Eddie Perdok, CEO Kramp

CONTENTS

00:54​ Kramp’s journey from a traditional family business to 95% of sales online – learning from pure players

04:10​ Digital transformation: how Kramp took along clients and employees

05:51​ Organizing activities centrally or locally? How Kramp does it

07:49​ Talent: how Kramp makes sure to attract the right talent for its digital journey

10:01​ Investing and long-term vision

11:07​ Understanding the challenge and sharpening the digital strategy with SparkOptimus

11:59​ Staying relevant for the customer: Kramp’s new platform model

17:14​ How Kramp faces internal challenges of digital disruption

17:48​ Eddie Perdok’s advice for B2B companies that want to sharpen their digital proposition

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Alexandra Jankovich: Eddie Perdok took over the family business from his father. In 2000, he merged Perdok and Kramp. In 2009, he became the CEO of Kramp, the new company. Kramp is the largest supplier of agricultural parts in Europe. From 2009, when Eddie became CEO, until now the company’s turnover has tripled. That’s quite a feat.

Eddie Perdok: Thank you.

Alexandra Jankovich: Welcome, Eddie. It’s a pleasure to speak with you.

Eddie Perdok: The pleasure is mine, Alexandra.

Alexandra Jankovich: Great. You run a traditional family business that is almost 70 years old. You engaged in the digital transition very early on. Can you tell me when you started exactly?

Eddie Perdok: We started digitizing after the first internet bubble, so after the year 2000. We thought we could benefit from this technology. At the time, we never thought it would ever get this big. These days, doubling our turnover in the last ten years is due in large part to our online proposition. Our turnover this year is 950 million euros and 95% of this business is online sales.

Alexandra Jankovich: That’s incredible. Then you’ve really become an online business.

Eddie Perdok: In the first few years, we were still largely experimenting, as you do with innovations. In 2005, we built our first-generation web store. That was a real benefit for us. Three or four years ago, we decided that technology was outdated and we needed to make some changes. We could either buy a standard package and customize it or do it differently. Then we looked at the industry players: The Amazons, Zalandos, Coolblues, and Bol.coms of this world. How are they doing it? Their digitization and e-commerce propositions are what make the difference. In the agriculture industry, in our particular niche we want to make the difference in e-commerce, online sales, and digitization. We decided to open up a start-up in Utrecht. We started out three years ago, with just a two-person staff. We now employ 50 people there: data scientists, front-end developers, back-end developers. An entire team of tech people who have developed a completely new e-commerce solution for us which we introduced this year. This year we phased out the old technology and we put the new technology online. That was quite a risky transition. If 95% of your turnover is online it means that 3 to 4 million euros are coming in through that channel on a daily basis. So if the transition doesn’t go well, and you’re offline for a day or two you’ve got a serious problem. The transition from old to new was very smooth. We were very happy with that. We’ve built a new technological foundation, including the proper competences which we can use to add new features and new functionalities in the future.

Alexandra Jankovich: That’s a great achievement in 20 years, if you look at the steps you took. You started experimenting with a web store, and expanded it with your own technology and your own hub. When you started, you had to convince your clients the dealers you sell your products to to buy the products online instead of the old-fashioned way. We often see this with our clients in the industrial sector. They are business clients but they often want personal contact and they don’t want to buy online. How did you manage to convince your clients?

Eddie Perdok: I still remember the early days, 20 years ago. We had town hall sessions with our clients. All of our clients are entrepreneurs, so they’re always very busy. We organized evening sessions with groups of clients. We set up a couple of computers in a hotel somewhere and we explained to them how the web store worked. That’s how we developed it over the years, and it worked perfectly.

Alexandra Jankovich: I can imagine, and we often see this happening that your salespeople, your account managers, took on a different role over the years.

Eddie Perdok: In the past, our account managers had a little notebook they used to write down orders. That has slowly transitioned into a situation where the account manager helps the client improve how their business functions. They’re no longer involved in the ordering process, which has been automated. They’re no longer involved in sales. They’re trying to optimize the supply chain between us and the client: ‘How can we improve the client’s business and the client’s life?’

Alexandra Jankovich: How was the transition to that new method? You operate in a lot of European countries. What do you manage locally, close to the market, and what do you manage centrally?

Eddie Perdok: That’s a good question. It was quite a stretch, quite a challenge to do this properly. We’re based in 25 different countries and we make products for those countries at the head office. You don’t want to be too directive from the head Office, but you do want to benefit from the scale. You don’t want to be doing the same thing in different countries. We’ve managed to find a balance in that tension. On one hand, we leave the countries enough room to cater to the local clients’ needs. On the other, we want to benefit from economies of scale by doing things centrally. What are you doing centrally? Take digitization, for instance: We’re not building web stores, there’s one technology for all of the different countries. Product data is stored in one central place. But in the Netherlands, we can’t really judge whether the translation of the product data is correct. So we have a local content specialist who monitors the translation quality for the product content and makes sure it reaches the right places.

Alexandra Jankovich: You’re helping your own people join the new digital world but you’ve also attracted new talent. How do you attract that new talent?

Eddie Perdok: When we started with the new technology for our web store we knew that we weren’t going to find the right people locally. That’s why we decided to open up an office in Utrecht. Opening an office in a different place was also a way to attract new talent. But it’s more than just a matter of location.

Alexandra Jankovich: The fact that you’re so serious and so ambitious about digitization is the biggest appeal for new talent, don’t you think?

Eddie Perdok: Yes, and by doing those things in Utrecht, you’re showing that you’re taking it seriously. We are indeed taking it seriously and we’re investing a great deal of money in it. We’re sending the signal that this is a really important issue for Kramp. And I never cease to stress the importance of what we’re doing there. In the beginning, the operation was really small. But by stressing the importance of your operation and by employing the right people you’re creating a spin-off that a lot of people are interested in and they want to work for you. I never imagined this before, but that is how it works. You have to make sure that you start out with a core group of people that are good and then it’s easy to do a quick scale-up. And you have to keep attracting new people. So we’ve got a great team, now. And I’m very proud of them.

Alexandra Jankovich: You’ve got lots of talent. I’ve noticed that people in the industrial sector often think: Do I have enough appeal to attract new talent? There’s plenty of appeal, because there’s plenty to be won. You’re proving that you can attract great people. A couple of years ago, you appointed a chief digital officer. Does that work, in that context?

Eddie Perdok: It works really well. At the time we said: This disruption will arrive, and it will affect us, too. We need to invest in digitization, take a real lead and make the difference. You have to start creating time and capacity and taking on competences at the highest level. So, three years ago, we added a digital officer to our board. It works really well. It was a good decision. We’ve added this digital expertise to our executive board, our management team but also to our supervisory board. That was a good decision, too.

Alexandra Jankovich: You’ve invested heavily in the digital transition. I think you invested as much as 15 million euros in IT innovations in 2019. In digital transformations, you often see that you have to sow before you can reap. For a lot of businesses, that’s a serious drawback to going ahead with the digital transition. How have you dealt with that in the last years?

Eddie Perdok: We did indeed have to sow before we could reap. And we had to sow quite a lot. And the reaping takes a lot longer than you would have hoped for. It’s always a bit disappointing, but it’s part of the Kramp mindset. Kramp is a family business and we do find tomorrow’s results important but not of the utmost importance. We don’t think in quarters or years, but in decades. Our long-term position and development are much more important than short-term success. That allows you to look at investments like this with a wider time horizon.

Alexandra Jankovich: Fortunately, we were asked to support you. What role have we been able to play?

Eddie Perdok: The great thing about your company is that you always kept us very strictly to our digital agenda. Our discussions with you enabled us to be much more outward looking. We looked around at what was causing the disruption and how we could tackle it. That led us to invest in digital competences at every level. We invested in the Utrecht branch. It helped us a lot.

Alexandra Jankovich: If you understand the Kramp business and the Kramp culture it allows you to give better and more tailored advice. You’re in a value chain. How do you manage to stay relevant within that value chain?

Eddie Perdok: In order to prevent disruption by the Amazons of this world we need to get in touch with the farmer. We looked into that several years ago. How could we build a business relationship with this farmer without disturbing his relationship with the dealer? On the contrary, we wanted to incorporate him into our model. We decided to develop a platform business model in which we incorporated all of the stakeholders and parties in the agricultural ecosystem in order to offer the farmer a good value proposition. We built a marketplace where the farmer can order everything he needs. And that’s much more than just the Kramp parts. It also includes the feed he needs, the seeds he needs, he can buy his machines there. He can organize his service there, or maybe even his financing. That’s our ambition for this platform business model. We introduced it this year. It’s not called Kramp, it’s called Maykers. It’s gone live in Denmark now. It’s a new way that Kramp is trying to make our position in the value chain future proof.

Alexandra Jankovich: It’s great that you’ve launched it in Denmark. Selling directly to the end customer, to the farmer himself together with other parties in the chain. Is a manufacturer like John Deere also included on the platform?

Eddie Perdok: We collaborate with them, but they’re hesitant because they believe they have the volume and the scale to do this themselves. Small and medium-sized companies don’t have that volume and scale and they’re not able to make those investments. We think we can get traction with those small and medium-sized companies. Then we will have created a model that even John Deere can’t ignore. Not all parties, like dealers and suppliers, but most of them see the potential disruption from Amazon, which offers the farmer a great programme. That will make it harder for all of us within the ecosystem. We’ve developed an inclusive business model where we can help join forces to prevent disruption by Amazon.

Alexandra Jankovich: You’re saying it’s easy for the farmers. Everyone keeps developing. There’s an expression, ‘farmer of the future’. What are the future developments in that particular area?

Eddie Perdok: Precision farming is an important theme for farmers: Using data in order to use fewer pesticides and farm sustainably. We’re able to help farmers with the data we’re collecting on our platform. We definitely want to make a constructive contribution to that.

Alexandra Jankovich: What is the required service level? Let’s say I’m harvesting on my tractor, and a certain part breaks. I need to replace it as quickly as possible so I can continue harvesting. What service level do you want to offer?

Eddie Perdok: I see a farmer sitting on his tractor, with a broken part. He can go back to his computer and check online for what he needs to order but we’ve developed a product recognition app. He simply has to scan the product and he can immediately place the order.

Alexandra Jankovich: How soon will the product be delivered?

Eddie Perdok: Within 12 or 24 hours. If you look at our logistics infrastructure we have ten DCs in Europe where we have all those wonderful spare parts stored. We can deliver to the farmer from those DCs within 12 to 24 hours. But in the long run, our business model, Maykers, will allow us to have the dealer’s stock available on Maykers. The dealer has much more proximity, is closer to the farmer than Kramp is. So if we can make the dealer’s stock of spare parts available on Maykers and that’s already happening right now we’ll be able to supply the required part within minutes. Sometimes 12 hours is fine, sometimes 24 hours, sometimes a week but sometimes it’s really urgent. Then it’s great to have transparency in the value chain about where the parts are. If the dealer has the part, we can trigger them quickly and the farmer can have his part within minutes.

Alexandra Jankovich: That’s really great, because it helps him make his business simpler and more efficient. What is the greatest organizational challenge to getting this done in the next five years?

Eddie Perdok: The organizational challenge is: We’ve invested a lot in technology and functionality. On the other hand, there are people in our organization who think more traditionally. In the years to come, we need to develop digital thinking in more traditional roles more and more. In five years’ time, everyone at Kramp will think digitally.

Alexandra Jankovich: That’s great. Let’s say I’m a player in a different industry. I have an industrial company, with commercial clients, in the B2B sector and I want to get started on a digital transformation or I want to seriously expand what I have already started. What advice would you give me?

Eddie Perdok: First of all, make sure you’ve got the right people. People first, digital second. I’m convinced of that. With a good team, you’ll get it done. And you have to be prepared to invest quite a lot before you can reap the benefits. If you can’t invest, try and collaborate with others and make those investments together.

Alexandra Jankovich: I also think you’ve taken client needs properly into account and considered what parties you need to bring together to meet your end customer’s needs.

Eddie Perdok: That’s right, an important reason to opt for a platform business model rather than a web store for farmers with Kramp products is this: If you look at Kramp’s share of the farmer’s expenditure it’s no more than or 2 or 3%. So you have to come up with a proposition that’s really relevant for the farmer. He has to be able to find everything he needs, not just Kramp products. That’s why we’ve opted for a platform business model. That means we can be relevant for the farmer and not just be a web store selling spare parts.

Alexandra Jankovich: It’s hard for companies when it’s not just their own products being sold but competitors’ products or other products, as well. It’s new for them to think in terms of client needs rather than their own products. Did you have to get used to this idea, too?

Eddie Perdok: It’s really in Kramp’s DNA to collaborate with others. If you have that kind of mindset already, it helps. My father preferred to be Mr Kramp’s collaborator rather than his competitor. That’s a mindset we still greatly value in our company. It helps to think in terms of inclusivity.

Alexandra Jankovich: Yes, that’s very important. That’s great. Thanks a lot, Eddie. It’s wonderful that you were willing to share the lessons you’ve learned. A lot of people will benefit from what you’ve told me.

Eddie Perdok: That’s great. I’m happy to oblige, as you know. I hope to see you again, soon.

Alexandra Jankovich: So do I. Great, wonderful.

Eddie Perdok: Thanks a lot.