Ten or 15 years ago many of us claimed to be global companies, but we operated as a collection of regional companies, said Zuzik. Supply chains, technical activities, operations and marketing were all regional.

In those days, he continued, Valvoline had three primary base oil suppliers in the United States. Two Valvoline plants on the West Coast were supplied by a West Coast API Group II supplier, one plant in Texas was supplied by a Texas Group I producer, and four Midwest plants were supplied by Ashlands own Midwest Group I plant. And none of the stocks were used outside the U.S.

But the world is changing, and this drove us to the concept of base oil flexibility, said Zuzik.

The primary technical driver for base oil changes has been 5W-30 volatility requirements, interjected Smith. They require using Group III base oils.

At Valvoline today, Zuzik said, Group I bright stocks are supplied in the U.S.; Group II comes from U.S., Canadian and Asian sources; and Group III from Asian, Canadian and European sources. Most important, he noted, many of the same stocks are used by Valvoline outside North America.

Tomorrow, Valvoline assumes there will be more OEM specs, and they will be increasingly important. There will be more premium products, with lower viscosity and synthetic base stocks. And it will be a greener world, said Zuzik, with more rerefined and biobased products. But we dont really know where the industry is going with 100 percent certainty, so we need to be able to respond to whatever the changes are.

What is needed to survive and grow are three key elements: agility to use a number of different base oils; speed to react fast to changes and be first to market; and global capability, to have global products and platforms. These three components define flexibility, Zuzik said.

Thom Smith focused on technical flexibility. We must think global in product development, he said, and we must think in terms of what if when developing formulations. What if we lose supply? What if we lose blending ability at a plant?

Its essential to understand the chemistry, Smith continued. Can we use different treat rates for different performance levels? Can we use boosters for product differentiation?

With base oils, said Smith, you must know what base oils are covered for your technology, and you must know how to apply the base oil interchange rules.

Im a proponent of industry-wide specs, Smith continued. We could never have developed high-mileage oils if wed been focused just on OEM specs, and the same is true with NextGen.

Smith urged every blender to be knowledgeable about the API Base Oil Interchange Guidelines (www.api.org/certifications/engineoil/pubs/index.cfm) and the ATIEL Base Oil Interchange Guidelines (www.atiel.org/codeprac.htm). Both API in the U.S. and ATIEL in Europe provide detailed information on what tests are required and how to use their guidelines. ACEA Engine Oil Sequences have footnotes, said Smith. Read them! They are very important.

Both API and ATIEL offer options for special situations, such as when an engine test is unavailable, or when a supply disaster strikes.

Its your job and your company, when you talk about base oil interchange, Smith said. You need to understand the guidelines and be self-reliant. Dont just rely on your additive supplier.

Switching from one Group II base oil to another may only require a Sequence IIIG test, for example. At a cost of about $50,000, a IIIG test has a run time of 100 hours and takes just 15 liters of oil to test.

Of course its nice to have your own qualified lab like Valvoline, Smith said, but there are many independent labs such as ISP, Southwest Research, APL and Intertek – if your additive supplier wont run the tests for you.

Zuzik concluded with a look at procurement and operations challenges that demand base oil flexibility. First, he said, you must be able to assure supply. You need to address current and future market conditions and build strong global relationship, as well as do scenario planning for disruptions.

Second, base oil flexibility can provide a competitive advantage. And finally, he said, operational challenges include more products, smaller batch sizes, more and more raw material growth, complex packaging requirements and more. In addition, the increased use of third party toll manufacturers is common when you grow internationally. All of this, he concluded, argues for base oil flexibility to minimize risk and maximize value.