aiccbox.org.