Looking into the future

Peter Ventress is not what you’d expect from the president of a multinational organisation who plays a pivotal role in unifying the fragmented European OP market.
The drive and determination is clearly evident, and a glance at his CV reflects his impressive expertise and experience. But the instant impression Peter gives is of a fiercely proud family man with a light-hearted sense of humour, who is as comfortable discussing his children’s education as he is describing the thorny issues of the day.
Here Peter talks openly and with candour as he reveals not only his strategic approach to his job but also his enthusiasm and passionate approach to serving his customers.

OPI: The North America division underwent a dramatic restructure during the middle of 2005. Are there similar plans for Corporate Express Europe?
Peter Ventress: There are a number of differences between the two divisions. Firtsly, the North American market is fundamentally different to Europe. In the US you have a homogenous market, a single language and Europe is obviously a lot different.
I wouldn’t anticipate that we will be following exactly the same models as the United States because it just wouldn’t fit. However, at the same time we’re always looking for best practice and leveraging our scale in Europe. An example of this is by creating a centrally coordinated purchasing function in Europe. This makes great sense because why do things 13 times when you can do them more effectively, more efficiently and better once.
There is no underlying strategy that says we will try this in the United States and then if it works, roll it out across Europe; it doesn’t work like that. We will do what is best for the European market and best for the European customers.
OPI: What point are you up to with the single point of purchasing plan?
PV: We are already in the process of bringing it together, it is a process that takes between six and 12 months to develop and fully set up. We believe this single purchasing function will be fully operational in 2007. It will be based in Amsterdam.
OPI: Do you anticipate any job losses?
PV: We are talking mainly about the movement of jobs but inevitably there will be some job losses. This is not a massive cost-cutting exercise; it’s just a process of consolidation. Each country has its own Corporate Express office and each country has its own managing director, and that will continue. These people are profit and loss accountable and will continue to be so.
This is just one of the ways that we will leverage our European and to some extent our global scale.
OPI: Are you feeling the pressure of the North America overhaul in any way?
PV: Our stakeholders, the business and our competitors generate the pressure. The European business needs to improve in terms of profitability – but that’s just a fact of life and is not in any way specifically connected to North America or anywhere else.
OPI: Where do you feel the pressure most?
PV: Ultimately, the customer drives everything and that’s the most important factor in what we do. The customer drives how we behave, how we perform and puts pressure on our business by making new demands and creating new opportunities. This is not new but at the same time we want to deliver a healthy return for our investors. I sit there thinking ‘how can we make money serving the customer?’ We try very hard in going further than just trying to satisfy our customers because it is a very competitive market. You know as well as I do that the products you buy from Corporate Express in Europe are the same or similar to products you can buy from Lyreco or Office Depot in Europe so it’s a case of being able to differentiate ourselves from our competitors.
OPI: So how can you differentiate yourself in the rest of the market?
PV: Do you really think I’d give you a detailed answer to that one! The one thing that can be said about the European market is how difficult it is to define one economy. We have different economies across Europe and Germany is different from the UK, which is different from France. We count our good, strong local leadership as one of our key strengths. We have strong local teams in each market and their role is really to interpret the requirements of that market and identify the opportunities there. They have to deliver the Corporate Express promise to the customer in those markets and they do it very well. There are some things that are solely European initiatives, such as our private label programme, and they are delivered and promoted in each country by a strong team of sales and marketing professionals. Because Europe is so different across the market there are unique challenges in each different country.
I cannot identify one big difference from country to country. Our business is about getting 1001 details right at the point of interaction with the customer, whether that is in sales, marketing, delivery, after-sales or call centres. So whatever it is, it’s getting all of those things right at the same time, every time.
The balance between those kinds of details changes between the different countries but fundamentally the business process remains the same.
OPI: Quality of service is usually the core strength of the independent; how can a multinational such as Corporate Express possibly match that?
PV: It’s certainly a challenge but that’s why we have strong local teams.
It sounds clichéd to say but we have global power, local presence and local customer contact. If we have the scale of a 16 billion company and can leverage that in sensible ways and yet still have the local flexibility and the local customer contact, then we can compete with both our global as well as local independent competitors.
The barriers to entry in this business are very low. Anybody can set up as an independent dealer with a Spicers catalogue and run a business and we have to be able to offer more than just that local relationship.
In addition, we have to get those 1001 things right all across the board, all the time, every time, and bring to bear some of the strengths of the big corporation such as the private label, the ability to deliver a range of products that perhaps the independent can’t deliver, products that are more than the traditional office products, things that we’re not used to seeing in all our catalogues.
OPI: Is that an ever-evolving process?
PV: Yes, it never stops. We want to be the single source supplier to the office but that is an evolving proposition. The demands of our customer are evolving and our responses to those demands are changing and it will continue. The people who want to ask the questions and want to change are going to be the winners of the future. There isn’t an answer today that will properly fit tomorrow’s environment.
OPI: The price of paper is expected to rise. As paper-based products accounts for a fifth of your revenue, how can you pass this on to customers?
PV: We can pass on the price rise and we have been successful in passing it on in the past. It is generally about timing and how quickly you can pass it on. Today we live in a world that is increasingly inflationary; people do expect prices to rise. However, on the other side we have people under enormous pressure to reduce costs. As with everything it’s about finding the balance between the drive to reduce costs on behalf of our customers and the commercial reality that says prices have risen, there is inflation and we have to pass those rises on.
We’ve been successful in passing the rises on in the past and I don’t see why we can’t in the future. Part of running a successful commercial entity is managing the variables and input prices are one of those variables.
OPI: Are you noticing an increase in the average customer spend?
PV: Where we will be successful in driving this single-source supply concept is by persuading customers that we can save them money by improving their processes as well as by product pricing. We are beginning to see people buying more products and goods from us and consolidating their business – that’s good for them and good for us. I would say that spend per office employee isn’t changing dramatically in our traditional products but by broadening the range people do spend more, clearly it also varies across countries.
OPI: Are you tracking the latest changes in property trends?
PV: There are certain parts of the world where there are economic booms which drive office space, which drives office products, and it is very clear for all to see. That is an economic event but there isn’t really one of those events in Europe that I would highlight as a hotspot.
We live in a competitive world. The biggest issue for us is how you manage all the variables and then still be in a position to offer your customer a competitive proposition that not only adds value for them but also adds value to your business. This is business, it’s how it’s always been, the only thing that changes is the competitive environment and that shifts over time. Our job is to find out what the customer really wants from us and what will add value for them; otherwise they’re not going to pay for it. Then we have to deliver in the most efficient way possible. Our business always has to deliver at the lowest cost and the most efficient because we’re in such a competitive environment.
Private label is another opportunity for us to add value to the customer by giving excellent products at a slightly lower price but with the peace of mind that they’ve got the Corporate Express name on them, they are well supported and the quality is controlled and high. There is a confidence in that brand.
OPI: What are the most critical challenges ahead?
PV: Private label is absolutely critical to our business. About 20 to 25 percent of our revenue derives from the private label programme – that has grown from about 12 to 15 percent five years ago. It will continue to grow but I am unsure whether it will continue to grow at such a rate.
We’re very clear that our private label fits within a portfolio of products, including manufacturers’ brands. They support each other and will always be there, they are fundamental to the business and you can’t have one without the other.
You are dealing with an extended supply chain. We invest a lot of time, money and effort in ensuring that quality is paramount in the products that we buy. We have engineers working on product design and agencies working on product testing. We are delivering to the customer something that we have already put through this massive quality process and can confidently put the Corporate Express name on. That’s what the customer is buying – they buy the product, but they’re also purchasing the confidence they feel in our brand.
OPI: How do you foresee your relationship with vendors changing?
PV: It’s a bit like our approach with the customer. There isn’t one single detail that you focus on. Our relationship with the vendor works on numerous different levels in terms of quality, availability and supply chain management. We’re looking for vendors who understand that a relationship with Corporate Express involves dealing with us across that whole spectrum. You have got to be good on all areas of it to be a true partner of Corporate Express. It is inevitable that we will want to deal with fewer suppliers because it makes it easier and also because there won’t be as many suppliers who will be able to do well on that complete spectrum – it could be described as self-selection.
OPI: Will the single purchasing function have a knock-on effect on your suppliers?
PV: Yes, our preferred supplier list will contract, but our aim is to make it easier to do business with us and therefore develop stronger partnerships with us. We’ll be talking more at a strategic level about how the partnership works, we will expect them to be coming to us with market information and product innovation, and have those high-level discussions that will mean we will have a more fruitful relationship.
It’s not just a buying or selling relationship, a "what’s your price today- conversation, because if it is, we’ll just go somewhere else.
We want to have a more strategic partnership and that again means we will be dealing with fewer people because you can’t have a strategic relationship with everybody.
OPI: What do you look for in a vendor partner?
PV: The people who want to be with us. The product has to be good, the quality has to be excellent and the supply chain has to be well managed, the commercial terms have to be right and there has to be a desire to work with us on that strategic level. People must value the partnership for it to work.
OPI: How can you get ahead of your competition?
PV: Our interaction with our customers comprises thousands and thousands of tiny details. Those details must be right first time, every time. Clearly you have to have the right systems and processes in place but above all every one of our businesses, in every part, will have the very best people. Our success is defined largely by the quality, the motivation, enthusiasm and passion of our people who we rely on to get each and every detail right. In a world where we do sell similar products, we can compete by being the most cost-efficient and the most cost-effective. We can compete by being the single-source supplier and having the easiest access for the customer, but that depends on having the best people.
OPI: What do you look for when recruiting a new member of staff in order to bring fresh blood into your organisation?
PV: They have to have some form of functional expertise, for example, we want the best logistics people, we want the best IT people, we want the best sales people and the best eCommerce people, but that is driven by a focus on the customer. We look for people who understand that what they do has an influence on the customer’s experience. We believe we have world-class logistics and a world-class eCommerce and private label, and that depends on having great people within our organisation who understand how our responses are shaped by the customer’s demands and requirements.
They have to deliver in a way that the customer really doesn’t have to think about the process, it just happens. New products are few and far between. We have to look at new ways of addressing customer processes.
We have built the business on some very strong fundamental building blocks. We have extraordinarily efficient IT systems, which are imperative in running a business our size.
OPI: What are your views on consolidation?
PV: There will continue to be consolidation in our industry and it is important that continues. I think it will happen at different levels although the medium-sized companies are the most vulnerable to takeover and they eventually will have to find an exit route. There are different imperatives. There are some companies that have an investor who wants to get out and get a return on his capital. There are others who realise that as a medium-sized company, they haven’t got the leverage of an own-label, the scale and purchasing power. A lot of them have tried with marketing and purchasing alliances but it’s not quite the same.
There is still scope to have consolidation at high level as it helps to improve the profitability of the whole industry. The margin pool is limited and consolidation helps you to maximise that margin pool for stakeholders.
OPI: Following the recent takeover in Norway, can you explain the general criteria you look for in a prospective acquisition?
PV: It’s due to a mixture of different factors. Geographical markets certainly play a role in our development strategy, but if we see opportunities where there may be other product sectors that fit very well with our current infrastructure then we will of course be attracted to those as well. Scale and geographical coverage are becoming more and more important to customers.
OPI: What do you predict for the future of the industry’s buying groups?
PV: Alliances really stand or fall by the strength of the members in there. Inevitably, the days of the buying group are numbered. I believe that as one or two of the bigger players are acquired or consolidate, they cease to need their buying groups. You need a critical mass within a buying group to make it work and I just can’t see the long-term future for them, I just can’t see their usefulness.
I’m not talking about tomorrow, I’m looking five years ahead and I can’t see how the concept can be supported moving forward.
This is assuming that there will be more consolidation – obviously if it doesn’t happen then yes, sure, they will have a future, but as their critical mass diminishes they will cease to be of interest to the manufacturers.
If I were a mid-sized dealer today I could see the value of the dealer group, I would want to feel part of something bigger, but that feeling of wanting to grow tends towards more consolidation. It means that you have appreciated that as a pure independent at a certain scale, you neither have the size for purchasing power and leverage nor are you small enough to have the kind of flexibility to play around on the margins. The missing element is filled by joining a buying group, but there will always be people who discover they can only find true benefits of scale through consolidation.
I’m not trying to be controversial and I don’t see it as a big thing, it’s just that I see it as an inevitable consequence of consolidation.
OPI: Where do you think Buhrmann stands today in Europe since you moved to Canada in 2003? What has changed and what is different compared to four years ago?
PV: Buhrmann moved on dramatically in Europe during the three years I was in Canada. The most significant step was the divestment of our paper merchanting operations, giving the business a strong strategic and operational focus on office supplies. At the same time the breadth of the offering has grown so that we no longer simply talk about traditional office products but rather about providing a ‘single-source solution’ to the office buyer. Corporate Express Europe has grown in size and at the same time matured as a business. The integration of companies acquired in the past seven or eight years has been completed and Corporate Express Europe moves forward now as a strong European player, one of the clear leaders.
OPI: We touched upon it earlier with the North America reorganisation, but how do you look at the European OP market relative to the market in North America?
PV: The European market is in many ways a lot more complex than that in North America. The obvious differences in terms of language, culture, currency and tradition which make Europe so diverse are to some extent reflected in our industry. Clearly too over the past few years macro-economic factors have had an influence on the development of the industry. If, however, we look beyond the differences, we see many areas where the fundamentals are the same. Within Corporate Express we are always looking to exchange best practice across all parts of our business in all parts of the world. We shamelessly steal ideas from each other in order to improve processes, organisation and customer service. I look to North America as a good source of innovation and ideas.
OPI: The European market is still very fragmented. What opportunities will Corporate Express Europe have to participate in the consolidation?
PV: We have shown in 2006 through our acquisitions in Spain and the Nordic regions that we continue to be ambitious. We have always said that we want to be one of the leaders in our industry on a European level. We seek to hold a number one or two market position in all our markets, and that also applies to Europe as a whole. I firmly believe that we will see more consolidation and as a company we are committed to playing a role in that as and when it transpires.
OPI: The European OP Division of Buhrmann is still well behind in terms of profitability; to what extent will the Andvord Tybring-Gjedde acquisition help to improve profitability? Will it be possible to reach the long-term margin target of 6.5 percent given the low profitability in Germany?
PV: In ATG we acquired a very successful profitable business. Clearly this has an immediate effect on our profitability as a Division of Buhrmann. At the same time we are seeing positive improvements in performance across our other businesses in Europe, including Germany. We are going through a period of change as we invest in new IT systems, bring some of our functions such as merchandising into a more European organisational structure, and develop new go-to-market organisations for the future. This involves a certain level of complexity for a short period. Even with this we see our bottom-line results improving so you can see that we have much to be positive about for the future. Our target remains in line with the stated Buhrmann long-term aim.