904: Becoming a Catalyst for Growth | Dayton Kellenberger, CFO, Vendavo

Even today, Dayton Kellenberger marvels at his good fortune in having landed inside the corporate finance department of The Coleman Company, Inc..

Of course, like a lot of career success stories, this tale had timing as a large contributor, especially inasmuch as and a little more than 10 years ago, Coleman was experiencing declining gross margins across its business.

To Kellenberger, a recently hired business analyst, Coleman’s shrinking gross margins seemed to present not only a problem-solving challenge but also an opportunity to help to rewire a renowned brand’s customer best practices.

“When you’re part of a consumer packaged goods (CPG) company, you basically have one shot at the beginning of the year to do an annual line review with a customer,’” explains Kellenberger, who adds that at the time, the process might have involved having a “seller” from, for example, Cabela’s freely thumbing through different Coleman catalogs while casually signaling to a Coleman representative, “Okay, we’d like to sell this product.”

“The process change that we made was to get finance involved from the very beginning and have us run the line reviews so that we would create one catalog of feature products,” recalls Kellenberger, who notes that the new catalog proved particularly invaluable for what it displayed internally.

Comments Kellenberger: “Because we could see what a product’s margin was from the previous year and compare it to the current one, we could flag low-margin products, consider replacement products with higher margins, and sometimes even sunset certain SKUs.”

Kellenberger believes that the resulting price volume analysis exposed the previous risks of making business decisions based on analysis that had historically seldom penetrated beyond the customer or product category level.

“What we learned at Coleman was that a single SKU at a single customer could be responsible for dragging an entire product category down,” remarks Kellenberger, who reports that the analysis also exposed the alarming fact that Coleman had at times unintentionally been replacing high-margin products with lower-margin newer ones.

Looking back, Kellenberger observes that Coleman’s margin decline turnaround might have had a different outcome had the manufacturer not rejected certain popular theories.

At the time, Kellenberger remembers, one management team member attributed the decline to “rising prices in China,” while another suggested that the downturn was due to “manufacturing snags in the U.S.”

Says Kellenberger: “This all began with a debate that was rooted not in fact but in emotion.” –Jack Sweeney