Chem buyers keep watchful eye over distributors
Jim Morgan -- Purchasing, 11/7/2002 7:00:00 AM
Chemical buyers appear to be more than moderately concerned these days about the need to reduce the size of supply bases and generally exercise greater control over them. Their concerns, in fact, boiled up in a poll of chemical industry buying conducted recently by PURCHASING magazine. Specifically, many buying professionals in the chemical industry are expressing a strong belief in the need for more supply base rationalization and much closer monitoring of distributor suppliers.
Indeed, 43% of chemical buying professionals buyers taking part in the poll indicated they are less than satisfied with the performance of their chemical distributor suppliers. A little more than 25% of these purchasing professionals cited specific examples of poor or marginal performance of their chemical distributor suppliers. Their concerns fell mostly into these categories:
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Service. The need to take a more active interest in improving customer value.
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Leadtimes. For many purchasing executives there simply are too many leadtime problems.
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Order handling. The need for more proactive efforts by chemical distributors in reducing handling problems.
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Business savvy. Any chemical buyers feel there is insufficient distributor participation in cost reduction efforts.
Especially needed, says David S. Kruegar, strategic sourcing manager, Michael Foods, Minnetonka, Minn., is greater efforts at "improving customer value." He suggests that it is especially important for distributor suppliers to work more proactively in such areas as "assisting with trial runs, being easy to do business with, having a single point of contact for various divisions, and having good total cost numbers." In essence, says Kruegar, distributors "need to provide value that makes it worthwhile for the buyer to avoid purchasing direct from the manufacturer."
For some purchasing execs like Michael S. Motyka, purchasing manager, Shelby Industries, Shelbyville, Ky., the big problem is leadtimes. Others, like the strategic sourcing manager for a Colorado autoparts maker, worry that "not enough is being done to curb careless handling and possible contamination of the chemicals" he buys from distributors.
For their part, major distributors are taking action to boost customer service. CHEMCENTRAL Corp., the world's largest privately held chemical distributor, has implemented a new operating strategy designed to expand and enhance the Chicago-based company's customer and market focus. Termed "regionalization", this new strategy centralizes support functions in regional business centers while retaining sales and operations at its many distribution sites throughout the country.
John R. Yanney, CHEMCENTRAL CEO and president, indicated that "Regionalization helps get our sales and marketing people out of office administration and into the field to do what they do best: service the marketplace." The plan is aimed at eliminating the "multiple and sometimes confusing points of contact" for billing and administrative transactions. The new operating structure will be fully implemented by the end of 2002.
Ashland Distribution Co. (ADC) implemented a new organization in October to improve customer service. ADC is now aligned in five geographic regions led by a a vice president who has responsibility for sales, customer support, and operations. "In an industry that has experienced a lot of upheaval recently, the 'new' ADC will stand for stability, quality, value and service," said Hank Waters, president. Sourcing will be managed by a central department led by Dave Benning.
The positive side
But while there is significant concern about the performance of some chemical distributors, many are ready to concede that improvements have taken place in recent years. In fact, survey participants are nearly equally divided over whether their chemical distributor suppliers could be doing more to meet their top concerns. On the positive side many buyers say their chemical distributor suppliers are improving value in these areas:
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Value added. Many are offering more value added services such as special packaging, remote tank monitoring, and global stocking.
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New products. Greater numbers of distributors are adding products to their lines that previously were handled only by producers.
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Niche support. Many are providing special niche support and market analysis.
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Order processing. Many distributors are investing in information technology and training to speed order servicing and inventory control.
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Inventory. Many chemical distributor suppliers are offering total inventory management programs and/or pre-packaging consignment programs.
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