The Giant Leap To Digital

When FLEXcon began its digital transformation journey in 2019, Aimee Peacock, then CFO, was the project’s chief champion. For roughly 30 years, FLEXcon had been running on a patchwork of home-grown systems with more than 100 applications that could not speak to each other, and Peacock saw huge opportunities both for top-line growth and bottom-line savings for the 67-year old maker of pressure-sensitive films and adhesives.

But in addition to the logistical challenges of converting the entire system to a new cloud-based ERP, the company, which employs 1,000 across nine sites, also has a long-tenured staff, most of whom were very comfortable with the old ways of doing business. “There definitely has been angst along the way,” says Peacock, who became president in January and has been spending the bulk of her time managing the seismic change. But, as she shares in the following interview, with a careful, methodical approach and plenty of transparency from the top, she’s been able to manage that anxiety and get employees excited about the company’s next phase.

What are the biggest business challenges you expect this transformation to solve?  

The first is, it’s going to put standard processes in place for us across multiple entities, which, right now, are doing everything differently. That will give us continuity in our business processes and will also enable us for growth because we’ll be able to serve our customers better—from order entry to how we deliver our product to providing transparency on ship dates and things that just haven’t really existed for us.

It will also reduce the amount of non-value-added work that people are doing because right now, they really are going through Herculean efforts on a daily basis to get their jobs done. The ERP is going to enable them to make the administrative part of their job easier so that they can focus on the value-added part of their job. Take finance for example—they spend so much time putting together reports and financial statements and so on, but with an ERP, those will just be produced [automatically], so then they can spend the time doing the analysis that’s needed to proactively guide the business into areas of growth and profitability, et cetera. Right now, we’re very reactive in our approach and I want to move the company to a more proactive approach.

The other piece is the analytics—so having one single source of truth that we know where the data comes from, we know the data is accurate and we can use that data to make informed business decisions on where we should grow, which areas we should focus on, what are the biggest markets, but also where is the margin in the product that we want to grow. Being able to simplify our product offerings and have visibility into that is another big thing.

The last piece would be around the end-to-end supply chain. Having that transparency and visibility from the customer order to purchasing all the way through delivery—that is going to be huge for us. Right now we don’t have visibility into that. We don’t have an MRP that tells us when we need to order—our purchasing team is manually determining that every day, again, reactively. This will help us become much more proactive in how we plan, how we schedule our orders, how we run through manufacturing and then how we also provide our customers with the visibility of when they’re going to receive their product.

The other thing is, our demand is 10 times higher now than it has ever been. We have a significant backlog and long lead times, so really being able to provide the customer with the transparency around when they can expect their orders is huge. We’re doing it, but it’s all manual and I think we can do it much better. With the new system that has scheduling and predictive tools and forecasting tools, and so on we’ll be able to provide the customer with better transparency and on-demand information around when they can expect their order to be shipped, when they can expect it to arrive. So that will help us from a customer satisfaction and customer intimacy perspective.

And then for the Great Resignation, what this is going to set up from a resiliency perspective is we’re not going to have to rely on people’s tribal knowledge as much because we will have standard processes. We won’t have things done differently in each site. We will have things in the system and documented so that if there is a downturn or we can’t hire people, automation will help us deal with that piece. I mean, we’re manufacturers, so we’re always going to need people out there running the machines, but there are other functional areas that as people determine that they’re going to retire, we may not need to backfill those roles, which will allow us to become more resilient with lower cost structure.

You’ve purposefully taken a slow, deliberate approach to this transformation. There must have been the temptation to push this through faster. Why are you going at this pace?

Most of the employees that have worked at FLEXcon are long tenured employees. They don’t even know what an ERP is, so we really need to get their buy-in and get them trained and able to use this new system because they’re doing a lot of things manually today. It’s a huge undertaking for us, so we decided that taking the methodical approach would get the buy-in we need from the employees who are actually running the teams. They’re the ones really involved in the day-to-day mapping of the processes. So it’s really the front line team members who are helping to support what we need to put in place to make sure that we don’t go through any of the horror stories that other people go through when they rush and then they can’t invoice and they’re upsetting their customers. So we’re really trying to make sure we have a very clean change management process internally and externally so that everyone understands what we’re going through and how we’re going to support them.

The other thing is, we’ve been on a lean journey for the last five years and the first three years were really focused on cultural transformation and becoming an organization focused more on servant leadership than management by objectives—one that’s focused on gaining the trust of the people. As we’ve done that, we’ve moved into sort of operationalizing the lean process. Part of that is really prioritizing what are those key metrics for daily management that we want the company to focus on and what are some of the activities or processes that drive those metrics? That’s how we’ll prioritize what data we need in order to make decisions. What are the key metrics we’re going after as an organization? What are the top priority items we’re focused on? And then what are the activities that are actually leading indicators into how we’re going to improve those metrics, really focusing the data on those types of things for us to go after. That’s going to be one of the key things for us as we continue down this path.

What is your approach as leader to getting employee buy-in?

It’s certainly difficult and I think people are very anxious about [change] and they’re uncomfortable. The servant leadership model of management is what is so key here, so rather than the mindset of, “I’m the leader, I must control everything,” it’s the mindset of, “I need to remove obstacles that are in the way of my people doing their good work.” It’s that mindset that really makes a difference. I put a lot of faith in my leadership team to have those conversations with people and calm them and explain to them this is a development opportunity and they are going be uncomfortable. But I would say people are extremely dedicated to it. We’re making it the number one project within the company for the next couple of years. We have the resources dedicated, we have people to back up the resources and we’re deprioritizing other things that aren’t as important so that we’re not overloading the workforce. It’s a huge education piece on change management and the why behind what we’re doing and the benefits that this is going to give us in the long run. So basically it’s about how this is going to be the enabler for growth in the future, so that FLEXcon is a sustainable business for many, many years. Considering it’s a family-owned company, we want to make sure that we’re keeping that viable for the long term.

What’s been your biggest challenge as president?

The biggest challenge is really around the change management and the adoption piece. Because if we can’t get the people to buy in to making the change and investing the time into this, we won’t be successful, we won’t be on time, we won’t be on budget. We’ll make a lot of mistakes. I mean, I’m expecting us to make mistakes along the way, that’s how we’re going to learn—but I think we’ll have bigger mistakes if we don’t. So my biggest fear is that we implement this and then people aren’t bought into it and they don’t necessarily take the time to get the training and use the system in the way that it’s designed. I’ve also been a big proponent of not [overly] customizing. I want to make sure we can use as much as we can out of the box and then configure to what we need for specifications, and customize only when necessary to ensure that we stay on track. But it’s really getting that adoption from the business to realize, this isn’t a corporate-down IT project—this is a business project that the business needs to own because this is the way decisions need to be made moving forward.

What do you tell your employees who are nervous about the technology replacing them?

Yeah, so I think there are a couple things there. One is, at FLEXcon, we have a no-layoff practice, so no one is going to be displaced by this automation. The other thing for them to think about is from an economic perspective, looking down the road seven, eight years—they’re predicting a recession and we’re having such a hard time hiring people. If we don’t automate and we continue on the path we’re on, we will become irrelevant because we won’t be able to keep up with the pace of the economy. We won’t become recession proof. So that’s a major concern for me, getting people to understand the why behind what we’re doing and the benefits that they’re going to see from it for themselves from our day-to-day work, but then the overall benefits to the company and the growth that the company will get, which means we can invest more in the company and we can invest more in the people and we can continue to grow and expand. Understanding that holistic picture is really what helps them drive.

And a big thing is transparency. The reason we have not had much pushback or reluctance is that we were able to educate and really show the true benefits and also be transparent about, maybe this doesn’t work and maybe there’s going to be pitfalls along the way, but we’re not hiding that. We’re having those open conversations about, here’s what could go wrong. Here’s what we’re going to put in place to try to mitigate that. Here’s what could happen to our timeline. Here’s what could happen to our budget. It’s really the transparency of not going in and saying, we’re going to do this in two years, we’re going to be on budget, on time—that’s just never going to work. So having those open transparent conversations makes people a lot more comfortable that we’re going to communicate to the entire organization what’s going on, where are we at get their buy-in and really be open and honest about the path forward.

And of course, some people are just going to be naysayers, right? They’re not going to want to change and they’ll choose to select out.

How long do you think it will take to recoup the investment?

From a pure cash outlay? It will probably be a couple of years. If I factor in all the time and money spent from a resource perspective than it would be longer term, probably more like five to 10 years, just because it’s been a huge investment in time and people.

But it had to be done?

Yes. If we want to be a sustainable business, then we have to do this because the current systems can’t support growth to higher levels and how we’re projecting to grow over the next several years.

Have you had to put some projects on the back burner?

Yes. Obviously, we still want to grow and we don’t want to stop business as usual, but we also realize that if you don’t have the enabling factors to sustain growth, you may see growth in the short-term, but in the long-term you’re just going to revert backwards. So it’s having that forward, long-term vision on how we’re going to sustain and continuously grow versus that short-term vision.