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Sealed Air and Diversey Care - a tale of integration and reinvention23rd of June 2014
ECJ editor Michelle Marshall speaks to Jerome Peribere, ceo of Sealed Air, and Dr Ilham Kadri, president of DiverseyCare, about how the two companies are going through the integration process.
Since Sealed Air - global leader in protective packaging, food care and shrink packaging - acquired Diversey, now called DiverseyCare, in 2011 the two companies have been involved in a lengthy integration process which is still very much ongoing, explains Jerome Peribere, Sealed Air's ceo.
“We have been working hard at integrating Diversey into our industrial food packaging business, while at the same time bringing the technology pertaining to Sealed Air into Diversey. It certainly has been hard work but we go into 2014 as a new Sealed Air, with DiverseyCare now being part of the group.”
A key element of that process has been to bring new leaders into the DiverseyCare business, and Dr Ilham Kadri was appointed at the beginning of 2013 as its president. This is Kadri's first position in the cleaning and hygiene sector, which Peribere views only as an asset. “Someone with IQ and EQ does not have to be an industry expert," he says. "On the contrary, someone from outside an industry can come in to a company and look at it with fresh eyes, and implement new ideas.”
The process of merging the two cultures is still happening, says Peribere. “We have acquired great talent with Diversey and some members of the team have been there a very long time. As Sealed Air we have brought fresh eyes, new people and processes, go-to-market processes and financials to the DiverseyCare business.”
So how has the company's strategy changed under its new owners? Kadri describes the challenge that was presented to her when she joined. “The company had changed hands too often with no real vision so there was much to do," she says. "The first thing I did was assess the company, and the industry in general. I very quickly discovered it is an extremely price-driven sector.”
And this is where DiverseyCare is making fundamental changes to its operation. “We want to achieve quality before size so we must first verify the cultural fit between us and our customers," says Peribere. "Our belief is that we are developing the best solutions for BSCs – we are competitive but we are not the cheapest. Our aim is to offer the most competitive offer to our customers, however it is not our intention to be the cheapest."
He continues: "Our view is that we must eliminate price-oriented customers, and we are in the process of doing that. When we have low quality businesses as our customers we cannot realise the potential.
“We are starting to question the ‘value-added’ we can bring to our customers. How do we help them to win, to grow? Our solution is to help them to cut their costs, help them to differentiate themselves from the competition and maximise their efficiency. If we do those things we help them improve their gross profit.
“So my attitude is: if I help you, I want a part of that increased value. If not, why should we as a company invest in valuable R&D?”
Kadri reiterates the new DiverseyCare approach: "As a company we needed to have the courage to walk away from those customers who were only interested in price, and I believe the market now understands our message. The industry as a whole must re-imagine itself and its value, as we are doing at DiverseyCare – when we create a value we should extract it, and know how to measure it.”
Peribere stresses that DiverseyCare has improved its profitability after years of declining returns for the company. “We are all wasting our time by simply reducing the price of our chemicals. By putting our heads together we can optimise labour and improving the cleaning operation. As DiverseyCare we can really help BSCs improve their productivity - in fact we are already doing that with selected partners.
“The cleaning sector is not immune to competitive forces and everyone wants their costs to go down of course. I completely understand that our customers are trying to cut costs and improve margins – I’m the same. But if you want to cut costs and you think that comes from Sealed Air, no deal.
"However, if you accept the principle that additional value will be shared, by putting our heads and resources together, I can guarantee we can create that."
How DiverseyCare derives benefit from this new approach is then down to negotiation, Peribere says, once the company has demonstrated the tangible savings that can be made. “Purchasers are hard-pressed to generate short-term returns. If they don’t look at long-term goals they are not doing their job. Small savings on detergent mean nothing.”
A high-risk strategy on DiverseyCare's part? Time will tell, however Peribere and Kadri are set firm on this new course for the company. “Market leaders must innovate,” concludes Kadri. “We are not only reimagining the DiverseyCare business, but the future of the sector as a whole.”