Sean Tilley, Co-CEO and CCO of Tilley Distribution, has experience transforming his company for the digital age. He joins Knowde CEO Ali Amin-Javaheri to talk about changes in the distribution space, revamping Tilley’s customer experience and guidance for companies going through a digital transformation.
He joins Knowde to discuss digital data in the chemicals and ingredients industry, including:
Distribution today versus five years ago
The importance of properly structured master data to provide modern customer experiences
Integrating digitally with both customers and producers for better information flow
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Interview Transcript
Ali Amin-Javaheri: Hello and welcome, everyone. I’m your host, Ali, one of the founders of Knowde. Our goal with this series is to share perspectives on the changing digital landscape in our industry.
It’s exciting to have Sean Tilley, CEO and CCO of Tilley Distribution, with us today. I’m sure many of you guys know who Tilley Distribution is, but let me set a little bit of context. They are a global specialty ingredient distributor constantly investing in their product catalog, distribution capacity, and value-added services to better serve customers across many industries. With resources around the world, Tilley is a well-diversified distributor of ingredients, specialties and lubricants. Sean helped transform a regional family business into now a global player.
Sean, it’s great to see you again. Maybe before we jump in you can share a little bit more about the company and background.
Sean Tilley: Thank you, Ali. Great to be here – I’m actually honored to be part of this series given who some of your past guests are. It’s an impressive roster you’ve been able to engage with.
Tilley distribution, at its core, we’re the sales and logistics arm for the producer partners we represent, so we’re a brand extension for them. We take their products from the manufacturing center and I say we hold the responsibility to get them sold into the marketplace and get those product lines growing in the marketplace. Distribution has two masters with the customer and the supplier, and so we try to bridge that gap and create a transparent line from the producer to the end user.
[I’ve] spent a lot of time focused on our business, our markets. You mentioned the word transformation: we’re constantly trying to transform ourselves to be at the leading edge of the markets we serve and as a business, because it’s what makes us sustainable into the future.
Ali: I agree. How long have you been leading Tilley?
Sean: Formally I would say five or six years as the CEO. Before that, I held COO roles. We were a family business [and] became a private equity-backed business in 2020. I had a long transition period with my father who was the former CEO, and that was probably about a six-year transition period from doing that with him. Then I brought on a private equity partner to scale our business and go from a large regional player to a global specialty leader.
Ali: So you’ve been around long enough where you’ve seen a good number of changes.
Sean: Quite a few.
Ali: How would you characterize today’s distribution environment compared to five years ago?
Sean: It’s a great question. I would start with consolidation as a major theme and us being part of that consolidation. It’s a highly fragmented industry, distribution in particular. There’s all kinds of different markets that get served, there’s all kinds of different players.
Within the consolidation you have this professionalization of distribution, moving away from these family-run lifestyle businesses. There’s also an innovation aspect, so you have a group of the market that’s moving toward getting bigger, getting more professional, being more innovative, and you have, still, a large tail of the distribution segment that is lifestyle, family-run. I think over the last five to ten years that divergence has gotten more and more extreme.
My foresight on the industry is that it continues to consolidate, and we’ll get more and more larger players. Those larger players will get more and more focused in certain aspects of the market. I think the days of being everything to everyone are diminishing and we’re seeing that with what I call the ‘big two’ where they themselves are starting to pare down their organizations, be more segment-focused, get more aligned to their producer partners and markets.
Those are the big themes that I think have transitioned over the last five to ten years.
Ali: There was a lot there. We’ve seen the same thing where the majors see businesses like yours as very attractive. They’ve acquired a lot over the past many years and now it feels like the majors are almost trying to act very locally again. It’s this ebb and flow that constantly happens in this industry, and I agree: I think acquisitions are going to continue.
Outside of folks just acquiring more distributors what are the other levers that folks can pull in order to improve performance?
Sean: Obviously, and your organization’s on kind of the leading edge of it, but it’s the digitization of businesses.
When I first came into the industry nearly 20 years ago a lot of paper was moving through offices and you would throw bodies at capacity issues or bottlenecks, and today you’re utilizing digital tools to address the transactional work. So I think the companies that can really improve themselves embrace the digital era. I think they innovate themselves, they take those digital tools, they create innovation within their businesses and learn how to use that to enhance the customer experience.
For distribution the customer experience is so important. My customers can go to a lot of different places to get their supply, but if I can create a frictionless, efficient way of doing business for them, they’re more likely to come back to us and stay with us. For example, we have some back-end integrations with some very large customers of ours, very important customers where we’re integrated into their banking, we’re integrated into their ERP, we have information flowing in both directions. It’s very efficient for that customer to have us be almost a part of their operations and planning, and then it becomes very hard to displace us. So it’s a strategic tactic we use to improve our business, improve the sustainability of our business and also drive growth.
If we can do that with customers who are growing, it grows us.
Ali: I love what you said, and I’m going to come back to that in a second.
At Knowde we hire a lot of people from outside the industry. I’ve been in this industry a long time, as you have, and certain things that we do have become almost expected and not challenged and all that, but when we hire these outsiders they look at some of the basic things.
For instance, when somebody wants to buy any chemistry they’ve got to go get a bunch of documents to come along with it, and when they sell chemistry the customer is expecting to get a bunch of documents along with it. And the first question some folks ask is: Why? Who’s still sharing documents? Why are we doing this?
Sean: Quality regulatory or checking a box that I got the documents, right?
Ali: It’s wild. So coming back to customer experience: I totally agree on that framing and that’s how you build a differentiated moat compared to everyone else. Is that where you’re investing most of your tech dollars today?
Sean: It will be, I would say. To give your listeners a quick background, if they don’t know much about us: we went from a family-run regional business, brought in a PE partner, we made a series of acquisitions in a very short period of time, so then we had to integrate three equal-sized acquisitions to our business, so we spent a lot of time and investment on our IT infrastructure.
I think once that was mapped and put in place we then worked with you and your team, Ali, to clean up our master data and now we’re turning on that customer interface side of the business. That’s where we will continue to grow, whether that’s integrating directly with customers or trying to get them to use digital channels to drive efficiency for them – and also us; that’s a two-way proposition.
We’ll also invest on the supplier side. As I said earlier, with those two masters, we also have to be efficient for our producer partners. So to have integrations or systems talk back to the producers or have them talk to us in a digital format just improves their efficiency and improves our efficiency, and then at the end of the day it enhances that customer experience.
Ali: Totally agree. So it sounds as if with the acquisitions you had to rebuild the foundation and I would imagine it’s big investments in ERP and CRM.
Sean: It’s not even rebuild. It’s transform.
Ali: Got it. That’s a lot to undertake in the next couple years. Agreed that the next step would be supplier and customer experience.
Out of my own curiosity, when you think of supplier experience, are there one or two use cases that you think would be really valuable to your producer partners?
Sean: You brought up documents: it’s a burden for all distributors. It’s a real burden for my business in that a large portion of our sales go into the food ingredients, life sciences, flavor, and fragrance markets, so there’s a quality regulatory burden for our clients. To have systems and technology to drive that information sharing to meet all those quality standards and internal quality controls and assurances, there’s a huge efficiency. Knowde can maintain our documents for us, maintain them for the customers, that’s a big piece.
I think sampling is a huge friction on producers and distributors, so creating efficient ways to transfer not just information, because it’s sales data, it’s selling activity, but also transfer that information of sample requests and fulfillment. There’s a whole call center there on producers and distributors, and customers for that matter. But it’s a lot of manual transactions, a lot of manual work to do that fulfillment.
And then the other is just visibility for producers through the distribution channel to those end markets: Where is the customer demand? Where is all that market data going from the distribution sales back to the producer? Yes, utilize CRM, et cetera, but the producers don’t always have great visibility to that through their distribution channel partners. So that’s another area I think we as a company will invest in to make sure our producer partners feel like they’ve got total visibility of where their products are, why they’re going there and who’s using it for what use case.
Ali: I think that is a huge differentiator. Adoption – I don’t think I’m saying anything novel here – adoption of CRM in our industry has not been so good. It’s understanding how the product is being used, why it’s being used, and being able to roll that up and be able to chart trends and be able to talk about the pipeline in terms of applications and markets and where things are going I think is a massive differentiator. It’s data and system problems that have to be put in place.
Sean: We’ve seen customer data or sales data where we scratch our heads: Why are they buying this product? They’re in this totally different market segment, but they’re buying something from another one and you scratch your head.
That’s something that producers would love to understand or know, right? “So they’re using product X? How and why?” So you go find out why and then now you’ve got this knowledge of something that maybe there’s a whole new application that’s possible with that chemistry.
Ali: There’s nothing better than taking an existing asset and taking it to a new market.
Sean: Exactly.
Ali: People love that lever; people love that pricing lever, but that is certainly a big hot topic.
So you guys have spent a good amount of time, as you said, transforming a lot of the foundations. Based on my knowledge, I think Tilley’s ahead of many others. What guidance would you give folks as they go through their own transformation?
Sean: Their digital transformation? I think it goes back to where we connected with your team, Ali, and that’s get your master data structured properly because at the end of the day, everything you do digitally on the business is just a transfer of data. So if your master data is clean, you can then get good data, good analytics on your business. That’s first and foremost.
Two is make sure you have a team that understands good master data, understands analytics, can translate it to the rest of the org. I think that’s a big component. That’s one thing I don’t take credit for; I think I got lucky with the team we built internally. They really understood how to implement digital tools, how to work with them, how to bring in outside resources when needed.
And the final component is [that] your organization needs to be ready for it. Are they ready for change? Can you effectively do good change management? Because as you digitize the business, as you change systems, or as you bring in new systems, to quote the book: you’re gonna move a lot of cheese and a lot of employees are scared of change. [Spencer Johnson, Who Moved My Cheese?]
So that’s a critical component to success. Take working with your team: we redid all our product codes, so at some point every customer service rep was now looking at a whole new code set. Getting them mentally prepared to handle that change, have it not impact the customer, it takes time. There are going to be people in your organization who probably can’t handle that difference or, I use the change word too much, but can’t handle that, and you need to be prepared as an organization to absorb the digital transformation.
Ali: It’s such a huge part of it. When we step into any account it’s so important to have the leaders of the company around the table. One to stress the importance, but also to try to change mindset. Because no matter what you build, if you don’t have the right processes on the back end, you’re just wasting time and money.
Sean: And if the organization doesn’t trust those leaders, it’s going to fail, right?
Ali: But I will say I’ve been pleasantly surprised as to how open folks are when leadership makes it clear how important it is to them. And I think it always starts there, right? It’s basically saying, look, I’m putting a stake in the ground. I’m saying that this is important for the entire organization. We’ve got to rally behind this. And if there are concerns surface them, but this is the direction we’re going.
Sean: The clear why, and then show them how, and create that buy-in before it happens.
Ali: Look, it’s great seeing you. Thank you for all the thoughts.
People love listening to these short, informal conversations from people like you that are helping move the industry forward. Thank you for doing everything that you’re doing, and I’m looking forward to seeing what you guys build next.
Sean: Thank you, Ali, and again, I’m honored to be on the podcast.
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