Where do independents turn to when they want to compete with the big boys for a slice of the corrugated pie? Model FirstPak.
Who is FirstPak? And more importantly, what does it do? To answer these questions, BCI commissioned an expert on the matter, Nick Griffin, president of Griffin Communications and spokesperson for the Association of Independent Corrugated Converters (AICC).
Griffin explains FirstPak as a model structured to protect and expand corrugated market share by allying various members of the AICC to better serve one, often multi-locational, customer. Griffin quips FirstPak was “created as a means to compete in a broader…multi-location marketplace.”
“Typically, a manufacturer or anyone else that would use corrugated products, if they had multiple locations, they would seek to ally themselves with a very large company that also had multiple locations serving them.”
“It's a single-source purchasing trend in recent years that a lot of big companies, that don't want to be buying things locally, want to buy them once nationally,” states Griffin.
It is under these market conditions that the AICC came up with a model fashioned to allow independent companies grab some of the marketshare that large companies typically control. Their solution became FirstPak, a joint selling entity that enables independents to align themselves with other AICC members to serve multiple-location customers.
FirstPak works by forming groups of AICC members into joint selling entities (JSE) to serve national or regional clients without violating antitrust laws.
Today, the AICC has celebrated the success of FirstPak by issuing a report entitled How to Benefit from Joint Selling Entities and be Part of North America's Largest Network of Corrugated Suppliers, which details and explains the ideas, benefits and future potential of these independent sales forces.
To explain FirstPak's organization, one must begin with the lead member of the JSE — the company originally contracted to do the work. In order to compete for business with integrateds, which have the resources to cater to a customer in several geographical areas, the independent supplier can use the AICC network to subcontract work to qualified members located in areas the customer requires service.
“Truthfully, a great deal of the goal of FirstPak is to become invisible to them — to be just another supplier; we want them to think of FirstPak as a brand name. We're trying not to draw attention to the fact that it's an alliance of individual companies. That's basically the way it's structured. The lead member becomes, in essence, the sales force, and the partner members are the service providers around the other parts of the country.”
Instead of losing a potential work order to a multi-locational integrated company, the independent can commission a JSE to fulfill the needs of its client in various sites throughout the U.S. and Canada. And the potential profitability for doing business using FirstPak on an international level is just being understood.
“The real strength, and always has been, of AICC members is their service and the fact that they're able to do things that much larger or nationally based companies simply can't do — like just-in-time inventory and handwork,” explains Griffin. “Many people in the AICC are doing all sorts of things that you'd never think as coming out of a boxplant, including fulfillment services.”
“The object is not necessarily to give [independents] a competitive price advantage. It may. It may not. It's to give them the ability to service the customer. That's the real advantage. Pricing is an issue that's completely changeable in every deal.”
While it is clear from the initial success that there are many advantages of this grouping system, the next big challenge is to bring communication between all factors of the equation into the 21st century.
Meanwhile, Griffin contends, “People are making money from it. That's the whole idea.”
