The Bottom Line

Potandon Produce Embraces Data-Driven Business Evolution, Wins Big in Vendor Negotiations

Posted by Jim Kurtz on Jan 7, 2019 9:00:00 AM

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Potandon Produce is a powerhouse with a brand that continues to grow in more ways than one, making landmark partnerships and paving the way for businesses that will follow in their footsteps.

When Steve Ottum, their COO, decided to partner with SRM, he saw the new relationship had potential to push Potandon’s growth even further, and he was not disappointed.

Sowing the seeds for growing green

Steve Ottum, President and COO of Potandon Produce, founded the company in 1995 when he and three of his Pillsbury senior management colleagues licensed the Green Giant brand for use on fresh fruits and vegetables.

Today, Potandon is at the top of their game—steering the brand’s continued innovation, partnering with numerous grower cooperatives, and even introducing globally sourced potato and onion varieties to North American markets.

Although Potandon has enjoyed continued success, an ongoing conversation with SRM’s Jim Kurtz convinced Steve to give SRM a shot and opened a project for telecom vendor optimization.

Low risk; high reward?

“At first, I was skeptical,” Steve admitted. “We get approached by lots of firms that offer consulting services, but the more we talked, the more I was convinced there was no downside to working with SRM.”

Despite his growing confidence, Steve approached the partnership with caution. “It took a while to fully understand the value proposition,” he said, “But once we got over that hurdle, SRM suggested we focus on optimizing our telecom contracts and services. I felt this was a low-risk area with low spend, so it would be a good way to test SRM’s offerings.”

But Steve couldn’t shake one thing: Would SRM’s involvement disrupt any of his hard-won relationships with vendors?

His suspicions were eased soon after, when he learned that SRM would never contact Potandon’s vendors without express permission. “It was great to know that SRM could be 100% behind the scenes, or 100% engaged with the vendor,” said Steve. “It was up to me to decide.”

Taking advantage of the data—what did the company actually spend on telecom?

The key to understanding the true value of this new partnership was to fully understand the company’s renegotiated telecom contracts.

After giving SRM a chance to look at their contracts, Steve and his team confidently understood their service terms and reduced telecom costs for multiple locations.

Steve highlighted the benefit of clarifying what was actually spent on telecommunications.

“We did save money on our telecom services, but a possibly bigger benefit was getting to see our real spend on cell phones, internet usage, and so on,” said Steve. “To see real spend, we started small and simple and mainly focused on collecting the right data.”

Yet, additional savings and opportunities were right around the corner.

Unsurprisingly, this strategic partnership didn’t stop at telecom optimization.

Potandon decided to tackle a more complex project: Renegotiating their corrugated packaging contracts through SRM to discover even more cost savings and potential revenue opportunities.

“The corrugate project required involving multiple people in the company,” explained Steve. “We knew that collecting the necessary data and developing a cost of goods model would take some time, but we cannot argue with the results.”

Now, with a complete view of their spend on corrugated paper and a complete understanding of how vendors control pricing, SRM’s analysis revealed that Potandon had an opportunity to significantly reduce costs.

“What it boiled down to was gaining a better understanding of our real cost drivers and vendors’ control over that,” said Steve. “This enabled us to create a model we can now use to monitor new and existing SKUs.”

Only when using this data while leveraging the latest benchmarks to create cost and pricing models did the ultimate benefit present itself—SRM was able to quickly negotiate significant gains from the incumbent packaging vendors.

 “It was obvious in the two projects we’ve done that the people at SRM really know what they’re talking about,” noted Steve. “They offer far more than just a superficial knowledge of contract negotiations and benchmarking. Their work can lead to results that add material value to a business’s P&L.”

For more, download the original Potandon case study here.