In December 2008, William Toler arrived at Pierre Foods Inc. as its new CEO. A food industry veteran, Toler was hired to help the company get through the immediate crisis of facing Chapter 11 bankruptcy protection and then finding ways to make the company stronger moving forward.
“I was first attracted to the opportunity, because Pierre was a supplier to my last company and I knew that the products the company made were excellent and the team here was, largely, very good,” Toler says. “Obviously, there were some things that had caused them to go into bankruptcy, but they were pretty fixable.”
In a twist of fate, the four members of the new leadership team all ended up living in the same hotel when they moved to the Cincinnati area.
“The four of us were relocated here at the same time and we ended up living at the same hotel for a year,” Toler says. “So we found ourselves working out together in the mornings, working all day together then going to dinner and talking about the business from 6 a.m. to 11 p.m. four or five days a week. It really helped to create core camaraderie among the senior team that still exists today. So the fact that we were all relocating here at the same time and ended up living in the same hotel really gave kind of a dawn-to-dusk platform to discuss the business and get to know each other at the same time.”
And with the company facing several challenges, the extra time was a plus.
Pierre Foods’ struggles, while difficult, were not too severe that the company would never recover, and Toler knew that when he took over as CEO.
“You have to make sure you know that you have a good company under the problem,” Toler says. “Is the company the problem, or is the problem the balance sheet? In this case the problem was the balance sheet. It was a fundamentally good business inside of the problem, and a lot of times, it’s not. Make sure you’re doing the due diligence and the assessment upfront to make sure you’re going into a business that can be fixed. Does it have the fundamentals to be fixed? Is it a business that’s cyclical with the economy? Is it one that has a real competitive advantage that can be leveraged? Or is it a business that’s just a problem? In the case of Pierre, it was a strong business that had some unfortunate things happen to it all at once. I knew that we could get in here and fix it because it was a fundamentally good business underneath.
“The kind of business that you’d want to avoid is one that has parts undifferentiated or where you are in a commodity business where one product can be replaced easily for another that customers don’t value. That would be a problem or scenario that you’d be hard-pressed to go in and fix.”
Unprecedented inflation in the food industry in 2008 left Pierre without the systems, analytics or tools to understand how that inflation affected its products.
Toler’s first priority was to fix the obvious problems.
“They didn’t really know what the profitability of their various items or the profitability of their various business segments were,” Toler says. “They were unable to properly price the business to make sure they stayed up with inflation as that hit in 2008.”
Oftentimes when a new CEO takes over a company, the amount of data needed to successfully right the ship or move in a new direction is unavailable.
“We had quite a bit of limitations on data here,” Toler says. “We didn’t understand our profitability by item. We brought in an outside firm who developed a profitability tool and model for us that we still use today that essentially allowed us to understand the profitability by item. We also didn’t have all the plants on one ERP, so we moved all the plants to one ERP and got common visibility and common information across all the items. That allowed us to understand where we made money and where we didn’t and be able to take appropriate pricing and be able to work constructively to make sure that we knew what businesses to stay in and what businesses to get out of.”
Data is usually available; it just usually isn’t pulled out of the system in an effective way that leaders can use. Companies with data issues need to mine the data and then get a plan in motion to fix the problems they find.
Besides a lack of data, productivity was also an issue.
“The other thing we identified when we first got here was the idea that their plants were very good plants, but they hadn’t been stretched to [maximize] productivity,” Toler says. “We immediately began focusing on improving the productivity of the plants in terms of how they operated and the number of people per line and the efficiencies of the plants and the waste in the plants and all the things that can cost money to businesses. Really, it was about getting visibility on pricing and also driving productivity. Those were the two things we focused on when we first got here.”
Pierre had also made two acquisitions that they were struggling to integrate. That challenge, along with the condition of the industry and the economy, served to be too much for the company to handle all at once. Faced with the challenges of lack of visibility in data, lack of integration of acquisitions, and lack of pricing, Toler had to prioritize each task in order to get Pierre back on its feet.
“It was all about knowing where you made money and where you didn’t,” Toler says. “Once you have those things in place, you are able to act pretty decisively. You prioritize in the places were there is the greatest payback. Where can you get the most return for your efforts? Is it understanding the data, is it in moving the ERP’s together, is it in pricing the business or in driving productivity? You look where you get the greatest payback and you put your efforts into that.”
Communicate your plan
Once you have determined where your problems areas are and what needs to be done to fix them, you have to communicate to all your employees why those changes are being implemented.
“The most important thing is to communicate [your plan] internally so you make sure people understand what you’re doing and why,” Toler says. “We did everything from e-mail communications to town-hall meetings to plant floor meetings to conference calls and various other forms of communications. It wasn’t easy, but it was straightforward. It was something we knew we needed to do and something we had to get at right away. The one thing that happens in challenging situations is that people often don’t communicate enough, and we tried to be very upfront with folks and let them know where we stood.”
The planning process is a calculated, communicative process that requires collaboration with everyone on your team. There is no substitute for communication during planning.
“I think the thing we tried to do was talk to the people that were closest to the business,” Toler says. “You have to talk to people working the lines, the front-line salespeople, talk to the marketing team and understand what they thought were the issues in the business. One of the things I’ve always found is that when you have a problem in a business, you go to the problem. You try and find out how we can help. You put people out in the plants, you put people out in the field and you talk to the team and ask them what things they think need to get changed and what things could get better.
“Assess what you’re good at. Assess where your competitive advantages are and assess where your weaknesses are and then leverage your strengths and try and either strengthen your weaknesses or get out of them. Stop trying to do things that you can’t do and focus on the things you can do really well.”
This strategy also paid off for integrating acquired companies, including two recent ones made last fall.
“When most companies go in and do these type of deals they just take the home-teams approach and wipeout the other guys,” Toler says. “The most important thing to do is to listen and to defer judgment when you’re getting opinion from folks that are new to you. You shouldn’t automatically assume that your approach is the best approach, but you should listen and be open to each others’ ideas. That’s been what we have all tried to do. We believe you can find a better approach by listening to each others’ best practices versus just saying, ‘Because I’m doing it a certain way, that’s the best way.’ It takes a little longer and sometimes it’s harder, but generally you end up with a better outcome if you have the patience and willingness to do it.”
Toler’s solutions led to the company’s best performance in 63 years.
“Coming out of the bankruptcy, the strength of the first year results has enabled us to more than double the size of the company,” Toler says.
Pierre’s merged last September with Advance Foods Company Inc. and Advance Brands LLC, creating Advance Pierre Foods, double the size of the pre-merger organization.
Today, the company has $1.3 billion in sales and more than 4,000 employees, making it the largest privately held company in the tri-state area.
“Fixing the bottom line by productivity and pricing, staying focused on our core products and understanding how to merge two businesses together with us that strengthen us in our product lines and also strengthen us in our core channels have made us successful,” Toler says.
HOW TO REACH: Advance Pierre Foods, (800) 969-2747 or www.advancepierrefoods.com
The Toler File
William Toler, CEO, Advance Pierre Foods
Born: Raleigh, N.C.
Education: Graduated from North Carolina State University with a double major in business management and economics
Previous work experience: Procter & Gamble, Nabisco, Campbell’s, Pinnacle Foods
What was your first job, and what did you learn from that experience?
My very first job was as a swim coach and from that I learned that leadership matters. Trying to lead to inspire others is an important approach in business and in life.
What is the toughest challenge you’ve had to face in business?
The hardest thing is letting go of bad business. Getting out of bad businesses or getting rid of customers that you don’t make money on. That’s always the hardest thing, because people love revenue and sometimes they confuse revenue with good business. Getting out of business is hard and saying no to new ideas is hard. The trick is to not do the things that can distract the business.
What is your favorite thing about working at Advance Pierre?
It’s the quality of the people I get to work with. The way we feed off of each other and the things we do to challenge each other makes it fun every day.
What is your favorite Advance Pierre product?
My favorite product is our Graham Snackers, which are two graham crackers with peanut butter and jelly in between. They’re really good.