Big Ideas at Pinnacle Oil

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In 1987, Kimball Morris had an inspiration. He saw that convenience stores and gas stations were largely limited to carrying major brands of motor oil and other automotive lubricants. Wouldnt they welcome the opportunity to leverage their customers loyalty by marketing their own brands, and thus keep more of the profits for themselves?

So he founded Pinnacle Oil with a vision to provide quality passenger car motor oils under private-label brands for the convenience store industry in the Midwest. Prior to that, only the larger, super-regional or national chains could afford to have their own brands.

Through another business, I owned some packaging machinery, the Indianapolis-based businessman told a visitor from LubesnGreases. So I opened up with about 12,500 square feet and six tanks. We made an SAE 10W-30, a 10W-40 and a transmission product. We started with three people and served a three-state area.

Morris hunch paid off. Today Pinnacles private-label brands are marketed in nearly 50,000 C-stores, groceries, retailers and gas stations across North America, said Kent Morris, his son and Pinnacle Oils president. While many of our customers are located in a 500-mile radius around Indianapolis, we serve a broad range of national and even international customers. We make products for virtually every end-use market.

Having grown organically over 26 years, Pinnacle today employs 75 people and operates out of three facilities in Indianapolis. It occupies more than 275,000 square feet of manufacturing and warehousing space, and recently leased 125,000 sq.ft. more. The company has 1.5 million gallons of tank storage, with an additional 250,000 gallons under construction. It oper-ates a rail siding with positions for 24 cars.

We are one of CSXs most active users in Indianapolis, Kent Morris noted. We have rail service here every night, switching out and spotting cars. And we have substantial rolling stock of base oils and additives in a local railyard.

From day one, our focus has been on quality, Kimball Morris continued. All of our products are produced to the latest industry specifications. We dont play in the low-cost, non-licensed world.

Building from his early C-store marketing successes, Morris diversified by entering three more key segments: contract blending and packaging for major oil companies; contract blending and packaging for OEMs; and the distributor market. The company now services most major lubricant distributors in a 500-mile radius around Indianapolis, Kent Morris said.

Pinnacle is active in Indiana, Ohio, Michigan, Illinois, Wisconsin, Minnesota, Iowa, Missouri, Kentucky and Tennessee. And it has customers as far east as Rhode Island and Atlanta. Smaller but growing volumes are exported to customers in countries ranging from the Dominican Republic to Russia, from Turkey to Canada.

On the manufacturing side, the company holds ISO 9001:2008 certification and is audited annually. Our blending and manufacturing procedures for each product are documented and controlled by a proprietary quality system to eliminate errors, the younger Morris said. No product or component comes into our plant or leaves our facilities before going through our quality control lab.

Pinnacles blending system is designed to eliminate product contamination and waste. Were a little unique in that we blend and store product in every tank, Kent Morris explained. We dont have a common area, where we blend in kettles and then move product to storage tanks. And we dont in-line blend. Instead, a single product is blended and stored in each tank until it is packaged or shipped out in bulk.

The Indianapolis plant has eight dedicated tank farms for various product families. We believe this set-up allows us to ensure better product integrity and high product quality, said Kent Morris. It minimizes potential for contamination, simplifies the cleaning of lines, and allows us to have dedicated piping by product family throughout the plant.

Pinnacle has also invested heavily in its laboratories, with the aim of mimicking those of its major oil customers. Its quality control laboratory participates in the ASTM Interlaboratory Crosscheck Program to ensure that its testing capabilities meet industry standards. And most lab equipment is automated to ensure testing accuracy and reproducibility.

Kent Morris continued, We work hard to differentiate ourselves from our competition. Our approach to quality is one way we do this, and an emphasis on customer service is another. Our customer service team has been rated among the most responsive and best in the industry. Thats really important to us.

The plant manufactures a full range of engine oils, including synthetics, that meet the latest heavy-duty and passenger car international specifications. The company also offers a full line of automatic transmission fluids, gear lubricants and two-cycle oils. And it manufactures industrial lubricants, including hydraulic oil, tractor hydraulic fluid, gear oil, cutting fluids and other specialties. We literally can make all lubricants outside of grease and white oils, Kimball Morris said proudly.

Pinnacle ships about 40 percent of its product in bulk in tank trucks, totes and railcars. But packaged products are the lions share of the business, ranging from 3.2-ounce bottles to 55-gallon drums. The plant has six automated filling lines, each a high-speed operation:

Quarts (300-plus bottles per minute).

Larger-format (90-plus gallon bottles/minute).

Small-format for pints.

2.5-gallon line (40-plus/minute).

Pails (20 or more/minute).

Drums, filled at rates of more than 400 per shift.

To speed processing, the plant uses robotic palletizing and stretch-wrapping, and on the pail line, robotic pail-stacking equipment. These robots are very accurate, cost-effective and flexible in their operation, Kimball Morris added. And on its larger-format line, Pinnacle invested in mass-flow filling technology, which measures the density, viscosity and temperature of the product. Then it corrects for these conditions to control the amount of oil put into each bottle. The fill of a gallon container, for example, is accurate to plus-or-minus 2 grams.

The company works closely with major additive companies and customers to develop product formulations, Kent Morris said, strictly following protocols established by licensing agencies such as API, as well as requirements set forth by the customers.

He explained, Were doing more and more with our customers to come up with custom blended products. For example, we might work with a customer to develop a heavy-duty engine oil that helps differentiate their product from that of a major oil company. That might include additive selection and formulation work, followed by running field tests, documenting the results and assisting with product approvals and literature. When they go to the marketplace, they have substantiated, empirical data to support their claims, noted Kent Morris.

Its also alert when customers need other assistance. For example, after Hurricane Katrina, some major oil companies lost their ability to supply SAE 5W-30 and 5W-20 motor oils. For months, Pinnacle manufactured the products on their behalf to ensure continuity of supply.

Another customer, a major C-store chain, wanted to sell its branded motor oil outside near the gasoline pumps, but exposure to weather caused the labels on their quart bottles to deteriorate. Pinnacle suggested a plastic label material used by a shampoo company which solved the problem, and resulted in increased sales.

Today, Kent Morris says Pinnacles major challenge is to continue to invest in our business to provide cost-effective solutions without sacrificing quality. Were doing that with our investments in the robotics and our mass-fill technology.

Kimball Morris added, We are going through the process of installing a complete enterprise resource planning system that will give us data on everything from real-time inventory numbers to 100 percent traceability of our products throughout the supply chain, including incoming raw materials, finished products, transfers to our warehouse, and shipments out the door.

Our number one strategic goal for 2013, Kent Morris concluded, is to get that system fully implemented. It will give us high-quality data from which we can make more informed decisions.

The company expects to see continued organic growth in all its major segments. Since 2008, its volume has grown by over 40 percent, the Morrises said, and they are actively targeting and pursuing strategic accounts. The two also see some opportunity to grow through mergers and acquisitions – and say theyll jump when the right one presents itself.

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