If you ask Travis Mlakar what the problem is with being in the paper industry today, he would joke that it’s people asking him if he is Dunder Mifflin from the TV show, “The Office.” While Mlakar hopes his company wasn’t the model for the show, he does want to strive to do something the show has accomplished, which is to make paper more appealing.
Mlakar will be the first to admit that he is in charge of a product that is both boring and bland. However, that boring product is a necessary one and although it lacks the rock star product status, paper has been the lifeblood of Mlakar’s family business, The Millcraft Paper Co., for 92 years.
“It’s white paper,” says Mlakar, president. “It’s about as boring and bland as you could possibly get, so we’ve had to find other ways of differentiating the product.”
That product differentiation, among other initiatives, would come in handy when the recession hit home for Millcraft Paper, a $150 million independent distributor and converter of commercial printing paper. The company went from experiencing record performances one month to a 15 percent drop in revenue the next. The business of paper was no longer boring or bland.
“In October 2008, we had the single largest month in company history, and in November 2008, we literally lost about 15 percent of our business overnight,” Mlakar says. “The world just came to a screeching halt. We’ve had to redefine who we are and the value that we bring and how we run our businesses after 2008 and 2009. Coming out of that, we realized internally we had to find a way as a business to take corporate responsibility and corporate sustainability to the next level.”
Millcraft’s footprint of operation is the Midwest in cities like Cleveland, Detroit, Buffalo, Pittsburgh and Indianapolis. The company realized it had to find way to become more efficient and stronger while also finding ways of giving back to the communities it works in to help those economies grow.
“It’s not the booming metropolises of the world,” Mlakar says. “We have spent a lot of time over the last few years really focusing on the communities in which we work. What we are trying to do is make better decisions ourselves as well as educate our customers about the impact their buying decisions have beyond price, because there is a lot more to it.”
Evaluate the business
When your business experiences a change from month to month as Millcraft did, it wakes you up. Mlakar and his team had to begin to identify ways to deal with the new economic and business environments.
“We obviously have had to drive efficiencies through our organizations,” Mlakar says. “Unfortunately, we went through massive headcount reductions, which are never fun. We also looked at how our organizations can do a better job of supporting each other. While we have 13 locations, the real question was what were we doing that was redundant in those 13 locations and how could we do a better job of all collaborating with each other to better support each other and do more with less?”
While the recession caused businesses a great deal of pain, it did provide a window of opportunity to those willing to put in the effort to truly improve their companies.
“The benefit of 2008 and 2009 was it blew everything up and you finally had a backdrop to question everything and you could get people to understand why you were attacking some of the sacred cows in your industry or in your business,” he says. “Necessity is the mother of all invention and I think that the necessity of changing your business and finding a way to be more efficient after the Great Recession really afforded people the opportunity to look at things differently.”
For Millcraft, one of the areas of business that had always been done one way was inventory management. There were old paradigms and it was time the company took a second look at those operations.
“When the downturn happened, we brought a new group of people together who were able to bring a fresh perspective to how we managed inventory and we were able to take our turns on our inventory from six times a year to 10 to 12 times a year,” Mlakar says. “They’ve done a fantastic job of just breaking the old paradigms that were there and really asking questions, ‘Why do we do this? Why do we do it this way? Why can’t we do it this way?”
Millcraft asked those same kinds of questions in customer service across its 13 locations. That effort has had a monumental impact and has allowed those locations to act as one rather than 13.
“We have competitors who have chosen to drive efficiencies by centralizing things and literally going to a centralized customer service department that they may have moved out of the area to another location,” Mlakar says. “What we’ve done is we’ve used technology to bring our organization closer together so that we are coordinating everything versus centralizing it. Right now our customers can pick up the phone in Cincinnati and if all of our customer service reps are on the phone, instead of going on hold, somebody in Columbus will answer the call or somebody in Cleveland or somebody in Detroit, to make sure that we’re not dropping the ball. That’s what we have focused on and we really looked at every aspect of our business to say, ‘How can we do a better job of utilizing what we have more effectively and efficiently?’”
Taking a step back and evaluating your entire business, seeing things differently and also questioning old processes and procedures is a great way to find better ways of doing things. However, the solutions don’t have to be up to you alone.
“You don’t have to have all the answers,” he says. “We have a wonderful group of people and what we’ve found to be most effective is to sit people down and ask them to describe their day and walk through all the different roles and responsibilities that they have. What do they feel is efficient or inefficient? If you can do it in a venue where you’re listening to what they’re saying, you’re bringing people together so that they can hear what they’re doing versus somebody else versus somebody else and then they start to draw parallels and say, ‘Wait a minute, I can do that and this person can do that, or what happens if we were all able to work together this way or that way?’ I find that some of the best business ideas that we’ve had certainly weren’t mine, they came from the people within our organization. I think if you can listen and facilitate you can get a lot further along than if you try and craft the answer.”
Communicate the changes
When you are asking employees for their feedback and input to identify areas of the business that can be improved, you have to make sure you communicate your decisions and actions based on that input.
“You have to be honest with people and say, ‘Here’s what you said, here’s what I heard, here’s what we took away from it or here are the decisions that we’ve made as a result,’” Mlakar says. “Sometimes you have to be honest with people and say, ‘Listen, I heard you say this, but I don’t agree and here are my reasons why.’ I think the key is you’ve got to educate people about the decisions that you’re making and more importantly, why are you making them. People may not like the decision, they may not agree with it, but the key is do they understand why we’re making it.”
During times of uncertainty and change, communication is the No. 1 tool for a business leader. When the recession first hit in 2008, it was unclear why business was declining and Mlakar had to communicate to understand why changes were happening.
“In November when we first saw the fall off in business, we didn’t understand why,” he says. “November was bad, December was bad and it wasn’t until January that other people in our industry began talking about the fall-off that had happened. So for 60 to 90 days, we were feeling a little lonely and it wasn’t until everyone started coming out saying, ‘Oh yeah, we’ve seen the same decline. We’ve seen this and we’ve seen that.’ Misery loves company and that certainly helped to understand that it wasn’t something that we were doing independently of the industry, and it wasn’t necessarily the decisions that we were making, but that it was a broader systemic issue.”
Once it was understood that it was a systemic issue it was quickly realized that everything that the company had been doing before had to be thrown out the window. You had to play by all different rules because no one had ever seen anything like this before.
“It just comes down to the fact that you’ve got to be honest,” he says. “You’ve got to be able to look people in the whites of the eyes and say, ‘Listen, it might be my job to be president, but that doesn’t mean I have all the answers. The reality is here’s what’s happening, here’s what we’re going to do or try to do to solve it.’ With respect to the people in our business and the people in this industry and a lot of industries, 2008 and 2009 was unprecedented. Nobody had any experience. Anytime there is a radical change in a business, often times it is uncharted waters and I don’t think there is anything wrong with telling people, ‘We’re in uncharted waters and we’re going to do our best, but we don’t have all the answers.’ You’ve just got to be honest and humble. If you come across like you have all the answers sooner or later people are going to see right through that.”
Find solutions
When the environment changes as drastically as it did, you can’t look for answers by staying within your company or even your industry. You have to get ideas and help from other industries where things can translate over.
“Everybody during that time was talking with friends on the side and asking, ‘What’s going on with your business and your industry?’” Mlakar says. “Whether it was casual conversations or talking with friends or just being open to ideas and things that were happening somewhere else, the benefit of a catastrophe like we went through is that you become much more open to ideas and potential solutions. I found myself listening to friends that are in the medical industry about what are they doing and trying to find a way of how could I apply that to our business.”
Whether you’re in tough times or not, it’s very important to develop a network of people that you regularly talk to that are outside of your industry.
“Too often people in business and in leadership positions inhale their own exhaust and they either sit in a room full of people that tell them what they want to hear, or they sit in a room full of people in their industry, in which case the only ideas you have are the ones that are going to perpetuate what’s currently happening,” he says. “You have to go outside and find things that are totally new and different to your particular industry. Find somebody that is in a totally different industry and look for those creative ideas.”
Millcraft focused on two parts of the business: assets/working capital employed in the business, and expenses.
“With both assets and working capital it really comes down to efficiency and analytics and how do you run your business more efficiently and where is there waste you can do without,” he says. “We’ve continued to do that and as our business is now growing again and we are in much better times, we’re finding that the work that we did two or three years ago is beginning to help us exponentially now. It’s the same thing on the expense side. That’s resulted in lower expenses, but more importantly, it’s also opened up the ability for us to grow more cost effectively.”
Once Millcraft had hit its low and was starting to grow again, the company found ways to continue that growth through a focus on its local communities.
“Lots of companies looked outside of their current territory or geographic area to open up new opportunities,” he says. “While we have diversified the products that we sell and the things that we can offer to our customers, we really focused more and more on the cities and the markets that we were already in. When other people said Cleveland doesn’t have the growth potential and we’re going to look elsewhere for revenues, we really said, ‘This is home. We’ve got to make this work and we’ve got to find a way to improve what we’re doing here in Cleveland and Buffalo and Pittsburgh and everywhere else.’”
Mlakar and Millcraft turned toward buying locally and supporting other companies in those same locations.
“We align ourselves with organizations that call home the same place that we call home,” he says. “We all have to realize that the decisions that we make every day go far beyond what we pay for a product. The only way that we’re going to support our communities is to make sure that the dollars that we have to invest on a daily basis as businesses stay in our local communities. Go the extra mile to find a local supplier. Go the extra mile to find out how you can do something that’s going to support somebody that’s going to keep the money here. The reality is that there is a huge downstream effect from your business decisions. When our customers, who tend to be local businesses, do business with Millcraft, those dollars, in turn, are going back into the community once again.”
Along with remaining loyal to local companies, Millcraft asked its customers and clients how it could add value to its products and services.
“We listened and we went to our customers and said, ‘Here’s the situation, we’d like to grow, and we’re not going to grow in other areas of the country, we need to grow with you. What is it that you buy? What is it that we can offer you as products or services? How else could we be of value?’” he says. “We listened to our customers and they said, ‘Well, we currently are buying this and we’re buying that and we’re doing this and it would really help us if you were doing that.’ So we really reengineered our business from our customers backwards. Once again, we didn’t try or attempt to think that we had the answers. Don’t focus on the products, focus on the customers. What you’ve got to do is redefine your organization’s strategy away from ‘Here’s what I have to sell,’ to more of ‘What is it that you need?’”
In conjunction with the company’s philosophy of remaining local and supporting the community, Millcraft started the “Buy and Give” program.
We have developed programs that are designed to give back to the community,” Mlakar says. “The thought behind it is pretty simple. We’re paper, it’s a commodity item, it’s something that nobody thinks about and it’s a supply item that every business has to buy. What we’ve done is we’ve taken that and we have teamed up with two organizations; the Cleveland Clinic Children’s Hospital being one and the United Way of Greater Cleveland being the other. We’ve developed a program to say for every carton of paper that we sell, we are donating back a dollar to the Cleveland Clinic or the United Way of Greater Cleveland to help support those organizations. What we want to do is find a way where we can turn a business decision into a much more efficient business decision by helping organizations and helping our communities and that’s what it is about.”
HOW TO REACH: The Millcraft Paper Co., (216) 441-5500 or www.millcraft.com
Takeaways
– Make the effort to evaluate where you can improve your business.
– Be honest and communicate every chance you get with employees.
– Look outside your industry for solutions to problems within your business.
