Best Practices

Best Practices


Author, executive and chemical engineer Jack Welch is credited with coining this phrase, and it is a useful one to apply judiciously to your business. Welch, who led General Electric for 20 years, was speaking to the big picture of changing circumstances and trends that could impact any business, and the wisdom of getting ahead of that change versus the risk of getting left behind by it.

Examples of big-picture changes that are having an impact in the lubricants, additives and specialty chemicals industries are many. Some of the biggest in my mind are the impact of social media, the growth of wealth and vehicle ownership in China and India, improvements in battery technology, and reactions of governments to global warming. It is worth taking some time to think broadly with your management team about these and other megatrends, and decide which ones deserve some attention both as threats and opportunities.

In my experience though, this catch-phrase is also useful when thinking about issues that are more specific or more immediate to your company. I am talking here about business problems that you may have been watching develop over some period of time without yet taking action to address them. Of course if you havent taken action it is for a good reason. You have probably taken a look at the impact of the issue and the cost to address it and decided it isnt worth it – at least not yet. My advice is to rethink this. The examples below may be ones that you recognize.

Lets say you have a product which is not robust in some way. Perhaps it is hard to manufacture to its specification. This could have many causes (specification established too tight, raw materials changed over time, facilities have been modified, process changed over time, etc.) The lack of robustness may be the result of many small changes, each one of which was immaterial but the accumulation of changes is not.

This is in my mind a classic change before you have to situation. At some point in time you may simply be unable to make the product to specification and you will end up disappointing customers. In the worst case this product could be a critical component to some downstream customer or OEM, resulting in damage to your reputation and/or out-of-pocket costs.

If you have these types of issues hanging around I suggest it is worth devoting some time to address them. Of course there could be many routes to fixing the situation, such as changing the spec (with customer endorsement), backtracking on some change that triggered the problem, working with suppliers to understand any changes they may have made, or coming up with a new product altogether.

Consider also that if you come up with a new product it may have other benefits. Can you add features and benefits to the new product that will improve or sustain its success, or perhaps reduce the cost and improve profitability – or both?

Another example where action may well be worth taking sooner rather than later is any area in which you experience repetitive customer complaints. You may think that if the customer is complaining but still buying, then the issue may not be significant enough to warrant action. But chances are the customer is already working alternatives, and when they become viable the business will move away from you with little notice.

Another area pertinent to lubricants and additives has to do with whether to add new capabilities, qualifications or specifications to an existing product, or to build a new product to meet the new specifications. Often customers prefer that the new features be added to an existing product as this reduces their complexity. From the seller viewpoint though, there are other things to take into consideration:

Will adding the new features to the existing product be very costly versus building and qualifying a new product?

Will adding new features to the existing product reduce your ability to get proper value for the enhanced product?

Will your existing product, with its new features, be competitive with the approach competitors might take?

This is by no means an easy decision, but it is clear that at some point simply adding features and qualifications to an existing product becomes counterproductive. In such cases, it is better to build a new product before lack of competitiveness forces you to.

In my experience it is also wise not to ignore any area in which you are seriously lagging your competitors in performance, especially in what I would characterize as hygiene areas such as safety, quality and customer performance. While you dont have to target superiority in these areas (unless they are differentiators for you and key to your brand promise), you do need to perform at a level which is satisfactory. How do you tell what is sufficient? It may not be easy but here are some of the things you can do.

Survey your customers and pay attention to strong negatives in the hygiene areas.

Measure your performance and see what competitive data may be available in the public domain about your rivals performance. Set targets for performance improvement over time.

Set targets together with your customers. Work with your customers to understand the cost or other negative impacts that poor performance in certain areas might cause them or their customers. This may allow you to set priorities for where to invest in improvement.

Understand your own costs associated with poor performance. This may help to support allocating resources for the improvement.

At this point perhaps you are convinced that Change before you have to is sound business advice … in certain situations. However, you obviously cant invest in all of the changes you may need to make all at once. I suggest giving priority to the following four:

1. Those areas directly related to your brand promise.

2. Hygiene areas of safety, quality and customer performance.

3. Repeat complaints from your most important customers or across a wide range of customers.

4. Issues that could result in reputation damage.

One other area in which Change before you have to is very pertinent is procurement, and I will address this and other best practices for procurement in a subsequent column.

Change is never easy but if you do it before you have to there will likely be more time, more options, less stress and likely a better outcome.

Sara Lefcourt of Lefcourt Consulting LLC specializes in helping companies to improve profits, reduce risk and step up their operations. Her experience includes many years in marketing, sales and procurement, first for Exxon and then at Infineum, where she was vice president, supply. E-mail her at or phone (908) 400-5210.

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