Purchasing executives come to their professional positions from a wide variety of backgrounds. But it’s fair to suggest that few executives entered purchasing 37 years into their accomplished professional careers.
But that’s exactly what Wesley T. Farrell has done.
Ten years after joining East Balt Inc., 28 years after entering the baking industry, and 37 years after graduating from Bryant College in Rhode Island and entering the workforce, Mr. Farrell has become director of purchasing at East Balt.
In fairness, Mr. Farrell had assignments earlier in his career at major baking companies that included oversight of the purchasing function. But his new post at East Balt has Mr. Farrell for the first time in his career directly responsible for purchasing a wide range of ingredients, packaging and other supplies.
In giving the purchasing portfolio to Mr. Farrell, East Balt is tapping into the experience of an executive who has held high ranking financial and operational assignments. In accepting the post, Mr. Farrell is purchasing flour, shortening, sweetener, specialty ingredients and packaging for one of the largest suppliers of baked foods to McDonald’s Corp. in the world.
Privately held East Balt has roots dating back to the 1930s when Louis Kuchuris began acquiring baking companies in the Chicago area. The company grew dramatically after 1955 when Mr. Kuchuris, who recently was inducted into the Baking Hall of Fame (see Milling & Baking News of April 7, Page 32), agreed to begin supplying buns to Ray Kroc’s McDonald’s restaurants.
Plants around the globe
Today, the company bakes buns, English muffins and tortillas for McDonald’s in the United States as well as Belgium, Switzerland, Italy, France, Turkey, South Africa, China, Japan, the Ukraine and South Korea. In China, East Balt operates five baking plants. The company will be opening plants in Moscow, southern France and another in South Africa shortly.
East Balt’s U.S. baking plants are located in Chicago, Denver and St. Paul, Minn.
Mr. Farrell was nine years into his career before entering the world of baking. With his B.S. in accounting, he held financial positions in the Clairol Division of Bristol-Myers in Stamford, Conn.; GTE, a telecommunications company, in Stamford; Beker Industries, a chemical fertilizer company in Greenwich Conn.; and Standard Brands, in Poughkeepsie, N.Y., first in the Fleischmann’s Yeast business and then the alcoholic beverage division.
To Arnold Bakers in 1981
In 1981, Mr. Farrell joined Arnold Bakers in Greenwich, Conn., landing in the industry where he has remained, with numerous zigs and zags, ever since. While at Arnold, still in accounting functions, Mr. Farrell attended an allied baking course from AIB in Manhattan, Kas., and also attended Sacred Heart University in Fairfield, Conn., where he graduated with an M.B.A. in finance and operations management.
After finishing business school but while still at Arnold, Mr. Farrell taught for a year, offering a course in operational budgeting and activity-based costing.
"I loved it," he said of his time teaching. "I just can’t make a living doing that."
Mr. Farrell brought to his teaching "real world" experience and said most of his students had worked as well, which he appreciated.
"One of the key things I tried to get across was communication between the operational side and the financial side," he said. "I had generally experienced a lack of trust of both groups of each other. Finance people are viewed as policemen. Operational people are viewed as unaware of administration and following procedures, not really caring about budgeting."
Six months in the plant
Mr. Farrell took pride in his own knowledge of baking operations. In addition to taking the AIB course, he spent six months working in the Arnold plant at night.
"I spent that time operating different pieces of equipment, doing a regular function," he said. "I actually was doing something like operating a mixer or divider. Or sorting loads for delivery, from top to bottom."
In addition to affording him a wide variety of experiences, his time at Arnold also gave Mr. Farrell tenure at a single company that gave him a better understanding of the company and baking overall.
"I was at Arnold through several mergers and buyouts as a manager of accounting," he said. "Eventually I was given oversight of purchasing, beginning in 1983. There was a three-person purchasing staff that reported to me, and I was pretty involved. The Greenwich plant with eight production lines was the main priority. It was the largest baking plant in the world at the time. We handled all purchases for packaging, ingredients and maintenance parts. In 1987, we merged with CPC in New Jersey, and they moved the Arnold corporate group to Fairfield, N.J., west of the Englewood Cliffs headquarters."
In New Jersey, Mr. Farrell’s group was merged with the Bestfoods (the name changed from CPC) Thomas English muffin group to form Bestfoods Baking. He served as operations controller responsible for 25 plants that included Brownberry and Oroweat as well as Thomas and Arnold.
Reporting to the senior vice-president of manufacturing and the chief financial officer, Mr. Farrell said purchasing was not included in his portfolio of duties initially but two years later he was responsible for the function again, overseeing a team of six in charge of purchasing for the plants.
Mr. Farrell remained an operations controller until 1994, when he took the ultimate step toward applying the wide range of knowledge he’d gained over the previous 22 years in business.
New York Italian Bakery
Going into business for himself, Mr. Farrell purchased the New York Italian Bakery in Philipsburg, N.J., a small town a few miles northeast of Bethlehem, Pa. The company owned three retail stores and a wholesale business that delivered product daily on four trucks, including bread, rolls, donuts, cookies, pastry and special occasion cakes.
"I took what money I had and invested it into this," he said. "I had a staff of 40, and we grew the business substantially. But I went into the bakery business with the intention of getting a partner. That didn’t occur, so I got out a year later. It’s a 24/7 job, through holidays, sickness and everything. It was a lot of fun from the standpoint of growing the business. I grew it a lot, but if I kept going alone it’s not something I think I would have lived through."
After selling the bakery, Mr. Farrell spent a year doing consulting work before hearing from a former CPC colleague who had moved to East Balt.
Finance role at East Balt
Mr. Farrell applied for a position and was hired the next day. He moved to Chicago and became director of finance at East Balt, where he was part of a three-member team responsible for implementation of enterprise resource planning software from SAP.
"I was in charge of material-, production- and operations-related reporting and helped design custom programs," he said.
Mr. Farrell subsequently was named controller at East Balt, responsible for implementing procedures and training, financial and operational. In 2006 he helped install SAP in Italy and the same the following year in France.
A transition toward his new position in purchasing began in the fall of 2008, which included training in advance of his move into the role in early 2009.
While the first to admit he has significantly more to learn to master his new assignment, Mr. Farrell said he is convinced that his background in finance and operations have been very helpful and that the new job is a good fit.
‘Very aggressive’ personality
"My personality is very aggressive," he said. "That’s what my whole career has been about — understanding costs. The purchasing role fits perfectly, calling vendors, getting bids.
"From an operational side, I understand how what we purchase, say film, works."
Like every food processing company, 2007-08 gave East Balt fresh perspective on the importance of purchasing in determining the company’s fate. All across grain-based foods, record high ingredient and energy costs drew the attention of management toward purchasing, even at companies that previously had looked at the team as a somewhat peripheral or even exotic group to be left alone.
Cost control orientation
"East Balt was looking for someone to bring cost-control orientation toward purchasing," Mr. Farrell said. "We knew there were opportunities to save money. As we refer to it, there is low-hanging fruit, and we wanted to take it right away. Eventually, this approach will expand to East Balt purchasing from other parts of the world. We already are working with Italy and France in relation to ingredients."
While purchasing was handled by a team of managers at Arnold and the successor companies where Mr. Farrell worked, the approach is different at East Balt, where he reports to Frank Kuchuris, chairman and chief executive officer.
"I am alone," he said. "We are very lean. I buy the commodities — flour, shortening, high-fructose corn syrup, sesame seed, wheat gluten, yeast, minor ingredients and expense items."
In preparation for his new assignment, Mr. Farrell met with the American Bakers Association commodities task force and also received what he described as valuable guidance from an executive at Archer Daniels Midland Co. and utilized an outside consultant "to help bring me up to speed for education."
He said monthly conversations with McDonald’s representatives about flour and shortening are helpful.
"And I’m trying to read up on everything," he said.
While he has let his suppliers know that competitive pricing is crucial, Mr. Farrell said he shuns "come-ons," seeking instead an approach to pricing that is sustainable.
"My approach to suppliers is that I want the best price they can provide us without hurting themselves," he said. "I do not want them coming to me six months later and saying I really have to raise prices. I don’t want someone selling me a product at $2 when everyone else is $6, just so they can get the business. I want stability. I want them to be partners with us."
Multiple bids/clear expectations
Mr. Farrell said he is in the process of establishing new relationships with suppliers, generally gathering two to three bids on everything for which he is responsible. He has met with many vendors, trying to be sure they understand what he expects of them.
"Quality, price and performance are critical, in that order, and must be proven with every purchase," he said.
When he chooses the word "prove," Mr. Farrell means that literally.
"We test everything, from bun trays to flour," he said. "The suppliers will come in, and work with our production, product development, quality departments, which are very solid and valuable groups, making sure the quality is satisfactory. If it’s flour, they will be a part of the preparation of the dough and bake through to a finished product.
Trial with single shipment
Once they clear that hurdle of the evaluation, the performance and the quality, then we’ll see how their service is. We may begin with a single truck or pallet, and the next time we have to order we see if they are on time. It’s about quality, delivery — general vendor performance."
Additionally, all vendors of ingredients or packaging, "anything that touches the product," are required to provide an up-to-date sanitation audit.
Most suppliers have AIB certification. Mr. Farrell said when plants do not, East Balt will send someone to perform the audit from the quality department.
In the short period of time he’s been in charge of procurement, Mr. Farrell said East Balt has changed film suppliers.
"We have a more price competitive, dedicated partner," he said. "We changed the size of bags, reduced costs. We also saved money on our corrugated boxes by receiving competitive bids."
Innovation in bun trays
More ambitious is work East Balt is doing to create a corrugated bun tray to ship in stacks. Mr. Farrell said the new design, which has been tried in Denver, now is being sent to Belgium and Italy for testing.
"When you ship great distances, it can be very difficult to get plastic trays back," he said.
No major changes have been made in East Balt’s principal ingredient suppliers, Mr. Farrell said.
"There are very few players, and they are competitive with one another," he said. "ADM, ConAgra, Sweetener Supply, Far Horizon (sesame seeds), Red Star Yeast International Paper, Temple-Inland, New Tech film, Packaging Personified and Profile film are our major packaging suppliers."
Only a few months into his rookie season in purchasing, Mr. Farrell has no regrets.
"I like it because it’s an adventure," he said. "When I work, I like to see an immediate reward. A little like when I was able to increase sales when I had my own bakery. With purchasing, too, it’s been good. If you can do something to help the company, you see right away that it works. I am looking for suppliers/partners to help East Balt achieve that."
This article can also be found in the digital edition of Milling and Baking News, May 19, 2009, starting on Page 1. Click