Smithers: Your job title is Chief Commercial Officer; can you tell us a bit about what your role entails?
Matt Schicke: I lead the sales and logistics functions for the company which entails developing the commercial strategy for the company. I also focus on optimizing our products, developing new customer strategies and our risk management programs.
Smithers: Supply chain solutions are key to the financial risk framework – what advances have you seen in this area to support best practices?
Matt Schicke: As a coal producer we want to provide our customers the most flexibility possible. We provide our domestic customers access to our products on both major Eastern US railroads which differentiates us versus our competitors. As an exporter, we utilize this flexibility to create the lowest cost supply chain and the highest availability of our product to the Port of Baltimore and Hampton Roads/Newport News. Over the past few years we’ve witnessed producer consolidation and a lot of other industry players exit the business which has created an opportunity. We have set forth a strategy to utilize our facilities to buy in 3rd party supplies to better utilize our plant capacity and thus reduce our costs. In addition, we’ve set forth an export marketing strategy that focuses on not only selling our product on a direct basis but also creating blends for customers that require alternative specifications. Historically, traders have played this role to aggregate third party supplies but given our proximity to other producers, marketing and logistics management capability we’re able to grow our customer base and maximize value to our shareholders.
Smithers: What are the key opportunities and challenges for businesses to address to achieve optimizing value added services?
Matt Schicke: I see the primary challenges as cultural and financial. The challenges in changing the culture is moving the mindset from selling just your product(s) to be a solution provider to your customers. This requires not only a cultural change, but a broader commercial capability that not only understands sales but also understands logistics, sourcing, quality, and risk management. The other challenge is the financial aspect. To provide additional services and products the company will usually require additional working capital and will need to manage additional credit performance risks associated with the value-added services. The opportunities in providing value added services are creating additional profits by providing new services and products that you wouldn’t otherwise as well as finding ways to better utilize your asset base to lower costs. This could be better utilizing a wash plant by bringing in third party supplies or blending your product to meet alternative quality specifications.
Smithers: What are you most looking forward to about the conference?
Matt Schicke: I always look forward to catching up with friends and colleagues at the conference and hearing other industry perspectives. This conferences always does a nice job of presenting quality discussions around both the technical and commercial aspects of the industry.