Chicago — Patrick McKune had a lot of work to do when he was hired as chief financial officer of resin distribution firm M. Holland Co. in 2005.
"It was a classic case study of growth pains," McKune said June 8 at Plastics News Financial Summit 2017 in Chicago. "Our executive management was loyal and long-term, but they were unprepared for the next step."
At the time, Northbrook, Ill.-based M. Holland was a regional distributor. McKune was one of the first hired by President and CEO Ed Holland to build a new executive team.
"Our business plan was just to beat last year," he said. "Ed said that he thought 'budget' was a rental car company.
"It was sales by brute force, and it could crumble under its own weight," McKune added. "We were tripping over dollars to pick up pennies."
One of McKune's first successes with the new program came when he "brokered detente" between the firm's credit and sales staffs. In the early phases of M. Holland's transformation, the firm had no formal communications system. "Tribal knowledge and Post-it notes were best practices," McKune said. "It was indeed the wild, Wild West.
"To Ed's credit, he recognized changes were needed to the executive leadership team," he added. "Many initiatives were started and stopped. We needed a better planning process."
With this goal in mind, M. Holland hired executives to improve the firm's planning and focus. Sales now can be traced to one of 50 end segments and are now integrated with budgeting and performance management.
"We love to manage by feel, but we added facts to our decision-making," McKune explained. "We broke down silos and improved communications."
As part of this process, the firm also reduced the number of warehouses it uses from 140 to 50. It's now in the process of moving to a global ERP computer system.
The changes that were needed at M. Holland were difficult to make, but they've paid off. The firm has been growing three times as fast as the overall industry and has made a series of acquisitions in recent years in the U.S. as well as in Mexico and the Caribbean.
M. Holland also will be the main client of a massive resin distribution center being built in the Chicago area by G&D Hoffman Transportation. Major Prime Plastics Inc. will provide logistics services for the site. The center — in Coal City, Ill. — is expected to open in January.
Today, M. Holland sells more than 1.4 billion pounds of resin per year, offering more than 8,000 stock keeping units (SKUs) to more than 4,000 customers and making more than 40,000 shipments.
"We've gone from regional to international in less than 10 years," McKune said.
He added that communicating remains "the hardest part" of the firm's business. "We failed to understand how much competition there is for the attention of people in a digital age," McKune said. "You need to use gentle pressure consistently applied."
Looking ahead, McKune said M. Holland plans to increase its annual sales by 1 billion pounds in the next five years. The firm also aims to increase its international sales amount from 10 percent to 20 percent in that time frame.
McKune added that M. Holland's cultural foundation starts with Ed Holland himself, who personally meets with new employees and gives them a poker chip marked with the words ALL IN. McKune carries his chip with him and showed it toward the end of his speech.
"Now we have a foundation on which to build," he said. "We didn't have that 10 years ago."