Building Strategic Partnerships

Kurt Scherwatzky

Senior Director, Global Sourcing at John Wiley & Sons

Learning Objectives

Join us for an exectuive interview with Kurt Scherwatzky, the Senior Director, Global Sourcing at John Wiley & Sons. We will be discussing the ins and outs of building strategic partnerships!


Key Takeaways:



  • What is your team's process for identifying and approving new suppliers?

  • How do you differentiate between a standard vendor and a strategic partnership?

  • How do you determine if a vendor partnership has been successful?

  • Have you ever had a business relationship go bad and how did you react?

  • How do you foresee your industry (publishing) progressing in terms of 'next steps' with strategic vendor partnerships?


"When you're engaged with a supplier on a high volume, high dollar basis, stay in touch all the time, even when things are quiet."

Kurt Scherwatzky

Senior Director, Global Sourcing at John Wiley & Sons

Transcript

Britt Erler

Hello, and welcome to the Scope Procurement Virtual Summit hosted on Quartz Network. My name is Britt Erler, QN Executive Correspondent. Thank you so much for joining us. I would like to welcome our Executive Speaker here with us today, Kurt Scherwatzky, Senior Director of Global Sourcing at John Wiley & Sons, as he discusses his insights and experience on building strategic partnerships. Welcome, Kurt.


Kurt Scherwatzky

Hi, thank you. Great to be here.


Britt Erler

It’s a pleasure to have you here, and really excited to dive into this topic today because this is crucial for a lot of businesses moving forward, especially in this new virtual environment. Before we do so, if you wouldn’t mind talking a little bit more about your background, your specialty, and your current role.


Kurt Scherwatzky

Sure, glad to. I’ve been with John Wiley & Sons a little over 5 years now, which is a publishing company that does, from scholarly journals to college textbooks, and a lot of educational services in between. I’ve been in the publishing industry for about 30 years—time does fly. My experiences with John Wiley have brought me full-on into strategic sourcing, where much of my career had been in production, manufacturing, even some editorial roles.


Britt Erler

Fantastic. Through the process of last year, what were some of the changes you and your team had to make moving forward?


Kurt Scherwatzky

Last year has been a challenge for sure. We had to engage with our suppliers and our internal business partners on a different level, like we’ve never done before. We were really the conduits for finding out how our global supply base was doing during a pandemic. If they had closures, if they had a large number of employees that were out sick, if they had equipment down, so we were in constant contact with the suppliers, and then disseminating the information to our internal partners.


Britt Erler

I would assume that that may be shifted a little bit how you identify and approve new suppliers. Walk me through a little bit of what that process is like for you and your team.


Kurt Scherwatzky

It has changed a little bit during the pandemic. Doesn’t make anything easier, but we have learned to engage in different ways. When we’re looking for new suppliers, one of the first things we do is find out from our internal business partners, what they’re looking for, what do they need to achieve, what’s the current problem they’re trying to solve? Sometimes, I have suppliers that they’re interested in, sometimes they don’t. We can either take their lead or we can begin doing research on our own. We could typically reach out to our colleagues at other publishers talk about suppliers that they use. We could draw upon our existing supplier base to see if we can expand services and expand relationship with them. Sometimes, we’ll even take to a Google search to see if there’s any suppliers out there that maybe we have not heard about, maybe somebody that’s new and emerging. We also go to a lot of conferences, back in the days when we did have things like London Books Book Fair or Frankfurt Book Fair, and meet up with a lot of new suppliers in that way.


Britt Erler

Fantastic. I know I’ve heard in kind of your market, especially that you really differentiate between just a normal standard vendor and really developing a strategic partnership. What does that mean for you?


Kurt Scherwatzky

That’s a big part of what we do. That’s something that’s really taken a lot of shape at Wiley over the past few years. One of the first things that we needed to do when I joined the team was to segment our supplier base. Who do we engage with and why do we work with them? What value are they bringing to our business?


Because the publishing industry has been changing so much in the past 10 years or so, we are and we’re looking to consolidate our supplier base. For the partners that we did continue to work with, they saw some increased volume, but we wanted to be able to designate how we engage with these partners. That’s very important not only for us in sourcing, but for our internal customers as well.


We divided our supplier into four different categories. Most people call them tiers—we call them levels—just as not to conflict with another structure that we had in place already. We have our level one suppliers, those are our strategic partners. Those are the ones that we ideate with, that we have a very close and open relationship with to progress the way we do business together. We have quarterly business reviews with them. We have close relationships with their leadership. Those are number ones.


Our level two suppliers are tactical. Now, they are important as well. They serve a very critical function to our business, but we don’t ideate with them. We don’t have this ongoing method of doing things better all the time. They’re largely volume based, but still critical to our business, and not to undersell it.


Level three are our niche suppliers. Those are generally smaller vendors that our internal business partners feel as though they need them for specific reasons that nobody else can do this business. There’s not really a high spend, but they’re critical to getting the work done.


Level four, the last one, are suppliers that are under review. Those might be suppliers that have been doing business but the base has been diminishing, or there might be performance problems. Vendors that are have a lower spend, and could be on their way out through consolidation, or other other ways of reducing their supply.


Britt Erler

What are the benefits to separating these vendors into these tiers for you?


Kurt Scherwatzky

It’s really so everybody, internally and on the supplier side, they know what the engagement is. They’re not spending time trying to do something with a supplier that we shouldn’t be spending time with. Let me give you an example of that. If we have a new supplier, that’s a level three supplier for us, that’s not doing a high volume of dollar business, we want that to be understood by the supplier and by the internal folks at Wiley. We don’t really want anybody to be spending the time with any false assumptions that we should be doing a huge number of either volume or dollar spend with the supplier—that’s not what they’re there for. Likewise, for level ones, that’s what they are there for. They’re for higher spend, they’re for ideation, they’re for new opportunities and business improvement.


Britt Erler

Now, through your career, I’m assuming you’ve worked with so many different vendors. Your company, as you mentioned, works with a lot of different strategic partnerships and also standard vendors. How many do you usually keep on your roster, so to speak, at a time? How often do you look to actually refresh that list and look for new vendors that are just coming on to the marketplace?


Kurt Scherwatzky

Yeah, that’s a great question. We try to keep a pulse on both, right. Like I said, we have our level one vendors, and level two, three, and four accordingly, but we’re still always on the lookout for new suppliers. It’s hard to say what the right number of suppliers is because it’s really based on how much work you have going through, how much spend you have going through. Particularly in the publishing space, the type of product we do has changed a lot over the years. We have seen a decrease in printed product, we’ve seen an increase in online product. We try to keep that in check. If spend is going down in one area, we might need to consolidate. We might not need as many suppliers if spend in product types are going up in another area, we might need some more suppliers or to expand a relationship. We are always keeping an eye on that.


It’s hard to say what the right number is, it’s easier to say what the wrong number is. You don’t have enough suppliers, you know that you’re in a tight spot and you’re not hitting schedules, etc. If you have too many suppliers, well, that’s a big problem too, because then your spend is too spread out, too diversified—you have too many suppliers to keep in touch with. That’s when you need to tighten it up so you can bring in efficiencies and cost savings.


Britt Erler

Right. Really take a look internally at your business and see what is the right fit for you, your profit, your customers. Completely agree. I want to talk a little bit more about these business relationships because, no secret, it’s not always flowers and rainbows. There are always going to be partnerships that eventually either you know something goes wrong or someone new comes on with the company that just doesn’t mesh. Talk to me a little bit about a relationship that you’ve had go bad, and how did you react? How did you either turn it around or end it smoothly?


Kurt Scherwatzky

It’s never easy, and it has happened a lot through my career, and for various reasons as well. Whether it was that while your previous places of employment, we have engaged in very large, high dollar value relationships with many other large key suppliers and some small ones. Sometimes, it goes bad. Sometimes, you could see it happening, you could get together, fix it, get it back on track again. Other times, it’s just a runaway train. You know when it’s happening and the supplier knows when it’s happening, and you could put teams together, you could have meetings, you could do whatever you need to do to get her on the right track, but sometimes, it just doesn’t happen.


Not to say that we don’t work hard to fix things. We do have an escalation path, which I would recommend to anybody. Lots of sourcing teams have it, it’s not the secret sauce. When our operational teams are having problems, and they need to escalate because it can’t get resolved, then they bring in the sourcing team. We try to work objectively to help solve the problem, and sometimes, we can’t. If we need to escalate beyond that, then we might bring in the legal team. Once you bring in a legal team, it changes the scope of the discussion, so we try not to get there unless we feel as though that there might be issues with the contract and fulfillment of the terms. I think it is really important.


My advice would be number one, have a very transparent relationship with your supplier. Now, if either you or the supplier feel like things are going off track, talk about it as early as possible, and do bring the right people in the right room to try to resolve it before it gets out of hand. If that continues, and it does get, to use my own expression, out of hand, you might need to bring in senior management. You might need to take a closer look at those contract terms. These things do happen. Like I said, you might need to escalate that to a legal situation, which we want to avoid, but it does happen sometimes.


Britt Erler

Absolutely. I want to kind of dive into the customer side of this a little bit as well, because I’m assuming the way you choose your strategic partnerships and your vendors, a lot of it is based on your consumer needs, what they’re looking for, as well as your business needs. How are you measuring that in terms of what your company needs, what the consumers are looking for, especially when it changes so rapidly?


Kurt Scherwatzky

Good question and a tough question too. We do always keep the customer in mind. When you’re in a sourcing team or any kind of production role, you have two customers: you have your internal customer and you have your end customer. We don’t get a lot of—or sometimes no—FaceTime with our end user customers. There are other people in other roles that do that, but we do get a lot of one-on-one time with our internal customers. When it comes to the end customer, the user of the product, we need to rely on our internal customers to learn what that experience is about. It’s more difficult to measure that success or those failures because we’re not right there. You might see emails, things like that, but it’s really our internal customers and relationships with them. Other employees at our company, they are the ones who are really the key as to whether we’re succeeding or not, in terms of a product.


Britt Erler

Absolutely. Based on what you’ve seen last year and into the future, I don’t think anyone has a straight plan in place right now, just because of all the changes that we’re seeing in every market across the board. For publishing specifically, how do you see progressing in terms of kind of the next steps with strategic vendor partnerships?


Kurt Scherwatzky

I think that it’ll continue the track that it’s been on for the past five or seven years. We’ve seen a lot of consolidation. I remember when I joined publishing, which was in the early 90s, there were more suppliers. There were more smaller suppliers. I mean, we had a list that was quite long that we would use over the years. Particularly starting around 2010 or so, we started to see consolidation, and that took on a new meaning. Now, it’s in the past five or six years, where larger publishers began having larger relationships with larger suppliers. A lot of that work with them condense that would help us with with cost control as well and with processes, because if we’re working with a smaller number of suppliers, and we’re working with a number of smaller number of processes as well. It does, in that sense, make things easier in terms of workflow. We’re going to continue to see that. We’re just going to see larger publishers with larger suppliers and smaller publishers with smaller suppliers, so they can get the attention that they deserve and they don’t get lost in the mix up of these larger relationships.


I could add a second part to that, I think we’re also going to see the continuation of higher technology relationships. We’ve seen a lot of automation come into the industry. I think that’s going to continue—there’s going to be more automation, and those are all towards facilitating workflows, which will help with cost control as well. There’s so much new technology coming out all the time, and we all try to take advantage of that. When it does make things faster, easier, better, it’s terrific.


Britt Erler

Of course. I think this greatest technology is—and the changes that we’re seeing, especially day to day, one of the biggest struggles a lot of companies are having is how do I keep my team on board? How do I keep them upskilled with whether it’s in technology, or even just how you’re building your partnerships? For leaders out there that are looking for advice on this, what do you believe are some of the key areas that they should focus on when making sure that their team is on the right track?


There’s so much out there, and there’s so much available online now. I was always a big believer in seminars. I would attend plenty of seminars, my team would attend seminars, and also larger industry events, or talking to people. In publishing was—and still is—to a different degree, an industry that is very focused on relationships. You have those relationships between publishers, and suppliers, and lots of industry events where people can mingle and talk and learn. Learning could be through conversations or through visiting various sites, or suppliers, which we can’t do right now either, but we’ll get back to that.


There are plenty of seminars as well, we just do them online now. For the folks on my team—everyone knows that on an annual basis, they are a tasked with a certain number of hours of learning per year. Whether those are smaller, more targeted webinars, and we do have a broader relationship with a consultation company. They offer a lot of different learning opportunities to us through classes.


I can add one more thing to that as well. There are a lot of good certifications out there for sourcing teams, whether it’s in the US or elsewhere. Various countries have certifications that are a great opportunities to learn and expand your knowledge base, and then bring those learnings back to your company.


Britt Erler

I completely agree. I think one of the beauties of virtual and the ever evolving technologies is there are so many resources out there for people now to take advantage of upskilling or making sure that they’re on the right track or whatever business that they’re in. I think part of it is just the personal mindset, wanting to do it yourself, and also making sure that the company says, “Hey, this is available to you. Let us help you progress forward.” Completely agree with you there.


Britt Erler

To kind of wrap up this conversation a little bit today, you’ve obviously been through so many strategic partnerships in your career, you’ve seen how this industry has changed. What would you say are some of the biggest lessons learned for you?


Kurt Scherwatzky

The biggest lessons learned. I would think that, and I kind of touched on this before, that when you’re engaged with a supplier on a high volume, high dollar basis, stay in touch all the time, even when things are quiet. I mentioned before that when things are quiet, things are good. Make sure that those relationships don’t sort of fade onto the side as you’re focusing on other problems of the day, because stuff could lurk. You just never know when it’s gonna pop up, so even when you do have those beneficial high value, strategic partnerships, keep those lines of communication open, even up to the leadership of your company on the suppliers company. Those are really the key relationships and the key strategic partnerships that you just want to make sure that they’re healthy. You need to invest the time to do that and be transparent, be open, and just continue talking, so no surprises.


Britt Erler

Exactly. At the end of the day, it’s really benefiting both companies—the lines of communication open. I think no matter what industry you’re in or what department, the two things we’re seeing the biggest trend with our transparency and open lines of communication, especially virtually, as you said. When you’re not on the floor with these people, you’re not having the opportunity to visit them. You’re just seeing them be a zoo, and really making sure you’re hitting those touch points. See where they’re progressing with their business and to make sure that it’s still aligned. Completely agree with you there. Any final comments or pieces of advice that you have for other leaders within this industry before we wrap up today?


Kurt Scherwatzky

I think people that are in my position or similar ones, they’ve been experiencing that things aren’t getting easier. The pandemic has really added a whole new edge to this whole thing. Whether it’s due to the pandemic or not, we’re seeing a lot of emphasis being placed on things like BCP Business Continuity Plans, diversity and equality. We’re seeing sustainability issues and lots of Code of Conduct compliances. There’s a lot more out there, that makes what we do more complicated than [inaudible]. For folks who have been in the industries for a long time, like myself, it’s not always easy going.


My advice is to have the right relationships, both internal and external. We’ve got some great complexities out there that are all there for a reason—data protection, privacy, data privacy. Be in touch with your legal team, be in frequent contact, keep those lines of communication open both with your internal partners, and as I have already said, your external partners. No sourcing team could take this all on on their own. You’re going to need the right alliances within your company, so you can address all of these different items that have become so important and all for good reasons. They’ve all become very important in the past couple of years. Stay in touch to what is percolating out there. Stay in touch with your internal partners, talk frequently, and just make sure that you have all of your bases covered, so you could do the right thing for your company and for your supplier base.


Britt Erler

Fantastic advice. I think it’s great, because there are a lot of companies that, as I mentioned at the beginning of this conversation, that are either just beginning their process of building these partnerships or they’re in the middle, and now they’re trying to figure out, “Okay, how do I move them forward? How do I either hit the chopping block and remove some that are no longer benefiting my industry?” Fantastic advice for everyone across the board.


Thank you so much for being here, Kurt. It’s been a pleasure. Thank you to everyone who has joined us today as well. I’m sure you will have further questions for Kurt—not worry—we do have a discussion forum underneath this presentation where you can ask questions and comments. Thank you so much for joining us again. I hope you enjoy the rest of the Scope Procurement Virtual Summit. Thank you.


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