Best Practices

Best Practices


Whether your product is lubricants, base oils, additives or chemicals, what drives your business success is trust. Keeping the trust of your customers, employees, communities and stockholders is paramount. We have seen in the news many examples of companies losing the trust of stakeholders; most recently Facebook, where data of over 50 million users were allegedly used by an outside company without permission. Lets examine some key areas in which you may want to bolster your procedures and culture to keep the trust of those most important to your business.

The first area is product quality. Our industry pours tens of millions of dollars each year into testing and qualification of new products and the quality of these products is of utmost importance. Ensure that quality assurance procedures are in place and that colleagues adhere to them. If you do find a problem with a product, act swiftly to inform customers and take action accordingly. Being open with customers and taking immediate action will minimize the costs of the incident, both in terms of real dollars and with regard to your companys reputation.

The next area to focus on is safety and security. Hire a consultant with expertise in cybersecurity to examine how safe your systems are, especially in manufacturing plants. Also consider whether your onsite security is adequate; for example, do you have metal detectors at plant entrances? Does your company have a weapons policy? Try to run some drills that test your system response to a security threat.

Also evaluate the culture of your workplace. We have seen numerous examples this year of toxic cultures in Hollywood and across the business world regarding the treatment of women. You may think it is unlikely to happen in the more conservative world of lubricants and chemicals, but take a hard look and confirm that sexual harassment is not happening in your workplace.

Have an explicit policy stating that employees in a romantic relationship cannot work for each other or be involved in processes of evaluations or promotions regarding either person. Make sure there is awareness of the procedures an employee should follow to report harassment of any kind and that the procedures lead to an investigation. Ensure that your human resources personnel and legal team are at the forefront of these processes.

Another area of focus should be pricing. Be honest and open with customers about the rationale behind price increases. Customers likely have various methods to calculate raw materials increases, so any obfuscation in this area can lead to a lack of trust, extended negotiations or loss of business. If you need to raise pricing on certain products due to low margins, try to discuss this with customers and alert them to the longer-term implications of the situation. I have had suppliers in the past do just this, and in the end I accepted the price increases, as the alternative of the supplier decommercializing the product was significantly more difficult to handle.

The final, critical trust area is the supply chain. If you anticipate supply outages, give your customers a heads-up and assist them with alternate options to the extent possible. In the complex world of base oils, lubricants and additives, finding these options is somewhat difficult and time consuming and may require engine testing and re-qualification if the outage is long-term. Chances are that your customers will return to you if you provide them information and assistance in advance of a supply crisis.

The advice here is to diligently secure and be open about critical trust areas of product quality, security, workplace culture and treatment of people, pricing and supply chain issues. This may sound like I am recommending opening the books with your customers, but that is not the case. Consider the following areas to keep private:

Dont share too much information about an area that you consider your competitive moat. If your competitive advantage is in the supply chain, for example, show customers the advantage in performance and some high-level themes of how you achieve this, but keep the details to yourself. Similarly, if your advantage is in the formulating area, protect the key information about formulation style, key components, manufacturing processes and the like.

Consider keeping long-term strategies confidential. Of course, you may need to discuss strategy to some extent with your biggest or most strategic customers. Do recognize, though, that such discussions may leak to competitors; carefully gauge the level of detail you share. For example, a strategy to grow sales in China may be fine to share with customers, while an execution plan that calls for a new plant or a sales force of 50 people on the ground in China may be way too much information.

Protect your financial data, which can be extremely useful information to competitors and customers. Competitors may be able to assess your companys areas of strength and weakness and better target their attacks if they have access to some of your financial information. Customers may be able to bring convincing arguments about how profits are unfairly split between players in the supply chain.

Carefully shield customer and original equipment manufacturer information. Customers and OEMs, by necessity, share a lot of information about their strategies, product plans and their own customers, and this information must be guarded. Leaks in this area are a serious breach of trust.

It would be timely to take a closer look at how your company is keeping the trust of stakeholders, and take action where necessary.

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. Email her at or phone (908) 400-5210.

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